United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant To Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

For the month of

August 2006

Companhia Vale do Rio Doce

Avenida Graça Aranha, No. 26
20005-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(Check One) Yes o No þ

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-   .)

 

 

COMPANHIA VALE DO RIO DOCE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005
Condensed Consolidated Statements of Income for the three-month periods ended June 30, 2006 and 2005 and March 31, 2006 and for the six-month periods ended June 30, 2006 and 2005
Condensed Consolidated Statements of Cash Flows for the three-month periods ended June 30, 2006 and 2005 and March 31, 2006 and for the six-month periods ended June 30, 2006 and 2005
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended June 30, 2006 and 2005 and March 31, 2006 and for the six-month periods ended June 30, 2006 and 2005
Notes to the Condensed Consolidated Financial Information
Signature Page

This report on Form 6-K is hereby incorporated by reference into the Registration Statement on Form F-3 of Vale Overseas Limited, File No. 333-110867-01 and the Registration Statement on Form F-3 of Companhia Vale do Rio Doce, File No. 333-110867 and shall be deemed to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars

		June				December
		30, 2006				31, 2005
		(Unaudited)
Assets
Current assets
Cash and cash equivalents			1,894				1,041
Accounts receivable
Related parties			226				159
Unrelated parties			1,733				1,490
Loans and advances to related parties			80				22
Inventories			1,322				1,142
Deferred income tax			237				186
Recoverable taxes			389				362
Others			432				373
			6,313				4,775
Property, plant and equipment, net			18,786				14,166
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments			1,764				1,672
Other assets
Goodwill on acquisition of subsidiaries			593				548
Loans and advances
Related parties			9				4
Unrelated parties			67				61
Prepaid pension cost			409				308
Judicial deposits			740				568
Recoverable taxes			153				110
Advances to suppliers - energy			398				311
Others			250				121
TOTAL

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars
(Except number of shares)

						(Continued)
		June				December
		30, 2006				31, 2005
		(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Suppliers			895				1,110
Payroll and related charges			176				229
Remuneration attributed to stockholders			666				—
Current portion of long-term debt - unrelated parties			1,115				1,218
Short-term debt			15				15
Loans from related parties			64				62
Provision for income taxes			186				244
Taxes payable			163				53
Employees post-retirement benefits			35				30
Others			337				364
			3,652				3,325
Long-term liabilities
Employees post-retirement benefits			253				241
Long-term debt - unrelated parties			4,688				3,714
Loans from related parties			1				1
Provisions for contingencies (Note 11 (b))			1,321				1,286
Unrealized loss on derivative instruments			314				260
Deferred income tax			309				2
Provisions for asset retirement obligations			243				225
Others			461				395
			7,590				6,124
Minority interests			1,032				1,218
Stockholders’ equity
Preferred class A stock - 1,800,000,000 no-par-value shares authorized and 959,758,200 issued			4,702				2,150
Common stock - 900,000,000 no-par-value shares authorized and 1,499,898,858 issued			3,806				3,806
Treasury stock - 1,304,016 preferred and 28,291,020 common shares			(113	)			(88	)
Additional paid-in capital			498				498
Other cumulative comprehensive deficit			(2,426	)			(2,729	)
Appropriated retained earnings			4,705				4,357
Unappropriated retained earnings			6,036				3,983
			17,208				11,977
TOTAL			29,482				22,644

See notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Income
Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)

														Six-month periods ended
		Three-month periods ended												June 30,
		June 30,				March 31,				June 30,
		2006				2006				2005				2006				2005
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals			3,286				2,760				3,077				6,046				4,825
Revenues from logistic services			362				289				316				651				548
Aluminum products			640				429				327				1,069				673
Other products and services			25				12				1				37				3
			4,313				3,490				3,721				7,803				6,049
Taxes on revenues			(167	)			(150	)			(185	)			(317	)			(300	)
Net operating revenues			4,146				3,340				3,536				7,486				5,749
Operating costs and expenses
Cost of ores and metals sold			(1,350	)			(1,256	)			(1,134	)			(2,606	)			(2,046	)
Cost of logistic services			(196	)			(174	)			(169	)			(370	)			(312	)
Cost of aluminum products			(324	)			(257	)			(203	)			(581	)			(394	)
Others			(14	)			(8	)			(2	)			(22	)			(3	)
			(1,884	)			(1,695	)			(1,508	)			(3,579	)			(2,755	)
Selling, general and administrative expenses			(212	)			(168	)			(135	)			(380	)			(248	)
Research and development			(101	)			(71	)			(54	)			(172	)			(88	)
Employee profit sharing plan			(35	)			(28	)			(24	)			(63	)			(41	)
Others			(41	)			(42	)			(44	)			(83	)			(51	)
			(2,273	)			(2,004	)			(1,765	)			(4,277	)			(3,183	)
Operating income			1,873				1,336				1,771				3,209				2,566
Non-operating income (expenses)
Financial income			45				42				27				87				56
Financial expenses			(245	)			(213	)			(51	)			(458	)			(143	)
Foreign exchange and monetary gains (losses), net			28				259				304				287				302
Gain on sale of investments			338				9				—				347				—
			166				97				280				263				215
Income before income taxes, equity results and minority interests			2,039				1,433				2,051				3,472				2,781
Income taxes
Current			(158	)			(242	)			(330	)			(400	)			(490	)
Deferred			(80	)			(53	)			(107	)			(133	)			(60	)
			(238	)			(295	)			(437	)			(533	)			(550	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments			184				156				220				340				353
Minority interests			(105	)			(123	)			(204	)			(228	)			(256	)
Net income			1,880				1,171				1,630				3,051				2,328
Basic and diluted earnings per Preferred Class A Share			0.77				0.51				0.71				1.25				1.01
Basic and diluted earnings per Common Share			0.77				0.51				0.71				1.25				1.01
Weighted average number of shares outstanding (thousands of shares)
Common shares			1,471,608				1,471,608				1,471,608				1,471,608				1,471,608
Preferred Class A shares			959,717				831,448				831,432				959,717				831,432

See notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows
Expressed in millions of United States dollars (Unaudited)

														Six-month periods
		Three-month periods ended												ended June 30,
		June 30,				March 31,				June 30,
		2006				2006				2005				2006				2005
Cash flows from operating activities:
Net income			1,880				1,171				1,630				3,051				2,328
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization			205				181				136				386				265
Dividends received			98				112				126				210				195
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments			(184	)			(156	)			(220	)			(340	)			(353	)
Deferred income taxes			80				53				107				133				60
Provisions for contingencies			19				13				(8	)			32				(11	)
Gain on sale of investments			(338	)			(9	)			—				(347	)			—
Foreign exchange and monetary losses (gains)			(75	)			(291	)			(298	)			(366	)			(271	)
Unrealized derivative losses (gains), net			51				44				(85	)			95				(90	)
Minority interests			105				123				204				228				256
Interest payable (receivable), net			40				(28	)			38				12				36
Others			(21	)			46				(51	)			25				(64	)
Decrease (increase) in assets:
Accounts receivable			(346	)			162				(472	)			(184	)			(564	)
Inventories			(23	)			(17	)			(50	)			(40	)			(70	)
Others			(38	)			(108	)			(187	)			(146	)			(261	)
Increase (decrease) in liabilities:
Suppliers			103				(367	)			142				(264	)			187
Payroll and related charges			47				(108	)			13				(61	)			(22	)
Income taxes			175				(178	)			325				(3	)			246
Others			(34	)			(172	)			76				(206	)			(10	)
Net cash provided by operating activities			1,744				471				1,426				2,215				1,857
Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions			1				(7	)			(27	)			(6	)			(27	)
Repayments			—				3				22				3				25
Others			(35	)			48				—				13				1
Guarantees and deposits			(12	)			(23	)			(3	)			(35	)			(20	)
Additions to investments			(2	)			(2	)			(90	)			(4	)			(91	)
Additions to property, plant and equipment			(961	)			(855	)			(777	)			(1,816	)			(1,438	)
Proceeds from disposal of investments			418				14				—				432				—
Proceeds from disposals of property, plant and equipment			29				9				1				38				3
Net cash used in investing activities			(562	)			(813	)			(874	)			(1,375	)			(1,547	)
Cash flows from financing activities:
Short-term debt, net issuances (repayments)			(65	)			50				216				(15	)			237
Loans
Related parties
Additions			1				10				3				11				7
Repayments			29				(40	)			(9	)			(11	)			(26	)
Issuances of long-term debt
Related parties			—				—				11				—				15
Others			4				1,347				114				1,351				349
Stock treasury			(25	)			—				—				(25	)			—
Repayments of long-term debt			(200	)			(321	)			(432	)			(521	)			(588	)
Interest attributed to stockholders			(669	)			—				(500	)			(669	)			(500	)
Net cash (used in) provided by financing activities			(925	)			1,046				(597	)			121				(506	)
Increase (decrease) in cash and cash equivalents			257				704				(45	)			961				(196	)
Effect of exchange rate changes on cash and cash equivalents			(7	)			(101	)			(121	)			(108	)			(97	)
Cash and cash equivalents, beginning of period			1,644				1,041				1,122				1,041				1,249
Cash and cash equivalents, end of period			1,894				1,644				956				1,894				956
Cash paid during the period for:
Interest on short-term debt			(5	)			(1	)			—				(6	)			—
Interest on long-term debt			(73	)			(94	)			(35	)			(167	)			(117	)
Income tax			(31	)			(187	)			(171	)			(218	)			(250	)
Non-cash transactions
Income tax paid with credits			(40	)			(30	)			(53	)			(70	)			(80	)
Interest capitalized			(31	)			(31	)			(9	)			(62	)			(24	)

See notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Changes in Stockholders’ Equity
Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)

														Six-month periods ended June
		Three-month periods ended												30,
		June 30,				March 31,				June 30,				2006				2005
		2006				2006				2005
Preferred class A stock (including three special shares)
Beginning of the period			4,702				2,150				1,176				2,150				1,176
Capital increase (Note 5)			—				2,552				—				2,552				—
Transfer from appropriated retained earnings			—				—				974				—				974
End of the period			4,702				4,702				2,150				4,702				2,150
Common stock
Beginning of the period			3,806				3,806				2,121				3,806				2,121
Merger of shares			—				—				1,685				—				1,685
End of the period			3,806				3,806				3,806				3,806				3,806
Treasury stock
Beginning of the period			(88	)			(88	)			(88	)			(88	)			(88	)
Acquisitions			(25	)			—				—				(25	)			—
End of the period			(113	)			(88	)			(88	)			(113	)			(88	)
Additional paid-in capital
Beginning and end of the period			498				498				498				498				498
Other cumulative comprehensive deficit
Cumulative translation adjustments
Beginning of the period			(2,006	)			(2,856	)			(3,891	)			(2,856	)			(3,869	)
Change in the period			(532	)			850				1,032				318				1,010
End of the period			(2,538	)			(2,006	)			(2,859	)			(2,538	)			(2,859	)
Unrealized gain on available-for-sale securities
Beginning of the period			132				127				116				127				95
Change in the period			(20	)			5				(1	)			(15	)			20
End of the period			112				132				115				112				115
Total other cumulative comprehensive deficit			(2,426	)			(1,874	)			(2,744	)			(2,426	)			(2,744	)
Appropriated retained earnings
Beginning of the period			4,687				4,357				4,126				4,357				4,143
Transfer from unappropriated retained earnings			18				330				362				348				345
Transfer to capital stock			—				—				(2,659	)			—				(2,659	)
End of the period			4,705				4,687				1,829				4,705				1,829
Unappropriated retained earnings
Beginning of the period			4,824				3,983				4,030				3,983				3,315
Net income			1,880				1,171				1,630				3,051				2,328
Dividends and interest attributed to stockholders
Preferred class A stock			(257	)			—				(180	)			(257	)			(180	)
Common stock			(393	)			—				(320	)			(393	)			(320	)
Appropriation to reserves			(18	)			(330	)			(362	)			(348	)			(345	)
End of the period			6,036				4,824				4,798				6,036				4,798
Total stockholders’ equity			17,208				16,555				10,249				17,208				10,249
Comprehensive income is comprised as follows:
Net income			1,880				1,171				1,630				3,051				2,328
Cumulative translation adjustments			(532	)			850				1,032				318				1,010
Unrealized gain (loss) on available-for-sale securities			(20	)			5				(1	)			(15	)			20
Total comprehensive income			1,328				2,026				2,661				3,354				3,358
Shares
Preferred class A stock (including six special shares) (1)			959,758,200				959,758,200				831,455,478				959,758,200				831,455,478
Common stock			1,499,898,858				1,499,898,858				1,499,898,858				1,499,898,858				1,499,898,858
Treasury stock (2)
Beginning of the period			(28,313,936	)			(28,313,936	)			(28,314,650	)			(28,313,936	)			(28,314,922	)
Acquisitions			(1,281,100	)			—				—				(1,281,100	)
Sales			—				—				24				—				296
End of the period			(29,595,036	)			(28,313,936	)			(28,314,626	)			(29,595,036	)			(28,314,626	)
			2,430,062,022				2,431,343,122				2,303,039,710				2,430,062,022				2,303,039,710
Dividends and interest attributed to stockholders (per share)
Preferred class A stock (including six special shares)			0.27				—				0.22				0.27				0.22
Common stock			0.27				—				0.22				0.27				0.22

(1)

Increase of 128,302,722 (after split of shares) preferred shares due to merger of shares from Caemi.

(2)

As of June, 2006, 28,291,020 common shares and 1,304,016 preferred shares were held in treasury in the amount of US$113. The 28,291,020 common shares are provided as collateral to secure a loan of our subsidiary Alunorte. On June 30, 2006 the market value of 4,988,922 of these shares would be sufficient to offset the balance of the debt.

See notes to condensed consolidated financial statements.

		Notes to the Condensed Consolidated Financial Statements Expressed in millions of United States dollars, unless otherwise stated
1		The Company and its operation
		Companhia Vale do Rio Doce (CVRD) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. Our operations are carried out through CVRD and its subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production and logistics, as well as energy, aluminum and steel activities. Further details of our joint ventures and affiliates are described in Note 8.
		The main operating subsidiaries we consolidate are as follows:

				% voting		Head office
Subsidiary		% ownership		capital		location		Principal activity
Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)		57		61		Brazil		Alumina
Alumínio Brasileiro S.A. — Albras (“Albras”)		51		51		Brazil		Aluminum
CADAM S.A (CADAM) (1) (3)		61 (37)		100		Brazil		Kaolin
CVRD Overseas Ltd.		100		100		Cayman Islands		Trading
Ferrovia Centro-Atlântica S. A.		100		100		Brazil		Logistics
CVRD International S.A. (4)		100		100		Swiss		Trading
Minerações Brasileiras Reunidas S.A. — MBR (2) (3)		90 (56)		90		Brazil		Iron ore
Mineração Onça Puma Ltda		99		99		Brazil		Nickel
Navegação Vale do Rio Doce S.A. — DOCENAVE		100		100		Brazil		Shipping
Pará Pigmentos S.A. (1) (3)		82 (76)		86		Brazil		Kaolin
Rio Doce International Finance Ltd. — RDIF		100		100		Bahamas		International finance
Rio Doce Manganês S.A.		100		100		Brazil		Manganese and Ferroalloys
Rio Doce Manganèse Europe — RDME		100		100		France		Ferroalloys
Rio Doce Manganese Norway — RDMN		100		100		Norway		Ferroalloys
Salobo Metais S.A.		100		100		Brazil		Copper
Urucum Mineração S.A.		100		100		Brazil		Iron ore, Ferroalloys and
								Manganese

(1)		Through Caemi Mineração e Metalurgia S.A CVRD holds 100% of the voting and total capital.
(2)		Through Caemi Mineração e Metalurgia S.A. and Belém Administrações e Participações Ltda.
(3)		The participation in parenthesis refers to the interest before the merger of shares from Caemi on March, 2006.
(4)		Previously known as Itabira Rio Doce Company Ltd. — ITACO

2		Basis of consolidation
		All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. As from January 1, 2004, our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are reported at cost plus our equity in undistributed earnings or losses. Included in this category are certain joint ventures in which we have majority ownership but, by force of shareholders’ agreements, do not have effective management control. We provide for losses on equity investments with negative stockholders’ equity where applicable.
		We evaluate the carrying value of our listed investments relative to publicly available quoted market prices. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.
		We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a minority stockholder but with significant influence over the operating and financial policies of the investee.
		Investments in unincorporated joint ventures, formed for the purpose of investing in hydroelectric power projects, are proportionately consolidated.

3		Summary of significant accounting policies
		Our condensed consolidated interim financial information for the three-month periods ended June 30, 2006, March 31, 2006 and June 30, 2005 and for the six-month periods ended June 30, 2006 and 2005 is unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods. The results of operations for the three-month and six-month periods ended June 30, 2006 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2006.
		In preparing the condensed consolidated financial statements, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our condensed consolidated financial statements therefore include various estimates concerning the selection of useful lives of property, plant and equipment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired in business combinations, income tax valuation allowances, employee post-retirement benefits and other similar evaluations. Actual results may vary from our estimates.
		We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$2.1643 and R$2.3370 at June 30, 2006 and December 31, 2005, respectively to US$1.00 or the first available exchange rate if exchange on the last day of the period, was not available), and all accounts in the statements of income (including amounts relative to local currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remeasurement process is included in the cumulative translation adjustments account in stockholders’ equity.
4		Recently-issued accounting pronouncements
		In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). Under the Interpretation, the financial statements will reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values.
5		Major acquisitions and disposals during the years presented
		On July 3, 2006 we acquired the remaining 45.5% of Valesul for US$28, becoming our subsidiary.
		During the second quarter of 2006, we sold our total interest in Gulf Industrial Investment Company for US$418, resulting in a net gain of US$338.
		At an Extraordinary Shareholders’ Meeting on March 31, 2006, the Capital Stock increased by            US$2,552, corresponding to 128,302,722 preferred shares (64,151,361 before split), due to the issuance of shares in relation to the acquisition of the outstanding minority interest in Caemi.

Pro forma information considers that our acquisition of the 39.77% preferred shares of Caemi, totaling 100% of total interest as if it was completed at January 1, 2005.

		Three-month periods ended
		March 31, 2006												June 30, 2005
						Caemi -												Caemi -
						Merger				Pro Forma								Merger				Pro Forma
		Consolidated				(39.77%)				(unaudited)				Consolidated				(39.77%)				(unaudited)
Income before minority interests			1.294				—				1.294				1.834				—				1.834
Minority interests			(123	)			54				(69	)			(204	)			70				(134	)
Net income			1.171				54				1.225				1.630				70				1.700
Outstanding shares (thousands)			2.303.040								2.431.343				2.303.040								2.431.343
Basic and diluted earnings per share			0,51								0,50				0,71								0,70

		Six-month periods ended
		June 30, 2006												June 30, 2005
						Caemi -												Caemi -
						Merger				Pro Forma								Merger				Pro Forma
		Consolidated				(39.77%)				(unaudited)				Consolidated				(39.77%)				(unaudited)
Income before minority interests			3.279				—				3.279				2.584				—				2.584
Minority interests			(228	)			54				(174	)			(256	)			92				(164	)
			3.051				54				3.105				2.328				92				2.420
Outstanding shares (thousands)			2.303.040								2.430.062				2.303.040								2.431.343
Basic and diluted earnings per share			1,32								1,28				1,01								1,00

		In November 2005, we acquired 93.0% of the voting capital of Canico Resource Corp. (Canico) a Canadian-based junior resource company focused on the development of the Onça-Puma nickel laterite, for US$750. In December 2005, we acquired an additional 6.20% of the voting capital of Canico for US$50. Canico ´s only significant asset other than US$63 of cash and cash equivalents was US$794 of mining rights. On February 10, 2006, we concluded the acquisition of the outstanding common shares of Canico, acquiring the remaining voting capital of Canico, 0.8% of its total capital for US$6, which is now a wholly-owned subsidiary.
		During the first quarter of 2006, we sold our total interest in Nova Era Silicon (49%) to JFE Steel Corporation for US$14, resulting in a net gain of US$9.

6		Income taxes
		Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34% represented by a 25% federal income tax rate plus a 9% social contribution rate.
		The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:

		Three-month periods ended												Six-month periods
		June 30,				March 31,				June 30,				ended June 30
		2006				2006				2005				2006				2005
Income before income taxes, equity results and minority interests			2,039				1,433				2,051				3,472				2,781
Federal income tax and social contribution expense at statutory enacted rates			(693	)			(487	)			(697	)			(1,180	)			(945	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders			85				91				131				176				185
Exempt foreign income (loss)			348				114				82				462				128
Difference on tax basis of equity investees			(18	)			(66	)			(17	)			(84	)			(21	)
Tax incentives			44				32				59				76				81
Other non-taxable gains (losses)			(4	)			21				5				17				22
Federal income tax and social contribution expense in consolidated statements of income			(238	)			(295	)			(437	)			(533	)			(550	)

		We have certain tax incentives relative to our manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relative to manganese comprise partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels which expires in 2009 and 2013, respectively, while the partial exemption incentives relative to aluminum and kaolin expire in 2013. An amount equal to the tax saving must be appropriated to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends. Tax loss carry forward have no expiration date.
7		Inventories

						December 31,
		June 30, 2006				2005
Finished products
Iron ore and pellets			375				271
Manganese and ferroalloys			128				151
Alumina			39				22
Aluminum			64				52
Kaolin			24				18
Others			49				28
Spare parts and maintenance supplies			643				600
			1,322				1,142

8

Investments in affiliated companies and joint ventures

		June 30, 2006																Investments								Equity Adjustments																				Dividends received
																																						Six-month periods																				Six-month periods
																										Three-month periods ended												ended June 30								Three-month periods ended												ended June 30
														Net income
		Participation in								Net				(loss) for the				June 30,				December				June 30,				March 31,				June												June 30,				March 31,				June
		capital (%)								equity				period				2006				31, 2005				2006				2006				30, 2005				2006				2005				2006				2006				30, 2005				2006				2005
		voting				total
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)			51.11				51.00				72				32				37				60				7				9				11				16				13				—				22				—				22				—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)			51.00				50.89				65				13				33				37				2				5				14				7				16				—				13				3				13				4
Companhia Coreano-Brasileira de Pelotização — KOBRASCO			50.00				50.00				73				28				36				41				5				9				14				14				17				11				—				—				11				—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)			51.00				50.90				59				12				30				33				2				4				13				6				14				—				12				—				12				—
SAMARCO Mineração S.A. — SAMARCO (2)			50.00				50.00				788				211				444				335				67				39				56				106				90				—				25				35				25				55
Minas da Serra Geral S.A. — MSG			50.00				50.00				44				1				22				21				1				—				(4	)			1				(4	)			1				—				—				1				—
Gulf Industrial Investment Company — GIIC (5)			—				—				—				—				—				62				4				14				23				18				35				—				—				11				—				11
Others			—				—				—				—				20				25				—				(2	)			1				(2	)			(1	)			1				—				—				1				—
																			622				614				88				78				128				166				180				13				72				49				85				70
Logistics
MRS Logística S.A			37.23				40.45				389				98				167				109				24				14				12				38				22				20				—				5				20				5
																			167				109				24				14				12				38				22				20				—				5				20				5
Holdings
Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (4)			22.99				11.46				2,869				468				329				281				28				26				57				54				99				28				—				34				28				34
California Steel Industries Inc. — CSI			50.00				50.00				380				66				190				161				18				15				5				33				16				—				3				—				3				—
SIDERAR (cost $15) — available for sale investments (4)			4.85				4.85				—				—				127				142				—				—				—				—				—				—				—				—				—				20
																			646				584				46				41				62				87				115				28				3				34				31				54
Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN			40.00				40.00				315				66				126				178				14				12				15				26				32				22				37				30				59				58
Valesul Alumínio S.A. — VALESUL			54.51				54.51				133				22				72				58				8				4				3				12				4				—				—				8				—				8
																			198				236				22				16				18				38				36				22				37				38				59				66
Coal
Henan Longyu Resources Co. Ltd			25.00				25.00				370				45				92				96				4				7				—				11				—				15				—				—				15				—
Shandong Yankuang International Company Ltd(3)			25.00				25.00				86				—				22				22				—				—				—				—				—				—				—				—				—				—
																			114				118				4				7				—				11				—				15				—				—				15				-
Other affiliates and joint ventures
Others							—				—				—				17				11				—				—				—				—				—				—				—				—				—				-
																			17				11				—				—				—				—				—				—				—				—				—				-
																			975				949				72				64				80				136				151				65				40				72				105				120
Total			—				—				—				—				1,764				1,672				184				156				220				340				353				98				112				126				210				195