Edgar Filing: Companhia Vale do Rio Doce

FORM 6-K

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- .)

Table of Contents

BRGAAP Press Release

BRGAAP Financial Pages

A-Quarterly information

1-Balance Sheet

2-Statement of Income

3-Statement of Changes in Stockholders’ Equity

4-Statement of Cash Flows

5-Notes to the Quarterly information at June 30, 2006 and 2005

5.1- Operations

5.2- Presentation of Quarterly information

5.3- Principles and Practices of Consolidation

5.4- Significant Accounting Policies

5.5- Accounting Pronouncements Recently-issued by Comissão de Valores Mobiliários (CVM)

5.6- Stock Merger — CAEMI

5.7- Acquisition and Divestiment

5.8- Cash and Cash Equivalents

5.9- Accounts Receivable

5.10- Related Parties

5.11- Inventories

5.12- Taxes to recover or offset

5.13- Deferred Income Tax and Social Contribution

5.14- Consolidated investments

5.15- Property, Plant and Equipment

5.16- Loans and Financing

5.17- Contingent Liabilities

5.18- Environmental and Site Reclamation and Restoration Costs

5.19- Treasury Stock

5.20- Paid-up Capital

5.21- Payment to Shareholders

5.22- Financial Results

5.23- Financial Instruments — Derivatives

5.24- Sales, Administrative and Other Operating Expenses

6- Attachment I — Statement of Investments in Subsidiaries and Jointly-Controlled Companies

7- Report of the Independent Accountants on Limited Review

B — Additional Information (not reviewed)

8 - Management’s Discussion and Analysis of the Operating Results for the Year Ended June 30, 2006 and Supplemental Information

8.1- Comments on Consolidated Operating Results

8.1.1- Gross revenue

8.1.2 — Cost of products and services

8.1.3 — Selling expenses and administrative expenses

8.1.4 — Research and development

8.1.5 — Other operating expenses

8.1.6 — Net financial results

8.1.7 — Income tax and social contribution

8.1.8 - Cash generation

8.2- Comments on the Parent Company Results

8.2.1 - Gross revenue

8.2.2 - Cost of products and services

8.2.3 - Gross margin

8.2.4 - Results of shareholdings by business area

8.2.5 — Selling expenses and administrative expenses

8.2.6 — Research and development

8.2.7 — Other operating expenses

8.2.8 - Net financial results

8.2.9 - Income tax and social contribution

9- Board of Directors, Fiscal Council, Advisory Committees and Executive Officers

Signature Page

BR GAAP

BOVESPA: VALE3, VALE5
NYSE: RIO, RIOPR
LATIBEX: XVALO, XVALP

www.cvrd.com.br
rio@cvrd.com.br

Investor Relations Departament
Roberto Castello Branco
Alessandra Gadelha
Daniela Tinoco
Marcelo Silva Braga
Theo Penedo
Virgínia Monteiro
Phone: (5521) 3814-4540

MAINTAINING GROWTH MOMENTUM
Performance of CVRD in the first half of 2006 (1H06)

Rio de Janeiro, August 2, 2006 — Companhia Vale do Rio Doce (CVRD) has shown a performance in the first half of 2006 (1H06) consistent with the trend of improving earnings, begun in the last quarter of 2002.

Here are the main highlights of the Company’s financial performance:

	•		Gross accumulated revenues in 1H06 of R$18.4 billion, compared to R$17.1 billion in 1H05. In 2Q06, gross revenue totaled R$10.1 billion, a new quarterly record, beating the previous one, obtained in 2Q05, of R$10.0 billion.

	•		Exports of US$4.8 billion in 1H06, up 46.8% on 1H05. Net exports amounted to US$4.4 billion, up 50.3% on the same half a year earlier. As a result, CVRD’s contribution to Brazil’s trade balance amounted to 22.4% of the trade surplus in 1H06, of US$19.6 billion.

	•		Operating profit, as measured by EBIT(earnings before interest and tax) of R$7.8 billion in 1H06, against R$7.1 billion in 1H05. Operating profit of R$4.5 billion in 2Q06, 5% below 2Q05, R$4.8 billion.

	•		EBIT margin of 43.7% in 1H06, and 46.2% in 2Q06.

	•		Cash generation, as measured by EBITDA (earnings before interest, tax, depreciation and amortization), of R$8.9 billion in 1H06, 8.8% higher than in 1H05. In 2Q06, EBITDA totaled R$5.2 billion, compared to R$5.3 billion in 2Q05.

	•		Net earnings in 1H06, of R$6.1 billion, R$2.51 per share, 19.5% higher than that in 1H05, of R$5.1 billion. In 2Q06, net earnings amounted to R$3.9 billion, R$1.61 per share, a new quarterly record, up 12.2% on the earnings in 2Q05, of R$3.5 billion.

	•		Return on net equity (ROE) of 32.2% in 2Q06 and 38.3% in 2Q05.

	•		Investments realised in 1H06 of US$1.9 billion¹, compared to US$1.4 billion in 1H05. In 2Q06, investments were US$818 million, US$518 million being spent on organic growth and US$300 million in the sustaining of existing operations.


¹		Calculated according to the generally accepted accounting principles in the United States (US GAAP) based on the amount disbursed.

		The financial and operational information contained in this press release, except where otherwise indicated, was consolidated in accordance with generally accepted Brazilian accounting principles (Brazilian GAAP). According to the criteria of Brazilian GAAP, those companies in which CVRD has effective control, or shared control as defined by shareholders agreement, are included in the consolidated figures. In the instances where CVRD has effective control, the consolidation is carried out on a 100% basis and the difference between this amount and the percentage of CVRD’s equity stake in the subsidiary is discounted at the minority shareholding line. CVRD’s main subsidiaries are Caemi, Alunorte, Albras, RDM, RDME, RDMN, Urucum Mineração, Docenave, Ferrovia Centro-Atlântica (FCA), Rio Doce Europa, CVRD International, CVRD Overseas and Rio Doce International Finance. For companies in which control is shared, the consolidated figures are proportional to the equity stake held by CV RD in each company. The main companies in which CVRD had shared control on June 30, 2006 were MRN, Valesul, Kobrasco, Nibrasco, Hispanobras, Itabrasco, Samarco and CSI.

2Q06

BR GAAP

SELECTED FINANCIAL INDICATORS

R$ million


	2Q05		1Q06		2Q06		1H05		1H06
Gross operating revenues		10,051		8,281		10,131		17,104		18,412
Exports (US$ million)		1,951		2,282		2,543		3,287		4,825
Net exports (US$ million)		1,817		2,054		2,322		2,912		4,376
EBIT		4,756		3,240		4,519		7,132		7,759
EBIT margin (%)		49.8		40.7		46.2		43.8		43.7
EBITDA		5,334		3,753		5,153		8,183		8,907
Net earnings		3,479		2,184		3,906		5,094		6,090
Net earnings per share (R$)		1.51		0.90		1.61		2.21		2.51
Annualized ROE (%)		38.3		34.7		32.2		38.3		32.2
Capex* (US$ million)		821		1,126		818		1,392		1,944


*		acquisitions included

BUSINESS OUTLOOK

The economic cycle that began in 2002, and which supports the present cycle of expansion in metals — the longest in the last 40 years — has alternated phases of acceleration and deceleration of the global economy growth, with an average duration of four quarters. The most recent period of acceleration began in the second quarter of 2005 and continued at least until the second quarter of 2006, characterized by global GDP growth rates close to 5% per year.

The normalization of monetary policies, led by the US Federal Reserve Bank and followed by the world’s main central banks, brings the world economy into a transition in which the rate of increase of GDP is moving from a pace above that of its long-run capacity to a more moderate and sustainable rate. Although the current level of interest rates does not constrain economic growth, they are not stimulating factors to the acceleration of the economic activity.

Leading indicators are showing signs that expansion of the world economy should continue to be robust in the next six months, though more moderate than in recent quarters.

The OECD Composite Leading Indicator (OECD CLI) rose, in May, for the 13^th consecutive month, but with a lower growth rate. This indicates continuing vigorous economic growth in the coming quarters, but at a slower pace, especially in the USA. Simultaneously, the OECD CLI indicates improvement in the performance of the economies of Japan and the Euro Zone.

The Global Manufacturing PMI, a leading indicator for performance of the world’s manufacturing industry, increased in July, reaching a level consistent with a 5% annual growth in industrial production. This index projects a similar outlook to the OECD CLI for the near future — moderation, with regional rotation in the growth dynamics, with acceleration in Europe and Japan, and deceleration in the USA.

In the US, consumer spending has grown more slowly, due to the effect of the increase in energy prices on consumers’ real income and a negative wealth effect derived from housing prices. The interest rate rise produced a reduction in new home construction and sales, with a direct negative impact on economic growth while the end of the housing price boom generating a negative wealth effect on consumer spending.

2Q06

BR GAAP

On the other hand, the US unemployment rate continues to fall, from 5.0% in the second half of 2005 to 4.7% in the second quarter of 2006; capital spending on equipment and software is rising, at approximately 10% per year; and investment in non-residential construction, after a weak year in 2005, has recovered considerably in first half 2006. Productivity is growing consistently, benefiting from technological innovation, organizational changes and improvements in processes. Companies continue to return excellent profitability and, in spite of the increase in long-term interest rates, credit quality continues to be good.

In spite of the concerns expressed by the capital markets in 2Q06 on the future performance of the US economy, which resulted in a strong increase in price volatility of financial assets and commodities, the outlook is good, with GDP growth in the US expected to be around 3.5% per year, a rate that is compatible with its potential.

The Bank of Japan’s 25-basis-point increase in short-term interest rates on July 14 ended almost six years of a zero per cent interest rate policy, used to reverse the process of deflation that had taken over the Japanese economy — officially closing the longest period of economic stagnation in a developed economy since the Great Depression of 1929.

The emerging economies maintain growth of about 6% per year, which acts in favor of the development of global demand for minerals and metals. China and India, which together account for 21% of the world’s GDP, have been characterized by considerable dynamism.

In India, where industrial production is expanding at an annualized rate of 10%, steel production is growing at 16% for the second consecutive year.

In 2Q06 the economy of China posted its highest quarterly GDP growth rate — 11.3% — since fourth quarter 1994, when it grew 12.8%. The extraordinary performance of the Chinese economy has been primarily due to growth of exports, totaling US$429 billion in 1H06, 25.2% more than in 1H05, and investment in fixed assets, of 31.3%. As in 2004, the economic authorities are beginning to adopt restrictive measures, directing the economy to a growth rate closer to 9% p.a., which represents the long-term trend.

The Brazilian economy grows for the third consecutive year, along with consistent reduction of inflation rate and of its vulnerability to external shocks. The Brazilian real shows signals of stabilization after strong appreciation since the last quarter of 2002.

The increase in global demand for steel caused a clear reversal of the trend to falling prices shown in 2005, with the CRU Steel Price Index returning to the record levels of second half 2004 reported in North America, Europe and Asia. In reaction to the price incentives, world crude steel production is growing at 9% p.a. — and, respectively, at 21.3%, 6.7% and 5.5%, in China, the US and Europe of the 25.

The rising global steel output has caused an increase in prices of metallic products — pig iron, HBI and scrap — in all regions of the world since March 2006, and had a direct effect on demand for iron ore.

Chinese iron ore imports in 1H06 totaled 161.4 million tons, which was 30 million tons — or 22.9% — more than in the first half of 2005. Spot iron ore market prices continued to be above the reference prices for long-term contracts even after the 19% increase for 2006, showing that the disequilibrium between global demand and supply persists.

2Q06

BR GAAP

The world steel production ex-China, which has decreased in 2H05 and part of 1Q06, is recovering — with growth of 3.7% in 1H06. This fact has strengthened demand for iron ore, and also contributed to resumption of growth in seaborne demand for pellets, which caused the return of operation at the São Luís plant on July.

The good outlook for maintenance of the solid performance of the global economy sustains expectations that the current minerals and metals cycle will be prolonged, which clearly has positive implications for the performance of CVRD, whose production in the various sectors of the mining industry is in a process of strong expansion.

MATERIAL EVENTS

•

Reference prices of iron ore and pellets for 2006

Negotiation of iron ore and pellet prices for 2006 was concluded with an increase of 19% in prices of fines and lumps, and a reduction of 3% in prices of blast furnace and direct reduction pellets.

The raise in the price of iron ore reflects the imbalance between global demand and supply resulting from significant expansion in demand, which grew at an average annual rate of 11% in the first half of this decade.

•

Asset portfolio

In July CVRD acquired 45.5% of total capital of Valesul Alumínio S.A., an aluminum smelter located in the state of Rio de Janeiro, Brazil, for US$27.5 million, increasing its stake to 100%.

The acquisition is aligned with CVRD’s strategy for the aluminum business of focusing on organic growth in the upstream of the value chain and strategic partnership in smelters. Valesul will begin to be fully consolidated in our financial statements in 3Q06.

At the same time, the Company disposed of its 50% stake in Gulf Industrial Investment Company (GIIC), a pelletizing plant in Bahrain, for US$418 million. CVRD and Gulf Investment Corporation — the holder of the other 50% of GIIC, developed different views on management of the joint venture, and entered into a mandatory buy-sell agreement to solve the divergences in accordance with the shareholders’ agreement.

•

Financial management and risk perception

CVRD contracted a revolving credit line in the amount of US$500 million, with tenor of five years, with a pool of global commercial banks. The commitment fee is 0.09% p.a., and the cost of its utilization is Libor plus 0.235% p.a. The transaction was structured in such a way as not to have any restrictions on disbursement of funds related to sovereign risk.

With this new credit line CVRD now has, in addition to its own cash holdings, a liquidity cushion of approximately US$1.2 billion, which makes an important contribution to its risk perception by the financial markets.

Recognition of CVRD’s financial solidity is evidenced by its investment grade rating from the world’s four largest rating agencies: Standard & Poor’s (BBB+),

2Q06

BR GAAP

Moody’s (Baa3), Dominion Bond Rating Services (BBB high) and Fitch Ratings (BBB-), with a positive contribution to its cost of capital reduction.

In 2Q06, the rating of CVRD by S&P was improved from BBB, given in October 2005, to BBB+, two notches above the lowest investment grade level. Dominion Bond Rating Services also upgraded its risk rating for the Company, from BBB (low), given in August 2005, to BBB (high).

•

Shares

In April CVRD’s Extraordinary General Meeting of Shareholders approved a one-for-two stock split, for both the common and preferred shares.

This was made effective on the São Paulo Stock Exchange — Bovespa — on May 25, 2006 for shareholders record on May 19, 2006.

For the American Depository Receipts (ADRs) traded on the New York Stock Exchange (NYSE) the distribution of new ADRs — one new ADR for each existing ADR — took place on June 7, for record date May 24, 2006. Each ADR, whether RIO or RIOPR, continues to represent one common or preferred share.

The split increased CVRD’s total number of shares to 2,459,657,056, of which 1,499,898,858 are common shares and 959,758,198 are PNA preferred shares.

On June 21 CVRD announced a 180-day buy-back program for up to 47,986,763 of its preferred Class A shares, or 5% of the total number of preferred shares outstanding on May 31, 2006.

By the end of July 15,149,600 preferred shares had been acquired, involving the spending of R$659.6 million.

REVENUES

In the first half of 2006, our gross revenue amounted to R$18.412 billion, up 7.7% on that achieved in 1H05, of R$17.103 billion.

In 2Q06, gross revenue totaled R$10.131 billion, beating the previous record obtained in 2Q05, of R$10.051 billion, by R$79 million.

Despite the fact that increased in sales volume was responsible for R$905 million, and price rises were responsible for R$267 million of this increase in gross revenue observed, the 13.3% appreciation in the Brazilian Real against the US dollar neutralized these effects, having a negative impact of R$1.093 billion.

In 2Q06, revenues of R$310 million were added due to the booking of the retrospective iron ore price increases on sales in 1Q06, while in the case of pellet sales, R$9 million was deducted as a result of the price reduction. Bearing in mind that the price negotiations with our clients in China were completed at the end of 2Q06, net sales of R$466 million will be added to revenues in 3Q06, for shipments carried out in 2Q06.

In 2Q06, shipments of ferrous minerals (iron ore, pellets, manganese and ferro-alloys) were responsible for 65.7% of total revenues. Sales of products in the aluminium chain (bauxite, alumina, primary aluminium) accounted for 15.2% of the total revenues, while logistics services accounted for 8.8%, non-ferrous minerals (copper, potash and kaolin) 5.9% and steel products, 3.8%.

2Q06

BR GAAP

Revenues from sales to the Americas accounted for 33.8% of CVRD’s total revenues in 2Q06. Shipments to Asia were responsible for 33.7%, while sales to Europe accounted for 26.6%.

Brazil was the Company’s main sales destination, from where 20.7% of gross revenues originated. China, CVRD’s most important shipping destination after Brazil, accounted for 18.3% of revenues, having almost doubled its share of total revenues from two years ago, when in 2Q04 the figure was 9.5%.

GROSS REVENUES — BY PRODUCT

R$ million

2Q05

1Q06

2Q06

Iron ore and pellets

7,015

69.8

5,480

66.2

6,338

62.6

Iron ore

5,072

50.5

4,147

50.1

5,130

50.6

Pellets

1,943

19.3

1,333

16.1

1,208

11.9

Pelletizing plants operation services

0.1

0.2

Manganese and ferro-alloys

443

4.4

256

3.1

301

3.0

Copper concentrate

229

2.3

242

2.9

447

4.4

Potash

0.8

0.6

0.5

Kaolin

111

1.1

106

1.3

100

1.0

Aluminum

928

9.2

1,051

12.7

1,543

15.2

Logistics

848

8.4

704

8.5

896

8.8

Railroads

631

6.3

535

6.5

689

6.8

Ports

123

1.2

106

1.3

127

1.3

Shipping

0.9

0.8

Steel products

379

3.8

349

4.2

382

3.8

Coal

—

0.0

0.1

—

0.0

Others

0.1

0.2

0.6

Total

10,051

100.0

8,281

100.0

10,131

100.0

GROSS REVENUES — BY DESTINATION

R$ million


	2Q05		%		1Q06		%		2Q06		%
Americas		3,786		37.7		2,854		34.5		3,422		33.8
Brazil		2,323		23.1		1,761		21.3		2,094		20.7
USA		715		7.1		526		6.4		671		6.6
Others		748		7.4		567		6.8		656		6.5
Asia		2,518		25.0		2,840		34.3		3,409		33.7
China		1,129		11.2		1,495		18.1		1,850		18.3
Japan		841		8.4		837		10.1		864		8.5
Others		548		5.5		508		6.1		695		6.9
Europe		3,027		30.1		2,175		26.3		2,693		26.6
Rest of the World		721		7.2		412		5.0		607		6.0
Total		10,051		100.0		8,281		100.0		10,131		100.0

OPERATIONAL COSTS AND EXPENSES

In 1H06, our cost of goods sold (COGS) was R$8.295 billion, 6.4% higher than that reported in 1H05.

In 2Q06, COGS totaled R$4.351 billion, up R$340 million compared to the 2Q05 figure, of R$4.011 billion.

2Q06

BR GAAP

We are making strenuous efforts to contain the rise in costs, expecting more significant results to materialize over the next 12 months.

The main COGS item, accounting for 21.4% of the total, is expenditure on outsourced services, which amounted to R$931 million in 2Q06, up 17.1% on the same quarter a year earlier. The main drivers behind this cost item are railfreight — contracted for the transport of its iron ore production at MBR mines and Oeste mines, in CVRD’s Southern System, equipment and installation maintenance services, and the removal of tailings and ores.

Energy costs — 20% of total COGS, were R$869 million, 6.2% more than in 2Q05. This reflected an increase in consumption as a consequence of the expansion to our operational activities, as well as the rise in energy prices.

Expenses on material — 18.7% of total COGS — amounted to R$813 million, in line with the expenditure on this item in 2Q05, R$792 million. The main components consisted of equipment parts and components, inputs, conveyor belts and tyres.

The cost of product purchases totaled R$554 million, 12.7% of total COGS, down R$16 million, or 2.8%, yoy. The lower quantity of iron ore bought from small mining operations in the state of Minas Gerais (3.689 million in 2Q06 compared to 4.140 million in 2Q05), the difference in retrospective price adjustments — 2005 and 2006 — relative to the first quarter, and the effect of the appreciation in the Brazilian Real against the US dollar, all reduced expenditure under this heading.

Personnel expenses amounted to R$403 million, up R$63 million on 2Q05. In addition to the effect of the annual salary increase from July 2005, costs rose with the need to hire the additional employees required for the expansion in our activities.

As a function of the Company’s increased asset base, the cost of depreciation and exhaustion, of R$394 million, was 8.8% higher yoy.

Demurrage expenses — fines paid for delays in loading ships at the Company’s maritime terminals were R$35 million, 12.5% down on 2Q05. CVRD has been working intensively on perfecting its logistic processes, seeking to optimize integrated systems (mines-railroad-port). As a result, there was a reduction of 15.2% in demurrage per ton shipped, amounting to US$0.28 in 2Q06 against US$0.33 in 2Q05.

Operational expenses amounted to R$910 million in 2Q06, 16.1% higher than the 2Q05 figure.

Administrative expenses totaled R$381 million, compared to R$308 million in 2Q05. This increase is basically explained by the higher expenditure on personnel (R$39 million) and the higher expenditure on sales (R$36 million).

Expenditure on research and development (R&D) amounted to R$222 million, against R$161 million in 2Q05. CVRD has been increasing its expenditure on R&D, within the context of its strategic focus on organic growth, which implies increased expenditure on investment in mineral exploration and feasibility studies for the development of the mineral deposits located in Brazil and in various other countries.

2Q06

COGS BREAKDOWN

R$ million

2Q05

1Q06

2Q06

Outsourced services

795

19.8

865

21.9

931

21.4

Energy

818

20.4

760

19.3

869

20.0

Fuel oil and gases

446

11.1

456

11.6

531

12.2

Electric energy

371

9.3

304

7.7

338

7.8

Material

792

19.7

712

18.0

813

18.7

Acquisition of products

570

14.2

524

13.3

554

12.7

Personnel

340

8.5

372

9.4

403

9.3

Depreciation and exhaustion

362

9.0

368

9.3

394

9.0

Goodwill amortization

2.4

2.3

2.2

Others

238

5.9

252

6.4

294

6.8

Total

4,011

100.0

3,945

100.0

4,351

100.0

OPERATIONAL PERFORMANCE

In 1H06, EBIT amounted to R$7.759 billion, 8.8% over the 1H05, R$7.132 billion. EBIT margin was 43.7%, practically the same as that seen in the same period a year earlier, of 43.8%.

In 2Q06, our EBIT was R$4.519 billion, 4.9% lower than the record achieved in 2Q05, R$4.756 billion.

Although there was a raise of R$228 million in our net revenues when comparing 2Q06 with 2Q05, this result was partially offset by the appreciation in the Brazilian Real against the US dollar, which promoted a negative impact of R$1.093 billion. Besides that, EBIT was also negatively affected by the increase in COGS of R$340 million, as well as higher SG&A costs, R$64 million, and R&D expenses, R$61 million.

In 2Q06, CVRD’s EBIT margin amounted to 46.2%, against 49.8% yoy and 40.7% qoq. Since 2Q05, we have been reporting EBIT margin of higher than 40.0%.

CASH GENERATION

CVRD’s EBITDA in 1H06 amounted to R$8.906 billion, 8.8% higher than in the same period the previous year, of R$8.183 billion.

EBITDA in 2Q06 was R$5.153 billion, only 3.4% below the quarterly record achieved in 2Q05, of R$5.334 billion. The reduction of R$180 million is mainly due to a drop in EBIT, of R$237 million, partially compensated for by an increase of R$52 million in depreciation.

In 2Q06, CVRD received R$94 million in dividends from non-consolidated companies, while in 2Q05, this contribution totaled R$89 million. Usiminas contributed with R$59 million in this quarter. Henan Longyu Resources, which begun its operations in the 4Q05, distributed dividends of R$33 million.

The cash generation breakdown by business area in 2Q06 was as follows: ferrous minerals 71%, products of the aluminum chain 15%, non-ferrous minerals 6.6%, logistics 6.5%, steel, 2.6% and others, representing expenditure on R&D, (1.6%).

2Q06

QUARTERLY EBITDA

R$ million


	2Q05			1Q06			2Q06
Net operating revenues		9,551			7,965			9,780
COGS		(4,011	)		(3,944	)		(4,351	)
SG&A		(403	)		(436	)		(512	)
Research and development		(161	)		(156	)		(222	)
Other operational expenses		(220	)		(189	)		(176	)
EBIT		4,756			3,240			4,519
Depreciation, amortization & exhaustion		488			512			540
Dividends received		89			1			94
EBITDA		5,334			3,753			5,153

FINANCIAL RESULT

CVRD’s net financial result in 1H06 was a negative R$725 million: financial expenses totaled R$1.084 billion and financial revenues, R$213 million. Monetary variation amounted to a positive R$146 million.

In 2Q06, the net financial result was a negative R$466 million, down from the figure of R$548 million in 2Q05, when we reported a positive net financial result of R$82 million.

Financial revenues amounted to R$105 million, 78% over 2Q05, due to the higher interest rates and an increase in the average amount held in cash or equivalents.

Financial expenses in 2Q06 totaled R$557 million, more than two times the same period in 2005, R$247 million. Other factors which further contributed to the raise in financial expenses were losses from derivatives and the negative effect of shareholders debentures held being marked to market.

The losses from derivatives were due to remaining hedge operations on the aluminium prices done until 2004.

In May 1997, when CVRD was privatized, we isseued shareholders debentures. Their return was established as a percentage of the revenues to be generated in the future through the exploitation of certain mineral assets. These shareholders debentures were registered with the CVM, Brazil’s Securities Exchange Commission, in 2002 and are traded on ANDIMA’s National Debentures System (SND), www.debentures.com.br.

These debentures constitute a liability for the Company and as such have their prices marked to market. Owing to their increased trading volume on the SND and the strong increase in their average prices, from R$0.060999 in 1Q06 to R$0.325928 in 2Q06, the book value of these obligations on June 30, 2006 was updated to R$126.6 million, implying the realization of a loss of R$108.7 million.

Interest expenses amounted to R$166 million, up R$27 million yoy, as the reduction in the average cost of debt partially compensated for the increase in gross debt, from US$4.168 billion in June 30, 2005 to US$5.883 billion in June 30, 2006.

The effect of the 8.6% appreciation in the Brazilian Real against the US dollar as at June 30, 2006, compared to the end of 2Q05, generated a negative accounting effect of R$14 million on the 2Q06 result — R$285 million less than in 2Q05, when monetary variation amounted to a positive R$271 million.

2Q06

BR GAAP

EQUITY RESULT

In 1H06, the equity income result was a negative R$41 million, compared to a positive result of R$150 million in 1H05.

In 2Q06, the equity income result was a negative R$57 million against a positive R$76 million in 2Q05. This was heavily impacted by the premium on companies consolidated as a result of the incorporation of Caemi shares, which took place at the end of March 2006, of R$132 million, and of the lower contributions from CVRD’s stakes in steel companies, R$60 million compared to R$128 million in 2Q05.

NET EARNINGS

In 1H06, our net earnings amounted to R$6.090 billion, up 19.5% on 1H05’s figure of R$5.094 billion.

Net earnings in 2Q06 totaled R$3.906 billion, setting a new record for the Company, being 12.3% above the previous quarterly record, achieved in 2Q05, of R$3.479 billion.

The increase in net earnings in the 2Q06 vis-a-vis the 2Q05 is explained by the sale of our stake in GIIC (R$737 million) and by the elimination of the negative effect of R$141 million from minority stakes due to the incorporation of the shares of Caemi, which more than compensated the negative effect of the financial result (R$548 million).

A HEALTHY BALANCE SHEET: UPGRADE IN THE CREDIT RATING SCALE

CVRD’s total debt, calculated according to the generally accepted accounting principles in the United States, on June 30, 2006 was US$5.883 billion, vs. US$6.063 billion on March 31, 2006 and US$4.168 billion on June 30, 2005. Net debt at the end of June 2006 was US$3.989 billion, compared to US$4.419 billion at the end of March 2006, and US$3.212 billion at the end of June 2005.

The average tenor of the debt on June 30, 2006 was 8.27 years, longer than the average tenor of 6.57 years at June 30, 2005, and 8.15 years at the end of March 2006. Of the total debt on June 30, 2006, 53% was indexed to floating interest rates, and 47% was at fixed rates of interest.

Total debt/LTM adjusted EBITDA diminished from 0.84x on March 31, 2006 to 0.80x on June 30, 2006. Meanwhile, total debt/EV was maintained in the level of 10%.

Interest coverage as measured as LTM adjusted EBITDA/Interest paid was slightly reduced, from 27.08x at the end of the first quarter to 23.76x on June 30, 2006.

Thus, in spite of the increase of total debt in first half of 2006, which was largely due to the anticipation of fund raising to take advantage from lower interest rates, our debt leverage and interest coverage indices are at extremely comfortable levels.

In 2Q06 Fitch Ratings gave CVRD investment grade rating (BBB—), becoming the fourth rating globally-operating agency to do so. Simultaneously, Standard & Poor’s (S&P) and Dominion Bond Rating Services (DBRS) also upgraded CVRD’s risk rating — S&P from BBB to BBB+, and DBRS from BBBlow to BBBhigh. These two changes place CVRD only one notch below the A band, the highest on the credit rating agencies’ classification scale.

2Q06

BR GAAP

DEBT INDICATORS

US$ million


	2Q05		1Q06		2Q06
Gross debt		4,168		6,063		5,883
Net debt		3,212		4,419		3,989
Gross debt / adjusted LTM EBITDA (x)		0.83		0.84		0.80
Adjusted LTM EBITDA / LTM interest expenses (x)		17.73		27.08		23.76
Gross debt / EV (%)		10.98		10.31		9.85

Enterprise Value = market capitalization + net debt

PERFORMANCE OF THE BUSINESS SEGMENTS

Ferrous minerals

In 1H06, sales of iron ore and pellets, of 129.768 million tons, were 7.6% higher than those in 1H05. This was composed by 114.563 million tons of iron ore sales and 15.205 million tons of pellet sales.

Iron ore and pellet shipments in 2Q06, of 67.141 million tons, were up 8.8% compared to the figure in 2Q05. This reflected the Company’s record production and the continuing buoyancy in the market for iron ore fines and lumps.

In the 2Q06, iron ore sales amounted to 59.703 million tons, up 12.7% on 2Q05 and setting a new quarterly record, beating in 3.696 million tons the sales of 4Q05.

As expected, pellet sales, of 7.438 million tons, were below sales recorded in 2Q05 (8.748 million tons) and in 1Q06 (7.767 million tons). The São Luís pellet plant remained shut down in 2Q06, but with the strength in demand picking up in the seaborne pellet market, the plant resumed operations in the second fortnight of July.

In 2Q06, the Company purchased 3.689 million tons of iron ore from mining operators located in the so-called “Iron Quadrangle”, in the state of Minas Gerais, to complement its production.

In this quarter, 20.427 million tons of iron ore and pellets sold, 30.4% of shipments, were sent to China, compared to 19.9% in 2Q05. Japan absorbed 9.2% of the volumes sold, Germany 8.0%, and France, 3.9%. Sales in Brazil accounted for 17.2% of total shipments.

In 1H06, sales of manganese ore amounted to 347,000 tons, while sales of ferro- alloys, 270,000 tons.

In 2Q06, manganese ore shipments were 198,000 tons and ferro-alloy sales were 144,000 tons, similar amounts to those shipped in 2Q05, which were respectively, 194,000 tons and 151,000 tons.

In 1H06, sales of ferrous minerals resulted in gross revenues of R$12.410 billion, 4.2% higher than the figure in 1H05. EBITDA amounted to R$6.596 billion, compared to R$6.381 billion in 1H05.

Revenues from the shipment of ferrous minerals in 2Q06 totaled R$6.638 billion, down 11% against the figure in 2Q05. This is explained by the BRL/USD negative exchange rate effect when reporting in Brazilian reais — R$873 million — and by the difference in the price levels — R$301 million — as in the 2Q05 was reflected

2Q06

BR GAAP

the retroactive price impact, more than compensating the positive effect of the increase in the sales volume — R$356 million.

In 2Q06, revenues from the sales of iron ore reached R$5.130 billion, R$1.208 billion from pellet sales, R$17 million from pelletization services provided by the pellet plants in Tubarão, R$26 million from the sales of manganese ore, and R$275 million from the sales of ferro-alloys.

In 2Q06, EBIT margin in the ferrous minerals segment amounted to 50.8%. EBITDA generated by this segment was R$3.656 billion, against R$4.446 billion in 2Q05.

SALES VOLUME — IRON ORE AND PELLETS


	thousand tons
	2Q05		%		1Q06		%		2Q06		%
Iron ore		52,969		85.8		54,860		87.6		59,703		88.9
Pellets		8,748		14.2		7,767		12.4		7,438		11.1
Total		61,717		100.0		62,627		100.0		67,141		100.0

VOLUME SOLD BY DESTINATION — IRON ORE AND PELLETS


	million tons
	2Q05		%		1Q06		%		2Q06		%
Americas		12.5		20.3		11.7		18.7		13.1		19.5
Brazil		11.4		18.5		11.1		17.7		11.5		17.2
USA		1.1		1.8		0.6		1.0		1.6		2.4
Asia		22.5		36.5		29.3		46.8		31.4		46.7
China		12.3		19.9		17.6		28.0		20.4		30.4
Japan		6.5		10.6		6.7		10.7		6.2		9.2
Others		3.7		6.0		5.0		8.0		4.7		7.0
Europe		20.6		33.4		16.4		26.2		17.6		26.2
Germany		6.5		10.6		5.5		8.7		5.4		8.0
France		3.0		4.9		2.6		4.2		2.6		3.9
Others		11.1		17.9		8.3		13.3		9.7		14.4
Rest of the World		6.1		9.8		5.2		8.3		5.1		7.5
Total		61.7		100.0		62.6		100.0		67.1		100.0

Aluminum products

In 1H06, bauxite sales reached 2.164 million tons, sales of alumina amounted to 1.357 million tons, and shipments of primary aluminium totaled 249,000 tons. Gross revenue from the sale of products in the aluminium chain amounted to R$2.597 billion, 31.9% over the figure in the 1H05. EBITDA was R$1.208 billion, compared to R$802 million in 1H05.

Alumina sales in 2Q06 amounted to 867,000 tons, a new quarterly record, up 136.2% on 2Q05, showing the conclusion of the ramp-up phase of the capacity expansion at the Barcarena refinery to 4.4 million tons a year, for which production was also a record, of one million tons.

Sales of primary aluminum, of 125,000 tons, were two thousand tons higher than in 2Q05, continuing to reflect the productivity gains at the smelter in Barcarena, where production reached 112,000 tons this quarter.

2Q06

BR GAAP

Revenues from the sale of products in the aluminium chain in 2Q06 amounted to R$1.544 billion. Larger alumina sales contributed with R$429 million for the raise of R$616 million in 2Q06 vis-à-vis 2Q05. Higher prices were responsible for R$305 million while the BRL/USD exchange rate effect was negative in R$109 million.

In 2Q06, EBIT margin amounted to 47.4%, while EBITDA totaled R$772 million, up 121.6% to the 2Q05 figure, R$348 million.

Non-ferrous minerals

In 1H06, sales of potash totaled 224,000 tons, sales of kaolin, 626,000 tons, and shipments of copper, 175,000 tons. Gross revenue generated by the sale of these products amounted to R$994 million, up 24.2% on 1H05. EBITDA was R$456 million, against R$186 million in 1H05.

The better performance of copper concentrate sales was fundamental in bringing up the EBIT margin on the sales of non-ferrous minerals to 46.7%, while EBITDA amounted to R$340 million, four times that obtained in the 2Q05, R$83 million.

Shipments of copper concentrate in 2Q06 amounted to 105,000 tons, the same amount as in 2Q05, but up 35,000 tons in relation to 1Q06, due to the recovery in production at Sossego. Copper sales generated revenues of R$447 million, almost double that reported in 2Q05, due to the higher price of copper concentrate.

In 2Q06, the volume of kaolin sold, of 305,000 tons, was in line with the sales in the same quarter a year earlier, of 303,000 tons. Revenues from this product amounted to R$100 million, down 9.7% on 2Q05, because the higher price in US dollar terms was negatively impacted by the appreciation in the Brazilian Real.

The reduction in the planted land area in Brazil due to the drop in agricultural profitability, resulting from the appreciation of the Brazilian Real, lower soya prices seen since 2Q04 and higher input prices — all resulted in a significant drop in potash consumption. At the same time the potash price, having reached a peak in 2Q05, began to decline as a result of the reduction in global demand.

Our potash sales in 2Q06 amounted to 120,000 tons, down 6.2% yoy. Revenue were R$49 million, compared to the R$76 million obtained in the 2Q05.

SALES VOLUME — ORES AND METALS


	thousand tons
	2Q05		1Q06		2Q06
Manganese		194		149		198
Ferro alloys		151		126		144
Copper concentrate		105		70		105
Potash		129		103		121
Kaolin		303		321		305
Bauxite		1,401		1,108		1,056
Alumina		367		490		867
Aluminum		123		124		125

Logistics services

The quest for productivity gains in railroad operations has resulted in greater energy efficiency as fuel consumption per gross ton kilometre went down 3.2% on the Estrada de Ferro Vitória a Minas and 6.3% on the Ferrovia Centro-Atlântica (FCA), remaining unchanged on the Estrada de Ferro Carajás, which already has the lowest fuel consumption of our three railroad systems.

2Q06

BR GAAP

In 1H06, revenues from logistics services provided to clients were R$1.599 billion, while EBITDA amounted to R$568 million, compared to R$1.572 billion and R$656 million, respectively in 1H05.

The problems seen in Brazil’s agricultural segment and the 8.4% drop in Brazil’s steel production in the first half of the year had an adverse affect on the performance of CVRD’s railroads, seeing that our main clients are in these sectors. In 2Q06, our railroads transported 7.962 billion net ton kilometres (ntk) of general freight for clients, 2.7% higher than the volume transported in 2Q05, of 7.755 billion ntk. The main cargoes transported were agricultural products, 47.3% of the total, inputs and products for the steel industry, 38.1%, and fuels, 6.5%.

CVRD’s ports and maritime terminals handled 7.781 million tons of general freight in this quarter, against 8.280 million tons in 2Q05.

Logistics services for clients generated revenues of R$896 million in 2Q06, up 5.7% yoy. Railroad transportation produced revenues of R$689 million, while port services R$127 million, and coastal shipping and ports support services, R$80 million.

In 2Q06, EBIT margin in the logistics segment was 34.3%, while EBITDA amounted to R$333 million compared to R$364 million yoy.

LOGISTICS SERVICES


	2Q05		1Q06		2Q06
Railroads (million ntk)		7,755		6,170		7,962
Ports (thousand tons)		8,280		6,189		7,781

Steel

In 1H06, revenues generated by our equity stakes in the steel industry amounted to R$731 million, compared to R$831 million in 1H05. EBITDA was R$201 million, 9.2% higher the same period a year earlier.

In 2Q06, revenues from CVRD’s equity stakes in the steel industry amounted to R$382 million, in line with the revenues obtained in 2Q05. In this quarter, EBIT margin was 17.1%, while EBITDA totaled R$135 million.

EBITDA BY BUSINESS AREA


	R$ million
	2Q05			%		1Q06			%		2Q06			%
Ferrous minerals		4,445			83.3		2,939			78.3		3,657			70.9
Non- ferrous minerals		83			1.5		117			3.1		340			6.6
Logistics		364			6.8		235			6.3		333			6.5
Aluminum		348			6.5		436			11.6		772			15.0
Steel		120			2.2		66			1.8		135			2.6
Others		(27	)		-0.5		(40	)		-1.1		(83	)		-1.6
Total		5,334			100.0		3,753			100.0		5,153			100.0

CAPITAL EXPENDITURE

CVRD’s capex in 2Q06, calculated according to the generally accepted accounting principles in the United States based on the amount disbursed, reached US$818 million, 27.4% less than the US$1.126 billion expended in 1Q06 — which included

2Q06

BR GAAP

the acquisition of the assets of Rio Verde Mineração for US$47 million — and was at the same level as the 2Q05 capex of US$821 million.

Total capital expenditure in the first half of the year was US$1.944 billion, 39.8% higher than the capex of US$1.391 billion in the first half of 2005.

Investment in organic growth — projects and R&D — totaled US$518 million in the quarter, while “stay-in-business capex” reached US$300 million. CVRD’s investment in R&D in 2Q06 was US$101 million, which compares with US$81 million in the prior quarter and US$43 million in 2Q05. This spending was concentrated on identifying new deposits of copper, coal, nickel and manganese, and in studies for projects (conceptual, pre-feasibility and feasibility).

The new mine at Brucutu, in the Southern System, one of CVRD’s most important iron ore projects, is starting pre-operational tests, and we expect it to start producing in August.

Start-up of operations at the 118 project, CVRD’s second copper mine, is being delayed by a year due to extra time taken to acquire the license for implementation — so that it is now scheduled to start operating only in 2009.

Shandong Yankuang International Coking Ltd, a Chinese producer of metallurgical coke, where the Company owns a 25% stake, started its operation in the end of June 2006. The estimated production capacity is 2 million tons per year of coke and 200,000 tons per year of methanol.

• Current projects at implementation phase


		2006
		budget,
Area	Project	US$ MM		Status
Ferrous minerals	Expansion of Carajás iron ore capacity to 85 Mtpy — Northern System		41	This project will increase capacity by 15 million tons per year — completion in 3Q06.

	Expansion of capacity of Carajás iron ore mines to 100 Mtpy — Northern System		289	This project will increase CVRD’s annual output capacity by 15 million tons, with conclusion planned for the second half of 2007. The Ponta da Madeira Port Terminal will be expanded, and Pier III will be extended, with a third ship loading unit and fourth shipment line.

	Brucutu iron ore mine — Southern System		310	Completion of Phase I is expected in 2Q06, increasing nominal production capacity to 12 million tons per year. Phase II is scheduled for completion in 1Q07, bringing the mine’s capacity to 24 million tons per year.

	Fazendão iron ore mine — Southern System		39	Project to produce 14 million tons of run-of-mine (ROM — unprocessed) iron ore per year. The project makes Samarco’s third pelletization plant viable. Work will start in 2H06, for completion and operational start-up in second half 2007.

	Expansion of the Fábrica iron ore mine — Southern System		88	Expansion by 5 million tons, from 12 to 17 million tons per year, with start-up planned for 4Q07.

2Q06

BR GAAP


	Expansion of the Tubarão port — Southern System	20	Project to expand the conveyor belt systems, patio machinery and new storage platforms, adding 10 million tons per year to the port’s handling capacity — conclusion planned for 1Q07.

	Itabiritos	338	Construction of a pelletization plant in Minas Gerais state, with nominal annual production capacity of seven million tons, and an iron ore concentration plant. Start-up planned for second half 2008.

	Tubarão VIII	31	Construction of pelletization plant, with nominal production capacity of 7 Mtpy in the Tubarão complex. Start-up planned for 2008. Subject to CVRD Board of Directors approval.

Non-ferrous minerals	118 copper mine	21	This project will have capacity to produce 36,000 tons per year of copper cathode. Key equipment has been ordered and start-up is scheduled for first half 2009. Proceedings to obtain the license for the project are in progress.

	Vermelho nickel mine	97	Estimated production capacity is 46,000 tons of metallic nickel and 2,800 tons of cobalt, per year. The main equipment has been ordered. EPCM (Engineering, Procurement, Construction Management) contracts were signed in December 2005. Proceedings to obtain environmental license are in progress. Start-up of the mine timetabled for fourth quarter 2008.

	Paragominas I bauxite mine	210	The first phase of this mine will produce 5.4 million tons of bauxite per year starting in 1Q07. A 244-km ore pipeline will transport the bauxite to the Barcarena alumina refinery, in the Brazilian state of Pará — its construction is planned for completion in December 2006.

	Stages 6 and 7 of Alunorte — alumina	239	This will increase Alunorte’s capacity to 6.26Mtpy of alumina — conclusion is planned for 2Q08.

	Paragominas II bauxite mine	14	The second phase of Paragominas will add 4.5Mtpy to the capacity of 5.4Mtpy resulting from the first phase. Conclusion timetabled for 2Q08.

Logistics	Railroads (EFVM, EFC, FCA): acquisition of locomotives and wagons	379	In 2006, CVRD will acquire 22 locomotives, and 1,426 rail wagons — 150 for general cargo and 1,276 to carry iron ore. All the locomotives will be used to haul iron ore.

Power generation	Capim Branco I and II hydroelectric power plants	61	Both are on the Araguari river in the state of Minas Gerais, and will have generation capacity, respectively, of 240MW and 210MW. Capim Branco I started operating in 1Q06. Capim Branco II is timetabled for start-up in 1Q07.

	Estreito hydroelectric power plant	68	On the Tocantins river, on the border between the Brazilian states of Maranhão and Tocantins. Planned installed capacity of 1,087MW. Start of construction is planned for 2006, subject to obtaining installation license. First rotor is expected to start producing in second half 2009.

Steel holdings	Ceará Steel	11	Project for a steel slab plant in the state of Ceará in Brazil’s Northeast region, with nominal capacity for 1.5 million tons per year. Start-up planned for 2009.

	CSA	72	Project for a steel slab plant in the state of Rio de Janeiro, with nominal capacity for 5 million tons per year, and start-up in the first half of 2009. CVRD’s Board of Directors approved the investment in 1Q06.

2Q06

BR GAAP

TOTAL CAPEX BY BUSINESS AREA


	US$ million
By business area	Actual, 2Q06				Actual, 2006
Ferrous minerals		407	49.8	%		926	47.6	%
Non-ferrous minerals		94	11.6	%		177	9.1	%
Logistics		107	13.0	%		335	17.2	%
Aluminum		131	16.0	%		349	18.0	%
Coal		21	2.6	%		29	1.5	%
Energy		20	2.5	%		45	2.3	%
Steel holdings		6	0.7	%		14	0.7	%
Other		32	3.9	%		69	3.6	%
Total		818	100.0	%		1,944	100.0	%

CONFERENCE CALL AND WEBCAST

CVRD will hold a conference call and webcast on August 4, at 12:00 midday Rio de Janeiro time, 11:00 am US Eastern Standard Time, 4:00 pm UK time. Instructions for participation are on the website www.cvrd.com.br, under Investor Relations. A recording will be available on CVRD’s site for 90 days from August 4.

FINANCIAL INDICATORS OF NON-CONSOLIDATED COMPANIES

For selected financial indicators of the main companies not consolidated, see CVRD quarterly financial statements on www.cvrd.com.br, under Investor Relations.

2Q06

BR GAAP

FINANCIAL STATEMENTS


	R$ million
	2Q05			1Q06			2Q06
Gross operating revenues		10,051			8,281			10,131
Taxes		(500	)		(316	)		(351	)
Net operating revenues		9,551			7,965			9,780
Cost of goods sold		(4,011	)		(3,944	)		(4,351	)
Gross profit		5,541			4,021			5,429
Gross margin (%)		58.0			50.5			55.5
Operational expenses		(784	)		(781	)		(910	)
Sales		(96	)		(105	)		(130	)
Administrative		(308	)		(331	)		(381	)
Research and development		(161	)		(156	)		(222	)
Other operational expenses		(220	)		(189	)		(176	)
Operating profit before result from shareholdings		4,756			3,240			4,520
Result from shareholdings		77			16			(56	)
Equity income		147			76			75
Goodwill amortization		(57	)		(38	)		(132	)
Others		(13	)		(22	)		—
Financial result		82			(259	)		(466	)
Financial expenses		(247	)		(527	)		(557	)
Financial revenues		58			108			105
Monetary variation		271			160			(14	)
Operating profit		4,915			2,997			3,996
Result of discontinued operations		—			19			737
Income tax and social contribution		4,915			3,016			4,734
Earnings before income tax and social contribution		(1,061	)		(585	)		(593	)
Minority interest		(375	)		(247	)		(234	)
Net earnings		3,479			2,184			3,906

BALANCE SHEET


	R$ million
	06/30/05		03/31/06		06/30/06
Asset
Current		12,387		13,715		14,660
Long term		4,106		4,551		4,998
Fixed		30,462		41,917		43,540
Total		46,954		60,183		63,198
Liabilities
Current		8,195		10,078		8,855
Long term		12,918		16,292		16,393
Others		2,579		2,085		2,370
Shareholders’ equity		23,262		31,727		35,579
Paid-up capital		14,000		19,492		19,492
Reserves		9,262		12,235		16,087
Total		46,954		60,182		63,198

2Q06

BR GAAP

CASH FLOW

R$ million


	2Q05			1Q06			2Q06
Cash flows from operating activities:
Net income		3,479			2,185			3,906
Adjustments to reconcile net income with cash provided by operating activities:
Result from shareholdings		(77	)		(16	)		57
Result from sale of investment		—			(19	)		(737	)
Depreciation, depletion and amortization		384			420			446
Deferred income tax and social contribution		53			(77	)		96
Financial expenses and foreign exchange and monetary net variation		(982	)		(654	)		65
Minority interest		375			246			234
Impairment of property, plant and equipment		60			18			60
Goodwill amortization in the COGS		96			92			94
Net unrealized derivative losses		(10	)		158			107
Dividends/interest attributed to stockholders received		89			1			94
Others		58			22			(25	)
Decrease (increase) in assets:
Accounts receivable		(1,026	)		492			(896	)
Inventories		(67	)		(188	)		90
Advanced pay to energy suppliers		(143	)		(68	)		(67	)
Others		(450	)		(404	)		210
Increase (decrease) in liabilities:
Suppliers and contractors		278			(842	)		242
Payroll and related charges		30			(242	)		110
Taxes and Contributions		885			(329	)		268
Others		288			(285	)		(148	)
Net cash provided by operating activities		3,323			511			4,205
Cash Flow from investing activities:
Loans and advances receivable		(43	)		26			(181	)
Guarantees and deposits		(37	)		(52	)		(28	)
Additions to investments		(208	)		(112	)		—
Additions to property, plant and equipment		(1,926	)		(1,699	)		(2,434	)
Proceeds from disposals of investments/property, plant and equipment		4			48			970
Net cash used in investing activities		(2,212	)		(1,789	)		(1,673	)
Cash flows from financing activities:
Short-term debt, net issuances (repayments)		470			155			(55	)
Long-term debt		342			3,091			28
Financial institutions		(1,138	)		(739	)		(450	)
Interest attributed to stockholders		(1,280	)		(55	)		(1,378	)
Stock treasury		—			—			(54	)
Net cash used in financing activities		(1,606	)		2,452			(1,908	)
Increase (decrease) in cash and cash equivalents		(496	)		1,174			661
Cash and equivalents, beginning of period		3,240			2,703			3,877
Cash and equivalents, end of period		2,744			3,877			4,502
Cash paid during the period for:
Interest on short-term debt		(20	)		(8	)		(8	)
Interest on long-term debt		(128	)		(219	)		(164	)
Paid income tax and social contribution		(378	)		(432	)		(101	)
Non-cash transactions:
Additions to property, plant and equipment — interest capitalization		402			(220	)		89
Income tax and social contribution paid with credits		(56	)		(82	)		(78	)

2Q06

BR GAAP

“This communication may include declarations which represent the expectations of the Company’s Management about future results or events. All such declarations, when based on future expectations and not on historical facts, involve various risks and uncertainties. The Company cannot guarantee that such declarations turn out to be correct. Such risks and uncertainties include factors relative to the Brazilian economy and capital markets, which are volatile and may be affected by developments in other countries; factors relative to the iron ore business and its dependence on the steel industry, which is cyclical in nature; and factors relative to the high degree of competitiveness in industries in which CVRD operates. To obtain additional information on factors which could cause results to be different from those estimated by the Company, please consult the reports filed with the Comissão de Valores Mobiliários (CVM — Brazilian stock exchange regulatory authority) and the U.S. Securities and Exchange Commission — SEC, including the most recent Annual Report — CVRD Form 20F.”

2Q06


Contents
A-Quarterly information			2
1-Balance Sheet			2
2-Statement of Income			3
3-Statement of Changes in Stockholders’ Equity			4
4-Statement of Cash Flows			5
5-Notes to the Quarterly information at June 30, 2006 and 2005			6
5.1- Operations			6
5.2- Presentation of Quarterly information			6
5.3- Principles and Practices of Consolidation			6
5.4- Significant Accounting Policies			6
5.5- Accounting Pronouncements Recently-issued by Comissão de Valores Mobiliários (CVM)			7
5.6- Stock Merger — CAEMI			7
5.7- Acquisition and Divestiment			7
5.8- Cash and Cash Equivalents			8
5.9- Accounts Receivable			8
5.10- Related Parties			8
5.11- Inventories			9
5.12- Taxes to recover or offset			9
5.13- Deferred Income Tax and Social Contribution			9
5.14- Consolidated investments			11
5.15- Property, Plant and Equipment			12
5.16- Loans and Financing			13
5.17- Contingent Liabilities			14
5.18- Environmental and Site Reclamation and Restoration Costs			15
5.19- Treasury Stock			16
5.20- Paid-up Capital			16
5.21- Payment to Shareholders			16
5.22- Financial Results			17
5.23- Financial Instruments — Derivatives			18
5.24- Sales, Administrative and Other Operating Expenses			20
6- Attachment I — Statement of Investments in Subsidiaries and Jointly-Controlled Companies			21
7- Report of the Independent Accountants on Limited Review			22
B — Additional Information (not reviewed)			23
8 - Management’s Discussion and Analysis of the Operating Results for the Year Ended June 30, 2006 and Supplemental Information			23
8.1- Comments on Consolidated Operating Results			24
8.1.1- Gross revenue			24
8.1.2 — Cost of products and services			26
8.1.3 — Selling expenses and administrative expenses			26
8.1.4 — Research and development			26
8.1.5 — Other operating expenses			26
8.1.6 — Net financial results			26
8.1.7 — Income tax and social contribution			27
8.1.8 - Cash generation			27
8.2- Comments on the Parent Company Results			28
8.2.1 - Gross revenue			28
8.2.2 - Cost of products and services			28
8.2.3 - Gross margin			28
8.2.4 - Results of shareholdings by business area			28
8.2.5 — Selling expenses and administrative expenses			29
8.2.6 — Research and development			29
8.2.7 — Other operating expenses			29
8.2.8 - Net financial results			29
8.2.9 - Income tax and social contribution			29
9- Board of Directors, Fiscal Council, Advisory Committees and Executive Officers			30

A- Quarterly information

(A free translation of the original in Portuguese relating to the Quarterly information prepared in thousands in accordance with the requirements of Accounting Practices Generally Accepted in Brazil)

1- Balance Sheet


Periods ended June 30	In thousands of reais
				Consolidated				Parent Company
	Notes			06/30/06		03/31/06		06/30/06		03/31/06
Assets
Current assets
Cash and cash equivalents		5.8			4,501,953		3,877,362		116,099		144,164
Accounts receivable from customers		5.9			4,527,871		3,670,235		2,243,382		2,071,977
Related parties		5.10			22,626		220,847		1,023,253		1,363,243
Inventories		5.11			3,342,975		3,488,755		1,331,895		1,377,421
Taxes to recover or offset		5.12			787,265		966,031		257,182		498,424
Deferred income tax and social contribution		5.13			509,073		586,394		425,575		506,555
Other		—			967,764		905,046		288,664		333,830

					14,659,527		13,714,670		5,686,050		6,295,614

Non-current assets
Long-term receivables
Related parties		5.10			14,226		18,566		404,800		407,013
Loans and financing		—			144,144		141,414		107,170		105,448
Deferred income tax and social contribution		5.13			945,081		994,339		399,246		427,929
Judicial deposits		5.17			1,953,963		1,722,990		1,284,908		1,068,188
Taxes to recover or offset		5.12			314,494		214,280		214,572		176,722
Asset for sale		—			110,972		114,997		—		—
Advances to energy suppliers		5.4	(f)		861,575		794,789		—		—
Prepaid expenses		—			264,010		109,399		—		—
Other		—			389,339		439,921		24,321		10,637

					4,997,804		4,550,695		2,435,017		2,195,937

Investments		5.14			6,816,643		7,008,981		29,292,636		26,485,896
Property, plant and equipment		5.15			36,539,637		34,696,174		22,953,483		21,548,895
Deferred charges		—			183,685		211,531		—		—

					43,539,965		41,916,686		52,246,119		48,034,791

					63,197,296		60,182,051		60,367,186		56,526,342

Liabilities and stockholders’ equity
Current liabilities
Short-term debt		5.16			652,389		615,994		—		—
Current portion of long-term debt		5.16			2,514,229		2,746,618		621,121		771,617
Payable to suppliers and contractors		—			2,018,364		1,788,399		1,398,583		1,213,474
Related parties		5.10			73,040		62,457		4,279,199		4,126,936
Payroll and related charges		—			413,094		303,466		286,225		196,976
Pension Plan — Valia		—			74,808		75,357		74,808		75,408
Dividends and interest on stockholders’ equity		5.21			1,440,843		2,961,312		1,357,850		2,750,150
Taxes and contributions		—			781,517		529,006		93,506		54,201
Other		—			886,956		995,143		393,047		422,645

					8,855,240		10,077,752		8,504,339		9,611,407

Non-current liabilities
Long-term liabilities
Long-term debt		5.16			10,576,743		10,768,483		2,049,055		2,113,611
Related parties		5.10			2,847		3,106		10,255,884		9,381,736
Provisions for contingencies		5.17			3,040,826		2,825,735		2,322,604		2,138,215
Pension Plan — Valia		—			545,665		546,695		545,665		545,060
Provision for asset retirement obligations		5.18			541,631		554,679		326,953		343,532
Provisions for derivatives		5.23			679,838		644,966		77,567		75,471
Other		—			1,005,629		947,947		706,215		589,706

					16,393,179		16,291,611		16,283,943		15,187,331

Deferred income		—			6,787		7,603		—		—

Minority interest		—			2,363,186		2,077,481		—		—

Stockholders’ equity
Paid-up capital		5.20			19,492,401		19,492,401		19,492,401		19,492,401
Revenue reserves		—			16,086,503		12,235,203		16,086,503		12,235,203

					35,578,904		31,727,604		35,578,904		31,727,604

					63,197,296		60,182,051		60,367,186		56,526,342

The additional information, notes and attachment I are an integral part of the quarterly information.

(A free translation of the original in Portuguese relating to the Quarterly information prepared in accordance with the requirements of Accounting Practices Generally Accepted in Brazil)

2- Statement of Income


Periods ended June 30	In thousands of reais
			Consolidated															Parent Company
			Quarter									Accumulated						Accumulated
	Notes		2Q/06			1Q/06			2Q/05			06/30/06			06/30/05			06/30/06			06/30/05
Operating revenues	8.1.1 and 8.2.1
Sales of ore and metals
Iron ore and pellets				6,354,472			5,498,489			7,027,883			11,852,961			10,969,421			7,232,217			7,040,421
Manganese and ferroalloys				300,246			256,362			442,982			556,608			941,221			—			—
Copper				447,328			241,738			228,570			689,066			428,550			460,841			392,847
Potash				49,377			48,888			75,506			98,265			155,879			98,265			155,879
Kaolin				100,151			106,327			110,955			206,478			215,531			—			—

				7,251,574			6,151,804			7,885,896			13,403,378			12,710,602			7,791,323			7,589,147
Transport services				895,968			703,644			847,967			1,599,612			1,572,430			902,429			842,921
Sales of aluminum-related products				1,544,296			1,052,552			928,170			2,596,848			1,968,138			20,889			98,796
Sales of steel products				381,832			348,909			378,697			730,741			830,850			—			—
Other products and services				56,995			24,215			10,718			81,210			21,791			38,215			21,564

				10,130,665			8,281,124			10,051,448			18,411,789			17,103,811			8,752,856			8,552,428
Value Added taxes				(350,794	)		(315,852	)		(499,993	)		(666,646	)		(831,783	)		(479,643	)		(486,788	)

Net operating revenues				9,779,871			7,965,272			9,551,455			17,745,143			16,272,028			8,273,213			8,065,640

Cost of products and services	8.1.1 and 8.2.1
Ores and metals				(2,815,494	)		(2,598,146	)		(2,619,094	)		(5,413,640	)		(5,024,506	)		(4,435,139	)		(4,147,292	)
Transport services				(426,850	)		(452,964	)		(489,874	)		(879,814	)		(930,669	)		(342,789	)		(290,784	)
Aluminum-related products				(761,378	)		(600,677	)		(543,775	)		(1,362,055	)		(1,093,067	)		(89,553	)		(50,946	)
Steel products				(308,211	)		(278,906	)		(352,156	)		(587,117	)		(735,816	)		—			—
Other products and services				(38,789	)		(14,017	)		(5,761	)		(52,806	)		(11,581	)		(15,403	)		(14,283	)

				(4,350,722	)		(3,944,710	)		(4,010,660	)		(8,295,432	)		(7,795,639	)		(4,882,884	)		(4,503,305	)

Gross profit				5,429,149			4,020,562			5,540,795			9,449,711			8,476,389			3,390,329			3,562,335
Gross margin				55.5	%		50.5	%		58.0	%		53.3	%		52.1	%		41.0	%		44.2	%
Operating expenses
Selling and Administrative		5.24		(511,794	)		(435,793	)		(403,106	)		(947,587	)		(760,804	)		(414,099	)		(285,396	)
Research and development				(222,030	)		(156,058	)		(161,446	)		(378,088	)		(242,575	)		(235,122	)		(174,887	)
Other operating expenses		5.24		(175,902	)		(188,825	)		(219,770	)		(364,727	)		(340,638	)		(244,775	)		(177,401	)

				(909,726	)		(780,676	)		(784,322	)		(1,690,402	)		(1,344,017	)		(893,996	)		(637,684	)

Operating profit before financial results and results of equity investments				4,519,423			3,239,886			4,756,473			7,759,309			7,132,372			2,496,333			2,924,651
Results of equity investments		5.14		(57,280	)		16,410			76,889			(40,870	)		150,408			4,111,198			2,413,136
Gain on investments accounted for by the equity method				75,422			76,774			146,831			152,196			277,190			4,950,619			3,261,237
Amortization of goodwill				(132,256	)		(37,941	)		(57,270	)		(170,197	)		(114,540	)		(170,197	)		(114,540	)
Provision for losses				—			—			—			—			—			(58,095	)		(36,311	)
Exchange variation in stockholders’ equity of companies abroad				(446	)		(22,423	)		(12,672	)		(22,869	)		(12,242	)		(611,129	)		(697,250	)
Financial results, net		5.22		(466,405	)		(259,054	)		81,871			(725,459	)		(192,576	)		(33,925	)		455,448
Sale of assets		5.7		736,866			19,326			—			756,192			—			19,326			—

Income before income tax and social contribution				4,732,604			3,016,568			4,915,233			7,749,172			7,090,204			6,592,932			5,793,235
Income tax and social contribution		5.13		(593,102	)		(585,334	)		(1,060,879	)		(1,178,436	)		(1,451,423	)		(503,273	)		(698,760	)

Income before minority interests				4,139,502			2,431,234			3,854,354			6,570,736			5,638,781			6,089,659			5,094,475
Minority interests				(234,405	)		(246,672	)		(375,069	)		(481,077	)		(544,306	)		—			—

Net income for the period				3,905,097			2,184,562			3,479,285			6,089,659			5,094,475			6,089,659			5,094,475

Number of shares outstanding at the end of the period (in thousands)	5.19 and 5.20			2,430,062			2,431,343			2,303,040			2,430,062			2,303,040			2,430,062			2,303,040

Net earnings per share outstanding at the end of the period (R$)				1.61			0.90			1.51			2.51			2.21			2.51			2.21

The notes and attachment I are an integral part of the quarterly information.

(A free translation of the original in Portuguese relating to the Quarterly information prepared in accordance with the requirements of Accounting Practices Generally Accepted in Brazil)

3- Statement of Changes in Stockholders’ Equity


Periods ended June 30	In thousands of reais
					Revenue reserves
			Paid-up		Expansion/						Unrealized						Fiscal			Treasury			Retained
	Notes		capital		Investments			Depletion			income			Legal			incentives			stock			earnings			Total
December 31, 2004				7,300,000		8,206,978			1,004,166			345,728			1,403,117			40,663			(131,318	)		—			18,169,334

Net income for the year				—		—			—			—			—			—			—			10,442,986			10,442,986
Capitalization of reserves				6,700,000		(5,129,319	)		(1,004,166	)		—			(525,853	)		(40,662	)		—			—			—
Realization of reserves				—		—			—			(109,561	)		—			—			—			109,561			—
Exchange — Samitri shares				—		—			—			—			—			—			21			—			21
Treasury stock				—		—			—			—			—			—			(3	)		—			(3	)
Appropriations:
Interim interest on stockholders’ equity				—		—			—			—			—			—			—			(783,387	)		(783,387	)
Interim dividends				—		—			—			—			—			—			—			(1,028,160	)		(1,028,160	)
Additional remuneration proposed				—		—			—			—			—			—			—			(2,750,150	)		(2,750,150	)
Appropriation to revenue reserves				—		5,385,337			—			—			522,149			83,364			—			(5,990,850	)		—

December 31, 2005				14,000,000		8,462,996			—			236,167			1,399,413			83,365			(131,300	)		—			24,050,641

Capital Increase		5.20		5,492,401		—			—			—			—			—			—			—			5,492,401
Net income for the period				—		—			—			—			—			—			—			2,184,562			2,184,562

March 31, 2006				19,492,401		8,462,996			—			236,167			1,399,413			83,365			(131,300	)		2,184,562			31,727,604

Net income for the period				—		—			—			—			—			—			—			3,905,097			3,905,097
Treasury stock				—		—			—			—			—			—			(53,797	)		—			(53,797	)

June 30, 2006				19,492,401		8,462,996			—			236,167			1,399,413			83,365			(185,097	)		6,089,659			35,578,904

The notes and attachment I are an integral part of the quarterly information.

(A free translation of the original in Portuguese relating to the Quarterly information prepared in accordance with the requirements of Accounting Practices Generally Accepted in Brazil)

4- Statement of Cash Flows


Periods ended June 30	In thousands of reais
	Consolidated															Parent Company
	Quarter									Accumulated						Accumulated
	2Q/06			1Q/06			2Q/05			06/30/06			06/30/05			06/30/06			06/30/05
Cash flows from operating activities:
Net income for the period		3.905.097			2.184.562			3.479.285			6.089.659			5.094.475			6.089.659			5.094.475
Adjustments to reconcile net income for the period with cash provided by operating activities:
Results of equity investments		57.280			(16.410	)		(76.889	)		40.870			(150.408	)		(4.111.198	)		(2.413.136	)
Sale of assets		(736.866	)		(19.326	)		—			(756.192	)		—			(19.326	)		—
Depreciation, amortization and depletion		445.923			420.329			384.488			866.252			769.513			465.626			415.866
Deferred income tax and social contribution		95.560			(76.550	)		52.590			19.010			(60.719	)		(67.953	)		(36.459	)
Financial expenses and monetary and exchange rate variations on assets and liabilities, net		64.191			(653.868	)		(981.548	)		(589.677	)		(935.257	)		(452.305	)		(591.177	)
Minority interest		234.405			246.672			375.069			481.077			544.306			—			—
Disposal of property, plant and equipment		60.059			18.653			60.382			78.712			75.629			33.464			21.202
Amortization of goodwill in the cost of products sold		94.090			91.987			96.095			186.077			192.190			183.974			192.190
Net losses on derivatives		107.435			157.681			(10.321	)		265.116			(5.726	)		25.707			(511	)
Dividends/interest on stockholders’ equity received		93.786			1.327			88.922			95.113			88.922			826.113			598.001
Other		(24.506	)		22.018			57.532			(2.488	)		(23.795	)		62.886			3.886

		4.396.454			2.377.075			3.525.605			6.773.529			5.589.130			3.036.647			3.284.337

Decrease (increase) in assets:
Accounts receivable		(895.971	)		492.456			(1.025.615	)		(403.515	)		(1.363.451	)		(205.264	)		(341.567	)
Inventories		89.591			(188.357	)		(67.305	)		(98.766	)		(137.204	)		(109.505	)		(193.763	)
Advances to energy suppliers		(66.786	)		(67.562	)		(142.886	)		(134.348	)		—			—			—
Other		210.128			(404.070	)		(449.748	)		(193.942	)		(714.961	)		163.256			(457.701	)

		(663.038	)		(167.533	)		(1.685.554	)		(830.571	)		(2.215.616	)		(151.513	)		(993.031	)

Increase (decrease) in liabilities:
Suppliers and contractors		242.012			(841.968	)		278.468			(599.956	)		327.085			(368.940	)		399.755
Payroll and related charges and Other		109.629			(241.710	)		30.438			(132.081	)		(63.827	)		(138.242	)		(62.998	)
Taxes and contributions		267.800			(329.416	)		885.434			(61.616	)		306.558			479			510.992
Other		(147.612	)		(285.510	)		288.291			(433.122	)		31.537			(376.093	)		95.724

		471.829			(1.698.604	)		1.482.631			(1.226.775	)		601.353			(882.796	)		943.473

Net cash provided by operating activities		4.205.245			510.938			3.322.682			4.716.183			3.974.867			2.002.338			3.234.779

Cash flows from investing activities:
Loans and advances receivable		(180.756	)		25.771			(43.441	)		(154.985	)		(31.411	)		83.684			(50.554	)
Guarantees and deposits		(28.305	)		(51.764	)		(37.493	)		(80.069	)		(89.053	)		(59.413	)		(25.074	)
Additions to investments		—			(112.081	)		(208.400	)		(112.081	)		(218.582	)		(3.140.402	)		(602.265	)
Additions to property, plant and equipment		(2.434.198	)		(1.699.135	)		(1.926.388	)		(4.133.333	)		(3.681.652	)		(2.926.093	)		(2.621.146	)
Net cash used in acquisitions and increase of funds to subsidiaries		—			—			—			—			—			—			—
Proceeds from disposal of property, plant and equipment/ investments		970.440			48.353			3.584			1.018.793			10.061			63.702			10.061

Net cash used in financing activities		(1.672.819	)		(1.788.856	)		(2.212.138	)		(3.461.675	)		(4.010.637	)		(5.978.522	)		(3.288.978	)

Cash flows from financing activities:
Short-term debt		(54.637	)		155.180			469.987			100.543			690.839			(97.606	)		1.322.016
Long-term debt		27.965			3.090.699			341.618			3.118.664			1.067.437			5.923.127			1.157.767
Repayments:
Related parties		—			—			—			—			—			—			(497.986	)
Financial institutions		(449.775	)		(739.096	)		(1.138.189	)		(1.188.871	)		(1.615.536	)		(418.608	)		(713.291	)
Interest on stockholders’ equity payed to stockholders		(1.377.591	)		(54.755	)		(1.279.900	)		(1.432.346	)		(1.279.900	)		(1.392.300	)		(1.279.900	)
Treasure stock		(53.797	)		—			—			(53.797	)		—			(53.797	)		—

Net cash provided by (used in) financing activities		(1.907.835	)		2.452.028			(1.606.484	)		544.193			(1.137.160	)		3.960.816			(11.394	)

Increase (decrease) in cash and cash equivalents		624.591			1.174.110			(495.940	)		1.798.701			(1.172.930	)		(15.368	)		(65.593	)
Cash and cash equivalents, beginning of the period		3.877.362			2.703.252			3.239.768			2.703.252			3.916.758			131.467			305.927

Cash and cash equivalents, end of the period		4.501.953			3.877.362			2.743.828			4.501.953			2.743.828			116.099			240.334

Cash paid during the period for:
Short-term interest		(8.170	)		(7.875	)		(19.680	)		(16.045	)		(21.224	)		(9.488	)		—
Long-term interest		(164.077	)		(219.143	)		(128.388	)		(383.220	)		(354.512	)		(194.715	)		(133.776	)
Income tax and social contribution		(101.492	)		(431.936	)		(378.927	)		(533.428	)		(589.068	)		(386.892	)		(396.246	)
Non-cash transactions:
Additions to property, plant and equipment — interest capitalization		88.562			(220.168	)		402.249			(131.606	)		375.457			(139.156	)		144.297
Transfer of advance for future capital increase to investments		—			—			—			—			—			(253.720	)		(506.880	)
Compensated income tax and social contribution		(77.646	)		(82.078	)		(56.159	)		(159.724	)		(104.840	)		(51.509	)		(16.045	)

The notes and attachment I are an integral part of the quarterly information.

(A free translation of the original in Portuguese relating to the Quarterly information prepared in accordance with the requirements of Accounting Practices Generally Accepted in Brazil)

5- Notes to the Quarterly information at June 30, 2006 and 2005

Expressed In thousands of reais

5.1- Operations

Companhia Vale do Rio Doce is a publicly traded corporation whose predominant activities are mining, processing and sale of iron ore, pellets, copper and potash, as well as logistic services, power generation and mineral research and development. In addition, through its direct and indirect subsidiaries and jointly controlled companies, CVRD operates in iron ore, pellets, manganese, ferroalloys, kaolin, steel, aluminum-related products and logistics.

5.2- Presentation of Quarterly information

The quarterly information have been prepared in conformity with accounting practices followed in Brazil, based on corporate legislation, as well as the rules and guidelines issued by the Comissão de Valores Mobiliários — CVM (Brazilian Securities Commission.

5.3- Principles and Practices of Consolidation

The consolidated quarterly information shows the balances of assets and liabilities on June 30 and March 31, 2006 and the operations of the Parent Company, its direct and indirect subsidiaries and its jointly-controlled companies for the periods ended on June 30, 2006, March 31, 2006 and June 30, 2005;

Intercompany balances and the Parent Company’s investments in its direct and indirect subsidiaries and jointly controlled companies were eliminated in the consolidation. Minority interests are shown separately on the balance sheet and statement of income;

In the case of investments in companies in which the control is shared with other stockholders, the components of assets and liabilities and revenues and expenses are included in the consolidated quarterly information in proportion to the participation of the Parent Company in the capital of each investee; and

The principal figures of the subsidiaries and jointly controlled companies included in the consolidation are presented in Attachment I.

5.4- Significant Accounting Policies

(a)		The Company adopts the accrual basis of accounting;

(b)		Assets and liabilities that are realizable or due more than twelve months after the quarterly information date are classified as non-current;

(c)		Marketable securities, classified as cash and cash equivalents are represented by less than 90 days applications and are stated at cost plus accrued income earned to the quarterly information date;

(d)		Inventories are stated at average purchase or production cost, and imports in transit at the cost of each item, not exceeding market or realizable value;

(e)		Assets and liabilities in foreign currencies are translated at exchange rates in effect at the quarterly information date, and those in local currency, when applicable, are restated based on contractual indices;

(f)		Amounts given in advance to Centrais Elétricas do Norte do Brasil S.A. — Eletronorte due to long term contract to supply energy, are classified as “Advances to energy suppliers”, in long-term receivables;

(g)		Investments in subsidiaries, jointly-controlled companies and affiliated companies are accounted for by the equity method, based on the stockholders’ equity of the investees, and when applicable increased/decreased by goodwill and negative goodwill to be amortized and provision for losses. Other investments are recorded at cost, less provision for losses when applicable. In the consolidated the exchange rate effect over stockholders equity from investees abroad are classified as monetary and exchange rate variation included as financial results, net;

(h)		Property, plant and equipment, including interest incurred during the construction period of large-scale projects, are recorded at historical cost (increased by monetary restatement up to 1995) and depreciated on the straight-line method, based on the useful lives of the assets. Depletion of mineral reserves is based on the ratio between effective production and estimated capacity;

(i)		Research and development costs are incurred as operational expenses until the proof of its economical feasibility to exploit commercially a mine. After this proof, the costs are capitalized as part of the costs of building and the development;

(j)		During the development of a mine, stripping costs incurred are capitalized as part of the depreciable cost of developing the mine. Post-production stripping costs are recorded as cost of sales;

(k)		Pre-operating costs except for financial charges capitalized as mentioned in (h) above, are deferred and amortized over a period of 10 years. The deferred charges (consolidated) refer basically to copper projects and expansion of Alunorte and Albras; and

(l)

CVRD follows the accounting practices laid down by to Deliberation CVM 371/00 related to the recognition of liabilities and results from actuarial valuation of employees’ pension plan.

5.5- Accounting Pronouncements Recently-issued by Comissão de Valores Mobiliários (CVM)

	(a)		On June 19, 2006 CVM issued Deliberation No. 505, which approved IBRACON Pronouncement NPC 10 — Subsequent events to the balance sheet date (correlation to IAS No.10) about the moment a company must adjust its financial statements in relation to subsequent events after the balance sheet date and the information the company must disclose about the date it was given permission to finish the preparation of its financial statements. The application of this pronouncement shall be effective on 01/01/07 or after and its early application is recommended; and

	(b)		On the same date CVM issued Deliberation No. 506, which approved IBRACON Pronouncement NPC 12 — Accounting policies, changes in accounting estimates and errors occurred in previous periods or years (correlation to IAS No. 8) about the criteria of accounting policies as well as the accounting treatment and the disclosure of the changes in accounting estimates and errors, in order for the companies to prepare and disclose the financial statements on the same basis. The application of this pronouncement shall be effective on 01/01/07 or after and its early application is recommended.

5.6- Stock Merger — CAEMI

At the Extraordinary General Shareholders Meeting held on March 31, 2006 the merger of outstanding shares issued by Caemi Mineração e Metalurgia — Caemi into the assets of CVRD, was approved with the issuance by CVRD of 64,151,361 (128,302,722 after the split) preferred shares class A.

CVRD held 100% of the common shares of Caemi and 40.06%od the preferred shares, totaling 60.23% of its Capital. After the merger, became wholly owned subsidiary of CVRD.

If CVRD owned 100% of Caemi shares in the periods presented our results would be as follows:


	Quarter
	1Q/06								2Q/05
				Caemi								Caemi
				Additional		Pro Forma						Additional		Pro Forma
	Consolidated			(39.77%)		(unaudited)			Consolidated			(39.77%)		(unaudited)
Operating results		3,017			—		3,017			4,915			—		4,915
Income tax and social contribution		(585	)		—		(585	)		(1,061	)		—		(1,061	)
Minority interests		(247	)		117		(130	)		(375	)		189		(186	)

Net income		2,185			117		2,302			3,479			189		3,668

Number of shares outstanding ( in thousands)		2,303,040			—		2,431,343			2,303,040			—		2,431,343
Net earnings per share outstanding		0.95			—		0.95			1.51			—		1.51


	Accumulated
	06/30/05
				Caemi
				Additional		Pro Forma
	Consolidated			(39.77%)		(unaudited)
Operating result		7,090			—		7,090
Income tax and social contribution		(1,452	)		—		(1,452	)
Minority interests		(544	)		253		(291	)

Net income		5,094			253		5,347

Number of shares outstanding ( in thousands)		2,303,040			—		2,431,343
Net earnings per share outstanding		2.21			—		2.20

5.7- Acquisition and Divestiment

On July 3, 2006 Vale do Rio Doce acquired 45.5% of Valesul Alumínio S.A — Valesul, an aluminum smelter. for R$60 million becoming Vale’s subsidiary.

On May 29, 2006, Vale sold, for R$910,349, its indirect interest in Gulf Industrial Investment Company (GIIC) generating a net gain of R$736,866.

In February 2006, Vale sold, for R$30,205, its total interest in Nova Era Silicon (49% of the capital) to JFE Steel Corporation, resulting in a net gain of R$19,326.

5.8- Cash and Cash Equivalents


	Consolidated				Parent Company
	06/30/06		03/31/06		06/30/06		03/31/06
Cash and bank accounts		575,239		729,767		25,796		48,902

Marketable securities linked to the interbank deposit certificate rate				1,001,900		90,303		95,262
		1,262,704

Time deposits / overnight investments		2,664,010		2,145,695		—		—

		4,501,953		3,877,362		116,099		144,164

5.9- Accounts Receivable


	Consolidated						Parent Company
	06/30/06			03/31/06			06/30/06			03/31/06
Domestic		838,487			702,840			879,646			748,766
Export		3,834,401			3,100,626			1,446,256			1,402,057

		4,672,888			3,803,466			2,325,902			2,150,823
Allowance for doubtful accounts		(110,510	)		(104,612	)		(52,005	)		(53,133	)
Allowance for ore weight credits		(34,507	)		(28,619	)		(30,515	)		(25,713	)

		4,527,871			3,670,235			2,243,382			2,071,977

No individual client was responsible for more than 10% of total revenues.

5.10- Related Parties

Derived from sales and purchases of products and services or from loans under normal market conditions, with maturities up to the year 2008, as follows:


	Consolidated
	Assets								Liabilities
	06/30/06				03/31/06				06/30/06				03/31/06
			Related				Related				Related				Related
	Customers		party		Customers		party		Suppliers		party		Suppliers		party
Companhia Nipo-Brasileira de Pelotização - NIBRASCO		64,711		—		44,621		—		34,644		29,799		42,846		1,487
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		52,861		131		61,652		131		37,306		11,357		43,243		1,217
Companhia Ítalo-Brasileira de Pelotização - ITABRASCO		43,797		—		39,923		—		25,819		1,998		19,115		2,399
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		45,841		600		39,233		24,793		11,414		4,220		29,196		11,005
Usina Siderúrgica de Minas Gerais S.A. - USIMINAS		40,766		26,606		36,017		88,543		866		—		28		8,029
Valesul Alumínio S.A.		984		641		2,520		445		34		—		34		2
Samarco Mineração S.A		4,392		7,379		2,409		31		—		—		—		—
MRS Logistica S.A.		219		366		241		46,012		1,172		14,922		5,331		17,939
Baovale Mineração S.A		106		—		7		482		18,179		—		24,567		—
Mineração Rio do Norte S.A.		523		—		529		51,233		24,960		—		28,841		—
Others		13,654		1,129		17,504		27,743		8,782		13,591		21,045		23,485

Total		267,854		36,852		244,656		239,413		163,176		75,887		214,246		65,563

Registered as:
Current		267,854		22,626		244,656		220,847		163,176		73,040		214,246		62,457
Non-current		—		14,226		—		18,566		—		2,847		—		3,106

		267,854		36,852		244,656		239,413		163,176		75,887		214,246		65,563

5.11- Inventories


	Consolidated				Parent Company
	06/30/06		03/31/06		06/30/06		03/31/06
Finished products
. Iron ore and pellets		916,155		976,781		534,472		476,518
. Manganese and ferroalloys		276,236		300,470		—		—
. Aluminum		248,421		216,414		—		—
. Steel products		59,328		59,001		—		—
. Copper		26,906		29,543		26,906		29,543
. Other		136,212		72,861		46,505		27,547

		1,663,258		1,655,070		607,883		533,608
Spare parts and maintenance supplies		1,679,717		1,833,685		724,012		843,813

		3,342,975		3,488,755		1,331,895		1,377,421

5.12- Taxes to recover or offset


	Consolidated				Parent Company
	06/30/06		03/31/06		06/30/06		03/31/06
Withholding income tax on marketable securities and stockholders’ equity received		52,687		44,573		9,978		9,293
Value-added tax		551,133		609,111		419,813		503,893
PIS and COFINS non cumulative		355,145		300,109		15,504		64,847
IR anticipated		90,592		168,011		—		65,678
Others		52,202		58,507		26,459		31,435

Total		1,101,759		1,180,311		471,754		675,146

Current		787,265		966,031		257,182		498,424
Non-current		314,494		214,280		214,572		176,722

		1,101,759		1,180,311		471,754		675,146

5.13- Deferred Income Tax and Social Contribution

Income of the company is subject to the normal tax system. The balances of deferred assets and liabilities are presented as follows:


	Net Deferred
	Consolidated						Parent Company
	06/30/06			03/31/06			06/30/06			03/31/06
Tax loss carryforward		554,819			636,012			107,763			198,464

Temporary differences:
. Pension Plan — Valia		210,961			210,959			210,961			210,959
. Contingent liabilities		672,406			660,988			604,810			588,881
. Provision for losses on assets		181,349			173,219			156,091			170,987
. Others		(165,381	)		(100,445	)		(254,804	)		(234,807	)

		899,335			944,721			717,058			736,020

Total		1,454,154			1,580,733			824,821			934,484

Current		509,073			586,394			425,575			506,555
Non-current		945,081			994,339			399,246			427,929

		1,454,154			1,580,733			824,821			934,484

The amounts reported as income tax and social contribution, which affected the results for the period, are as follows:


	Consolidated															Parent Company
	Quarter									Accumulated						Accumulated
	2Q/06			1Q/06			2Q/05			06/30/06			06/30/05			06/30/06			06/30/05
Income before income tax and social contribution		4,732,604			3,016,568			4,915,233			7,749,172			7,090,204			6,592,932			5,793,235
Results of equity investment		57,280			(16,410	)		(76,889	)		40,870			(150,408	)		(4,111,198	)		(2,413,136	)
Results on sale of assets		(736,866	)		(19,326	)		—			(756,192	)		—			(19,326	)		—

		4,053,018			2,980,832			4,838,344			7,033,850			6,939,796			2,462,408			3,380,099

Income tax and social contribution at combined tax rates		34	%		34	%		34	%		34	%		34	%		34	%		34	%

Federal income tax and social contribution at statutory rates		(1,378,026	)		(1,013,483	)		(1,645,037	)		(2,391,509	)		(2,359,531	)		(837,219	)		(1,149,234	)

Adjustments to net income which modify the effect on the results for the period:
. Income tax benefit from interest on stockholders’ equity		184,154			198,464			290,166			382,618			435,166			382,618			435,166
. Fiscal incentives		97,977			69,428			52,764			167,405			111,245			4,780			11,846
. Interest on stockholders’ equity received		—			—			—			—			—			—			—
. Results of overseas companies not taxed (bilateral
. international agreements)		467,349			247,410			178,790			714,759			300,395			—			—
. Reduced incentive aliquot		26,705			17,943			29,335			44,648			50,081			—			—
. Other		8,739			(105,096	)		33,103			(96,357	)		11,221			(53,452	)		3,462

Income tax and social contribution		(593,102	)		(585,334	)		(1,060,879	)		(1,178,436	)		(1,451,423	)		(503,273	)		(698,760	)

The deferred assets and liabilities for income tax and social contribution arising from tax losses, negative social contribution bases and temporary differences are recognized from an accounting standpoint considering an analysis of likely future results, based on economic and financial projections prepared based on internal assumptions and macroeconomic, commercial and fiscal scenarios which could change in the future.

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 expire in 2009 and 2013, respectively, while the partial exemption incentives relative to aluminum and kaolin expire in 2013 and bauxite in 2008. 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.

5.14- Consolidated investments


	Equity Results
	Investments				Quarter									Accumulated
	06/30/06		03/31/06		2Q/06			1Q/06			2Q/05			06/30/06			03/31/06
Investments in affiliated companies
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (a)		1,064,154		1,009,392		59,473			56,322			127,999			115,795			239,505
Shandong Yankuang International Company Ltd.		46,561		46,735		—			—			—			—			—
Henan Longyu Resources Co. Ltd. (b)		200,172		223,488		9,931			14,377			—			24,308			—
Other		6,493		6,517		—			—			—			—			—
Exchange variation in stockholders’ equity of companies abroad		—		—		(900	)		(19,118	)		(4,967	)		(20,018	)		(4,769	)
Goodwill of consolidated companies		5,394,664		5,619,323		(132,256	)		(37,941	)		(57,270	)		(170,197	)		(114,540	)
Investments at cost
SIDERAR Sociedad Anonima Industrial Y Comercial (a)		32,465		32,586		—			—			—			—			—
Quadrem International Holdings Ltd.		10,094		10,132		—			—			—			—			—
Other (b)		62,040		60,808		6,018			6,075			18,832			12,093			37,685
Exchange variation in stockholders’ equity of companies abroad		—		—		454			(3,305	)		(7,705	)		(2,851	)		(7,473	)

		6,816,643		7,008,981		(57,280	)		16,410			76,889			(40,870	)		150,408

(a) Interest at market price — Usiminas R$ 2,193,912 and Siderar R$ 274,526; and

(b) Dividends received from Gerdau, R$ 2,536 (2Q/06 R$ 1,209 and 1Q/06 R$ 1,327), Longyu 2Q/06 R$ 33,147, Usiminas 2Q/06 R$ 59,074 and others at cost R$ 356.

5.15- Property, Plant and Equipment

(a)

By type of asset:


				Consolidated									Parent Company
				06/30/06							03/31/06		06/30/06							03/31/06
	Average
	deprecia-					Accumulated									Accumulated
	tion rates			Cost		depreciation			Net		Net		Cost		depreciation			Net		Net
Buildings		2.82	%		3,420,035		(1,195,651	)		2,224,384		1,855,575		2,121,020		(749,419	)		1,371,601		1,260,411
Installations		3.69	%		15,187,830		(4,851,306	)		10,336,524		9,032,894		8,166,283		(3,105,993	)		5,060,290		4,781,911
Equipment		9.52	%		6,914,484		(3,132,663	)		3,781,821		3,661,933		2,608,069		(962,762	)		1,645,307		1,574,775
Information technology equipment		20.00	%		1,148,006		(444,061	)		703,945		691,324		994,872		(343,138	)		651,734		624,748
Railroads		3.87	%		8,156,496		(3,254,420	)		4,902,076		4,768,319		8,234,336		(3,252,742	)		4,981,594		4,854,355
Mineral rights (*)		1.84	%		1,958,001		(865,137	)		1,092,864		1,120,522		1,302,866		(185,360	)		1,117,506		1,135,264
Others		14.50	%		4,002,376		(1,972,922	)		2,029,454		1,977,429		1,904,791		(792,688	)		1,112,103		1,033,713

					40,787,228		(15,716,160	)		25,071,068		23,107,996		25,332,237		(9,392,102	)		15,940,135		15,265,177
Construction in progress		—			11,468,569		—			11,468,569		11,588,178		7,013,348		—			7,013,348		6,283,718

Total					52,255,797		(15,716,160	)		36,539,637		34,696,174		32,345,585		(9,392,102	)		22,953,483		21,548,895


(*)		Calculated on the basis of the volume of ore extracted in relation to the proven and probable reserves.

(b)

By business area:


	Consolidated
	06/30/06							03/31/06
			Accumulated
	Cost		depreciation			Net		Net
Ferrous
In operation		26,287,769		(10,943,337	)		15,344,432		14,691,314
Construction in Progress		5,938,563		—			5,938,563		5,159,013

		32,226,332		(10,943,337	)		21,282,995		19,850,327

Non-Ferrous
In operation		2,969,687		(781,133	)		2,188,554		2,211,499
Construction in Progress		2,939,831		—			2,939,831		2,910,310

		5,909,518		(781,133	)		5,128,385		5,121,809

Logistics
In operation		3,080,747		(852,941	)		2,227,806		2,170,557
Construction in Progress		238,096		—			238,096		212,402

		3,318,843		(852,941	)		2,465,902		2,382,959

Holdings
In operation		7,414,502		(2,806,623	)		4,607,879		3,359,268
Construction in Progress		1,636,522		—			1,636,522		2,651,575

		9,051,024		(2,806,623	)		6,244,401		6,010,843

Corporate Center
Corporate		1,034,523		(332,126	)		702,397		675,358
Construction in Progress		715,557		—			715,557		654,878

		1,750,080		(332,126	)		1,417,954		1,330,236

Total		52,255,797		(15,716,160	)		36,539,637		34,696,174

5.16- Loans and Financing

Current


	Consolidated
	06/30/06		03/31/06
Trade finance		448,208		426,459
Working capital		204,181		189,535

		652,389		615,994

Non-current


	Consolidated								Parent Company
	Current liabilities				Long-term liabilities				Current liabilities				Long-term liabilities
	06/30/06		03/31/06		06/30/06		03/31/06		06/30/06		03/31/06		06/30/06		03/31/06
Foreign operations
Loans and financing in:
U.S. dollars		1,533,949		1,730,018		4,371,768		4,477,420		516,607		689,547		1,832,982		1,881,711
Other currencies		7,827		6,885		31,562		33,798		7,827		6,885		31,562		33,798
Notes in U.S. dollars		—		—		4,406,214		4,422,704		—		—		—		—
Export securitization		181,128		179,484		653,013		701,796		—		—		—		—
Perpetual notes		—		—		173,969		168,646		—		—		—		—
Accrued charges		287,341		203,335		—		—		46,067		19,070		—		—

		2,010,245		2,119,722		9,636,526		9,804,364		570,501		715,502		1,864,544		1,915,509

Local operations
Indexed by TJLP, TR and IGP-M		166,432		180,455		343,497		362,796		44,945		47,540		167,211		179,927
Basket of currencies		3,530		3,799		17,642		18,553		3,259		3,555		17,289		18,164
Loans in U.S. dollars		256,073		367,777		236,398		248,070		825		1,241		—		—
Non-convertible debentures		690		652		342,680		334,700		690		652		11		11
Accrued charges		77,259		74,213		—		—		901		3,127		—		—

		503,984		626,896		940,217		964,119		50,620		56,115		184,511		198,102

		2,514,229		2,746,618		10,576,743		10,768,483		621,121		771,617		2,049,055		2,113,611

(a)		Foreign currency loans and financing were converted into reais at exchange rates effective on the quarterly information date, being US$1.00 = R$2.1643 in 06/30/06 (R$2.1724 in 03/31/06) and ¥1.00 = R$0.018920 in 06/30/06 (R$0.018456 in 03/31/06);

(b)		At June 30, 2006, our consolidated debt was secured as follows:

	•		Loans guaranteed by the Federal Government, to which we gave counter-guarantees of R$255,350;

	•		Securitization program of R$842,920;

	•		Property, plant and equipment of R$138,850;

	•		Others assets R$998,434.

(c)

Amortization of principal and financing charges incurred on long-term loans and financing obtained abroad and domestically mature as follows, as of 06/30/06:


	Consolidated		Parent Company
2007		685,198		213,706
2008		981,489		428,919
2009		748,780		387,587
2010 onward		7,644,638		1,018,843
No due date (perpetual notes and debentures)		516,638		—

		10,576,743		2,049,055

		The estimated market values of long-term loans and financing calculated at present value based on available interest rates as of 06/30/06 approximate their book values.

(d)		On October, 2005, the subsidiary Vale Overseas Limited launched a US$300 million notes issue maturing in 2034. The notes carry a coupon of 7.65% p.a. The notes form a single series with the US$500 million notes issued in January 2004 and 8.25% p.a. coupon.

(e)		In January, 2006, the subsidiary Vale Overseas Limited issued US$1 billion 10-year 6.250% p.a. notes, payable semi-annually due 2016, at a price of 99.97% p.a. of the principal amount.

(f)		In January, 2006, the subsidiary Vale Overseas Limited concluded its tender offer for any and all of its US$300 million aggregate principal amount outstanding 9.00% p.a. Guaranteed Notes due 2013.

5.17- Contingent Liabilities

At the quarterly information dates the contingent liabilities of the Company were:

(a)

Provisions for contingencies and judicial deposits (booked under long-term liabilities and long-term assets, respectively), considered by management and its legal counsel as sufficient to cover losses from any type of lawsuit, were as follows:


	Consolidated
				Labor and social
Judicial deposits	Tax contingencies			security claims			Civil claims			Others			Total

Balance at 03/31/2006		1.097.409			347.598			269.601			8.382			1.722.990
Addition		327.543			136.571			22.833			57			487.004
Write off		(160.913	)		(108.804	)		(17.568	)		(5.912	)		(293.197	)
Updating’s		27.697			20.689			(11.278	)		58			37.166

Balance at 06/30/2006		1.291.736			396.054			263.588			2.585			1.953.963


	Parent Company
				Labor and social
Judicial deposits	Tax contingencies			security claims			Civil claims			Others			Total

Balance at 03/31/2006		606.568			254.979			198.469			8.172			1.068.188
Addition		323.871			130.752			18.921			57			473.601
Write off		(160.913	)		(106.384	)		(17.568	)		(5.910	)		(290.775	)
Updating’s		26.457			18.471			(11.092	)		58			33.894

Balance at 06/30/2006		795.983			297.818			188.730			2.377			1.284.908


	Consolidated
				Labor and social
Provisions for contingencies	Tax contingencies			security claims			Civil claims			Others			Total

Balance at 03/31/2006		1.674.482			553.101			538.510			59.642			2.825.735
Addition		194.063			249.143			106.336			2.244			551.786
Write off		(154.387	)		(115.900	)		(127.472	)		(5.020	)		(402.779	)
Updating’s		39.826			9.923			10.774			5.561			66.084

Balance at 06/30/2006		1.753.984			696.267			528.148			62.427			3.040.826


	Parent Company
				Labor and social
Provisions for contingencies	Tax contingencies			security claims			Civil claims			Others			Total

Balance at 03/31/2006		1.301.502			427.985			390.888			17.840			2.138.215
Addition		183.137			234.201			99.964			4.040			521.342
Write off		(153.883	)		(114.640	)		(127.392	)		(2.084	)		(397.999	)
Updating’s		36.959			8.525			10.001			5.561			61.046

Balance at 06/30/2006		1.367.715			556.071			373.461			25.357			2.322.604

The Company is party to labor, civil, tax and other suits and has been contesting these matters both administratively and in court. When applicable, these are backed by judicial deposits. Provisions for losses are estimated and restated monetarily by management based on the opinions of the legal department and outside counsel.

Labor and social security - related actions principally comprise claims for (i) payment of time spent traveling from their residences to the work-place, (ii) additional health and safety related payments and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal and the one-third extra holiday pay.

Civil - actions principally related to claims made against us by contractors in connection with losses alleged to have been incurred by them as a result of various past government economic plans during which full indexation of contracts for inflation was not permitted and accidents.

		Tax — related actions principally comprise our challenges of certain revenue taxes, value added tax and income tax.

		In addition to the contingencies for which we have made provisions we have possible losses totaling R$2,663,347 (R$1,795,356 parent company). Based on the advice of our legal counsel, no provision is maintained.

(b)		Guarantees given to jointly controlled companies are as follows:

Amount of guarantee

Denominated

Final

Counter

Affiliate

06/30/06

03/31/06

currency

Purpose

maturity

guarantees

SAMARCO

8,508

8,165

US$

Debt guarantee IFC

2008

None

VALESUL

767

Debt guarantee BNDES

2007

None

		The Company does not expect such guarantees to be executed and therefore no provisions for losses have been made. CVRD does not charge Valesul for granting these guarantees.

(c)		Upon privatization of the Company in 1997, the Brazilian government stipulated the issuance of non-convertible debentures (Debentures) to the stockholders of record, including the federal government. The maturity dates of these Debentures were established to guarantee that pre-privatization stockholders, including the federal government, would share any future benefits from the Company mineral resources.

		A total of 388,559,056 Debentures were issued at a par value of R$0.01 (one cent), whose value is to be restated in accordance with the variation in the General Market Price Index (IGP-M), as set forth in the Issue Deed.

		On October 4, 2002, the Comissão de Valores Mobiliários — CVM (Brazilian Securities Commission) approved the Company’s registration request, for public trading of the Debentures. As from October 28, 2002, the Debentures can be traded on the secondary market.

		The debenture holders are entitled to receive semi-annual payments equivalent to a percentage of the net revenue deriving from certain mineral resources owned in May 1997 and included in the Issue Deed.

		According to the Debenture Issue Deed, the amount of the premium must include interest up to the month prior to that of effective payment, plus 1% in the month in which the funds are made available to the debenture holder. Pursuant to this Deed, the payment date shall take place each semester in March and September.

		Based on estimates of the operational start-up of copper projects, CVRD began calculating the premium referring to these minerals rights. Considering the iron ore sale, the Company estimates that the threshold for payment will be reached by approximately 2032 and 2019 for the Southern and Northern systems, respectively. Regarding other minerals, such as bauxite and nickel, the forecast for exploitation is for the second half of the decade, and according to the criteria established in the Deed, payment will be due on the net sales revenue in the fourth year after the date of first commercialization. The obligation to make payments to the debenture holders will cease when the pertinent mineral resources are exhausted.

		On 04/03/06 we made available payment related to debentures in the amount of R$4,491.

5.18- Environmental and Site Reclamation and Restoration Costs

Expenditures relating to ongoing compliance with environmental regulations are charged to production costs or capitalized as incurred. The Company manages its environmental policies according to the specifications of ISO 14,001 and maintains ongoing programs to minimize the environmental impact of its mining operations as well as to reduce the costs that will be incurred upon termination of activities at each mine. On 06/30/06, the provision for asset retirement obligations amounted to R$541,631 (R$326,953 parent company), which was accounted for in “Provision for asset retirement obligations” in non-current liabilities and R$18,903 (R$18,903 parent company) in “Other” in current liabilities. The Company adopts the concepts of the Accounting for Asset Retirement Obligations, as follows:

	•		Costs for mine closure are recorded as part of the cost of these assets and a corresponding provision is made for such future expenditure;

	•		The estimated costs are accounted for at the present value of the obligations, discounted using a risk free rate; and

	•		The estimated costs are reviewed annually and changes in the present value are adjusted in the recorded amounts of the assets and liabilities.

5.19- Treasury Stock

The Board of Directors, under the terms of Subparagraph XXXII of Article 14 of the Bylaws and based on Article 30 of Law 6404/76 and CVM Instructions 10 of 02/14/80 and 268 of 11/13/97, approved the acquisition by the Company of its own shares to be held in treasury for later sale or cancellation.

On June 21, 2006, the Board of Directors approved a buy-back program of its preferred shares. The program will involve the acquisition of up to 47,986,763 preferred shares, corresponding to 5% of its outstanding preferred shares on May 31, 2006, to be executed over the next 180 days. Until 06/30/06, 1,281,100 preferred shares had been acquired.

On 06/30/06, the Company had acquired 28,291,020 common shares and 1,304,016 preferred shares, which are held in treasury in the amount of R$185,097. The 28,291,020 common shares guarantee a loan of the 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.


Shares											Average
Class	Quantity				Unit acquisition cost						quoted market price
	06/30/06		03/31/06		Average		Low		High		06/30/06		03/31/06
Preferred		1,304,016		22,916		41.44		41.16		42.65		44.56		44.68

Common		28,291,020		28,291,020		4.63		3.34		8.68		51.78		51.02

		29,595,036		28,313,936

5.20- Paid-up Capital

At the Extraordinary Shareholders’ Meeting held on 03/31/06 the Capital Stock is in the amount of R$19,492,400,974.56, corresponding to 1,229,828,529 shares, being R$9,007,032,395.62 divided into 749.949.429 common shares and R$10,485,368,578.94, divided into 479,879,100 preferred Class “A”, including three (3) special Class shares, all without par value.

After the split the capital stock in the amount of R$19.5 billion, corresponds to 2,459,657,058 shares, being 1,499,898,858 common shares and 957,758,200 preferred Class “A”, including six special class shares without par value (Golden share). The share/ADR proportion was maintained at 1/1; therefore, each common and preferred share, will continue to be represented by one ADR supported by one common share or by one ADR supported by one class “A” preferred share, respectively.

Preferred shares have the same rights as common shares, except for the right to elect the members of the Board of Directors. They have priority to a minimum annual dividend of 6% on the portion of capital represented by this class of share or 3% of the book net equity value of the share, whichever is greater.

The Extraordinary Shareholders’ Meeting held on 04/27/06 approved the split of shares, which occurred on 05/22/06. Each preferred and commom share was split and represented by two shares.

For comparative purposes we considered the effects of the split to calculate the net income per outstanding share, presented in the Statement of Income.

5.21- Payment to Shareholders

At 04/28/06 the payment of the first installment of the minimum dividend to shareholders for R$1,392,300, equivalent to R$1.145292894 per outstanding common or preferred class A or common share was made. From this amount, R$809,800 equivalent to R$0.666133869 per outstanding preferred class A or common share were paid in the form of interest on shareholders’ equity and R$582,500, equivalent to R$0.479159025 per outstanding preferred or common share, in the form of dividends.

5.22- Financial Results


Consolidated
	2Q/06									1Q/06									2Q/05
				Monetary and									Monetary and									Monetary and
				exchange rate									exchange rate									exchange rate
	Financial			variation on						Financial			variation on						Financial			variation on
	expenses			liabilities			Total			expenses			liabilities			Total			expenses			liabilities			Total
Foreign debt		(123,118	)		76,420			(46,698	)		(115,961	)		242,259			126,298			(101,289	)		780,104			678,815
Local debt		(41,444	)		(100,574	)		(142,018	)		(37,133	)		155,170			118,037			(54,481	)		235,822			181,341
Related parties		(1,911	)		(7	)		(1,918	)		(2,664	)		(125	)		(2,789	)		16,459			4,124			20,583

		(166,473	)		(24,161	)		(190,634	)		(155,758	)		397,304			241,546			(139,311	)		1,020,050			880,739

Labor, tax and civil contingencies		(56,236	)		(7,771	)		(64,007	)		(56,910	)		(13,745	)		(70,655	)		(31,575	)		(18,697	)		(50,272	)
Derivatives, net of gain/losses (interest and currencies)		3,244			27			3,271			1,589			432			2,021			(5,878	)		2,637			(3,241	)
Derivatives, net of gain/losses (gold, aluminum and alumina)		(110,679	)		1,634			(109,045	)		(159,270	)		50,226			(109,044	)		16,198			41,964			58,162
CPMF		(42,486	)		—			(42,486	)		(48,456	)		—			(48,456	)		(46,111	)		—			(46,111	)
Other		(184,189	)		(49,334	)		(233,523	)		(108,266	)		(155,694	)		(263,960	)		(40,815	)		(85,525	)		(126,340	)

		(556,819	)		(79,605	)		(636,424	)		(527,071	)		278,523			(248,548	)		(247,492	)		960,429			712,937


				Monetary and									Monetary and									Monetary and
				exchange rate									exchange rate									exchange rate
	Financial			variation on						Financial			variation on						Financial			variation on
	income			assets			Total			income			assets			Total			income			assets			Total
Related parties		5,050			(1,443	)		3,607			791			4			795			(14,186	)		(5,169	)		(19,355	)
Marketable securities		55,001			(9,289	)		45,712			69,026			(52,529	)		16,497			51,507			(230,392	)		(178,885	)
Other		44,713			75,987			120,700			38,290			(66,088	)		(27,798	)		20,816			(453,642	)		(432,826	)

		104,764			65,255			170,019			108,107			(118,613	)		(10,506	)		58,137			(689,203	)		(631,066	)

Financial income (expenses), net		(452,055	)		(14,350	)		(466,405	)		(418,964	)		159,910			(259,054	)		(189,355	)		271,226			81,871


	06/30/06									06/30/05
				Monetary and									Monetary and
				exchange rate									exchange rate
	Financial			variation on						Financial			variation on
	expenses			liabilities			Total			expenses			liabilities			Total
Foreign debt		(239,079	)		318,679			79,600			(181,999	)		770,505			588,506
Local debt		(78,577	)		54,596			(23,981	)		(119,051	)		224,394			105,343
Related parties		(4,575	)		(132	)		(4,707	)		(10,914	)		13			(10,901	)

		(322,231	)		373,143			50,912			(311,964	)		994,912			682,948

Labor, tax and civil contingencies		(113,146	)		(21,516	)		(134,662	)		(62,586	)		(42,412	)		(104,998	)

Derivatives, net of gain/losses (interest and currencies)		4,833			459			5,292			(1,290	)		2,566			1,276

Derivatives, net of gain/losses (gold, aluminum and alumina)		(269,949	)		51,860			(218,089	)		7,015			38,781			45,796
CPMF		(90,942	)		—			(90,942	)		(69,695	)		—			(69,695	)
Other		(292,455	)		(205,028	)		(497,483	)		(103,979	)		(160,696	)		(264,675	)

		(1,083,890	)		198,918			(884,972	)		(542,499	)		833,151			290,652


				Monetary and									Monetary and
				exchange rate									exchange rate
	Financial			variation on						Financial			variation on
	income			assets			Total			income			assets			Total
Related parties		5,841			(1,439	)		4,402			14,807			7,938			22,745
Marketable securities		124,027			(61,818	)		62,209			94,608			(216,133	)		(121,525	)
Other		83,003			9,899			92,902			61,562			(446,010	)		(384,448	)

		212,871			(53,358	)		159,513			170,977			(654,205	)		(483,228	)

Financial income (expenses), net		(871,019	)		145,560			(725,459	)		(371,522	)		178,946			(192,576	)


	Parent Company
	06/30/06									06/30/05
				Monetary and									Monetary and
				exchange rate									exchange rate
	Financial			variation on						Financial			variation on
	expenses			liabilities			Total			expenses			liabilities			Total
Foreign debt		(52,927	)		(47,560	)		(100,487	)		(9,972	)		192,101			182,129
Local debt		(13,475	)		(73,947	)		(87,422	)		(12,362	)		51,231			38,869
Related parties		(167,961	)		511,318			343,357			(139,085	)		419,017			279,932

		(234,363	)		389,811			155,448			(161,419	)		662,349			500,930

Labor, tax and civil contingencies		(110,042	)		(19,612	)		(129,654	)		(62,586	)		(41,472	)		(104,058	)
Derivatives, net of gain/losses (interest and currencies)		2,642			(134	)		2,508			(3,245	)		(407	)		(3,652	)
Derivatives, net of gain/losses (gold)		(28,349	)		4,116			(24,233	)		3,936			5,290			9,226
CPMF		(57,292	)		—			(57,292	)		(39,065	)		—			(39,065	)
Other		(167,915	)		172,406			4,491			(49,155	)		230,705			181,550

		(595,319	)		546,587			(48,732	)		(311,534	)		856,465			544,931


				Monetary and									Monetary and
				exchange rate									exchange rate
	Financial			variation on						Financial			variation on
	income			assets			Total			income			assets			Total
Related parties		37,419			(118,016	)		(80,597	)		31,342			(145,480	)		(114,138	)
Marketable securities		21,956			45			22,001			23,350			9,743			33,093
Other		13,778			59,625			73,403			22,495			(30,933	)		(8,438	)

		73,153			(58,346	)		14,807			77,187			(166,670	)		(89,483	)

Financial income (expenses), net		(522,166	)		488,241			(33,925	)		(234,347	)		689,795			455,448

5.23- Financial Instruments — Derivatives

The main market risks the Company faces are related to interest rates, exchange rates and commodities prices. CVRD has a policy of managing risks through the use of derivative instruments.

The Company’s risk management follows policies and guidelines reviewed and approved by the Board of Directors and Executive Board. These policies and guidelines prohibit speculative trading and short selling and require diversification of transactions and counterparties. The policy of the Company is to settle all contracts financially without physical delivery of the products. The credit limits and creditworthiness of counterparties are also reviewed periodically and are defined according to the rules approved by the Company’s management. The results of hedging are recognized monthly in the financial results.

The following table shows the movement of gains/loss on derivatives:


	Consolidated
	2Q/06
	Interest rates			*()**
	(libor)			Currencies		Gold			Aluminium			Alumina			Total
Gains / (losses) unrealized on 03/31/06		(6,361	)		2,325		(126,624	)		(353,234	)		(158,748	)		(642,642	)
Financial settlement		2,692			—		8,253			32,316			29,545			72,806
Financial expenses, net		1,358			1,886		(11,688	)		(68,105	)		(30,886	)		(107,435	)
Monetary variations, net		10			17		(1,235	)		3,581			(712	)		1,661

Gains / (losses) unrealized on 06/30/06		(2,301	)		4,228		(131,294	)		(385,442	)		(160,801	)		(675,610	)


	1Q/06
	Interest rates			*()**
	(libor)			Currencies			Gold			Aluminium			Alumina			Total
Gains / (losses) unrealized on 12/31/05		(8,769	)		1,725			(107,561	)		(367,928	)		(125,614	)		(608,147	)
Financial settlement		987			—			8,564			31,307			31,670			72,528
Financial expenses, net		838			751			(36,338	)		(47,664	)		(75,268	)		(157,681	)
Monetary variations, net		583			(151	)		8,711			31,051			10,464			50,658

Gains / (losses) unrealized on 03/31/06		(6,361	)		2,325			(126,624	)		(353,234	)		(158,748	)		(642,642	)


	2Q/05
	Interest rates			*()**
	(libor)			Currencies			Gold			Aluminium			Alumina			Total
Gains / (losses) unrealized on 03/31/05		(30,577	)		7,192			(83,661	)		(138,303	)		(134,046	)		(379,395	)
Financial settlement		10,162			(991	)		5,629			22,936			21,657			59,393
Financial expenses, net		(4,239	)		(1,638	)		(1,228	)		(28,254	)		45,680			10,321
Monetary variations, net		3,481			(844	)		9,705			16,381			15,877			44,600

Gains / (losses) unrealized on 06/30/05		(21,173	)		3,719			(69,555	)		(127,240	)		(50,832	)		(265,081	)


	Parent Company
	06/30/06
	Interest rates			*()**
	(libor)			Currencies			Gold			Total
Gains / (losses) unrealized on 12/31/05		(5	)		1,725			(63,408	)		(61,688	)
Financial settlement		—			—			10,074			10,074
Financial expenses, net		5			2,637			(28,349	)		(25,707	)
Monetary variations, net		—			(134	)		4,116			3,982

Gains / (losses) unrealized on 06/30/06		—			4,228			(77,567	)		(73,339	)


	06/30/05
	Interest rates			*()**
	(libor)			Currencies			Gold			Total
Gains / (losses) unrealized on 12/31/04		(9,268	)		9,405			(55,406	)		(55,269	)
Financial settlement		7,354			(1,197	)		6,440			12,597
Financial expenses, net		236			(3,661	)		3,936			511
Monetary variations, net		422			(829	)		5,290			4,883

Gains / (losses) unrealized on 06/30/05		(1,256	)		3,718			(39,740	)		(37,278	)

(*) Included as others in current assets.

Final maturity dates for the above instruments are as follows:


Gold		Dec 2008
Interest rates (LIBOR)		Oct 2007
Currencies		Dec 2011
Alumina		Dec 2008
Aluminum		Dec 2008

5.24- Selling, Administrative and Other Operating Expenses


	Consolidated										Parent Company
	Quarter						Accumulated				Accumulated
Administrative	2Q/06		1Q/06		2Q/05		06/30/06		06/30/05		06/30/06		06/30/05
Personnel		142,299		137,285		102,856		279,584		206,606		146,844		115,921

Services of technical consulting		33,179		38,436		42,155		71,615		63,157		40,937		41,970
Advertising and publicity		54,536		26,760		29,739		81,296		44,339		79,656		41,960
Depreciation		53,240		52,058		29,487		105,298		59,294		77,644		25,635
Travel expenses		13,509		10,705		15,041		24,214		24,045		20,575		16,574
Rents and taxes		15,001		10,051		21,014		25,052		33,314		11,852		13,731
Community aborigine		4,120		4,063		5,042		8,183		9,925		8,182		9,925
Other		64,750		51,549		62,258		116,299		124,461		25,221		19,083

Sub total		380,634		330,907		307,592		711,541		565,141		410,911		284,799

Sales		131,160		104,886		95,514		236,046		195,663		3,188		597

Total		511,794		435,793		403,106		947,587		760,804		414,099		285,396


	Consolidated										Parent Company
	Quarter						Accumulated				Accumulated
	2Q/06		1Q/06		2Q/05		06/30/06		06/30/05		06/30/06		06/30/05
Other operating expenses (income)
Provisions for contingencies		44,334		31,020		34,490		75,354		60,128		10,795		54,000
Provision for loss on ICMS credits		13,935		14,858		8,709		28,793		28,269		—		—
Provision for profit sharing		78,441		62,449		59,992		140,890		106,681		108,000		90,000
Donations		2,573		3,298		32,478		5,871		38,368		5,290		32,253
Pension plan		—		—		17,000		—		17,000		—		17,000
Copper expenses		—		—		19,585		—		19,585		—		19,450
Other		36,619		77,200		47,516		113,819		70,607		120,690		(35,302	)

Total		175,902		188,825		219,770		364,727		340,638		244,775		177,401

6- Attachment I — Statement of Investments in Subsidiaries and Jointly-Controlled Companies


Period ended June 30, 2006	In thousands of reais
					Accounting information
	Participation (%)				Assets						Liabilities and stockholders' equity									Statement of income
							Non-current assets						Non-current liabilities
									Investments,				Long-term,
									property plant				deferred
									and equipment				income and		Adjusted						Cost of			Operating			Non-						Adjusted net
									and deferred				minority		stockholders’						products and			income			operating			Income			income
	Total		Voting		Current		Long-term		charges		Current		interest		equity			Net revenues			services			(expenses)			result			tax and			(loss)
Subsidiaries (a)
ALBRAS — Alumínio Brasileiro S.A.		51,00		51,00		668.056		1.324.997		1.052.653		538.679		1.104.404		1.402.623			1.189.176			(743.861	)		(82.433	)		122			(91.504	)		271.500
ALUNORTE — Alumina do Norte do Brasil S.A.		57,03		61,74		727.051		183.857		3.489.277		381.365		1.272.634		2.746.186			1.193.679			(678.810	)		(66.545	)		353			(89.065	)		359.612
Brasilux S.A.		100,00		100,00		2.314		32.973		539		13.440		—		22.386			—			—			(1.456	)		—			—			(1.456	)
Caemi Mineração e Metalurgia S.A.(b, c)		100,00		100,00		2.805.594		114.354		1.987.832		641.933		936.914		3.328.933			2.438.186			(1.018.006	)		(282.950	)		(122.759	)		(238.954	)		775.517
Companhia Paulista de Ferro Ligas		100,00		100,00		55.953		163.342		3.859		139.382		81.913		1.859			—			—			4.376			232			(3.261	)		1.347
Companhia Portuária Baia de Sepetiba		100,00		100,00		184.157		5.959		146.791		73.011		—		263.896			120.795			(47.781	)		3.277			—			(25.927	)		50.364
CVRD Overseas Ltd.		100,00		100,00		690.207		653.013		820.848		1.537.213		43.438		583.417			1.356.248			(886.701	)		(22.339	)		—			—			447.208
Docepar S.A.		100,00		100,00		3.105		318.746		147		20.683		269.342		31.973			—			—			(11.211	)		—			(150	)		(11.361	)
Ferrovia Centro — Atlântica S.A.		100,00		100,00		323.695		132.596		1.471.915		207.234		1.894.803		(173.831	)		342.270			(349.524	)		(45.416	)		—			—			(52.670	)
Ferro Gusa Carajás S.A.		77,97		77,97		125.298		—		272.904		307.867		566		89.769			43.084			(46.337	)		(29.968	)		—			—			(33.221	)
Florestas Rio Doce S.A.		100,00		100,00		60.723		32.314		3.731		40.209		32.686		23.873			—			—			2.211			—			(2.063	)		148
CVRD International S.A. (d)		100,00		100,00		7.763.585		9.928.021		3.826.956		2.983.031		5.939.229		12.596.302			7.780.826			(5.702.546	)		(134.005	)		754.891			—			2.699.166
Mineração Tacumã Ltda.		100,00		100,00		129		—		1.601.013		16.322		1.773.342		(188.522	)		—			—			(71.826	)		—			—			(71.826	)
Navegação Vale do Rio Doce S.A. – DOCENAVE (c)		100,00		100,00		296.795		23.478		546.506		73.152		551.316		242.311			27.274			(8.241	)		(17.547	)		(5	)		(10.995	)		(9.514	)
Rio Doce International Finance Ltd.		100,00		100,00		543		—		—		8.779		137		(8.373	)		—			(647	)		156.605			—			—			155.958
Rio Doce Manganèse Europe — RDME		100,00		100,00		226.924		210		76.990		112.951		2.173		189.000			226.253			(228.494	)		(12.361	)		(24	)		(528	)		(15.154	)
Rio Doce Manganése Norway AS		100,00		100,00		62.392		7.674		65.512		64.232		15.044		56.302			82.403			(71.522	)		(17.026	)		—			—			(6.145	)
Rio Doce Manganês S.A.		100,00		100,00		460.975		211.527		393.602		283.022		187.684		595.398			302.593			(263.809	)		(74.191	)		(13.922	)		10.814			(38.515	)
Salobo Metais S.A.		100,00		100,00		1.558		—		851.275		340		576.358		276.135			—			—			—			—			—			—
TVV — Terminal de Vila Velha S.A. (c)		100,00		99,89		38.448		7.180		55.382		22.769		8.269		69.972			56.537			(42.082	)		(1.515	)		—			(4.205	)		8.735
Urucum Mineração S.A.		100,00		100,00		90.459		17.727		70.292		25.177		100.704		52.597			65.032			(36.186	)		(16.164	)		(3.159	)		(3.943	)		5.580
Vale Overseas Ltd.		100,00		100,00		153.094		4.524.580		—		153.093		4.524.580		1			—			—			—			—			—			—

Jointly-controlled companies (a)
California Steel Industries, Inc.		50,00		50,00		993.000		5.060		510.565		361.334		324.644		822.647			1.461.484			(1.174.002	)		(100.720	)		—			(100.503	)		86.259
Companhia Coreano-Brasileira de Pelotização — KOBRASCO (c)		50,00		50,00		119.804		42.417		242.270		171.633		78.984		153.874			390.305			(299.337	)		4.559			32			(33.394	)		62.165
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (c)		50,89		51,00		239.967		45.855		73.584		170.157		47.682		141.567			315.935			(254.921	)		(14.147	)		—			(17.168	)		29.699
Companhia Ítalo-Brasileira de Pelotização - ITABRASCO (c)		50,90		51,00		196.751		57.364		74.009		134.387		65.609		128.128			300.658			(248.533	)		(10.145	)		—			(15.554	)		26.426
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (c)		51,00		51,11		278.165		86.603		124.619		311.095		29.674		148.618			573.082			(458.367	)		(11.068	)		—			(40.606	)		63.041
Gulf Industrial Investment Co.-GIIC (e)		—		—		293.777		10.659		114.451		65.196		20.892		332.799			226.900			(134.188	)		(48.894	)		—			—			43.818
Minas da Serra Geral S.A. — MSG (c)		50,00		50,00		21.987		14.165		86.553		2.467		23.187		97.051			12.303			(5.378	)		(3.501	)		76			(1.406	)		2.094
Mineração Rio do Norte S.A. (c)		40,00		40,00		136.093		495.455		952.329		630.344		231.458		722.075			418.817			(249.658	)		3.397			(6.341	)		(23.111	)		143.104
MRS Logística S.A. (c)		40,45		37,23		681.867		295.004		1.267.455		731.283		670.930		842.113			885.406			(492.228	)		(69.013	)		(825	)		(110.444	)		212.896
Samarco Mineração S.A. (c)		50,00		50,00		757.978		129.424		1.572.801		1.399.605		161.561		899.037			1.133.523			(390.071	)		(149.175	)		4.526			(99.543	)		499.260
Valesul Alumínio S.A.		54,51		54,51		206.595		67.356		119.494		57.118		31.860		304.467			276.550			(204.856	)		(14.438	)		5.487			(12.651	)		50.092
Baovale Mineração S. A. (c)		50,00		100,00		36.254		—		51.472		1.114		—		86.612			14.719			(2.174	)		(17.534	)		—			(1.650	)		(6.639	)
Notes:

Notes:

(a)		The amounts above correspond to totals presented in the quarterly information of these companies on June 30, 2006 adjusted and unaudited;

(b)		The quarterly information of Caemi are consolidated and include R$124,746 of minority interests. Interest beginning on 03/31/06 (note 5.5);

(c)		Dividends received during the period: Baovale R$963, Belém R$19,818, Caemi R$334,238, Docenave R$70,134, Hispanobrás R$29,950, Itabrasco R$25,450, Kobrasco R$24,193, MRN R$10,183, MRN R$128,000, MSG R$1,480, Nibrasco R$46,713, Samarco R$54,238 and TVV R$18,787;

(d)		Previously known as Itabira Rio Doce Company Ltd. — ITACO; and

(e)		Investment sold on 05/29/06 and the last financial statement available refers to 04/06 (note 5.7).

Additional information of the main investees companies available on the CVRD website, www.cvrd.com.br, investors relations.

7- Report of the Independent Accountants on Limited Review
(Convenience Translation into English from the Original Previously Issued in Portuguese)

(REPORT OF INDEPENDENT ACCOUNTANTS ON LIMINTED REVIEW)

B — Additional Information (not reviewed)

8 — Management’s Discussion and Analysis of the Operating Results for the Year Ended June 30, 2006 and Supplemental Information

According to corporate governance best practices and with the objective of increasing the transparency of operations, CVRD presents additional information, which was reviewed by independent auditors.

As a result of the analysis some general aspects must be considered, as follows:

On 06/30/06, about 92% of the consolidated gross revenue and 30% of consolidated total cost are linked to the U.S. dollar. Consequently, fluctuations in the exchange rate variation between the two currencies have a significant impact on the operating results.

Approximately 86% of consolidated short-term and long-term loans on 06/30/06 are denominated in U.S. dollars. As a result, exchange rate fluctuations have a significant impact on the financial expenses and income.

The average Dollar rate fell 15% between periods (R$2.1927 on 06/30/06 against R$2.5727 in 06/30/05), partially offset by price increases, and the end rate fell 8% (R$2.1643 in 06/30/06 against R$2.3504 in 06/30/05).

In 2006, iron ore prices increased by 19% and pellets prices decreased by 3%.

The consolidated Trade Balance was:


	In US$ million
	Quarter
	2Q/06			1Q/06			2Q/05			06/30/06			06/30/05
Exports		2,543			2,282			1,951			4,825			3,287
Imports		(221	)		(228	)		(134	)		(449	)		(375	)

		2,322			2,054			1,817			4,376			2,912

8.1- Comments on Consolidated Operating Results

8.1.1- Gross revenue


	In thousands of metric tons (except railroad transportation)										In thousands of reais
	Quarter						Accumulated				Quarter						Accumulated
	2Q/06		1Q/06		2Q/05		06/30/06		06/30/05		2Q/06		1Q/06		2Q/05		06/30/06		06/30/05
Iron ore		59,703		54,860		52,969		114,563		102,128		5,129,829		4,146,849		5,072,201		9,276,678		7,825,608
Pellets (*)		7,438		7,767		8,748		15,205		18,473		1,224,643		1,351,640		1,955,682		2,576,283		3,143,813

		67,141		62,627		61,717		129,768		120,601		6,354,472		5,498,489		7,027,883		11,852,961		10,969,421

Manganese		198		149		194		347		392		25,581		24,869		62,013		50,450		125,368
Ferroalloys		144		126		151		270		287		274,665		231,493		380,969		506,158		815,853

												300,246		256,362		442,982		556,608		941,221

Copper		105		70		105		175		190		447,328		241,738		228,570		689,066		428,550
Potash		121		103		129		224		267		49,377		48,888		75,506		98,265		155,879
Kaolin		305		321		303		626		583		100,151		106,327		110,955		206,478		215,531

												596,856		396,953		415,031		993,809		799,960

Railroad transportation (millions of TKU) (**)		10,374		8,335		10,019		18,709		18,352		688,756		534,837		630,946		1,223,593		1,136,458
Port services		7,781		6,189		8,280		13,970		14,593		127,014		105,654		122,875		232,668		237,250
Boat services		—		—		—		—		—		12,670		12,915		16,164		25,585		32,214
Maritime transportation		—		—		—		—		—		67,528		50,238		77,982		117,766		166,508

												895,968		703,644		847,967		1,599,612		1,572,430

Aluminum		125		124		123		249		245		736,242		651,097		582,268		1,387,339		1,193,490
Alumina		867		490		367		1,357		831		743,806		336,068		237,726		1,079,874		596,429
Bauxite		1,056		1,108		1,401		2,164		2,634		64,248		65,387		108,176		129,635		178,219

												1,544,296		1,052,552		928,170		2,596,848		1,968,138

Steel		—		—		—		—		—		381,832		348,909		378,697		730,741		830,850
Pig iron		71		—		—		71		—		42,769		—		—		42,769		—
Coal		—		46		—		46		—		—		9,054		—		9,054		—
Other products and services		—		—		—		—		—		14,226		15,161		10,718		29,387		21,791

												10,130,665		8,281,124		10,051,448		18,411,789		17,103,811


(*)		Includes revenues derived from services provided to pelletizing join ventures in the amounts of R$16,799, R$17,891, R$12,689, R$34,690 and R$33,902 referring to the 2Q/06, 1Q/06, 2Q/05, 1H/06 and 1H/05, respectively.

(**)		The Company carried through its railroad system 7,962, 6,170, 7,755, 14,132 and 13,764 million of TKUs of general cargo and 2,412, 2,165, 2,264, 4,577 and 4,588 million of TKUs of iron ore for third parties in 2Q/06, 1Q/06, 2Q/05, 1H/06 and 1H/05, respectively.

Sales volume and revenues by products and services:

The 8% gross revenue increase, from R$17,103,811 to R$18,411,789 was due to:

	•		Reference price increase of 19% for iron ore and decreased 3% for pellets;

	•		Increase of copper prices;

	•		Increase of iron ore volumes sold; and

	•		Beginning of the sale of pig iron and coal in 2006.

The above effects were partially offset by:

	•		The devaluation of the average dollar compared with the real was 15%; and

	•		Decrease in ferroalloys prices (due to increase of offer began by the end of 2004) and the decline of manganese volume sold.

Gross consolidated revenue by segment


							Holdings				Quarter												Acumulated
			Non -
	Ferrous		Ferrous
	Minerals		Minerals		Logistics		Aluminum		Other		2Q/06		%		1Q/06		%		2Q/05		%		06/30/06		%		06/30/05		%
External market
Americas, except United States		421,898		168		16,574		217,350		—		655,990		6		566,971		7		748,101		7		1,222,961		7		1,266,359		7
United States		207,752		5,545		—		33,212		424,601		671,110		7		525,912		6		715,247		7		1,197,022		7		1,458,636		9
Germany		627,634		87,168		—		1,263		—		716,065		7		616,179		7		876,238		9		1,332,244		7		1,356,345		8
France		264,927		12,039		—		—		—		276,966		3		221,922		3		373,614		4		498,888		3		579,402		3
England		191,105		494		—		5,983		—		197,582		2		165,779		2		162,813		2		363,361		2		310,819		2
Europe, except for Germany, France and England		807,079		144,918		—		550,734		—
												1,502,731		15		1,171,010		14		1,613,854		16		2,673,741		15		2,608,079		15
Middle East/Africa/Oceania		429,327		989		—		176,288		—		606,604		6		412,456		5		721,516		7		1,019,060		6		1,057,190		6
China		1,702,011		11,772		12,102		124,272		—		1,850,157		18		1,494,737		18		1,128,828		11		3,344,894		18		1,965,052		11
South Korea		170,674		1,389		—		—		—		172,063		2		293,866		4		189,524		2		465,929		3		377,230		2
Japan		537,819		16,139		—		309,762		—		863,720		9		836,807		10		841,129		8		1,700,527		9		1,438,326		8
Ásia, other than China, South		279,600		243,656		—		—		—
Korea and Japan												523,256		5		214,642		3		358,044		4		737,898		4		598,772		4

		5,639,826		524,277		28,676		1,418,864		424,601		8,036,244		80		6,520,281		79		7,728,908		77		14,556,525		81		13,016,210		75
Brazil		1,042,630		72,579		852,612		126,589		11		2,094,421		20		1,760,843		21		2,322,540		23		3,855,264		19		4,087,601		25

Total		6,682,456		596,856		881,288		1,545,453		424,612		10,130,665		100		8,281,124		100		10,051,448		100		18,411,789		100		17,103,811		100

8.1.2 — Cost of products and services

By nature


	Denominated in						Quarter						Accumulated
	R$			US$			2Q/06		1Q/06		2Q/05		06/30/06		06/30/05
Personnel		373,324			30,616			403,940		372,415		340,120		776,355		654,291
Material		634,157			178,901			813,058		711,774		791,828		1,524,832		1,506,849
Oil and gas		398,231			132,672			530,903		456,295		446,398		987,198		852,907
Outsourced services		709,243			221,470			930,713		865,001		794,865		1,795,714		1,553,027
Energy		326,236			12,003			338,239		303,779		371,472		642,018		689,017
Raw Material		19,603			534,188			553,791		523,838		569,851		1,077,629		1,162,855
Depreciation and depletion		378,198			13,663			391,861		367,628		361,793		759,489		708,526
Amortization of goodwill		94,090			—			94,090		91,987		96,095		186,077		192,190
Others		128,986			165,141			294,127		251,993		238,238		546,120		475,977

Total		3,062,068			1,288,654			4,350,722		3,944,710		4,010,660		8,295,432		7,795,639

		70	%		30	%

The 6% increase in the cost of products and services (R$8,295,432 on 06/30/06 against R$7,795,639 on 06/30/05) is due to increase in sales volumes and changes in the prices of materials, oil, energy and services which comprise production cost during the period.

8.1.3 — Selling expenses and administrative expenses

Selling expenses increased by 21%, from R$195,663 on 06/30/05 to R$236,048 on 06/30/06. Administrative expenses increased by 26% from R$565,141 on 06/30/05 to R$711,541 on 06/30/06, basically due to personnel agreements and expenses with depreciation.

8.1.4 — Research and development

Research and development increased by 56%, from R$242,575 on 06/30/05 to R$378,088 on 06/30/06, reflecting CVRD expansion plan to diversify production and expansion of production to meet world demand.

8.1.5 — Other operating expenses

Other operating expenses increased by R$24,089, from R$340,638 on 06/30/05 to R$364,727 on 06/30/06.

8.1.6 — Net financial results

The net financial result had an impact of R$532,883 (expense of R$725,459 on 06/30/06 compared to expense of R$192,576 on 06/30/05) due to exchange rate variation effect over the foreign debt, that was partially compensated with the exchange variation on cash equivalents.

8.1.7 — Income tax and social contribution

Income tax and social contribution reflect an expense of R$1,178,436 on 06/30/06 compared with an expense of R$1,451,423 on 06/30/05, mainly caused by decrease of taxable income.

8.1.8 — Cash generation

The operating cash generation measured by EBITDA (earnings before financial results, results of equity investments, interest, income tax and depreciation, amortization and depletion, more dividends received) was R$8,906,751 on 06/30/06, against R$8,182,997 on 06/30/05, an increase of 9%.

EBITDA is not a BR GAAP measure and does not represent cash flow for the periods presented and should not be considered as an alternative to net income (loss), as an indicator of our operating performance or as an alternative to cash flow as a source of liquidity.

Our definition of EBITDA may not be comparable with EBITDA as defined by other companies.

Although EBITDA, as defined above, it does not provide a US GAAP measure of operating cash flows, our management uses it to measure our operating performance and it is commonly used by financial analysts in evaluating our business.

EBITDA


	Quarter									Accumulated
	2Q/06			1Q/06			2Q/05			06/30/06			06/30/05
Operating profit — EBIT		4,519,423			3,239,886			4,756,473			7,759,309			7,132,372
Depreciation / amortization of goodwill		540,013			512,316			488,208			1,052,329			961,703

		5,059,436			3,752,202			5,244,681			8,811,638			8,094,075
Dividends received		93,786			1,327			88,922			95,113			88,922

EBITDA		5,153,222			3,753,529			5,333,603			8,906,751			8,182,997
Depreciation / amortization of goodwill		(540,013	)		(512,316	)		(488,208	)		(1,052,329	)		(961,703	)
Dividends received		(93,786	)		(1,327	)		(88,922	)		(95,113	)		(88,922	)
Equity Results		(57,280	)		16,410			76,889			(40,870	)		150,408
Sale of assets		736,866			19,326			—			756,192			—
Financial results, net		(466,405	)		(259,054	)		81,871			(725,459	)		(192,576	)
Income tax and social contribution		(593,102	)		(585,334	)		(1,060,879	)		(1,178,436	)		(1,451,423	)
Minority interests		(234,405	)		(246,672	)		(375,069	)		(481,077	)		(544,306	)

Net income		3,905,097			2,184,562			3,479,285			6,089,659			5,094,475

Current liabilities
Current portion of long-term debt — unrelated parties		2,514,229			2,746,618			1,966,679			2,514,229			1,966,679
Short-term debt		652,389			615,994			1,165,071			652,389			1,165,071
Related parties		73,040			62,457			84,038			73,040			84,038

		3,239,658			3,425,069			3,215,788			3,239,658			3,215,788

Long-term liabilities
Long-term debt — unrelated parties		10,576,743			10,768,483			7,667,145			10,576,743			7,667,145
Related parties		2,847			3,106			33,973			2,847			33,973

		10,579,590			10,771,589			7,701,118			10,579,590			7,701,118

Gross debt		13,819,248			14,196,658			10,916,906			13,819,248			10,916,906

Interest paid		172,247			227,018			148,068			399,265			375,736
Stockholders’ equity		35,578,904			31,727,604			23,262,421			35,578,904			23,262,421
EBITDA (LTM) / Interest paid (LTM)		22.98			23.98			16.52			22.98			16.52
EBITDA Margin (LTM)		49	%		50	%		47	%		49	%		47	%
EBIT Margin (LTM)		43	%		44	%		42	%		43	%		42	%
Gross debt / EBITDA (LTM)		0.79			0.81			0.75			0.79			0.75
Gross debt / Equity Capitalization		28			31			32			28			32

Consolidated EBITDA by segment


	EBITDA
	Quarter									Accumulated
Segments	2Q/06			1Q/06			2Q/05			06/30/06			06/30/05
Ferrous minerals		3,656,493			2,939,026			4,445,461			6,595,519			6,381,427
Non-ferrous minerals		339,293			116,889			82,527			456,182			186,266
Logistics		333,346			234,764			364,264			568,110			656,297
Holdings
Aluminum		771,774			436,262			348,276			1,208,036			802,260
Steel		135,247			66,651			119,974			201,898			183,646
Others		(82,931	)		(40,063	)		(26,899	)		(122,994	)		(26,899	)
		5,153,222			3,753,529			5,333,603			8,906,751			8,182,997

8.2 — Comments on the Parent Company Results

8.2.1 — Gross revenue

The 2% increase in gross revenue (R$8,752,856 on 06/30/06 against R$8,552,428 on 06/30/05) is the result of the 7% increase in sales of iron ore and also for the increase of prices. This effect was compensated in part by the 15% average appreciation of the real against the U. S. dollar. The majority part of revenues is linked to dollar.

8.2.2 — Cost of products and services

Cost of products and services sold to 06/30/06 was R$4,882,884 on 06/30/06 against R$4,503,305 on 06/30/05 representing an 8% increase. The main factors are, higher volumes sold of products in general, contracts readjustments and the increase of assets reflecting increase of expenses related to depreciation.

8.2.3 — Gross margin

The gross margin increased by 3.2% (41.0% on 06/30/06 against 44.2% on 06/30/05) mainly due to the devaluation of the dollar against the real, since the majority of revenues is linked to dollar.

8.2.4 — Results of shareholdings by business area

The numbers below do not necessarily reflect the individual results of each company, but rather the amounts effectively applicable to the business area.


Business Area	06/30/06			06/30/05
Ferrous Minerals
. Iron ore		3,875,243			1,755,274
. Pellets		380,195			496,908
. Manganese and ferroalloys		(4,382	)		170,126
Non-Ferrous Minerals		(22,417	)		(167	)
Logistics		91,970			131,149
Holdings
. Steel		187,100			276,804
. Aluminum		553,818			457,659
. Research and development		(121,968	)		(26,816	)
Others		11,060			300

Gain on investments accounted for by the equity method		4,950,619			3,261,237

Provision for losses		(58,095	)		(36,311	)
Amortization of goodwill		(170,197	)		(114,540	)
Exchange variation in Stockholders’ Equity of companies abroad		(611,129	)		(697,250	)

Results of equity investments		4,111,198			2,413,136

Results of equity investments are strongly affected by the exchange rate variation over debt, which had a positive impact due to the appreciation of the Real against the Dollar in the period ended in June, 2006 of 7% in comparison with a 11% decrease during the period ended in June, 2005. This effect is partially offset by the negative exchange rate variation from investments abroad.

Operationally, volumes and average selling prices increased in iron ore and aluminum areas. This increase was partially compensated by decrease in average selling prices and volume in manganese and ferroalloys, manganese and steel areas. The decrease in pellets is due to reduction of quantities sold.

The negative result of equity in others, as above, refers to expenses with subsidiaries of mineral prospection in Africa, South America and Oceania.

8.2.5 — Selling expenses and administrative expenses

Selling expenses increased by R$2,591, from R$597 on 06/30/05 to R$3,188 on 06/30/06, while administrative expenses increased by 44%, from R$284,799 on 06/30/05 to R$410,911 on 06/30/06, basically due to personnel agreement and expenses with depreciation.

8.2.6 — Research and development

Research and development increased by 34%, from R$174,887 on 06/30/05 to R$235,122 on 06/30/06, reflecting CVRD expansion plan to diversify production and expansion of production to meet world demand.

8.2.7 — Other operating expenses

Other operating expenses increased by R$67,374, from R$177,401 on 06/30/05 to R$244,775 on 06/30/06.

8.2.8 — Net financial results

The net financial results on 06/30/06 had an impact of R$489,373 (expense of R$33,925 on 06/30/06 compared to expense of R$455,448 expense on 06/30/05) basically due to exchange rate variation effect of the Real against the dollar over the foreign debt.

8.2.9 — Income tax and social contribution

Income tax and social contribution reflect an expense of R$503,273 on 06/30/06 compared with an expense of R$698,760 on 06/30/05, mainly caused by decrease of taxable income.

9- Board of Directors, Fiscal Council, Advisory Committees and Executive Officers

Board of Directors

Sérgio Ricardo Silva Rosa
Chairman

Arlindo Magno de Oliveira

Eduardo Fernando Jardim Pinto

Erik Persson

Francisco Augusto da Costa e Silva

Hiroshi Tada

Julio Sérgio Gomes de Almeida

Jorge Luiz Pacheco

Mário da Silveira Teixeira Júnior

Oscar Augusto de Camargo Filho

Renato da Cruz Gomes

Advisory Committees of the
Board of Directors

Controlling Committee

Antonio José de Figueiredo Ferreira

Inácio Clemente da Silva

Paulo Roberto Ferreira de Medeiros

Executive Development Committee

Arlindo Magno de Oliveira

João Moisés de Oliveira

Olga Nietta Loffredi

Oscar Augusto de Camargo Filho

Strategic Committee

Roger Agnelli

Gabriel Stoliar

Demian Fiocca

Mário da Silveira Teixeira Júnior

Oscar Augusto de Camargo Filho

Sérgio Ricardo Silva Rosa

Finance Committee

Fábio de Oliveira Barbosa

Rômulo de Mello Dias

Wanderlei Viçoso Fagundes

Ivan Luiz Modesto Schara

Governance and Sustainability Committee

Renato da Cruz Gomes

Ricardo Simonsen

Ricardo Carvalho Giambroni

Fiscal Council

Marcelo Amaral Moraes
Chairman

Anibal Moreira dos Santos

Bernard Appy

José Bernardo de Medeiros Neto

Executive Officers

Roger Agnelli
Chief Executive Officer

Murilo de Oliveira Ferreira
Executive Officer for Equity Holdings and
Business Development

José Carlos Martins
Executive Officer for Ferrous Minerals

Carla Grasso
Executive Officer for Human Resources and Corporate Services

José Lancaster
Executive Officer for Non-Ferrous Minerals

Fábio de Oliveira Barbosa
Chief Financial Officer and Investor Relations

Gabriel Stoliar
Executive Officer for Planning

Guilherme Rodolfo Laager
Executive Officer for Logistics

Tito Botelho Martins
Executive Officer for Corporate Affairs

Otto de Souza Marques Júnior
Chief Officer of Control Department

Marcus Vinícius Dias Severini
Chief Accountant
CRC-RJ 093892/O-3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	COMPANHIA VALE DO RIO DOCE (Registrant)
Date: August 4, 2006	By:	/s/ Fabio de Oliveira Barbosa
		Fabio de Oliveira Barbosa
		Chief Financial Officer