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

March 2007

Companhia Vale do Rio Doce

Avenida Graça Aranha, No. 26
20030-900 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

USGAAP Financial Pages

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2006 and 2005

Consolidated Statements of Income for the three-month periods ended December 31, 2006, September 30, 2006 and December 31, 2005 and for the years ended December 31, 2006, 2005 and 2004

Consolidated Statements of Cash Flows for the three-month periods ended December 31, 2006, September 30, 2006 and December 31, 2005 and for the years ended December 31, 2006, 2005 and 2004

Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended December 31, 2006, September 30, 2006 and December 31, 2005 and for the years ended December 31, 2006, 2005 and 2004

Notes to the Consolidated Financial Information

Supplemental Financial Information

Signature Page

Report of Independent Registered
Public Accounting Firm

To the Board of Directors and Stockholders
Companhia Vale do Rio Doce

We have completed an integrated audit of Companhia Vale do Rio Doce’s 2006 consolidated financial statements and of its internal control over financial reporting as of December 31, 2006 and audits of its 2005 and 2004 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of changes in stockholders’ equity and of cash flows present fairly, in all material respects, the financial position of Companhia Vale do Rio Doce and its subsidiaries (“the Company”) at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 17, to the consolidated financial statements, the Company changed the manner in which it accounts for defined benefit pension and other retirement plans in 2006.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in the accompanying Management’s Report on internal control over financial reporting, that the Company maintained effective internal control over financial reporting as of December 31, 2006 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in

F - 1

accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
March 7, 2007

F - 2

Consolidated Balance Sheets
Expressed in millions of United States dollars


	As of December 31,
	2006		2005
Assets
Current assets
Cash and cash equivalents		4,448		1,041
Accounts receivable
Related parties		675		159
Unrelated parties		2,929		1,490
Loans and advances to related parties		40		22
Inventories		3,493		1,142
Deferred income tax		410		186
Recoverable taxes		414		362
Others		531		373

		12,940		4,775


Property, plant and equipment, net		38,007		14,166
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments		2,353		1,672
Other assets
Goodwill on acquisition of subsidiaries		4,484		548
Loans and advances
Related parties		5		4
Unrelated parties		109		61
Prepaid pension cost		977		308
Prepaid expenses		360		89
Judicial deposits		852		568
Advances to suppliers — energy		443		311
Recoverable taxes		305		110
Others		119		32

		7,654		2,031

TOTAL		60,954		22,644

The accompanying notes are an integral part of these consolidated financial statements.

F - 4

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

(Continued)


	As of December 31,
	2006			2005
Liabilities and stockholders’ equity
Current liabilities
Suppliers		2,382			1,110
Payroll and related charges		451			229
Minimum annual dividends attributed to stockholders		1,494			—
Current portion of long-term debt — unrelated parties		711			1,218
Short-term debt		723			15
Loans from related parties		25			62
Provision for income taxes		817			244
Taxes payable		119			53
Employees postretirement benefits		107			30
Others		483			364

		7,312			3,325

Long-term liabilities
Employees post-retirement benefits		1,841			241
Long-term debt — unrelated parties		21,122			3,714
Provisions for contingencies (Note 18 (c))		1,641			1,286
Unrealized loss on derivative instruments		733			260
Deferred income tax		4,527			2
Provisions for asset retirement obligations		676			225
Others		618			396

		31,158			6,124

Minority interests		2,811			1,218


Commitments and contingencies (Note 18)

Stockholders’ equity
Preferred class A stock - 3,600,000,000 no-par-value shares authorized and 959,758,200 issued		4,702			2,150
Common stock - 1,800,000,000 no-par-value shares authorized and 1,499,898,858 issued		3,806			3,806
Treasury stock - 15,172,516 preferred and 28,291,020 common shares		(389	)		(88	)
Additional paid-in capital		498			498
Other cumulative comprehensive deficit		(1,007	)		(2,729	)
Undistributed retained earnings		9,555			4,357
Unappropriated retained earnings		2,508			3,983

		19,673			11,977

TOTAL		60,954			22,644

The accompanying notes are an integral part of these consolidated financial statements.

F - 5

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


	Three-month periods ended (Unaudited)									Year ended December 31,
	December 31,			September 30,			December 31,
	2006			2006			2005			2006			2005			2004
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		6,451			4,014			3,055			16,511			10,767			6,333
Revenues from logistic services		342			383			309			1,376			1,216			877
Aluminum products		674			638			377			2,381			1,408			1,250
Other products and services		27			31			5			95			14			19

		7,494			5,066			3,746			20,363			13,405			8,479
Taxes on revenues		(181	)		(214	)		(148	)		(712	)		(613	)		(413	)

Net operating revenues		7,313			4,852			3,598			19,651			12,792			8,066

Operating costs and expenses
Cost of ores and metals sold		(3,760	)		(1,580	)		(1,372	)		(7,946	)		(4,620	)		(2,881	)
Cost of logistic services		(204	)		(203	)		(205	)		(777	)		(705	)		(513	)
Cost of aluminum products		(392	)		(382	)		(250	)		(1,355	)		(893	)		(674	)
Others		(31	)		(16	)		(2	)		(69	)		(11	)		(13	)

		(4,387	)		(2,181	)		(1,829	)		(10,147	)		(6,229	)		(4,081	)
Selling, general and administrative expenses		(269	)		(167	)		(175	)		(816	)		(583	)		(452	)
Research and development		(175	)		(134	)		(85	)		(481	)		(277	)		(153	)
Others		(302	)		(122	)		(48	)		(570	)		(271	)		(257	)

		(5,133	)		(2,604	)		(2,137	)		(12,014	)		(7,360	)		(4,943	)

Operating income		2,180			2,248			1,461			7,637			5,432			3,123

Non-operating income (expenses)
Financial income		181			59			31			327			123			82
Financial expenses		(708	)		(172	)		(201	)		(1,338	)		(560	)		(671	)
Foreign exchange and monetary gains (losses), net		204			38			(166	)		529			299			65
Gain on sale of investments		311			16			—			674			126			404

		(12	)		(59	)		(336	)		192			(12	)		(120	)

Income before income taxes, equity results and minority interests		2,168			2,189			1,125			7,829			5,420			3,003

Income taxes
Current		(314	)		(419	)		(92	)		(1,134	)		(754	)		(433	)
Deferred		(237	)		71			36			(298	)		(126	)		(316	)

		(551	)		(348	)		(56	)		(1,432	)		(880	)		(749	)

Equity in results of affiliates and joint ventures		183			187			213			710			760			542
Minority interests		(227	)		(124	)		(86	)		(579	)		(459	)		(223	)

Net income		1,573			1,904			1,196			6,528			4,841			2,573

Basic and diluted earnings per Preferred Class A Share		0.65			0.79			0.52			2.69			2.10			1.12
Basic and diluted earnings per Common Share		0.65			0.79			0.52			2.69			2.10			1.12
Weighted average number of shares outstanding (thousands of shares)
Common shares		1,471,608			1,471,608			1,471,608			1,471,608			1,471,608			1,471,608
Preferred Class A shares		944,586			952,346			831,432			954,426			831,432			831,432

The accompanying notes are an integral part of these consolidated financial statements.

F - 6

Consolidated Statements of Cash Flows
Expressed in millions of United States dollars


	Three-month periods ended (unaudited)									Year ended December 31,
	December 31,			September 30,			December 31,
	2006			2006			2005			2006			2005			2004
Cash flows from operating activities:
Net income		1,573			1,904			1,196			6,528			4,841			2,573

Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		379			232			183			997			619			399
Dividends received		64			242			136			516			489			200
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(183	)		(187	)		(213	)		(710	)		(760	)		(542	)
Deferred income taxes		237			(71	)		(36	)		298			126			316
Provisions for contingencies		(7	)		23			18			48			27			137
Loss on sale of property, plant and equipment		57			11			—			106			26			34
Gain on sale of investments		(311	)		(16	)		—			(674	)		(126	)		(404	)
Foreign exchange and monetary losses (gains)		(576	)		25			235			(917	)		(237	)		112
Unrealized derivative losses (gains), net		122			(75	)		126			143			101			134
Minority interests		227			124			86			579			459			223
Interest payable (receivable), net		79			(55	)		14			36			62			93
Others		(116	)		(10	)		(62	)		(141	)		(159	)		(123	)
Decrease (increase) in assets:
Accounts receivable		37			(291	)		(133	)		(438	)		(416	)		(98	)
Inventories		865			34			(24	)		859			(138	)		(216	)
Others		124			10			63			(12	)		(639	)		(78	)
Increase (decrease) in liabilities:
Suppliers		189			28			113			(47	)		279			230
Payroll and related charges		(72	)		47			40			(86	)		40			28
Income taxes		(25	)		112			(229	)		84			413			348
Others		180			88			3			63			154			105

Net cash provided by operating activities		2,843			2,175			1,516			7,232			5,161			3,471

Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions		(10	)		(2	)		1			(18	)		(27	)		(33	)
Repayments		—			8			62			11			115			51
Others		(49	)		20			—			(16	)		—			18
Guarantees and deposits		(17	)		(26	)		(7	)		(78	)		(59	)		(111	)
Additions to investments		(46	)		(57	)		(12	)		(107	)		(103	)		(34	)
Additions to property, plant and equipment		(1,781	)		(834	)		(1,237	)		(4,431	)		(3,977	)		(2,022	)
Proceeds from disposal of investments		405			—			—			837			126			579
Proceeds from disposals of property, plant and equipment		—			11			12			49			16			11
Cash used to acquire subsidiaries, net cash of acquired		(13,195	)		(6	)		(737	)		(13,201	)		(737	)		—

Net cash used in investing activities		(14,693	)		(886	)		(1,918	)		(16,954	)		(4,646	)		(1,541	)

Cash flows from financing activities:
Short-term debt, additions		1,151			1,378			229			4,912			763			379
Short-term debt, repayments		(670	)		(1,165	)		(358	)		(4,233	)		(849	)		(439	)
Loans
Related parties
Additions		—			—			3			10			10			21
Repayments		(22	)		(18	)		—			(50	)		(43	)		(27	)
Issuances of long-term debt
Related parties		14			—			—			14			15			20
Others		20,630			12			1,386			21,993			1,757			1,031
Stock treasury		—			(276	)		—			(301	)		—			—
Repayments of long-term debt
Related parties		—			—			—			—			—			(3	)
Others		(6,908	)		(206	)		(140	)		(7,635	)		(884	)		(1,283	)
Interest attributed to stockholders		(650	)		—			(800	)		(1,300	)		(1,300	)		(787	)
Dividends to minority interest		(9	)		(37	)		—			(65	)		—			—

Net cash (used in) provided by financing activities		13,536			(312	)		320			13,345			(531	)		(1,088	)

Increase (decrease) in cash and cash equivalents		1,686			977			(82	)		3,623			(16	)		842
Effect of exchange rate changes on cash and cash equivalents		(129	)		20			(112	)		(216	)		(192	)		(204	)
Initial cash in new consolidated subsidiary		—			—			—			—			—			26
Cash and cash equivalents, beginning of period		2,891			1,894			1,235			1,041			1,249			585

Cash and cash equivalents, end of period		4,448			2,891			1,041			4,448			1,041			1,249

Cash paid during the period for:
Interest on short-term debt		(1	)		(2	)		(8	)		(9	)		(9	)		(5	)
Interest on long-term debt		(252	)		(146	)		(55	)		(565	)		(243	)		(295	)
Income tax		(121	)		(247	)		(29	)		(586	)		(481	)		(108	)
Non-cash transactions
Income tax paid with credits		(25	)		(56	)		(65	)		(151	)		(161	)		(100	)
Interest capitalized		(30	)		(34	)		(52	)		(126	)		(86	)		(31	)
Issuance of preferred stock for the acquisition of Caemi, net of cash acquired (Note 6)		—			—			—			(2,552	)		—			—

The accompanying notes are an integral part of these consolidated financial statements.

F - 7

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


	Three-month periods ended (unaudited)									Year ended December 31,
	December 31,			September 30,			December 31,
	2006			2005			2006			2006			2005			2004
Preferred class A stock (including six special shares)
Beginning of the period		4,702			4,702			2,150			2,150			1,176			1,055
Capital increase (Note 6)		—			—			—			2,552			—			—
Transfer from appropriated retained earnings		—			—			—			—			974			121

End of the period		4,702			4,702			2,150			4,702			2,150			1,176

Common stock
Beginning of the period		3,806			3,806			3,806			3,806			2,121			1,902
Transfer from appropriated retained earnings		—			—			—			—			1,685			219

End of the period		3,806			3,806			3,806			3,806			3,806			2,121

Treasury stock
Beginning of the period		(389	)		(113	)		(88	)		(88	)		(88	)		(88	)
Acquisitions		—			(276	)		—			(301	)		—			—

End of the period		(389	)		(389	)		(88	)		(389	)		(88	)		(88	)

Additional paid-in capital
Beginning and end of the period		498			498			498			498			498			498

Other cumulative comprehensive deficit
Cumulative translation adjustments Beginning of the period		(1,922	)		(1,888	)		(2,269	)		(2,856	)		(3,869	)		(4,449	)
Change in the period		291			(34	)		(587	)		1,225			1,013			580

End of the period		(1,631	)		(1,922	)		(2,856	)		(1,631	)		(2,856	)		(3,869	)

Unrealized gain on available-for-sale securities
Beginning of the period		130			112			164			127			95			74
Change in the period		141			18			(37	)		144			32			21

End of the period		271			130			127			271			127			95

Superavit (deficit) accrued pension plan
Change in the period		460			—			—			460			—			—
Initial recognition effect		(107	)		—			—			(107	)		—			—

End of the period		353			—			—			353			—			—

Total other cumulative comprehensive deficit		(1,007	)		(1,792	)		(2,729	)		(1,007	)		(2,729	)		(3,774	)

Undistributed retained earnings
Beginning of the period		4,706			4,705			1,936			4,357			4,143			3,035
Transfer from unappropriated retained earnings		4,849			1			2,421			5,198			2,873			1,448
Transfer to capital stock		—			—			—			—			(2,659	)		(340	)

End of the period		9,555			4,706			4,357			9,555			4,357			4,143

Unappropriated retained earnings
Beginning of the period		7,349			5,386			6,008			3,983			3,315			2,857
Net income		1,573			1,904			1,196			6,528			4,841			2,573
Dividends and interest attributed to stockholders
Preferred class A stock		(585	)		—			(289	)		(1,098	)		(469	)		(241	)
Common stock		(923	)		—			(511	)		(1,710	)		(831	)		(426	)
Appropriation to reserves		(4,906	)		59			(2,421	)		(5,195	)		(2,873	)		(1,448	)

End of the period		2,508			7,349			3,983			2,508			3,983			3,315

Total stockholders’ equity		19,673			18,880			11,977			19,673			11,977			7,391

Comprehensive income is comprised as follows:
Net income		1,573			1,904			1,196			6,528			4,841			2,573
Cumulative translation adjustments		291			(34	)		(587	)		1,225			1,013			580
Unrealized gain (loss) on investments accounted by cost method		—			18			(37	)		—			32			21
Unrealized gain (loss) on available-for-sale securities		141			—			—			144			—			—
Superavit (deficit) accrued pension plan		(107	)		—			—			(107	)		—			—

Total comprehensive income		1,898			1,888			572			7,790			5,886			3,174


Taxes effect on other comprehensive income allocated to each component
Unrealized gain on investments available-for-sales
Tax (expense) benefit		(124	)		—			—			(124	)		—			—
Net effect		271			—			—			271			—			—
Superavit (deficit) accrued pension plan
Tax (expense) benefit		(187	)		—			—			(187	)		—			—
Net effect		353			—			—			353			—			—
Preferred class A stock (including six special shares) (1)		959,758,200			959,758,200			831,455,478			959,758,200			831,455,478			831,455,478
Common stock		1,499,898,858			1,499,898,858			1,499,898,858			1,499,898,858			1,499,898,858			1,499,898,858
Treasury stock (2)
Beginning of the period		(43,463,536	)		(29,595,036	)		(28,314,626	)		(28,313,936	)		(28,314,922	)		(28,316,118	)
Acquisitions		—			(13,868,500	)		—			(15,149,600	)		—			—
Sales		—			—			690			—			986			1,196

End of the period		(43,463,536	)		(43,463,536	)		(28,313,936	)		(43,463,536	)		(28,313,936	)		(28,314,922	)

		2,416,193,522			2,416,193,522			2,303,040,400			2,416,193,522			2,303,040,400			2,303,039,414

Dividends and interest attributed to stockholders (per share) Preferred class A stock (including six special shares)		0.61			—			0.70			1.16			0.57			0.29
Common stock		0.61			—			0.70			1.16			0.57			0.29


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

(2)		As of December 31, 2006, 28,291,020 common shares and 15,172,516 preferred shares were held in treasury in the amount of US$ 389. The 28,291,020 common shares are provided as collateral to secure a loan of our subsidiary Alunorte. On December 31, 2006 the market value of 3,617,821 of these shares would be sufficient to offset the balance of the debt.

The accompanying notes are an integral part of these consolidated financial statements.

F - 8

Notes to the Consolidated Financial Statements
Expressed in millions of United States dollars, unless otherwise stated

1		The Company and its operation

		Companhia Vale do Rio Doce (CVRD) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. Our operations are carried out through CVRD and its subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production and logistics, as well as energy, aluminum and steel activities. Further details of our operations and those of our joint ventures and affiliates are described in Note 13.

		On December 31, 2006 the main operating subsidiaries we consolidate are as follows:

% voting

Head office

Subsidiary

% ownership

capital

location

Principal activity

Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)

57.03

61,74

Brazil

Alumina

Alumínio Brasileiro S.A. — Albras (“Albras”)

51.00

51,00

Brazil

Aluminum

CADAM S.A (CADAM)

61.48

100,00

Brazil

Kaolin

CVRD International S.A. (1)

100.00

100,00

Swiss

Trading

CVRD Overseas Ltd.

100.00

100,00

Cayman Islands

Trading

Inco Limited (3)

87.73

87,73

Canada

Nickel

Ferrovia Centro-Atlântica S. A.

100.00

100,00

Brazil

Logistics

Minerações Brasileiras Reunidas S.A. — MBR

89.80

89,80

Brazil

Iron ore

Mineração Onça Puma Ltda

100.00

100,00

Brazil

Nickel

Navegação Vale do Rio Doce S.A. — DOCENAVE

100.00

100,00

Brazil

Shipping

Pará Pigmentos S.A. (“PPSA”)

82.05

85,57

Brazil

Kaolin

PT International Nickel Indonesia Tbk (“PT Inco”) (4)

61.16

61,16

Indonesia

Nickel

Rio Doce Manganês S.A.

100.00

100,00

Brazil

Manganese and Ferroalloys

Rio Doce Manganèse Europe — RDME

100.00

100,00

France

Ferroalloys

Rio Doce Manganese Norway — RDMN

100.00

100,00

Norway

Ferroalloys

Urucum Mineração S.A.

100.00

100,00

Brazil

Iron ore, Ferroalloys and Manganese

Valesul Aumínio S.A. (2)

100.00

100,00

Brazil

Aluminum


(1)		Previously known as Itabira Rio Doce Company Ltd. — ITACO

(2)		Subsidiary consolidated as from July, 2006 (Note 6 and 13)

(3)		Subsidiary consolidated as from October, 2006 (Note 7)

(4)		Through Inco Limited

2		Basis of consolidation

		All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are reported at cost plus our equity in undistributed earnings or losses. Included in this category are certain joint ventures in which we have majority ownership but, by force of shareholders’ agreements, do not have effective management control. We provide for losses on equity investments with negative stockholders’ equity where applicable (Note 13).

		We evaluate the carrying value of our listed investments relative to publicly available quoted market prices. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.

		We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a minority stockholder but with significant influence over the operating and financial policies of the investee.

		Our condensed consolidated interim financial information for the three-month periods ended

F - 9

		December 31, 2006, September 30, 2006, and December 31, 2005 is unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods.

		Our investments in hydroelectric projects are made via consortium contracts under which we have an undivided interest in assets and are liable for our proportionate share of liabilities and expenses, which is based on our proportionate share of power output. We do not have joint liability for any obligations, and all our recorded costs, income, assets and liabilities relate to the entities within our group. Since there is no separate legal entity for the project, there are no separate financial statements, income tax return, net income or shareholders’ equity. Brazilian corporate law explicitly provides that no separate legal entity exists as a result of a consortium contract, and our external legal counsel has confirmed this conclusion. So, we recognize our proportionate share of costs and our undivided interest in assets relating to hydroelectric projects described in Note 12 (c).

3		Summary of significant accounting policies

		The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to the selection of useful lives of property, plant and equipment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired in business combinations, income tax valuation allowances, employee post retirement benefits and other similar evaluations. Actual results could differ from those estimates.

(a)		Basis of presentation

		We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which differ in certain respects from the accounting practices adopted in Brazil that we use in preparing our statutory financial statements.

		For Brazilian operations the U.S. dollar amounts for the years presented have been remeasured (translated) from the Brazilian currency amounts in accordance with the criteria set forth in Statement of Financial Accounting Standards 52 — “Foreign Currency Translation” (SFAS 52).

		Prior to July 1, 1997, Brazil was considered under SFAS 52 to have a highly inflationary economy and accordingly, up to June 30, 1997, we adopted the U.S. dollar as both our functional currency and reporting currency.

		As from July 1, 1997, we concluded that the Brazilian economy had ceased to be highly inflationary and changed our functional currency from the reporting currency (U.S. dollars) to the Brazil currency (Brazilian Reais), for Brazilian operations and extensions thereof. Accordingly, we translated the U.S. dollar amounts of non-monetary assets and liabilities into Reais at the current exchange rate, and those amounts became the new accounting bases for such assets and liabilities.

		We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$2.1342 and R$2.3370 to US$1.00 or the first available exchange rate if exchange on December 31, was not available), and all accounts in the statements of income (including amounts relative to Brazil currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remesurement process is included in the cumulative translation adjustments account in stockholders’ equity.

		The net exchange transaction gain (loss) included in our statement of income was US$452, US$227 and US$79 in 2006, 2005 and 2004, respectively, included within the line “Foreign exchange and monetary gains (losses), net”.

F - 10

(b)		Business combinations

		We adopt the procedures determined by SFAS 141 — “Business Combinations” to recognize acquisitions of interests in other companies. The method of accounting used in our business combination transactions is the “purchase method”, which requires that acquirers reasonably determine the fair value of the identifiable assets and liabilities of acquired companies, individually, in order to determine the goodwill paid in the purchase to be recognized as an intangible asset. On the acquisition of assets, which include the rights to mine reserves of natural resources, the establishment of values for these assets includes the placing of fair values on purchased reserves, which are classified in the balance sheet as property, plant and equipment.

		Goodwill was amortized in a systematic manner over the periods estimated to be benefited through December 31, 2001. As required by SFAS 142 — “Goodwill and Other Intangible Assets” from January 1, 2002 goodwill resulting from the acquisitions is no longer amortized, but is tested for impairment at least annually and reduced to fair value to the extent any such impairment is identified.

(c)		Inventories

		Inventories are stated at the average cost of purchase or production, lower than replacement or realizable values. We record allowances for slow moving or obsolete inventories when considered appropriate, reflecting our periodic assessment of recoverability.

		We classify proven and probable reserve quantities attributable to stockpiled inventory as inventory and account for them as processed when they are removed from the mine. These reserve quantities are not included in the total proven and probable reserve quantities used in the units of production, depreciation, depletion and amortization calculations.

(d)		Property, plant and equipment

		Property, plant and equipment are recorded at cost, including interest cost incurred during the construction of major new facilities. We compute depreciation on the straight-line basis at annual average rates which take into consideration the useful lives of the items, such as: 3.20% for the railroads, 2.78% for buildings, 2.97% for installations and 4.95% for mining development costs and 9.89% for other equipment. Expenditures for maintenance and repairs are charged to operating costs and expenses as incurred.

		We capitalize the costs of developing major new ore bodies or expanding the capacity of operating mines and amortize these to operations on the unit-of-production method based on the total probable and proven quantity of ore to be recovered. Exploration costs are expensed. After economic viability of mining activities is established, subsequent development costs are capitalized. We capitalize mine development costs as from the time we actually begin such development.

(e)		Available-for-sale equity securities

		Equity securities classified as “available-for-sale” are recorded in accordance with SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities”. Accordingly, we exclude unrealized holding gains and losses, net of taxes, if applicable, from income and recognize them, net of tax effects, as a separate component of stockholders’ equity until realized.

(f)		Revenues and expenses

		Revenues are recognized when title has transferred to the customer or services are rendered. Revenue from exported products is recognized when such products are loaded on board the ship. Revenue from products sold in the domestic market is recognized when delivery is made to the customer. Revenue from transportation services, other than shipping operations, is recognized when the service order has been fulfilled. Shipping operations are recorded on the completed voyage basis and net revenue, costs and expenses of voyages not completed at period-end are deferred. Anticipated losses on voyages are provided when probable and can be reasonably estimated. Expenses and costs are recognized on the accrual basis.

F - 11

(g)		Asset retirement obligations

		Retirement of long-lived assets is accounted for in accordance with SFAS 143 — “Accounting for Asset Retirement Obligations”. Our retirement obligations consist primarily of costs associated with closure activities whose initial measurement is recognized as liabilities at its fair value calculated based on a present value discount rate and accreted to full value over time through charges on earnings. An asset retirement cost equivalent to the liabilities is capitalized as part of the related asset ´s carrying value and subsequently depreciated over the asset ´s useful life.

F - 12

(h)		Compensated absences

		We fully accrue the employees’ compensation liability for vacations vested during the year.

(i)		Income taxes

		In accordance with SFAS 109 — “Accounting for Income Taxes”, the deferred tax effects of tax loss carryforwards and temporary differences have been recognized in the consolidated financial statements. A valuation allowance is made when we believe that it is more likely than not that tax assets will not be fully recoverable in the future.

(j)		Statement of cash flows

		Cash flows relating to overnight financing and investment are reported net. Short-term investments that have a ready market and maturity to us, when purchased, of 90 days or less are considered cash equivalents.

(k)		Earnings per share

		Earnings per share are computed by dividing net income by the weighted average number of common and preferred shares outstanding during the period.

(l)		Interest attributed to stockholders

		As from January 1, 1996 Brazilian corporations are permitted to distribute interest attributable to stockholders’ equity. The calculation is based on the stockholders’ equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the long-term interest rate (TJLP) determined by the Brazilian Central Bank. Also, such interest may not exceed 50% of net income for the year neither 50% of retained earnings plus revenue reserves.

		The amount of interest attributed to stockholders is deductible for purposes of taxes on income. Accordingly, the benefit to us, as opposed to making a dividend payment, is a reduction in our income tax charge. Income tax is withheld from the stockholders relative to interest at the rate of 15%.

		Under Brazilian law, interest attributable to stockholders is considered as part of the annual minimum dividend (Note 16). Accordingly such distributions are treated as dividends for accounting purposes.

(m)		Derivatives and hedging activities

		We apply SFAS 133 — “Accounting for Derivative Financial Instruments and Hedging Activities”, as amended by SFAS 137, SFAS 138 and SFAS 149. Those standards require that we recognize all derivative financial instruments as either assets or liabilities on our balance sheet and measure such instruments at fair value. Changes in the fair value of derivatives are recorded in each period in current earnings or in other comprehensive income, in the latter case depending on whether a transaction is designated as an effective hedge. No contracts have been designed as an effective hedge in the years presented.

(n)		Comprehensive income

		We have disclosed comprehensive income as part of the Statement of Changes in Stockholders’ Equity, in compliance with SFAS 130 — “Reporting Comprehensive Income”. We disclose the components net of taxes and reconcile them at the Consolidation Statements of changes Stockholders’ equity.

(o)		Pension and other post retirement benefits

		Private pension and other post retirement benefits sponsored by us for our employees are actuarially determined and

F - 13

		recognized in asset or liability or both depending on the funded or unfunded status of each plan in accordance with SFAS 158 — “Employees´ Accounting for Defined Benefit Pension and Other Post retirement Plans” issued at the end of 2006. This statement amends previous related ones used by us for that purpose. The cost of our defined benefit and prior service costs or credits that arise during the period and are not components of net periodic benefit costs are recorded in other cumulative comprehensive deficit.

(p)		Removal of waste materials to access mineral deposits

		During the development of a mine, before production commences, stripping costs (i.e., the costs associated with the removal of overburden and other waste materials) are capitalized as part of the depreciable cost of developing the property. Such costs are subsequently amortized over the useful life of the mine based on proven and probable reserves.

		Post-production stripping costs are recorded as cost of production when incurred.

4		Recently-issued accounting pronouncements

		In February 2007, the Financial Accounting Standards Board issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. This standard is effective for fiscal years ending on or after November 15, 2007. We are currently studying the impact of this standard.

		In September 2006, the Financial Accounting Standards Board issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. SFAS No. 158 requires employers to recognize the over funded or under funded status of defined benefit postretirement plans as an asset or a liability and to recognize the changes in the funded status through comprehensive income. Statement No. 158 also requires that defined benefit plan assets and obligations be measured as of the fiscal year-end. This standard is effective for fiscal years ending on or after December 15, 2006. We adopted this Statement and its effects are disclosed at Note 17.

		In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. Accordingly to the Board, a single definition of fair value, together with a framework for measuring fair value, should result in increased consistency and comparability in fair value measurements. This standard is effective for fiscal years ending on or after November 15, 2007. We are currently studying the impact of this standard.

		In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). Under the Interpretation, the financial statements will reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. This standard is effective as from January 1, 2007. We do not expect this statement to have any significant impact on our financial position, results of operation and cash flows.

F - 14


5		Our privatization

In May 1997, we were privatized by the Brazilian Government, which transferred voting control to Valepar S.A. (“Valepar”). The Brazilian Government has retained certain rights with respect to our future decisions and those of Valepar and has also caused us to enter into agreements which may affect our activities and results of operations in the future. These rights and agreements are:

	•		Preferred Special Share. The Brazilian Government holds six preferred special shares of CVRD which confers upon it permanent veto rights over changes in our (i) name, (ii) location of our headquarters (iii) corporate purpose with respect to mineral exploration, (iv) continued operation of our integrated iron ore mining systems and (v) certain other matters.

	•		Shareholder revenue interests. On July 7, 1997, we issued to shareholders of record on April 18, 1997 (including the Brazilian Government) revenue interests providing holders thereof with the right to receive semi-annual payments based on a percentage of our net revenues above threshold production volumes from identified mining resources. These instruments are not secured by the corresponding mineral reserves and deposits (Note 18(e)).

6		Major acquisitions and disposals

		In February 2007, we entered into a purchase and sale agreement to acquire 100% of AMCI Holdings Australia Pty — AMCI HÁ, a private company held in Australia, which operates and controls coal assets through joint ventures, for AUD 835 million (approximately US$660).

		On December 2006, we sold our total interest in Siderar — S.A.I.C, corresponding to 4.85%, a steel plant located in Argentina to Ternium S.A. for US$108 and a gain of US$96.

		On November 2006, we keep the shares necessary to be in part of the control group at Usinas Siderúrgicas Minas Gerais —USIMINAS. Part of the remaining shares, corresponding to 5,362,928 common shares, we sold to Nippon Steel, Votorantim Participações S/A, and Camargo Corrêa S/A, in the amount of US$176 and a gain of US$175. We still have 13,839,192 Usiminas common shares that will be sold through a public offer.

		During the third quarter of 2006, we sold 1,361,100 shares of Gerdau S.A. for US$19. During the forth quarter we sold the remaining 3,379,825 shares of Gerdau S.A. for US$48. The total gain related to this operation amounted to US$56.

		On July 2006 we acquired the remaining 45.5% of Valesul Alumínio S. A., which was a jointly controlled company with equal voting rights, for US$28, becoming our aluminum subsidiary and therefore we have been consolidating it since then.

		During the second quarter of 2006, we sold our total interest in Gulf Industrial Investment Company for US$418, resulting in a net gain of US$338.

		At an Extraordinary Shareholders’ Meeting on March 31, 2006, the Capital Stock increased by US$2,552, corresponding to 128,302,722 preferred shares (64,151,361 before split), due to the issuance of shares in relation to the acquisition of the outstanding minority interest in Caemi and at an our Extraordinary Shareholders’ Meeting held on December 29, 2006, Caemi was incorporated. Had the acquisition of the 39.77% preferred shares of CAEMI occurred on January 1, 2005, the only effects that would have changed were elimination of minority interest and consequently increase of net income by US$283 and a total amount concerning basic and diluted earnings per share of US$2.11 in 2005 and increase of net income by US$54 and a total amount concerning basic and diluted earnings per share of US$2.71 in 2006.

		During the first quarter of 2006, we sold our total interest in Nova Era Silicon (49%) to JFE Steel Corporation for US$14, resulting in a net gain of US$9.

F - 15

On November 2005, we acquired 93.0% of the voting capital of Canico Resource Corp. (Canico) a Canadian-based junior resource company focused on the development of the Onça-Puma nickel laterite, for US$750. In December 2005, we acquired an additional 6.20% of the voting capital of Canico for US$50. Canico ´s only significant asset other than US$63 of cash and cash equivalents was US$794 of mining rights. On February 10, 2006, we concluded the acquisition of the outstanding common shares of Canico, acquiring the remaining voting capital of Canico, 0.8% of its total capital for US$6, which is now a wholly owned subsidiary.

F - 16

7		Acquisition of Inco

		In October, 2006 we acquired Inco Limited (Inco), a Canadian-based nickel company, and the world’s largest nickel possessing capacity and reserve base, for US$13 billion, corresponding to 174,623,019 common shares for Cdn$ 86.00 each share, representing 75.66% of its outstanding shares. By November 3, 2006 we had already acquired a total of 196,078,276 shares by aproximatelly US$15 billion, representing 86.57% of Inco’s capital. Due to the issuing of new shares related to the convertible debt, on December 31, we had 87.73% of the outstanding shares. On January 3, 2007 the special meeting of shareholders of Inco, approved the amalgamation of Inco with Itabira Canada Inc. (Itabira Canada), our wholly-owned indirect subsidiary.

		Pursuant to the amalgamation, Inco changed its name to “CVRD Inco Limited” (CVRD Inco) and we had 99.08% of the outstanding shares.

		In December 2006 we concluded several transactions to take out the bridge loan aiming to extend our average debt maturity close to the pre-acquisition level, which is close to ten years, as described in Note 15.

		The purchase price allocations based on the fair values of acquired assets and liabilities was based on management’s preliminary internal valuation estimates. Such allocations will be finalize based on valuation and other studies which are in course, performed by us with the assistance of outside valuation specialists. Accordingly, the purchase price allocation adjustments set forth bellow are preliminary and are subject to revision, which may be material.

		Fair values used herein were calculated using current pension and post retirement benefits obligation funded status, current interest rates and sales prices for finished goods, estimated future production, investment, costs, commodity prices and cash flows.

		The purchase price allocation in relation to the fair value of assets and liabilities acquired will be finalize in 2007.

		On the preparation of this information our acquisition is of 87.73% of Inco´s shares.


Total disbursements	14,971
Transaction costs	38

Purchase price	15,009

Book value of assets acquired and liabilities assumed, net	(3,993	)
Adjustment to fair value of inventory	(1,686	)
Adjustment to fair value of property, plant and equipment	(9,044	)
Change of control obligations	839
Adjustment to fair value of other liabilities assumed	223
Deferred taxes on the above adjustments	2,528

Goodwill	3,876

F - 17

Pro forma information considers that our acquisition of 87.73% of Inco as if it was completed at the beginning of each period (unaudited).


	Three-month periods ended
	September 30, 2006									December 31, 2005

	CVRD									CVRD
	Consolidated			Inco			Pro forma			Consolidated			Inco			Pro forma

Net operating revenues		4,852			2,326			7,178			3,598			1,121			4,719
Operating costs and expenses		(2,604	)		(1,484	)		(4,088	)		(2,137	)		(1,009	)		(3,146	)

Operating income		2,248			842			3,090			1,461			112			1,573
Non-operating income		(59	)		(20	)		(79	)		(336	)		(164	)		(500	)

Income before income taxes, equity results and minority interests		2,189			822			3,011			1,125			(52	)		1,073
Income taxes		(348	)		(381	)		(729	)		(56	)		47			(9	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		187			—			187			213			—			213
Minority interests		(124	)		(122	)		(246	)		(86	)		(28	)		(114	)

Net income		1,904			319			2,223			1,196			(33	)		1,163


	As of and for the year ended December 31,
	2006									2005

	CVRD
	Consolidated									CVRD
	(1)			Inco			Pro forma			Consolidated			Inco			Pro forma

Net operating revenues		19,651			5,351			25,002			12,792			4,518			17,310
Operating costs and expenses		(12,014	)		(3,738	)		(15,752	)		(7,360	)		(3,645	)		(11,005	)

Operating income		7,637			1,613			9,250			5,432			873			6,305
Non-operating income		192			(486	)		(294	)		(12	)		(1,065	)		(1,077	)

Income before income taxes, equity results and minority interests		7,829			1,127			8,956			5,420			(192	)		5,228
Income taxes		(1,432	)		(450	)		(1,882	)		(880	)		23			(857	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		710			—			710			760			—			760
Minority interests		(579	)		(229	)		(808	)		(459	)		(141	)		(600	)

Net income		6,528			448			6,976			4,841			(310	)		4,531


(1)		Includes consolidation of INCO as from October 23, 2006.

F - 18

8		Income taxes

Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34% represented by a 25% federal income tax rate plus a 9% social contribution rate.

In other countries where we have operation the applicable tax rate varied from 3.29% to 43.15%.

The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:


	Three-month periods ended (unaudited)									Year ended December 31,
	December			September			December
	31, 2006			30, 2006			31, 2005			2006			2005			2004
Income before income taxes, equity results and minority interests		2,168			2,189			1,125			7,829			5,420			3,003

Federal income tax and social contribution expense at statutory enacted rates		(737	)		(744	)		(383	)		(2,662	)		(1,843	)		(1,021	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		87			80			72			343			307			214
Difference on tax rates of foreign income		425			301			346			1,004			617			247
Difference on tax basis of equity investees		(93	)		(23	)		(28	)		(200	)		(58	)		(240	)
Tax incentives		(147	)		71			(26	)		194			109			53
Valuation allowance reversal (provision)		—			—			—			(21	)		3			77
Non-taxable losses on derivative		—			—			—			—			—			(57	)
Other non-taxable gains (losses)		(86	)		(33	)		(37	)		(90	)		(15	)		(22	)

Federal income tax and social contribution expense in consolidated statements of income		(551	)		(348	)		(56	)		(1,432	)		(880	)		(749	)

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

We have also taxes incentives related to Goro Project in New Caledonia. These incentives include an income tax holiday during the construction phase of the project and throughout a 15-year period commencing in the first year in which commercial production, as defined by the applicable legislation, is achieved followed by a five-year, 50 per cent income tax holiday. In addition, Goro qualifies for certain exemptions from indirect taxes such as import duties during the construction phase and throughout the commercial life of the project. Certain of these tax benefits, including the income tax holiday, are subject to an earlier phase out should the project achieve a specified cumulative rate of return. We are subject to a branch profit tax commencing in the first year in which commercial production is achieved, as defined by the applicable legislation. To date, we have not realized any net income for New Caledonia tax purposes. The benefits of this legislation are expected to apply with respect to any taxes otherwise payable once the Goro project is in operation.

F - 19

The major components of the deferred tax accounts in the balance sheet are as follows:


	As of December 31,
	2006			2005
Current deferred tax assets
Accrued expenses deductible only when disbursed		410			186

		410			186

Long-term deferred tax assets and liabilities
Assets

Related to provision for losses and write-downs of investments		19			53
Employees post retirement benefits provision		991			82
Tax loss carryforwards		265			275
Other temporary differences		—			3

		1,275			413

Liabilities
Inflationary income		(56	)		(30	)
Relative to equity investments acquired		(224	)		(144	)
Prepaid retirement benefit		(332	)		(105	)
Fair value adjustments in business combinations		(4,892	)		—
Other temporary differences		(185	)		(52	)

		(5,689	)		(331	)

Valuation allowance
Beginning balance		(84	)		(77	)
Translation adjustments		(8	)		(10	)
Change in allowance		(21	)		3

Ending balance		(113	)		(84	)

Net long-term deferred tax assets		(4,527	)		(2	)

Cash and cash equivalents


	As of December 31,
	2006		2005

Cash		1,542		177
Deposits denominated in Brazilian Reais		237		297
Deposits denominated in other currencies mainly United States dollars		2,669		567

		4,448		1,041

F - 20

Accounts receivable


	As of December 31,
	2006			2005
Customers
Brazil		517			349
Other countries, all denominated in United States dollars		3,164			1,355

		3,681			1,704

Allowance for doubtful accounts		(61	)		(42	)
Allowance for ore weight credits		(16	)		(13	)

Total		3,604			1,649

Accounts receivable from customers in the steel industry represent 37.2% of Brazilian receivables and 53.0% of other countries receivables at December 31, 2006.

No single customer accounted for more than 10.0% of total revenues.

11		Inventories


	As of December 31,
	2006		2005
Finished products

Iron ore and pellets		325		271
Manganese and ferroalloys		94		151
Alumina		33		22
Aluminum		110		52
Kaolin		23		18
Copper concentrate		5		—
Nickel (co-products and by-products)		2,046		—
Others		40		28
Spare parts and maintenance supplies		817		600

		3,493		1,142

F - 21

Property, plant and equipment

By business area:


	As of December 31, 2006						As of December 31, 2005

			Accumulated						Accumulated
	Cost		depreciation		Net		Cost		depreciation		Net

Ferrous

In operation		15,440		4,550		10,890		9,795		3,607		6,188
Construction in progress		2,650		—		2,650		2,049		—		2,049

		18,090		4,550		13,540		11,844		3,607		8,237

Non-Ferrous

In operation		12,962		540		12,422		1,291		301		990
Construction in progress		7,425		—		7,425		1,281		—		1,281

		20,387		540		19,847		2,572		301		2,271

Logistics

In operation		1,262		372		890		1,236		311		925
Construction in progress		97		—		97		74		—		74

		1,359		372		987		1,310		311		999

Holdings

In operation		2,758		902		1,856		1,567		557		1,010
Construction in progress		1,239		—		1,239		1,148		—		1,148

		3,997		902		3,095		2,715		557		2,158

Corporate Center

In operation		580		193		387		322		82		240
Construction in progress		151		—		151		261		—		261

		731		193		538		583		82		501

Total		44,564		6,557		38,007		19,024		4,858		14,166

By type of assets:


	As of December 31, 2006						As of December 31, 2005

			Accumulated						Accumulated
	Cost		depreciation		Net		Cost		depreciation		Net
Land and buildings		2,530		560		1,970		1,205		447		758
Installations		7,751		2,034		5,717		4,917		1,596		3,321
Equipment		3,301		1,016		2,285		1,855		711		1,144
Railroads		3,964		1,268		2,696		2,846		987		1,859
Mine development costs		12,703		584		12,119		1,945		281		1,664
Others		2,753		1,095		1,658		1,443		836		607

		33,002		6,557		26,445		14,211		4,858		9,353
Construction in progress		11,562		—		11,562		4,813		—		4,813

Total		44,564		6,557		38,007		19,024		4,858		14,166

Losses on disposals and impairments of property, plant and equipment totaled US$106, US$26 and US$34 in 2006, 2005 and 2004, respectively. Disposals and impairments mainly relate to impairment of sales of ships and trucks, locomotives and other equipment which were replaced in the normal course of business.

Assets given in guarantee to judicial processes totaled US$115.

F - 22

(c)		Hydroelectric assets

		We participate in several jointly-owned hydroelectric plants, already in operation or under construction. We have an undivided interest in these plants and are responsible for our proportionate share of the costs of construction and operation and entitled to our proportionate share of the energy produced. We record our undivided interest in these assets as property, plant and equipment.

		The situation of these projects at December 31, 2006 is as follows:


			Accumulated
Project	Plant in service		depreciation		Plant under construction
Igarapava		70		19		—
Porto Estrela		26		4		—
Funil		88		10		—
Candonga		68		5		—
Aimorés		190		9		—
Capim Branco I		117		3		—
Larona (*)		186		132		—
Balambano (*)		354		56		—
Machadinho		13		5		—
Capim Branco II		—		—		131


(*)		Through PT Inco

Income and expenses relating to operating plants are not material.

F - 23

Investments in affiliated companies and joint ventures


	2006									Investments				Equity Adjustments																		Dividends received
														Three-month periods ended (unaudited)									Year ended December 31,									Three-month periods ended (unaudited)						Year ended December 31,
							Net income
	Participation in				Net		(loss) for the							December			September			December												December		September		December
	capital (%)				equity		period			2006		2005		31, 2006			30, 2006			31, 2005			2006			2005			2004			31, 2006		30, 2006		31, 2005		2006		2005		2004
	voting		total
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)		51.11		51.00		78		36			40		60		2			(1	)		13			18			39			13			—		—		16		22		16		—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		82		29			42		37		4			4			4			15			28			9			—		—		—		13		20		1
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		80		33			40		41		—			2			6			17			26			11			10		—		—		21		—		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)		51.00		50.90		72		24			37		33		3			3			2			12			21			6			—		—		—		12		10		—
SAMARCO Mineração S.A. — SAMARCO (2)		50.00		50.00		640		458			370		335		66			57			85			229			257			117			25		175		95		225		225		100
Minas da Serra Geral S.A. — MSG		50.00		50.00		49		4			25		21		2			1			—			2			(2	)		(3	)		—		—		—		1		—		—
Gulf Industrial Investment Company — GIIC (4)		—		—		—		—			—		62		—			—			18			18			67			16			—		—		20		—		51		11
Others		—		—		—		—			23		25		1			1			—			1			(1	)		1			—		—		—		1		—		—

											577		614		78			67			128			312			435			170			35		175		131		295		322		112
Logistics
MRS Logística S.A		37.23		40.45		548		250			222		109		27			32			15			95			54			33			22		—		5		41		11		—

											222		109		27			32			15			95			54			33			22		—		5		41		11		—
Holdings
Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (3)		—		—		—		—			744		281		50			43			41			147			176			114			7		12		—		48		62		13
Companhia Siderúrgica de Tubarão — CST (6)		—		—		—		—			—		—		—			—			—			—			—			102			—		—		—		—		—		—
California Steel Industries Inc. — CSI		50.00		50.00		350		109			175		161		4			17			6			54			21			55			—		37		—		40		28		9
SIDERAR (cost $15) — available-for-sale investments		—		—		—		—			—		142		—			—			—			—			—			—			—		—		—		—		—		—

											919		584		54			60			47			201			197			271			7		49		—		88		90		22
Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		410		160			164		178		20			18			15			64			64			57			—		18		—		77		58		54
Valesul Alumínio S.A. — VALESUL (5)		100.00		100.00		—		—			—		58		—			—			(1	)		12			1			14			—		—		—		—		8		12

											164		236		20			18			14			76			65			71			—		18		—		77		66		66
Coal
Henan Longyu Resources Co. Ltd		25.00		25.00		448		122			112		96		9			10			9			31			9			—			—		—		—		15		—		—
Shandong Yankuang International Company Ltd		25.00		25.00		92		(21	)		23		22		(5	)		—			—			(5	)		—			—			—		—		—		—		—		—

											135		118		4			10			9			26			9			—			—		—		—		15		—		—
Nickel — available-for-sale investments (7)
Jubilee Mines N.L (cost $30)		4.88		4.88		—		—			79		—		—			—			—			—			—			—			—		—		—		—		—		—
Lion Ore Mining International Ltd (cost $21)		1.80		1.80		—		—			45		—		—			—			—			—			—			—			—		—		—		—		—		—
Mirabela Nickel Ltd (cost $12)		9.40		9.40		—		—			21		—		—			—			—			—			—			—			—		—		—		—		—		—
Skye Resources Inc (cost $-18)		9.60		9.60		—		—			36		—		—			—			—			—			—			—			—		—		—		—		—		—
Heron Resources Inc (cost $3)		9.80		9.80		—		—			12		—		—			—			—			—			—			—			—		—		—		—		—		—
Others											29		—		—			—			—			—			—			—			—		—		—		—		—		—

											222		—		—			—			—			—			—			—			—		—		—		—		—		—
Other affiliates and joint ventures
Others		—		—		—		—			114		11		—			—			—			—			—			(3	)		—		—		—		—		—		—

											114		11		—			—			—			—			—			(3	)		—		—		—		—		—		—

											1,554		949		78			88			70			303			271			339			7		67		—		180		156		88

Total		—		—		—		—			2,353		1,672		183			187			213			710			760			542			64		242		136		516		489		200


(1)		CVRD held a majority of the voting interest of several entities that were accounted for under the equity method, in accordance with EITF 96-16, due to veto rights held by minority shareholders under shareholders agreements;

(2)		Investment includes goodwill of US$50 and US$46 in 2006 and 2005, respectively;

(3)		Equity method used through November 2006, and available-for-sale subsequently;

(4)		Sold for US$418 in May, 2006;

(5)		Subsidiary consolidated as from July, 2006 (see note 6);

(6)		CST was sold is 2004; and

(7)		Investments hold through Inco Limited.

F - 24

14		Short-term debt

Our short-term borrowings are mainly from commercial banks and relate to export financing denominated in United States dollars.

Average annual interest rates on short-term borrowings were 5.5%, 4.2% and 2.3% at December 31, 2006 and 2005 and 2004, respectively.

15		Long-term debt


	As of December 31,
					Long-Term
	Current liabilities				liabilities
	2006		2005		2006		2005
Foreign debt

Loans and financing denominated in the following currencies:
United States dollars		192		848		10,622		1,617
Others		4		4		13		15

Fixed Rate Notes — US$ denominated		112		43		6,785		1,213
Securitization of export receivables — US$ denominated		86		82		259		345
Perpetual notes		—		—		86		75
Accrued charges		139		31		—		—

		533		1,008		17,765		3,265

Local debt

Denominated in Long-Term Interest Rate — TJLP		16		23		511		79
Denominated in General Price Index-Market (IGPM)		20		29		1		3
Basket of currencies		2		2		7		9
Non-convertible debentures		—		—		2,774		141
Denominated by U.S. dollars		107		132		64		216
Accrued charges		33		24		—		1

		178		210		3,357		449

Total		711		1,218		21,122		3,714

The long-term portion at December 31, 2006 falls due in the following years:


2008			8,590
2009			400
2010			1,212
2011 thereafter			10,664
No due date (Perpetual notes and non-convertible debentures)			256

			21,122

At December 31, 2006 annual interest rates on long-term debt were as follows:


3.1% to 5%			741
5.1% to 7%			15,204
7.1% to 9%			5,620
9.1% to 11%			124
Over 11%			53
Variable (Perpetual notes)			91

			21,833

F - 25


		Companhia Vale do Rio Doce

The indices applied to debt and respective percentage variations in each year were as follows (unaudited):


	%
	2006			2005			2004
TJLP — Long-Term Interest Rate (effective rate)		7.9			9.8			9.8
IGP-M — General Price Index — Market		3.8			1.2			12.4
Devaluation of United States Dollar against Real		(8.7	)		(11.8	)		(8.1	)

		Pursuant the acquisition of Inco we executed various operations through December, 2006. After the execution of three financing transactions totaling US$ 12.3 billion, completed a significant part of the take out of the initial US$ 14.6 billion bridge loan, used to finance the Inco acquisition.

		In the first of these three transactions, on November 16, 2006, we issued a US$ 3.75 billion 10-year and 30-year notes. The US$ 1.25 billion notes due in January 2017 bear a coupon rate of 6.25% per year, payable semi-annually. The US$ 2.50 billion notes due in November 2036 bear a coupon rate of 6.875% per year, payable semi-annually, and were priced with a yield to maturity of 6.997% per year.

		The second transaction involved the issue on December 20, 2006 in the Brazilian market of non-convertible debentures (debentures) in the amount of US$ 2.5 billion, in two series, with four and seven-year maturities. The first series, due on November 20, 2010, US$700, will be remunerated at 101.75% of the accumulated variation of the Brazilian CDI (interbank certificate of deposit) interest rate, payable semi-annually. The second series, due on November 20, 2013, US$ 1.8 million, will be remunerated at the Brazilian CDI interest rate plus 0.25% per year, also payable semi-annually. These debentures can be traded in the secondary market, through the Sistema Nacional de Debêntures (SND).

		The third transaction which closed on December 21, 2006, was a pre-export finance transaction of US$ 6.0 billion, defining the final allocation among the members of a bank syndicate. The transaction includes a US$ 5.0 billion tranche, five-year maturity, at Libor plus 0.625% per year, and a US$ 1.0 billion tranche, seven-year maturity, at Libor plus 0.75% per year.

		In January 2006, the subsidiary Vale Overseas Limited issued US$ 1 billion 10-year 6.250% per year notes, payable semi-annually due 2016, fully and unconditionally guaranteed by us.

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

		In October, 2005, we issued US$ 300 notes due 2034, bearing interest of 7.65% per year in the same form as the US$ 500, 8.25% unconditionally guaranteed notes issued on January 15, 2004.

		On December 31, 2006 the US dollar denominated Fixed Rate Notes of US$6,897 (2005 - US$1,256) and other debt of US$14,017 (2005 — US$2,661) are unsecured. The export securitization of US$345 (2005 — US$427) is debt securities secured by future receivables arising from certain export sales of our subsidiary CVRD Overseas Ltd. Loans from international lenders of US$106 (2005- US$135) are guaranteed by the Brazilian Federal Government, to which we have given counter-guarantees in the same amounts secured by our own shares and accounts receivable of a subsidiary. We also have loans from Brazil and international institutions secured by property, plant and equipment in the amount of US$0 (2005 — US$123). The remaining long-term debt of US$458 (2005 — US$330) is secured mainly by assets of subsidiaries.

F - 26


		Companhia Vale do Rio Doce

Stockholders’ equity

Each holder of common and preferred class A stock is entitled to one vote for each share on all matters that come before a stockholders’ meeting, except for the election of the Board of Directors, which is restricted to the holders of common stock. As described in Note 5, the Brazilian Government holds six preferred special share which confers to it permanent veto rights over certain matters.

On May 22, 2006 a stock split was effected which had been approved by the Extraordinary General Shareholders’ Meeting on April 27, 2006. Each existing, common and preferred, share was split into two shares. After the split our capital comprises 2,459,657,058 shares, of which 959,758,200 common shares and 1,499,898,858 class “A” preferred shares, 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, continued to be represented by one ADR supported by one common share (NYSE: RIO) or by one ADR supported by one class ”A” preferred share (NYSE: RIOPR) respectively. All numbers of share and per share amounts included herein reflect retroactive application of the stock split.

On June 21, 2006 the Board of Directors approved a buy-back program of our preferred shares, executed during 180 days. As of December 31, 2006, we had acquired 15,149,600 shares held in treasury for subsequent disposal or cancellation at an average weighted unit cost of US$19.98 (minimum cost of US$18.89 and maximum of US$ 20.74).

During 2006 we paid US$1.3 billion to stockholders, the first installment of US$650 was paid on April 2006 and the second installment of US$650 was paid on October 2006. The distribution was made in the form of interest on stockholders’ equity and dividends.

Both common and preferred stockholders are entitled to receive a dividend of at least 25% of annual adjusted net income based on the statutory accounting records, upon approval at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the statutory book equity value per share. For the year ended December 31,2006, this annual minimum dividend achieve US$ 1,508 of which US$ 14 was paid on October 2006 and therefore we accrued the remaining value of US$ 1,494 with a direct charge to stockholders equity. For each of the years 2005 and 2004 we distributed dividends to preferred stockholders in excess of this limit. Interest attributed to stockholders equity as from January 1, 1996 is considered part of the minimum dividend.

Brazilian law permits the payment of cash dividends only from retained earnings as stated in the statutory accounting records and such payments are made in Reais. In addition, undistributed retained earnings at December 31, 2006 includes US$8,542, related to the unrealized income and expansion reserves, which could be freely transferred to retained earnings and paid as dividends, if approved by the stockholders.

No withholding tax is payable on distribution of profits earned except for distributions in the form of interest attributed to stockholders (Note 3 (l)).

F - 27


		Companhia Vale do Rio Doce

Brazilian laws and our By-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis, all determined in accordance with amounts stated in the statutory accounting records, as detailed below:


	Three-month periods ended (Unaudited)									Year ended December 31,
	December			September			December
	31,2006			30,2006			31,2005			2006			2005			2004
Undistributed retained earnings
Unrealized income reserve
Beginning of the period		109			109			156			101			130			193
Transfer (to) from retained earnings		(52	)		—			(55	)		(44	)		(29	)		(63	)

End of the period		57			109			101			57			101			130
Expansion reserve
Beginning of the period		3,913			3,910			1,385			3,621			3,091			2,090
Transfer to capital stock		—			—			—			—			(2,036	)		(309	)
Transfer from retained earnings		4,572			3			2,236			4,864			2,566			1,310

End of the period		8,485			3,913			3,621			8,485			3,621			3,091
Legal reserve
Beginning of the period		646			647			395			599			529			374
Transfer to capital stock		—			—			—			—			(209	)		—
Transfer from retained earnings		324			(1	)		204			371			279			155

End of the period		970			646			599			970			599			529
Fiscal incentive depletion reserve
Beginning of the period		—			—			—			—			378			347
Transfer to capital stock		—			—			—			—			(398	)		—
Transfer from retained earnings		—			—			—			—			20			31

End of the period		—			—			—			—			—			378
Fiscal incentive investment reserve
Beginning of the period		38			39			—			36			15			31
Transfer to capital stock		—			—			—			—			(16	)		(31	)
Transfer from retained earnings		5			(1	)		36			7			37			15

End of the period		43			38			36			43			36			15

Total undistributed retained earnings		9,555			4,706			4,357			9,555			4,357			4,143

The purpose and basis of appropriation to such reserves is described below:

	.		Unrealized income reserve — this represents principally our share of the earnings of affiliates and joint ventures, not yet received in the form of cash dividends.

	.		Expansion reserve — this is a general reserve for expansion of our activities.

	.		Legal reserve — this reserve is a requirement for all Brazilian corporations and represents the appropriation of 5% of annual net income under Brazilian GAAP up to a limit of 20% of capital stock under Brazilian GAAP.

	.		Fiscal incentive depletion reserve — this represents an additional amount relative to mineral reserve depletion equivalent to 20% of the sales price of mining production, which is deductible for tax purposes providing an equivalent amount is transferred from retained earnings to the reserve account. This fiscal incentive expired in 1996.

	.		Fiscal incentive investment reserve — this reserve results from an option to designate a portion of income tax otherwise payable for investment in government approved projects and is recorded in the year following that in which the taxable income was earned. As from 2000, this reserve basically contemplates income tax incentives (Note 8).

F - 28


		Companhia Vale do Rio Doce

		Basic and diluted earnings per share

		Basic and diluted earnings per share amounts have been calculated as follows:


			Weighted
	Income		average		Basic and diluted
	(Numerator)		(Thousands)		per-share amount
	(US$ million)		(Denominator)		(US$ per share)
Net income for the year ended December 31, 2006		6,528

Income available to preferred stockholders		2,568		954,426		2.69
Income available to common stockholders		3,960		1,471,608		2.69

Net income for the year ended December 31, 2005		4,841

Income available to preferred stockholders		1,748		831,432		2.10
Income available to common stockholders		3,093		1,471,608		2.10

Net income for the year ended December 31, 2004		2,573

Income available to preferred stockholders		929		831,432		1.12
Income available to common stockholders		1,644		1,471,608		1.12

There are no securities outstanding with any diluted effect on earnings per shares.

Pension plans

		Since 1973 we have sponsored a complementary security plan with characteristics of defined benefit plan (the “Old Plan”) covering substantially all employees, with benefits calculation based on years of service, age, contribution salary and complementary social security benefits. This plan is administered by Fundação Vale do Rio Doce de Seguridade Social — VALIA and was funded by monthly contributions made by us and our employees, calculated based on periodic actuarial appraisals.

		In May 2000, we implemented a new security complementary plan with characteristics of variable contribution, which complements to the earnings of programmed retirements and benefits from risks (death, physical invalidity, and sickness benefit). When the “New Plan” (a Benefit Mix Plan — Vale Mais) was created, our active employees had the opportunity of transferring to it. Over 98% of our active employees opted to be transfered. The Old Plan will continue in existence, covering almost exclusively retired participants and their beneficiaries.

		Additionally we provide supplementary payments to a specific group of ex-employees, in addition to the regular benefit from Valia, through the “Abono Complementação”, which represents a postretirement health care, odontological and pharmaceutical benefit to this group of participants.

		Pursuant the acquisition of Inco we assumed benefits through defined benefit pensions that cover essentially all its employees and postretirement benefits other than pensions that provide certain health care and life insurance benefits for retired employees as well.

		The following information details the status of the defined benefit elements of all plans in accordance with SFAS 132 — “Employers’ Disclosure about Pensions and Other Post retirement Benefits” and SFAS 158 — “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, as amended.

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		Companhia Vale do Rio Doce

(a)

Change in benefit obligation


	As of December 31,
	2006									2005
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Benefit obligation at beginning of year		1,783			250			78			1,500			219			66
Liability recognized upon consolidation of Inco		—			3,619			1,225			—			—			—
Service cost		5			14			4			2			—			—
Interest cost		245			79			26			210			30			9
Plan amendment		—			(76	)		—			—			—			—
Assumptions changes		465			52			13			10			—			—
Benefits paid		(173	)		(86	)		(22	)		(145	)		(24	)		(5	)
Effect of exchange rate changes		175			(108	)		(41	)		204			30			9
Actuarial loss		31			(1	)		4			2			(5	)		(1	)

Benefit obligation at end of year		2,531			3,743			1,287			1,783			250			78

We use a measurement date of December 31 for our pension and post retirement benefit plans.

(b) Change in plan assets


	As of December 31,
	2006									2005
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Fair value of plan assets at beginning of year		2,781			63			—			2,079			29			—
Asset recognized upon consolidation of Inco		—			2,924			4			—			—			—
Actual return on plan assets		607			202			—			551			11			—
Employer contributions		25			84			6			22			42			5
Benefits paid		(173	)		(85	)		(6	)		(145	)		(24	)		(5	)
Effect of exchange rate changes		268			(110	)		—			274			5			—

Fair value of plan assets at end of year		3,508			3,078			4			2,781			63			-

Plan assets at December 31, 2006 include US$312 and US$46 of portfolio investments in our own shares (US$409 at December 31, 2005) and debentures, respectively, and US$36 and US$7 of shares of related parties (US$42 at December 31, 2005) and debentures, as well. They also include US$607 of Federal Government Securities (US$455 at December 31, 2005).

(c)		Funded Status and Financial Position


	As of December 31,
	2006						2005
	Overfunded		Underfunded		Underfunded		Overfunded		Underfunded		Underfunded
	pension plans		pension plans		other benefits		pension plans		pension plans		other benefits
Other assets		977		—		—		308		—		—
Current liabilities		—		42		65		—		25		5
Long-term liabilities		—		623		1,218		—		173		68

Funded status		977		665		1,283		308		198		73

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		Companhia Vale do Rio Doce

(d)

Assumptions used in each year (expressed in nominal terms)

Brazil

2006

2005

Overfunded

Underfunded

Overfunded

Underfunded

pension plans

other benefits

pension plans

other benefits

Discount rate

11.30% p.a.

13.40% p.a.

Expected return on plan assets

14.98% p.a.

—

13.40% p.a.

—

Rate of compensation increase — up to 47 years

8.15% p.a.

—

8.15% p.a.

—

Rate of compensation increase — over 47 years

5.00% p.a.

—

5.00% p.a.

—

Inflation

5.00% p.a.

Health care cost trend rate

—

8.67% p.a.

—

9.20% p.a.


	Foreign
	2006
	Underfunded	Underfunded
	pension plans	other benefits
Discount rate	5.00% p.a.	5.00% p.a.
Expected return on plan assets	7.50% p.a.	7.50% p.a.
Rate of compensation increase — up to 47 years	3.00% p.a.	3.00% p.a.
Rate of compensation increase — over 47 years	3.00% p.a.	3.00% p.a.
Inflation	1.80% p.a.	1.80% p.a.
Health care cost trend rate	—	5.05% p.a.

(e)

Investment targets and composition of plan assets

•

Overfunded pension plans

The fair value of the Brazil overfunded pension plan assets is US$3,508 and US$2,781 at the end of 2006 and 2005, respectively. There are no foreign overfunded pension plans assets at the period. The asset allocation for these plans at the end of 2006 and 2005, and the target allocation for 2007, by asset category, follows:


	Brazil
	Target
	allocation for			Percentage of plan assets at
	2007			December 31,
	(unaudited)			2006			2005
Equity securities		25	%		30	%		30	%
Real estate		6	%		5	%		5	%
Loans		4	%		4	%		4	%
Fixed Income		65	%		61	%		61	%

Total		100	%		100	%		100	%

•

Underfunded pension plans

The fair value of the underfunded pension plans assets is US$91 and US$63 at the end of 2006 and 2005, respectively, for Brazilian plans and US$2,987 at the end of 2006 for foreign plans. The asset allocation for these plans at the end of 2006 (Brazil and foreign) and 2005 (Brazil), and the target allocation for 2007, by asset category, follows:

F - 31


		Companhia Vale do Rio Doce


	Brazil
	Target
	allocation for			Percentage of plan assets at
	2007			December 31,
	(unaudited)			2006			2005
Equity securities		12	%		8	%		9	%
Real estate		4	%		1	%		2	%
Loans		8	%		1	%		1	%
Fixed Income		76	%		90	%		88	%

Total		100	%		100	%		100	%


	Foreign
				Percentage of plan
	Target allocation for 2007			assets at December 31,
	(unaudited)			2006
Equity securities		60	%		61	%
Fixed Income		40	%		39	%

Total		100	%		100	%

•

Underfunded other benefits

The fair value of the foreign underfunded other benefits assets is US$4 at the end of 2006. There are no Brazil underfunded other benefits assets in our postretirement benefits other than pensions at the period. The assets allocation for these benefits at the end of 2006 and target allocation for 2007, by asset category, follows:


	Foreign
	Target allocation for			Percentage of plan
	2007			assets at December 31,
	(unaudited)			2006
Equity securities		60	%		61	%
Fixed Income		40	%		39	%

Total		100	%		100	%

		The fixed income allocation target for Brazil plans was established in order to match the asset with the benefit payments and to be used for the payment of short-term plans. The proposal for 2007 is to re-establish the investments in inflation-indexed funds.

		The target for equity securities of these plans reflects the expected appreciation of the Brazilian stock markets as well as the volatility of market.

		The asset allocation policy for the foreign plans 40% fixed income and 60% equity securities, is maintained fairly close to the policy mix at most times by the use of a rigorous rebalancing policy.

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		Companhia Vale do Rio Doce

(f)

Pension costs


	As of December 31,
	2006								2005
	Overfunded			Underfunded			Underfunded		Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits		pension plans			pension plans			other benefits
Service cost — benefits earned during the period		5			14			4		2			—			—
Interest cost on projected benefit obligation		246			79			25		210			30			10
Expected return on assets		(391	)		(63	)		—		(295	)		(4	)		—
Amortization of initial transitory obligation		12			—			—		11			—			—
Net deferral		(28	)		—			—		(16	)		—			—

Net periodic pension cost		(156	)		30			29		(88	)		26			10

(g)

Expected contributions and benefits

		Employer contributions expected for 2007 are US$238 (unaudited).

		The benefit payments, which reflect future service, as appropriate, are expected to be paid as follows (unaudited):


	2006
	Overfunded		Underfunded
	pension		pension		Underfunded
	plans		plans		other benefits		Total
2007		195		267		65		527
2008		194		271		68		533
2009		194		274		70		538
2010		193		272		72		537
2011		191		269		74		534
2012 and there after		932		1,286		376		2,594

(h)

Accumulated benefit obligation


	2006									2005
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Accumulated benefit obligation		2,524			3,680			1,287			1,777			250			78
Projected benefit obligation		2,531			3,743			1,287			1,783			250			—
Fair value of plain asset		(3,508	)		(3,078	)		(4	)		(2,781	)		(63	)		—

(i)

Impact of 1% variation in assumed health care cost trend rate


	1% increase				1% decrease
	2006		2005		2006			2005
Accumulated postretirement benefit obligation (APBO)		178		9		(145	)		(7	)
Interest and service costs		15		1		(12	)		(1	)

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		Companhia Vale do Rio Doce

(j)

Effect of initial recognition provision of SFAS 158


				Adjustments
	Before			Overfunded		Underfunded			Underfunded			After
	aplication of			pension		pension			other			aplication of
	SFAS 158			plans		plans			benefits			SFAS 158
Prepaid pension cost		523			454		—			—			977
Total assets		60,500			454		—			—			60,954
Employees postretirement benefits		2,034			—		33			(119	)		1,948
Deferred income tax		4,340			154		(11	)		44			4,527
Total liabilities		41,180			154		22			(75	)		41,281
Other cumulative comprehensive deficit		(1,360	)		300		(22	)		75			(1,007	)
Total stockholders ´equity		19,320			300		(22	)		75			19,673

(l)

Other Cumulative Comprehensive Deficit


	As of December 31, 2006
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Net transition obligation / (asset)		(34	)		—			—
Net prior service cost / (credit)		—			—			—
Net actuarial loss / (gain)		422			(34	)		119
Effect of exchange rate changes		66			1			—
Deferred income tax		(154	)		11			(44	)

Amounts recognized in other cumulative comprehensive deficit		300			(22	)		75

(m)

Change in Other Cumulative Comprehensive Deficit


	As of December 31, 2006
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Net transition obligation / (asset) not yet recognized in NPPC at beginnig of period		(46	)		—			—
Net actuarial loss / (gain) not yet recognized in NPPC at beginning of period		736			10			(5	)
Deferred income tax at beginning of period		(234	)		(3	)		2

Effect of initial recognition of cumulative comprehensive deficit		456			7			(3	)
Change in the period Amortization of net transition obligation / (asset)		12			—			—
Amortization of net actuarial loss / (gain)		(28	)		—			—
Total net actuarial loss / (gain) arising during period		(286	)		(44	)		124
Effect of exchange rate changes		66			1			—
Deferred income tax		80			14			(46	)

Total recognized in other cumulative comprehensive deficit		300			(22	)		75

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		Companhia Vale do Rio Doce

(n)

Net periodic pension cost for the next year


	2007
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost		8			57			18
Interest cost		275			206			69
Expected return on plan assets		(513	)		(239	)		—
Net transition obligation / (asset) amortization		13			—			—
Net prior service cost / (credit) amortization		—			—			—
Net actuarial loss / (gain) amortization		(15	)		—			—
Expected employee contributions		—			—			—

		(232	)		24			87

Commitments and contingencies

(a)

At December 31, 2006, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of US$3, as follows:

Amount of

Denominated

Final

Counter

Joint Venture

guarantee

currency

Purpose

maturity

guarantees

SAMARCO

US$

Debt guarantee

2008

None

We expect no losses to arise as a result of the above guarantees. We charge commission for extending these guarantees.

(b)

We provided a guarantee covering certain termination payments to the supplier under an electricity supply agreement (“ESA”) entered into in October 2004 for our Goro nickel-cobalt development project in New Caledonia. The amount of the termination payments guaranteed depends upon a number of factors. If Goro defaults under the ESA, the termination payment could reach up to an amount of 145 million euros. Once the supply of electricity under the ESA to the project begins, the guaranteed amounts will decrease over the life of the ESA.

Additionally, in connection with a special tax-advantage lease financing related with this project we provided certain guarantees pursuant to which we guaranteed, in certain events of default, payments up to a maximum amount of US$100.

(c)

Our subsidiaries and we are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the provision for contingent losses is sufficient to cover probable losses in connection with such actions.

The provision for contingencies and the related judicial deposits are composed as follows:


	December 31, 2006				December 31, 2005
	Provision for				Provision for
	contingencies		Judicial deposits		contingencies		Judicial deposits
Labor and social security claims		378		234		229		138
Civil claims		260		117		210		98
Tax — related actions		972		500		816		329
Others		31		1		31		3

		1,641		852		1,286		568

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.

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		Companhia Vale do Rio Doce

		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.

		We continue to vigorously pursue our interests in all the above actions but recognize that we probably will incur some losses in the final instance, for which we have made provisions.

		Our judicial deposits are made as required by the courts for us to be able to enter or continue a legal action. When judgment is favorable to us, we receive the deposits back; when unfavorable, the deposits are delivered to the prevailing party.

		Contingencies settled in 2006, 2005 and 2004 aggregated US$424, US$114 and US$67, respectively, and additional provisions aggregated US$439, US$141 and US$157, respectively , classified in other operating expenses.

		In addition to the contingencies for which we have made provisions we are defending claims which in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible losses which total US$1,488 at December 31, 2006, for which no provision has been made.

(d)		We are committed under a take-or-pay agreement to purchase approximately 24,899 thousand metric tons of bauxite from Mineração Rio do Norte S.A. — MRN at a formula price, calculated based on the current London Metal Exchange (LME) quotation for aluminum. Based on a market price of US$26.00 per metric ton as of December 31, 2006, this arrangement represents the following total commitment:


2007			252
2008			252
2009 and thereafter			143

			647

(e)		At the time of our privatization in 1997, we issued shareholder revenue interests known in Brazil as “debentures” to our then-existing shareholders, including the Brazilian Government. The terms of the “debentures”, were set to ensure that our pre-privatization shareholders, including the Brazilian Government, would participate alongside us in potential future financial benefits that we are able to derive from exploiting our mineral resources.

		In preparation for the issuance of the debentures, we issued series B preferred shares on a one-for-one basis to all holders of our common shares and series A preferred shares. We then exchanged all of the series B shares for the debentures at par value. The debentures are not redeemable or convertible, and do not trade on a stapled basis or otherwise with our common or preferred shares. During 2002 we registered the debentures with the Securities Commissions (CVM) in order to permit trading.

		Under Brazilian Central Bank regulations, pre-privatization shareholders that held their shares through our preferred share American Depositary Receipt, or ADR, program and institutional investors that held their shares through rule 1,298/87 of Brazilian Central Bank were not permitted to receive the debentures or any financial benefits relating to the debentures. We sought approval

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		Companhia Vale do Rio Doce

		from the Central Bank to distribute the debentures to these investors, but the Central Bank rejected our request. We renewed our request to the Central Bank, but we cannot be sure that we will succeed. Therefore, unless the Central Bank approves our request, the debentures will not have any value for ADR holders and foreign investors through Annex V of Brazilian Central Bank.

		Under the terms of the debentures, holders will have the right to receive semi-annual payments equal to an agreed percentage of our net revenues (revenues less value added tax) from certain identified mineral resources that we owned as of May 1997, to the extent that we exceed defined threshold production volumes of these resources, and from the sale of mineral rights that we owned as of May 1997. Our obligation to make payments to the holders will cease when the relevant mineral resources are exhausted at which time we are required to repay the original par value plus accrued interest. Based on current production levels, and estimates for new projects, we began payments relating to copper resources in 2004 and expect to start payments relating to iron ore resources from approximately 2020 for the Northern System and 2030 for the Southern System, and payments related to other mineral resources at the end of the current decade.

		The table below summarizes the amounts we will be required to pay under the debentures based on the net revenues we earn from the identified mineral resources and the sale of mineral rights.


Area	Mineral	Required Payments by CVRD

Southern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.7 billion tons.

Northern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.2 billion tons.

Pojuca, Andorinhas, Liberdade and Sossego	Gold and copper	2.5% of net revenue from the beginning of commercialization.

Igarapé Bahia and Alemão	Gold and copper	2.5% of net revenue, after total sales from May 1997 exceeds 70 tons of gold.

Other areas, excluding Carajás /Serra Leste	Gold	2.5% of net revenue.

Other areas owned as of May 1997	Other minerals	1% of net revenue, 4 years after the beginning of the commercialization.

All areas	Sale of mineral rights owned as of May 1997	1% of the sales price.

		On March 27 and October 2, 2006 we paid a distribution on these “debentures” in the amount of US$2 and US$4, respectively.

(f)		We use various judgments and assumptions when measuring our asset retirement obligations. Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain. The changes are demonstrated as follows:

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		Companhia Vale do Rio Doce


	Three-month periods ended (Unaudited)									Year ended December 31,
	December 31,			September			December 31,
	2006			30, 2006			2005			2006			2005			2004

Provisions for asset retirement obligations beginning of period		258			252			166			225			134			81
Liability recognized upon consolidation of Inco		178			—			—			178			—			—
Accretion expense		186			7			4			205			14			13
Liabilities settled in the current period		(4	)		(1	)		(3	)		(9	)		(9	)		(3	)
Revisions in estimated cash flows		59			—			67			59			67			31
Cumulative translation adjustment		(1	)		—			(9	)		18			19			12

Provisions for asset retirement obligations end of period		676			258			225			676			225			134

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		Companhia Vale do Rio Doce

(g) Description of Leasing Arrangements

We conduct part of our railroad operation from leased facilities. The lease, which is for 30 years expiring in August, 2026, is classified as an operating lease and can be renewable for a further 30 years. At the end of the lease term, we are required to return the concession and the lease assets. In most cases, management expects that in the normal course of business, leases will be renewed.

Operating Leases

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2006:


Year ending December 31:

2008			48
2009			48
2010			48
2011			48
2012 and there after			937

Total minimum payments required			1,129

The total expenses of operating leases in 2006, 2005 and 2004 was US$48, US$42 and US$37, respectively.

19 Segment and geographical information

We adopt SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” with respect to the information we present about our operating segments. SFAS 131 introduced a “management approach” concept for reporting segment information, whereby such information is required to be reported on the basis that the chief decision-maker uses internally for evaluating segment performance and deciding how to allocate resources to segments. We analyze our segment information on aggregated and disaggregated basis as follows:

Ferrous products — comprises iron ore mining and pellet production, as well as the Northern and Southern transportation systems, including railroads, ports and terminals, as they pertain to mining operations. Manganese mining and ferroalloys are also included in this segment.

Non-ferrous — comprises the production of non-ferrous minerals, including potash, kaolin, copper and nickel (co-products and by-products).

Logistics — comprises our transportation systems as they pertain to the operation of our ships, ports and railroads for third-party cargos.

Holdings — divided into the following sub-groups:

	•		Aluminum — comprises aluminum trading activities, alumina refining and aluminum metal smelting and investments in joint ventures and affiliates engaged in bauxite mining.

	•		Others — comprises our investments in joint ventures and affiliates engaged in other businesses.

Information presented to senior management with respect to the performance of each segment is generally derived directly from the accounting records maintained in accordance with accounting practices adopted in Brazil together with certain minor inter-segment allocations.

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		Companhia Vale do Rio Doce

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations (Aggregated)


	As of and for the three-month periods ended (unaudited)
	December 31, 2006																					September 30, 2006																					December 31, 2005
										Holdings																					Holdings																					Holdings
				Non																					Non																					Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Export		4,237			3,182			23			841			15			(1,953	)		6,345			4,540			459			13			817			20			(1,984	)		3,865			3,670			262			21			485			—			(1,586	)		2,852
Gross revenues — Domestic		736			100			336			136			—			(159	)		1,149			769			95			379			167			—			(209	)		1,201			546			52			316			84			—			(104	)		894
Cost and expenses		(3,340	)		(2,591	)		(226	)		(709	)		(6	)		2,112			(4,760	)		(3,317	)		(319	)		(250	)		(735	)		(24	)		2,193			(2,452	)		(2,751	)		(235	)		(263	)		(447	)		(11	)		1,690			(2,017	)
Research and development		(36	)		(85	)		(5	)		—			(49	)		—			(175	)		(34	)		(38	)		(2	)		—			(60	)		—			(134	)		(38	)		(16	)		(3	)		—			(28	)		—			(85	)
Depreciation, depletion and amortization		(182	)		(149	)		(25	)		(21	)		(2	)		—			(379	)		(165	)		(28	)		(22	)		(17	)		—			—			(232	)		(134	)		(21	)		(17	)		(11	)		—			—			(183	)

Operating income		1,415			457			103			247			(42	)		—			2,180			1,793			169			118			232			(64	)		—			2,248			1,293			42			54			111			(39	)		—			1,461
Financial income		265			95			8			7			—			(194	)		181			190			—			8			5			5			(149	)		59			133			—			8			2			(6	)		(106	)		31
Financial expenses		(646	)		(80	)		(3	)		(169	)		(4	)		194			(708	)		(317	)		(2	)		(2	)		9			(9	)		149			(172	)		(195	)		(2	)		2			(119	)		7			106			(201	)
Foreign exchange and monetary gains (losses), net		(26	)		209			(4	)		23			2			—			204			42			—			—			(2	)		(2	)		—			38			(63	)		(51	)		3			(55	)		—			—			(166	)
Gain on sale of investments		80			—			—			—			231			—			311			16			—			—			—			—			—			16			—			—			—			—			—			—			—
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		77			—			27			20			59			—			183			69			—			31			18			69			—			187			128			—			15			14			56			—			213
Income taxes		(235	)		(251	)		(9	)		(56	)		—			—			(551	)		(298	)		1			(2	)		(49	)		—			—			(348	)		(103	)		—			(2	)		46			3			—			(56	)
Minority interests		(19	)		(190	)		—			(18	)		—			—			(227	)		(41	)		—			—			(83	)		—			—			(124	)		(104	)		—			—			18			—			—			(86	)

Net income		911			240			122			54			246			—			1,573			1,454			168			153			130			(1	)		—			1,904			1,089			(11	)		80			17			21			—			1,196


Sales classified by geographic destination:
Export market America, except United States		326			437			9			206			—			(249	)		729			376			—			8			232			—			(249	)		367			350			—			13			67			—			(187	)		243
United States		86			440			—			66			15			(49	)		558			160			5			—			23			20			(66	)		142			116			4			—			48			—			(53	)		115
Europe		1,575			497			6			316			—			(700	)		1,694			1,483			259			5			362			—			(762	)		1,347			1,202			192			4			228			—			(630	)		996
Middle East/Africa/Oceania		198			60			1			73			—			(58	)		274			193			42			—			52			—			(44	)		243			219			16			—			27			—			(46	)		216
Japan		536			473			—			143			—			(220	)		932			515			13			—			137			—			(170	)		495			371			12			—			103			—			(137	)		349
China		1,281			446			8			26			—			(486	)		1,275			1,413			37			—			11			—			(497	)		964			1,120			24			4			12			—			(422	)		738
Asia, other than Japan and China		235			828			(1	)		11			—			(190	)		883			400			103			—			—			—			(196	)		307			292			14			—			—			—			(111	)		195

		4,237			3,181			23			841			15			(1,952	)		6,345			4,540			459			13			817			20			(1,984	)		3,865			3,670			262			21			485			—			(1,586	)		2,852
Domestic market		736			100			336			136			—			(159	)		1,149			769			95			379			167			—			(209	)		1,201			546			52			316			84			—			(104	)		894

		4,973			3,281			359			977			15			(2,111	)		7,494			5,309			554			392			984			20			(2,193	)		5,066			4,216			314			337			569			—			(1,690	)		3,746

F - 40


		Companhia Vale do Rio Doce

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month periods ended (unaudited)
	December 31, 2006
	Revenues																							Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		2,163		484		2,647		(59	)		2,588		(1,183	)		1,405			(152	)		1,253			13,235		820		48
Pellets		432		112		544		(24	)		520		(311	)		209			(17	)		192			593		61		529
Manganese		11		4		15		—			15		(56	)		(41	)		(1	)		(42	)		65		7		—
Ferroalloys		99		48		147		(12	)		135		(120	)		15			(5	)		10			186		11		—

		2,705		648		3,353		(95	)		3,258		(1,670	)		1,588			(175	)		1,413			14,079		899		577

Non ferrous
Nickel and other products (*)		2,786		16		2,802		—			2,802		(2,267	)		535			(124	)		411			17,193		483		222
Potash		—		43		43		(2	)		41		(26	)		15			(7	)		8			178		7		—
Kaolin		62		8		70		(4	)		66		(63	)		3			(6	)		(3	)		249		19		—
Copper concentrate		152		31		183		(8	)		175		(67	)		108			(16	)		92			1,386		41		—

		3,000		98		3,098		(14	)		3,084		(2,423	)		661			(153	)		508			19,006		550		222

Aluminum
Alumina		338		—		338		2			340		(238	)		102			(13	)		89			1,805		170		—
Aluminum		263		65		328		(14	)		314		(143	)		171			(7	)		164			415		26		—
Bauxite		8		—		8		—			8		(8	)		—			—			—			609		95		164

		609		65		674		(12	)		662		(389	)		273			(20	)		253			2,829		291		164

Logistics
Railroads		—		247		247		(45	)		202		(110	)		92			(17	)		75			720		26		222
Ports		4		65		69		(12	)		57		(39	)		18			(4	)		14			222		6		—
Ships		12		14		26		(1	)		25		(16	)		9			(3	)		6			45		2		—

		16		326		342		(58	)		284		(165	)		119			(24	)		95			987		34		222

Others		15		12		27		(2	)		25		(107	)		(82	)		(7	)		(89	)		1,106		7		829

		6,345		1,149		7,494		(181	)		7,313		(4,754	)		2,559			(379	)		2,180			38,007		1,781		2,014


		(*) Includes the product nickel co-products and by products (copper, precious metals, cobalt and others) see note 3 (c).

F - 41


		Companhia Vale do Rio Doce

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month periods ended (unaudited)
	September 30, 2006
	Revenues																							Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		2,385		524		2,909		(82	)		2,827		(1,058	)		1,769			(141	)		1,628			12,383		530		44
Pellets		470		100		570		(22	)		548		(334	)		214			(14	)		200			533		12		471
Manganese		12		5		17		(1	)		16		(17	)		(1	)		(1	)		(2	)		60		1		—
Ferroalloys		85		45		130		(12	)		118		(122	)		(4	)		(6	)		(10	)		196		8		—

		2,952		674		3,626		(117	)		3,509		(1,531	)		1,978			(162	)		1,816			13,172		551		515

Non ferrous
Potash		—		55		55		(3	)		52		(33	)		19			(7	)		12			174		2		—
Kaolin		45		8		53		(2	)		51		(44	)		7			(8	)		(1	)		233		—		—
Copper concentrate		247		33		280		(7	)		273		(71	)		202			(13	)		189			1,352		56		—

		292		96		388		(12	)		376		(148	)		228			(28	)		200			1,759		58		—

Aluminum
Alumina		271		—		271		(8	)		263		(187	)		76			(10	)		66			1,624		114		—
Aluminum		304		59		363		(12	)		351		(192	)		159			(7	)		152			390		10		—
Bauxite		4		—		4		—			4		(5	)		(1	)		—			(1	)		499		74		143

		579		59		638		(20	)		618		(384	)		234			(17	)		217			2,513		198		143

Logistics
Railroads		—		278		278		(47	)		231		(131	)		100			(20	)		80			700		17		198
Ports		11		63		74		(12	)		62		(37	)		25			(4	)		21			222		4		—
Ships		11		20		31		(4	)		27		(28	)		(1	)		—			(1	)		3		—		—

		22		361		383		(63	)		320		(196	)		124			(24	)		100			925		21		198
Others		20		11		31		(2	)		29		(113	)		(84	)		(1	)		(85	)		1,058		6		834

		3,865		1,201		5,066		(214	)		4,852		(2,372	)		2,480			(232	)		2,248			19,427		834		1,690

F - 42


		Companhia Vale do Rio Doce

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month periods ended (unaudited)
	December 31, 2005
	Revenues																							Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		1,682		393		2,075		(57	)		2,018		(768	)		1,250			(128	)		1,122			8,157		830		46
Pellets		555		89		644		(18	)		626		(404	)		222			(9	)		213			461		39		568
Manganese		12		6		18		(1	)		17		(33	)		(16	)		—			(16	)		52		17		—
Ferroalloys		57		38		95		(10	)		85		(79	)		6			(7	)		(1	)		208		27		—

		2,306		526		2,832		(86	)		2,746		(1,284	)		1,462			(144	)		1,318			8,878		913		614

Non ferrous
Potash		—		41		41		(2	)		39		(25	)		14			(3	)		11			166		7		—
Kaolin		42		9		51		(2	)		49		(62	)		(13	)		(1	)		(14	)		231		—		—
Copper concentrate		129		2		131		(3	)		128		(60	)		68			(8	)		60			1,180		58		—

		171		52		223		(7	)		216		(147	)		69			(12	)		57			1,577		65		—

Aluminum
Alumina		131		8		139		(1	)		138		(122	)		16			(6	)		10			1,288		69		—
Aluminum		208		9		217		(1	)		216		(109	)		107			(5	)		102			361		9		58
Bauxite		21		—		21		—			21		(18	)		3			—			3			281		83		178

		360		17		377		(2	)		375		(249	)		126			(11	)		115			1,930		161		236

Logistics
Railroads		—		223		223		(43	)		180		(152	)		28			(13	)		15			612		82		109
Ports		—		57		57		(9	)		48		(35	)		13			(2	)		11			244		15		—
Ships		15		14		29		(1	)		28		(31	)		(3	)		(1	)		(4	)		3		1		—

		15		294		309		(53	)		256		(218	)		38			(16	)		22			859		98		109
Others		—		5		5		—			5		(56	)		(51	)		—			(51	)		922		—		713

		2,852		894		3,746		(148	)		3,598		(1,954	)		1,644			(183	)		1,461			14,166		1,237		1,672

F - 43


		Companhia Vale do Rio Doce

Results by segment — before eliminations (Aggregated)


																																																							As of and for the year ended December 31,
	2006																					2005																					2004
										Holdings																					Holdings																								Holdings
				Non																					Non																					Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Export		15,729			4,199			67			3,125			54			(7,029	)		16,145			12,655			787			75			1,784			—			(5,461	)		9,840			7,589			521			92			1,635			—			(3,725	)		6,112
Gross revenues — Domestic		2,738			277			1,373			474			7			(651	)		4,218			2,197			213			1,215			345			—			(405	)		3,565			1,424			163			871			227			—			(318	)		2,367
Cost and expenses		(12,004	)		(3,301	)		(970	)		(2,597	)		(56	)		7,680			(11,248	)		(9,646	)		(762	)		(886	)		(1,639	)		(10	)		5,866			(7,077	)		(6,459	)		(443	)		(622	)		(1,322	)		(1	)		4,043			(4,804	)
Research and development		(123	)		(166	)		(10	)		—			(182	)		—			(481	)		(87	)		(73	)		(4	)		(5	)		(108	)		—			(277	)		(40	)		(113	)		—			—			—			—			(153	)
Depreciation, depletion and amortization		(632	)		(219	)		(76	)		(66	)		(4	)		—			(997	)		(458	)		(65	)		(45	)		(51	)		—			—			(619	)		(301	)		(35	)		(29	)		(34	)		—			—			(399	)

Operating income		5,708			790			384			936			(181	)		—			7,637			4,661			100			355			434			(118	)		—			5,432			2,213			93			312			506			(1	)		—			3,123
Financial income		789			97			28			20			2			(609	)		327			439			1			34			9			2			(362	)		123			251			2			15			16			3			(205	)		82
Financial expenses		(1,541	)		(86	)		(8	)		(294	)		(18	)		609			(1,338	)		(751	)		(6	)		(19	)		(154	)		8			362			(560	)		(637	)		(6	)		(15	)		(218	)		—			205			(671	)
Foreign exchange and monetary gains (losses), net		206			214			(11	)		119			1			—			529			259			(44	)		(13	)		98			(1	)		—			299			20			5			(1	)		39			2			—			65
Gain on sale of investments		443			—			—			—			231			—			674			—			—			—			—			126			—			126			—			—			8			—			396			—			404
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		312			—			96			76			226			—			710			435			—			54			65			206			—			760			170			—			33			71			268			—			542
Income taxes		(976	)		(250	)		(18	)		(187	)		(1	)		—			(1,432	)		(808	)		(1	)		(17	)		(55	)		1			—			(880	)		(726	)		(7	)		(9	)		(4	)		(3	)		—			(749	)
Minority interests		(157	)		(190	)		—			(232	)		—			—			(579	)		(337	)		—			(1	)		(121	)		—			—			(459	)		(101	)		(2	)		—			(120	)		—			—			(223	)

Net income		4,784			575			471			438			260			—			6,528			3,898			50			393			276			224			—			4,841			1,190			85			343			290			665			—			2,573

Sales classified by geographic destination:
Export market America, except United States		1,249			438			30			726			—			(823	)		1,620			1,313			—			45			320			—			(762	)		916			735			1			65			221			—			(426	)		596
United States		506			450			—			95			54			(237	)		868			464			7			3			211			—			(268	)		417			533			—			15			186			—			(345	)		389
Europe		5,465			1,020			19			1,346			—			(2,667	)		5,183			4,847			449			23			750			—			(2,256	)		3,813			3,223			194			12			730			—			(1,607	)		2,552
Middle East/Africa/Oceania		767			218			1			263			—			(239	)		1,010			775			108			—			42			—			(148	)		777			412			107			—			8			—			(141	)		386
Japan		1,779			523			—			548			—			(662	)		2,188			1,261			44			—			395			—			(469	)		1,231			683			31			—			361			—			(287	)		788
China		4,781			499			16			126			—			(1,716	)		3,706			3,018			79			4			50			—			(1,135	)		2,016			1,392			81			—			129			—			(606	)		996
Asia, other than Japan and China		1,182			1,050			1			21			—			(684	)		1,570			977			100			—			16			—			(423	)		670			611			107			—			—			—			(313	)		405

		15,729			4,198			67			3,125			54			(7,028	)		16,145			12,655			787			75			1,784			—			(5,461	)		9,840			7,589			521			92			1,635			—			(3,725	)		6,112
Domestic market		2,738			277			1,373			474			7			(651	)		4,218			2,197			213			1,215			345			—			(405	)		3,565			1,424			163			871			227			—			(318	)		2,367

		18,467			4,475			1,440			3,599			61			(7,679	)		20,363			14,852			1,000			1,290			2,129			—			(5,866	)		13,405			9,013			684			963			1,862			—			(4,043	)		^8,479

F - 44

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2006
	Revenues																							Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		8,167		1,860		10,027		(271	)		9,756		(4,060	)		5,696			(528	)		5,168			13,235		2,616		48
Pellets		1,590		389		1,979		(86	)		1,893		(1,210	)		683			(53	)		630			593		110		529
Manganese		39		16		55		(3	)		52		(97	)		(45	)		(4	)		(49	)		65		19		—
Ferroalloys		342		166		508		(43	)		465		(443	)		22			(19	)		3			186		34		—

		10,138		2,431		12,569		(403	)		12,166		(5,810	)		6,356			(604	)		5,752			14,079		2,779		577

Non ferrous
Nickel and other products (*)		2,786		16		2,802		—			2,802		(2,267	)		535			(124	)		411			17,193		483		222
Potash		—		143		143		(8	)		135		(84	)		51			(23	)		28			178		16		—
Kaolin		188		30		218		(9	)		209		(182	)		27			(27	)		—			249		19		—
Copper concentrate		690		89		779		(20	)		759		(246	)		513			(49	)		464			1,386		150		—

		3,664		278		3,942		(37	)		3,905		(2,779	)		1,126			(223	)		903			19,006		668		222

Aluminum
Alumina		1,098		10		1,108		(8	)		1,100		(767	)		333			(39	)		294			1,805		433		—
Aluminum		1,093		151		1,244		(29	)		1,215		(558	)		657			(26	)		631			415		43		—
Bauxite		29		—		29		—			29		(29	)		—			—			—			609		273		164

		2,220		161		2,381		(37	)		2,344		(1,354	)		990			(65	)		925			2,829		749		164

Logistics
Railroads		—		1,011		1,011		(177	)		834		(488	)		346			(72	)		274			720		95		222
Ports		15		246		261		(44	)		217		(137	)		80			(16	)		64			222		12		—
Ships		52		52		104		(8	)		96		(97	)		(1	)		(5	)		(6	)		45		2		—

		67		1,309		1,376		(229	)		1,147		(722	)		425			(93	)		332			987		109		222

Others		56		39		95		(6	)		89		(352	)		(263	)		(12	)		(275	)		1,106		126		829

		16,145		4,218		20,363		(712	)		19,651		(11,017	)		8,634			(997	)		7,637			38,007		4,431		2,014


		(*) Includes the product nickel co-products and by products (copper, precious metals, cobalt and others) see note 3 (c).

F-45

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2005
	Revenues																							Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		5,890		1,506		7,396		(234	)		7,162		(2,658	)		4,504			(419	)		4,085			8,157		2,695		46
Pellets		1,722		361		2,083		(78	)		2,005		(1,321	)		684			(23	)		661			461		75		568
Manganese		56		21		77		(6	)		71		(81	)		(10	)		(1	)		(11	)		52		20		—
Ferroalloys		318		176		494		(47	)		447		(344	)		103			(20	)		83			208		82		—

		7,986		2,064		10,050		(365	)		9,685		(4,404	)		5,281			(463	)		4,818			8,878		2,872		614

Non ferrous
Potash		—		149		149		(11	)		138		(86	)		52			(8	)		44			166		18		—
Kaolin		150		27		177		(7	)		170		(176	)		(6	)		(20	)		(26	)		231		5		—
Copper concentrate		354		37		391		(8	)		383		(203	)		180			(34	)		146			1,180		152		—

		504		213		717		(26	)		691		(465	)		226			(62	)		164			1,577		175		—

Aluminum
Alumina		455		76		531		(24	)		507		(445	)		62			(25	)		37			1,288		400		—
Aluminum		784		39		823		(5	)		818		(397	)		421			(26	)		395			361		25		58
Bauxite		54		—		54		—			54		(49	)		5			—			5			281		200		178

		1,293		115		1,408		(29	)		1,379		(891	)		488			(51	)		437			1,930		625		236

Logistics
Railroads		—		881		881		(145	)		736		(528	)		208			(35	)		173			612		247		109
Ports		—		230		230		(34	)		196		(126	)		70			(5	)		65			244		22		—
Ships		56		49		105		(8	)		97		(101	)		(4	)		(3	)		(7	)		3		2		—

		56		1,160		1,216		(187	)		1,029		(755	)		274			(43	)		231			859		271		109

Others		1		13		14		(6	)		8		(226	)		(218	)		—			(218	)		922		34		713

		9,840		3,565		13,405		(613	)		12,792		(6,741	)		6,051			(619	)		5,432			14,166		3,977		1,672

F-46

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2005
	Revenues																							Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		3,146		849		3,995		(128	)		3,867		(1,761	)		2,106			(270	)		1,836			5,374		1,152		42
Pellets		893		255		1,148		(44	)		1,104		(824	)		280			(12	)		268			357		26		393
Manganese		61		15		76		(4	)		72		(46	)		26			—			26			24		5		—
Ferroalloys		423		202		625		(52	)		573		(315	)		258			(15	)		243			157		20		—

		4,523		1,321		5,844		(228	)		5,616		(2,946	)		2,670			(297	)		2,373			5,912		1,203		435

Non ferrous
Gold		—		—		—		—			—		(2	)		(2	)		—			(2	)		—		—		—
Potash		—		124		124		(15	)		109		(51	)		58			(5	)		53			125		44		—
Kaolin		142		22		164		(6	)		158		(93	)		65			(14	)		51			202		45		—
Copper concentrate		184		17		201		(3	)		198		(90	)		108			(16	)		92			997		168		—

		326		163		489		(24	)		465		(236	)		229			(35	)		194			1,324		257		—

Aluminum
Alumina		439		19		458		(18	)		440		(350	)		90			(19	)		71			786		189		—
Aluminum		710		29		739		(3	)		736		(286	)		450			(15	)		435			316		13		55
Bauxite		53		—		53		—			53		(48	)		5			—			5			62		62		171

		1,202		48		1,250		(21	)		1,229		(684	)		545			(34	)		511			1,164		264		226

Logistics
Railroads		—		612		612		(100	)		512		(334	)		178			(28	)		150			351		172		79
Ports		—		173		173		(29	)		144		(89	)		55			(4	)		51			185		1		—
Ships		52		40		92		(7	)		85		(123	)		(38	)		(1	)		(39	)		3		1		—

		52		825		877		(136	)		741		(546	)		195			(33	)		162			539		174		79

Others		10		9		19		(4	)		15		(132	)		(117	)		—			(117	)		124		124		419

		6,113		2,366		8,479		(413	)		8,066		(4,544	)		3,522			(399	)		3,123			9,063		2,022		1,159

F-47

20		Related party transactions

		Transactions with major related parties resulted in the following balances:


	As of December 31,
	2006				2005
	Assets		Liabilities		Assets		Liabilities
AFFILIATED COMPANIES AND JOINT VENTURES
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		58		49		24		42
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		51		19		24		17
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		101		39		47		83
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		39		11		34		26
Baovale Mineração S.A.		1		24		—		18
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		37		—		14		—
Minas da Serra Geral S.A. — MSG		—		14		3		9
MRS Logística S.A.		—		19		15		11
Mineração Rio Norte S.A.		—		21		—		34
Samarco Mineração S.A.		4		—		2		—
TAIWAN NICKEL REFINING CORPORATION		362		—		—		—
KOREA NICKEL CORPORATION		56		—		—		—
Others		11		8		22		12

		720		204		185		252

Current		715		204		181		252

Long-term		5		—		4		—

These balances are included in the following balance sheet classifications:


	As of December 31,
	2006				2005
	Assets		Liabilities		Assets		Liabilities
Current assets
Accounts receivable		675		—		159		—
Loans and advances to related parties		40		—		22		—
Other assets Loans and advances to related parties		5		—		4		—
Current liabilities Suppliers		—		179		—		190
Loans from related parties		—		25		—		62

		720		204		185		252

F-48

The principal amounts of business and financial operations carried out with major related parties are as follows:


	Year ended December 31,
	2006				2005				2004
	Income		Expense		Income		Expense		Income		Expense
AFFILIATED COMPANIES AND JOINT VENTURES

Companhia Siderúrgica de Tubarão — CST		—		—		—		—		251		—
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		363		292		280		310		147		80
Samarco Mineração S.A.		79		—		25		1		16		—
SIDERAR S.A.I.C		—		—		11		—		86		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		204		58		158		65		84		1
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		224		159		170		185		97		—
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		226		191		170		113		92		2
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		410		—		24		—		109		—
Valesul Alumínio S.A		11		—		66		—		16		—
Mineração Rio Norte S.A		—		234		—		136		—		154
Gulf Industrial Investment Company — GIIC		56		2		157		—		74		—
MRS Logística S.A		14		516		4		385		—		80
Others		3		39		19		60		15		56

		1,590		1,491		1,084		1,255		987		373

These amounts are included in the following statement of income line items:


	Year ended December 31,
	2006				2005				2004
	Income		Expense		Income		Expense		Income		Expense
Sales / Cost of iron ore and pellets		1,553		712		964		694		842		108
Revenues / expense from logistic services		13		516		4		387		95		80
Sales / Cost of aluminum products		11		234		66		136		16		144
Financial income/expenses		13		16		26		36		6		10
Others		—		13		24		2		28		31

		1,590		1,491		1,084		1,255		987		373

21		Fair value of financial instruments

		The carrying amount of our current financial instruments generally approximates fair market value because of the short-term maturity or frequent of these instruments.

		The market value of our listed long-term investments, where available, is disclosed in Note 13 to these financial statements.

		Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, the fair market value of long-term debt (current portion not included) at December 31, 2006 and 2005 is estimated as follows:


	As of December 31,
	2006		2005
Fair market value		21,746		4,076
Carrying value		21,122		3,714

Fair market value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. Changes in assumptions could significantly affect the estimates.

F-49

22		Derivative financial instruments

		The main market risks we face are interest rate risk, exchange rate risk and commodity price risk. We manage some of these risks through the use of derivative instruments. Our risk management activities follow the risk management policy, which requires diversification of transactions and counter-parties. We monitor and evaluate our overall position regularly in order to evaluate financial results and impact on our cash flow. We also periodically review the credit limits and creditworthiness of our hedging counter-parties.

(a)		Interest Rate and Exchange Rate Risk

		We are exposed to interest rate risk on our outstanding borrowing and in future debt issuances.

		Our floating rate debt consists principally of U.S. dollar borrowings related to trade finance and loans from commercial banks and Real borrowings indexed to CDI (Interbank Certificate of Deposit), related to the debentures issued in 2006 in the Brazil market.

		To mitigate the effects of interest rate volatility on our foreign debt we sometimes make use of natural hedges allowed by the positive correlation between floating interest rates and metals prices. When natural hedges are not effective, we try replicate the hedging effect by using derivatives.

		Our floating rate debt denominated in reais is mainly subject to changes in CDI, related to the debentures issued in 2006, and associated with the takeout strategy of Inco acquisition.

		To mitigate the foreign exchange exposure component in cash flows, associated with the issuance of debt in Brazilian reais, we have entered into swap agreements to convert cash flows in Brazilian reais indexed to CDI into U.S. dollar cash flows indexed to a fixed rate in dollars.

		We are exposed to exchange rate risk associated with our foreign currency denominated debt. On the other hand, a substantial proportion of our revenues are denominated in, or automatically indexed to, the U.S. dollar. This provides a natural hedge against any devaluation of the Brazilian real against the U.S. dollar. When devaluation occurs, the immediate negative impact on foreign currency denominated debt is offset over time by the positive effect of devaluation on future cash flows. In light of this framework, we generally do not use derivative instruments to manage the currency exposure on our long-term dollar-denominated debt. However, we may occasionally use derivatives to minimize the effects of the volatility of the exchange rates between Brazilian reais and U.S. dollars in the cash flow.

		We use forward currency contracts to eliminate the risk of exchange rate movements on a portion of our future construction cost of capital assets at our Ontario operations and the planned production facilities for the Goro project. These transactions are performed under CVRD Inco. The outstanding transactions are mainly executed to protect the risks arising from the volatility of Euro, AUD, CNY and GBP.

(b)		Commodity Price Risk

		We also use derivative instruments to manage exposure to the fluctuation of commodity prices.

		Nickel

F-50

We do not use derivatives instruments to hedge our exposure to fluctuating nickel prices. We do enter into LME forward purchase contracts which are substantially offset by fixed price customer contracts in order to maintain our exposure to nickel price risk.

F-51

		Copper

		We had outstanding put option contracts, giving us the right, but not the obligation, to sell copper, and sold call option contracts, giving the buyer the right, but not the obligation, to purchase copper, during the period extending to 2008.

		Gold

		We current hold a small position in gold derivative instruments, structured to manage the exposure associated with the production of gold as a by-product of copper concentrate.

		Aluminum

		We had outstanding option contracts and forwards to protect our exposure to aluminum prices in our aluminum and alumina operations.

		Platinum

		We use derivatives to guaranty certain minimum price in respect of a portion of our production of that metal.

		Fuel Oil and Natural Gas

		We use fuel oil and natural gas swap contracts to reduce the effect of energy price volatility on the operational costs.

		Most of our commodity derivative transactions have been settled in cash, without physical delivery of product.

		The nickel, platinum, fuel oil and natural gas derivative trades are performed under CVRD Inco. Copper derivative trades are performed to protect CVRD and CVRD Inco production and provide minimum cash flow requirements in accordance with our risk management policy.

F-52

The asset (liability) balances and the change in fair value of derivative financial instruments are as follows (the quarterly information is unaudited):


	Interest
	rates									Aluminum
	(LIBOR)			Currencies			Gold			Products			Copper			Nickel			Platinum			Total
Unrealized gains (losses) at October 1, 2006		(1	)		35			(51	)		(195	)		3			—			—			(209	)
Gain (Loss) recognized upon consolidation of Inco		4			9			—			—			(364	)		62			(22	)		(311	)
Financial settlement		—			(6	)		7			22			—			(88	)		—			(65	)
Unrealized gains (losses) in the period		3			(54	)		(8	)		(142	)		63			42			2			(94	)
Effect of exchange rate changes		—			—			(1	)		(3	)		—			—			—			(4	)

Unrealized gains (losses) at December 31, 2006		6			(16	)		(53	)		(318	)		(298	)		16			(20	)		(683	)


Unrealized gains (losses) at July 1, 2006		(1	)		2			(61	)		(252	)		—			—			—			(312	)
Financial settlement		—			—			5			23			—			—			—			28
Unrealized gains (losses) in the period		—			33			5			34			3			—			—			75

Unrealized gains (losses) at September 30, 2006		(1	)		35			(51	)		(195	)		3			—			—			(209	)


Unrealized gains (losses) at October 1, 2005		(7	)		1			(37	)		(129	)		—			—			—			(172	)
Financial settlement		1			—			4			21			—			—			—			26
Unrealized gains (losses) in the period		2			—			(16	)		(112	)		—			—			—			(126	)
Effect of exchange rate changes		—			—			3			10			—			—			—			13

Unrealized gains (losses) at December 31, 2005		(4	)		1			(46	)		(210	)		—			—			—			(259	)


Unrealized gains (losses) at January 1, 2006		(4	)		1			(46	)		(210	)		—			—			—			(259	)
Gain (Loss) recognized upon consolidation of Inco		4			9			—			—			(364	)		62			(22	)		(311	)
Financial settlement		2			(6	)		19			102			—			(87	)		—			30
Unrealized gains (losses) in the year		4			(19	)		(23	)		(187	)		65			42			2			(116	)
Effect of exchange rate changes		—			—			(4	)		(23	)		—			—			—			(27	)

Unrealized gains (losses) at December 31, 2006		6			(15	)		(54	)		(318	)		(299	)		17			(20	)		(683	)


Unrealized gains (losses) at January 1, 2005		(17	)		4			(37	)		(182	)		—			—			—			(232	)
Financial settlement		9			(1	)		11			70			—			—			—			89
Unrealized gains (losses) in the year		6			(2	)		(17	)		(88	)		—			—			—			(101	)
Effect of exchange rate changes		(2	)		—			(3	)		(10	)		—			—			—			(15	)

Unrealized gains (losses) at December 31, 2005		(4	)		1			(46	)		(210	)		—			—			—			(259	)


Unrealized gains (losses) at January 1, 2004		(46	)		5			(32	)		(18	)		—			—			—			(91	)
Loss recognized upon consolidation of Albras		—			—			—			(20	)		—			—			—			(20	)
Financial settlement		29			(2	)		4			—			—			—			—			31
Unrealized gains (losses) in the year		1			1			(5	)		(131	)		—			—			—			(134	)
Effect of exchange rate changes		(1	)		—			(4	)		(13	)		—			—			—			(18	)

Unrealized gains (losses) at December 31, 2004		(17	)		4			(37	)		(182	)		—			—			—			(232	)

		Unrealized gains in the amount of US$50, US$38, US$1 and US$4 for December 31, 2006, September 30, 2006, December 31, 2005 and December 31, 2004, respectively, are recorded as “others” in Other assets.

		Changes for the three month periods ended December 31, 2006, September 30, 2006 and December 31, 2005 are unaudited.

		Unrealized gains (losses) in the period are included in our income statement under the caption of financial expenses and foreign exchange and monetary gains (losses), net.

		Final maturity dates for the above instruments are as follows:

F-53


Gold		December 2008
Interest rates(LIBOR)		December 2011
Currencies		December 2011
Aluminum Products		December 2008
Copper concentrate		December 2008
Nickel		September 2008
Platinum		December 2008

F-54

		Supplemental Financial Information (Unaudited) Additional Information

		The following unaudited information provides additional details in relation to certain financial ratios.

		EBITDA — Earnings Before Financial Expenses, Minority Interests, Gain on Sale of Investments, Foreign Exchange and Monetary Gains (Losses), Equity in Results of Affiliates and Joint Ventures and Change in Provision for Losses on Equity Investments, Income Taxes, Depreciation and Amortization

	(a)		EBITDA represents operating income plus depreciation, amortization and depletion plus impairment/gain on sale of property, plant and equipment plus dividends received from equity investees.

	(b)		EBITDA is not a US 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.

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

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

Selected financial indicators for the main affiliates and joint ventures are available on the Company ´s website, www.cvrd.com.br, under “investor relations”

F-55

Calculation of EBITDA (Supplemental information — Unaudited)


	As of and for the three-month periods ended									As of and for the year ended
	December 31,			September 30,			December 31,			December 31,
	2006			2006			2005			2006			2005
Operating income		2,180			2,248			1,461			7,637			5,432
Depreciation		379			232			183			997			619

		2,559			2,480			1,644			8,634			6,051
Dividends received		64			242			136			516			489

EBITDA		2,623			2,722			1,780			9,150			6,540


Net operating revenues		7,313			4,852			3,598			19,651			12,792

Margin EBITDA		35.9	%		56.1	%		49.5	%		46.6	%		51.1	%

Adjusted EBITDA x Operating Cash Flows (Supplemental information — Unaudited)


	As of and for the three-month periods ended																					As of and for the year ended December 31,
	December 31, 2006						September 30, 2006						December 31, 2005						2006						2005
				Operating						Operating						Operating						Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows
Net income		1,573			1,573			1,904			1,904			1,196			1,196			6,528			6,528			4,841			4,841
Income tax — deferred		237			237			(71	)		(71	)		(36	)		(36	)		298			298			126			126
Income tax — current		314			—			419			—			92			—			1,134			—			754			—
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(183	)		(183	)		(187	)		(187	)		(213	)		(213	)		(710	)		(710	)		(760	)		(760	)
Foreign exchange and monetary losses		(204	)		(576	)		(38	)		25			166			235			(529	)		(917	)		(299	)		(237	)
Financial expenses		527			79			113			(55	)		170			140			1,011			36			437			163
Minority interests		227			227			124			124			86			86			579			579			459			459
Gain on sale of investments		(311	)		(311	)		(16	)		(16	)		—			—			(674	)		(674	)		(126	)		(126	)
Net working capital		—			1,298			—			28			—			(167	)		—			423			—			(307	)
Net unrealized derivative losses (gains)		—			—			—			—			—			—			—			—			—			—
Others		—			56			—			(51	)		—			(44	)		—			156			—			(106	)

Operating income		2,180			2,400			2,248			1,701			1,461			1,197			7,637			5,719			5,432			4,053
Depreciation, depletion and amortization		379			379			232			232			183			183			997			997			619			619
Dividends received		64			64			242			242			136			136			516			516			489			489

		2,623			2,843			2,722			2,175			1,780			1,516			9,150			7,232			6,540			5,161


Operating cash flows					2,843						2,175						1,516						7,232						5,161
Income tax					314						419						92						1,134						754
Foreign exchange and monetary gains (losses)					372						(63	)					(69	)					388						(62	)
Financial expenses					448						168						30						975						274
Net working capital					(1,298	)					(28	)					167						(423	)					307
Others					(56	)					51						44						(156	)					106

EBITDA					2,623						2,722						1,780						9,150						6,540

F-56

Board of Directors, Fiscal Council and Executive Officers


Board of Directors		Fiscal Council

Sérgio Ricardo Silva Rosa		Marcelo Amaral Moraes
Chairman		Chairman

Arlindo Magno de Oliveira		Anibal Moreira dos Santos

Vice Chairman
Eduardo Fernando Jardim Pinto		Bernard Appy

Erik Persson		José Bernardo de Medeiros Neto

Francisco Augusto da Costa e Silva		Executive Officers

Hiroshi Tada		Roger Agnelli
		Chief Executive Officer

Jorge Luiz Pacheco
		Carla Grasso
Julio Sérgio Gomes de Almeida		Executive Officer for Human Resources and Corporate Services

Mário da Silveira Teixeira Júnior
		Eduardo de Salles Bartolomeo
Oscar Augusto de Camargo Filho		Executive Officer for Logistics

Renato da Cruz Gomes		Fábio de Oliveira Barbosa
		Chief Financial Officer and Investor Relations

Advisory Committees of the Board of Directors

Controlling Committee		Gabriel Stoliar

Antonio José de Figueiredo Ferreira		Executive Officer for Planning

Inácio Clemente da Silva
Paulo Roberto Ferreira de Medeiros		José Carlos Martins
		Executive Officer for Ferrous Minerals

Executive Development Committee
Arlindo Magno de Oliveira		José Lancaster
João Moisés de Oliveira		Executive Officer for Copper, Coal and Aluminum
Olga Nietta Loffredi
Oscar Augusto de Camargo Filho		Murilo de Oliveira Ferreira
		Executive Officer for Nickel

Strategic Committee
Roger Agnelli		Tito Botelho Martins
Gabriel Stoliar		Executive Officer for Corporate Affairs
Demian Fiocca
Mário da Silveira Teixeira Júnior
Oscar Augusto de Camargo Filho
Sérgio Ricardo Silva Rosa		Marcus Vin—cius Dias Severini
		Chief Officer of Control Department

Finance Committee
Fábio de Oliveira Barbosa
Wanderlei Viçoso Fagundes
Ivan Luiz Modesto Schara		Vera Lúcia de Almeida P. Elias
		Chief Accountant
Governance and Sustainability Committee		CRC-RJ - 043059/O-8
Renato da Cruz Gomes
Ricardo Carvalho Giambroni
Ricardo Simonsen

F-57

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.


Date: March 9, 2007	COMPANHIA VALE DO RIO DOCE
	(Registrant)


	By:	/s/ Fabio de Oliveira Barbosa

		Fabio de Oliveira Barbosa
		Director of Investor Relations