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 2008

Companhia Vale do Rio Doce

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

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

(Check One) Form 20-F þ Form 40-F o

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

(Check One) Yes o No þ

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

Contents


A- Financial Statements			3

1- Balance Sheet			3

2- Statement of Income			5

3- Statement of Changes In Stockholders’ Equity			7

4- Statement of Changes In Financial Position			8

5- Statement of Cash Flows			9

6- Statement of Value Added			10

7- Notes to the Financial Statements at December 31, 2007 and 2006			11

7.1- Operations			11
7.2- Presentation of Financial Statements			11
7.3- Accounting Pronouncements Recently-issued by Comissão de Valores Mobiliários			11
7.4- Principles and Practices of Consolidation			11
7.5- Summary of significant Accounting Policies			12
7.6- Independent Auditors Policy			13
7.7- Acquisitions and divestments			14
7.8- Cash and Cash Equivalents			15
7.9- Accounts Receivable			15
7.10- Related Parties			15
7.11- Inventories			16
7.12- Taxes to recover or offset			16
7.13- Deferred Income Tax and Social Contribution			17
7.14- Investments — Consolidated and Parent Company			18
7.15- Intangible			19
7.16- Property, Plant and Equipment			20
7.17- Loans and Financing			20
7.18- Contingent Liabilities			23
7.19- Provision for asset retirement obligations			25
7.20- Pension Plan			25
7.21- Paid-up Capital			28


7.22- Resources linked to future mandatory conversion in shares			29
7.23- ADR Program — American Depositary Receipts			29
7.24- Treasury Stock			30
7.25- Remuneration of Stockholders			30
7.26- Financial Results			31
7.27- Financial Instruments — Derivatives			32
7.28- Selling, Administrative, Other Operating Expenses and Non Operating Income			36
7.29- Concessions, Subconcessions and Leases			36
7.30- Effects on the Statements if Price-Level Restatement were Applied (unaudited)			38
7.31- Insurance			39
7.32- Profit Sharing Plan			39
7.33- Information by segment			39
7.34- Social Report			42

8- Attachment I — Statement of Investments in Subsidiaries and Jointly — Ontrolled Companies			43

9- Report of the Independent Accountants			44

10- Opinion of the Fiscal Council on the Annual Report and Financial Statements at December 31, 2007			44

11- Opinion of the Board of Directors on the Annual Report and Financial Statements at December 31, 2007			47

B- Additional Information			48

12- Cash Generation (unaudited)			48

13- Board of Directors, Fiscal Council, Advisory Committees and Executive Officers			49

A- Financial Statements

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

1- Balance Sheet


Years ended December, 31		In millions of reais


			Consolidated				Parent Company
	Notes		2007		2006		2007		2006
Assets
Current assets
Cash and cash equivalents		7.8		2,128		9,778		120		203
Accounts receivable from customers		7.9		7,136		7,892		2,379		4,912
Related parties		7.10		36		61		1,580		1,056
Inventories		7.11		7,258		6,369		1,932		1,105
Taxes to recover or offset		7.12		2,230		1,003		792		463
Deferred income tax and social contribution		7.13		1,084		885		611		404
Others				1,281		1,181		479		379

				21,153		27,169		7,893		8,522

Non-current assets
Long-term receivables
Related parties		7.10		5		11		3,413		381
Loans and financing		7.17		226		234		115		110
Deferred income tax and social contribution		7.13		482		2,759		237		481
Judicial deposits		7.18		864		841		776		506
Taxes to recover or offset		7.12		500		809		193		220
Advances to energy suppliers				1,016		945		—		—
Provisions for derivatives		7.27		1,191		106		1,064		51
Prepaid expenses				459		811		—		116
Others				219		175		107		21

				4,962		6,691		5,905		1,886

Investments		7.14		1,869		1,856		62,738		54,572
Intangibles		7.15		12,834		9,532		12,143		9,507
Property, plant and equipment		7.16		91,959		77,611		28,097		25,665
Deferred charges				122		150		—		—

				106,784		89,149		102,978		89,744

				132,899		123,009		116,776		100,152


Years ended December 31	In millions of reais
			Consolidated				Parent Company
	Notes		2007		2006		2007		2006
Liabilities, and stockholders’ equity
Current liabilities
Short-term debt		7.17		1,007		2,035		297		1,511
Current portion of long-term debt		7.17		2,354		1,626		1,483		515
Payable to suppliers and contractors				4,294		5,164		1,927		1,690
Related parties		7.10		15		30		6,702		4,502
Payroll and related charges				1,344		1,001		776		494
Pension Plan		7.20		232		230		78		78
Proposed dividends and interest on stockholders’ equity				4,752		3,189		4,752		3,189
Provision for income tax				2,222		1,946		—		—
Taxes, contributions and royalties				586		285		50		79
Provisions for derivatives		7.27		613		—		47		—
Ferrovia Norte Sul subconcession				372		—		—		—
Others				1,556		1,138		500		426

				19,347		16,644		16,612		12,484

Non-current liabilities

Long-term debt		7.17		32,445		46,004		8,643		26,013
Related parties		7.10		—		1		29,466		18,956
Provisions for contingencies		7.18		3,189		2,363		1,979		1,508
Deferred income tax and social contribution		7.13		8,073		4,319		—		—
Pension Plan		7.20		3,808		4,118		590		569
Provision for asset retirement obligations		7.19		1,649		1,476		743		619
Provisions for derivatives		7.27		9		1,566		—		69
Ferrovia Norte Sul subconcession				372		—		—		—
Others				2,201		1,412		1,713		836

				51,746		61,259		43,134		48,570

Deferred income				93		7		—		—

Minority interest				4,683		6,001		—		—

Stockholders’ equity
Paid-up capital		7.21		28,000		19,492		28,000		19,492
Revenue reserves				25,966		19,606		25,966		19,606
Resources linked to the future mandatory conversion in shares		7.22		3,064		—		3,064		—

				57,030		39,098		57,030		39,098

				132,899		123,009		116,776		100,152

The notes and attachment I are an integral part of the financial statements

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

2- Statement of Income


Years ended December 31	In millions of reais
	Consolidated																	Parent Company
			Quarter (Unaudited)									Accumulated						Accumulated
	Notes		4Q/07			3Q/07			4Q/06			2007			2006			2007			2006
Operating revenues
Ore and metals				12,935			13,231			13,961			55,332			36,135			20,698			17,817
Transport services				843			894			849			3,497			3,405			1,939			1,864
Sales of aluminum-related products				1,247			1,358			1,496			5,529			5,533			278			102
Sales of steel products				265			318			333			1,248			1,478			—			—
Other products and services				231			236			53			779			195			114			91

				15,521			16,037			16,692			66,385			46,746			23,029			19,874
Value Added taxes				(436	)		(417	)		(370	)		(1,621	)		(1,454	)		(1,213	)		(1,051	)

Net operating revenues				15,085			15,620			16,322			64,764			45,292			21,816			18,823


Cost of products and services
Ores and metals				(6,271	)		(5,409	)		(5,872	)		(22,814	)		(14,578	)		(11,944	)		(9,776	)
Transport services				(538	)		(520	)		(441	)		(2,146	)		(1,770	)		(769	)		(718	)
Aluminum-related products				(853	)		(785	)		(829	)		(3,246	)		(3,013	)		(192	)		(75	)
Steel products				(277	)		(310	)		(310	)		(1,199	)		(1,231	)		—			—
Other products and services				(221	)		(243	)		(72	)		(679	)		(164	)		(41	)		(62	)

				(8,160	)		(7,267	)		(7,524	)		(30,084	)		(20,756	)		(12,946	)		(10,631	)


Gross profit				6,925			8,353			8,798			34,680			24,536			8,870			8,192

Gross margin				45.9%			53.5%			53.9%			53.5%			54.2%			40.7%			43.5%

Operating expenses
Selling and Administrative		7.28		(799	)		(581	)		(602	)		(2,550	)		(1,952	)		(1,159	)		(881	)
Research and development				(462	)		(391	)		(375	)		(1,397	)		(1,042	)		(767	)		(590	)
Other operating expenses		7.28		(608	)		(396	)		(741	)		(1,418	)		(1,453	)		(493	)		(856	)

				(1,869	)		(1,368	)		(1,718	)		(5,365	)		(4,447	)		(2,419	)		(2,327	)


Operating profit before financial results and results of equity investments				5,056			6,985			7,080			29,315			20,089			6,451			5,865


Years ended December 31	In millions of reais
	Consolidated																	Parent Company
			Quarter (Unaudited)									Accumulated						Accumulated
	Notes		4Q/07			3Q/07			4Q/06			2007			2006			2007			2006
Results of equity investments
Gain on investments accounted for by the equity method		7.14		46			44			118			143			389			22,483			10,708
Provision for losses				—			—			—			—			—			25			(60	)
Exchange variation in stockholders ´equity and goodwill of companies abroad				(22	)		(17	)		—			(112	)		(25	)		(8,625	)		(760	)

				24			27			118			31			364			13,883			9,888
Amortization of goodwill		7.14		(333	)		(344	)		(262	)		(1,304	)		(563	)		(1,304	)		(563	)
Exchange variation in goodwill of companies abroad				(265	)		(326	)		—			(1,132	)		—			(1,132	)		—

				(574	)		(643	)		(144	)		(2,405	)		(199	)		11,447			9,325


Financial results, net		7.26		395			138			(771	)		277			(1,745	)		3,320			(1,065	)

Non-operating income		7.28		—			197			(1,006	)		1,458			(215	)		1,300			278


Income before income tax and social contribution				4,877			6,677			5,159			28,645			17,930			22,518			14,403

Income tax and social contribution		7.13		(183	)		(1,633	)		(1,420	)		(7,085	)		(3,390	)		(2,512	)		(972	)


Income before minority interests				4,694			5,044			3,739			21,560			14,540			20,006			13,431

Minority interest				(284	)		(385	)		(371	)		(1,554	)		(1,109	)		—			—


Net income for the period				4,410			4,659			3,368			20,006			13,431			20,006			13,431


Number of shares outstanding at the end of the period (in thousands)				4,832,391			4,832,391			4,832,388			4,832,391			4,832,388			4,832,391			4,832,388


Net earnings per share outstanding at the end of the period (R$)				0.91			0.96			0.70			4.14			2.78			4.14			2.78

The notes and attachment I are an integral part of the financial statements

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

3- Statement of Changes in Stockholders’ Equity


Years ended December 31															In millions of reais
			Revenue reserves																		Resources linked to
			Expansion/			Treasury			Unrealized						Fiscal						mandatory conversion in
	Paid-up capital		Investments			stock			income			Legal			incentives			Retained earnings			shares		Total
December 31, 2005		14,000		8,463			(131	)		237			1,400			83			—			—		24,052


Capital Increase		5,492		—			—			—			—			—			—			—		5,492

Net income for the year		—		—			—			—			—			—			13,431			—		13,431

Realization of reserves		—		—			—			(114	)		—			—			114			—		—

Treasury stock		—		—			(659	)		—			—			—			—			—		(659	)

Interim dividends		—		—			—			—			—			—			(29	)		—		(29	)

Stockholder’s remuneration payed		—		—			—			—			—			—			(3,189	)		—		(3,189	)

Appropriation to revenue reserves		—		9,645			—			—			672			10			(10,327	)		—		—


December 31, 2006		19,492		18,108			(790	)		123			2,072			93			—			—		39,098

Net income for the period		—		—			—			—			—			—			20,006			—		20,006

Capitalization of reserves		8,508		(7,673	)		—			—			(752	)		(83	)		—			—		—

Resources linked to mandatory conversion in shares		—		—			—			—			—			—			—			3,064		3,064

Interim dividends		—		(371	)		—			—			—			—			(15	)		—		(386	)

Stockholder’s remuneration proposed		—		—			—			—			—			—			(4,752	)		—		(4,752	)

Appropriation to revenue reserves		—		14,220			—			(62	)		1,000			81			(15,239	)		—		—


December 31, 2007		28,000		24,284			(790	)		61			2,320			91			—			3,064		57,030

The notes and attachment I are an integral part of the financial statements

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

4- Statement of Changes in Financial Position


Years ended December 31	In millions of reais
	Consolidated						Parent Company
	2007			2006			2007			2006
Funds were provided by:
Net income for the year		20,006			13,431			20,006			13,431
Amounts that do not affect working capital:
Results of equity investments		2,405			199			(11,447	)		(9,325	)
Dividends/interest on stockholders’ equity		134			140			2,775			2,454
Depreciation, amortization and depletion		4,119			2,203			1,432			1,080
Long term deferred income tax and social contribution		7,303			61			244			(69	)
Investments sales		1,500			1,489			1,432			770
Results on sale of assets		(1,458	)		(1,212	)		(1,300	)		(278	)
Net monetary and exchange rate variations on long-term assets and liabilities		(6,468	)		(484	)		(5,625	)		(565	)
Disposal of property, plant and equipment		349			284			536			118
Amortization of goodwill in the cost of products sold		51			327			51			327
Net unrealized derivative losses		(1,715	)		316			(1,551	)		(13	)
Minority interest		1,554			1,109			—			—
Others		240			13			324			(348	)


Total funds from operations		28,020			17,876			6,877			7,582

Loans to related parties, transferred to current assets		20			12			46			45
Loans and financing obtained		19,281			49,388			1,983			38,035
Loans from related parties		—			31			16,534			14,840
Others		1,570			673			1,646			511


Total funds provided		48,891			67,980			27,086			61,013


Funds were used for:
Long-term debt transferred to current liabilities		24,802			15,860			19,495			15,025
Related parties		6			382			82			92
Additions to property, plant and equipment		25,429			9,433			4,526			6,099
Additions to Investments		492			315			2,314			34,647
Dividends/interest on stockholders’ equity		5,138			3,218			5,138			3,218
Guarantees and deposits		254			190			202			129
Advances to energy suppliers		71			217			—			—
Others		1,340			507			86			910


Total funds used		57,532			30,122			31,843			60,120


Increase (decrease) in working capital		(8,641	)		37,858			(4,757	)		893


Changes in working capital are as follows:

Initial working capital of new consolidated investments		78			28,237			—			—
Current assets:
At the end of the year		21,153			27,169			7,893			8,522
At the beginning of the year		27,169			12,571			8,522			5,206

		(6,016	)		14,598			(629	)		3,316


Current liabilities:
At the end of the year		19,347			16,644			16,612			12,484
At the beginning of the year		16,644			11,667			12,484			10,061

		2,703			4,977			4,128			2,423


Increase (decrease) in working capital		(8,641	)		37,858			(4,757	)		893

The notes and attachment I are an integral part of the financial statements

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

5- Statement of Cash Flows


Years ended December 31	In millions of reais
										Consolidated						Parent Company
	Quarter (Unaudited)									Accumulated						Accumulated
	4Q/07			3Q/07			4Q/06			2007			2006			2007			2006
Cash flows from operating activities:
Net income for the period		4,410			4,659			3,368			20,006			13,431			20,006			13,431
Adjustments to reconcile net income for the period with cash provided by operating activities:
Results of equity investments		574			644			144			2,405			199			(11,447	)		(9,325	)
Sale of assets		—			(197	)		(421	)		(1,458	)		(1,212	)		(1,300	)		(278	)
Depreciation, amortization and depletion		1,300			999			827			4,119			2,203			1,432			1,080
Deferred income tax and social contribution		(505	)		(493	)		81			(1,831	)		(158	)		37			(139	)
Financial expenses and monetary and exchange rate variations on assets and liabilities, net		(2,008	)		(1,773	)		80			(5,153	)		(193	)		(6,330	)		(385	)
Minority interest		284			385			371			1,554			1,109			—			—
Disposal of property, plant and equipment		203			22			162			349			284			536			118
Amortization of goodwill in the cost of products sold		—			—			47			51			327			51			327
Net unrealized losses (gains) on derivatives		(606	)		(643	)		214			(1,715	)		315			(1,551	)		(13	)
Dividends/interest on stockholders’ equity received		75			13			4			134			140			1,962			2,134
Others		(50	)		102			80			229			(57	)		643			38

		3,677			3,718			4,957			18,690			16,388			4,039			6,988


Decrease (increase) in assets:
Accounts receivable		349			1,268			264			1,359			(821	)		(500	)		(2,877	)
Inventories		(475	)		(602	)		(1	)		(1,397	)		(470	)		(690	)		159
Advances to energy suppliers		46			17			(17	)		(71	)		(217	)		—			—
Others		513			292			(441	)		348			(868	)		53			(346	)

		433			975			(195	)		239			(2,376	)		(1,137	)		(3,064	)


Increase (decrease) in liabilities:
Suppliers and contractors		559			194			230			1,358			(130	)		238			(78	)
Payroll and related charges		165			226			(159	)		223			(183	)		281			70
Taxes and contributions		(1,084	)		1,100			(212	)		242			122			(29	)		(11	)
Others		(50	)		(661	)		242			(405	)		108			997			(269	)

		(410	)		859			101			1,418			(83	)		1,487			(288	)


Net cash provided by operating activities		3,700			5,552			4,863			20,347			13,929			4,389			3,636


Cash flows from investing activities:
Loans and advances receivable		(39	)		6			(261	)		32			(322	)		281			155
Guarantees and deposits		(87	)		(28	)		87			(254	)		(190	)		(202	)		(129	)
Additions to investments		(362	)		(32	)		(80	)		(492	)		(315	)		(2,314	)		(34,647	)
Additions to property, plant and equipment		(4,681	)		(3,050	)		(4,191	)		(13,159	)		(10,102	)		(4,505	)		(6,144	)
Proceeds from disposal of property, plant and equipment/investments		—			198			608			1,500			1,670			1,432			888

Net cash used in acquisitions and increase of funds to subsidiaries, net of the cash of subsidiary		—			—			(28,211	)		(6,404	)		(28,237	)		—			2

Net cash used in investing activities		(5,169	)		(2,906	)		(32,048	)		(18,777	)		(37,496	)		(5,308	)		(39,875	)


Cash flows from (used in) financing activities:
Short-term debt additions		3,973			1,070			2,767			9,959			11,475			5,305			7,053
Short-term debt repayments		(3,549	)		(975	)		(1,828	)		(10,532	)		(10,004	)		(1,637	)		(5,638	)
Long-term debt		1,210			159			45,855			15,681			49,419			18,517			52,783
Issue of convertible notes, in common shares		—			—			—			2,481			—			—			—
Issue of convertible notes, in preferred shares		—			—			—			1,119			—			—			—
Repayments:
Related parties		—			—			—			—			—			(82	)		—
Financial institutions		(250	)		(1,675	)		(14,949	)		(23,046	)		(16,615	)		(17,693	)		(14,449	)
Interest on stockholders’ equity paid to stockholders and dividends		(2,664	)		—			(1,462	)		(4,882	)		(2,974	)		(3,574	)		(2,779	)
Treasury stock		—			—			—			—			(659	)		—			(659	)

Net cash provided by (used in) financing activities		(1,280	)		(1,421	)		30,383			(9,220	)		30,642			836			36,311


Increase (decrease) in cash and cash equivalents		(2,749	)		1,225			3,198			(7,650	)		7,075			(83	)		72
Cash and cash equivalents, beginning of the period		4,877			3,652			6,580			9,778			2,703			203			131

Cash and cash equivalents, end of the period		2,128			4,877			9,778			2,128			9,778			120			203

Cash paid during the period for:
Short-term interest		(18	)		(23	)		(14	)		(143	)		(41	)		(102	)		(18	)
Long-term interest		(649	)		(623	)		(562	)		(2,505	)		(1,271	)		(2,490	)		(903	)
Income tax and social contribution		(867	)		(986	)		(151	)		(5,724	)		(1,264	)		(2,219	)		(912	)

Non-cash transactions:
Additions to property, plant and equipment — interest capitalization		145			7			(7	)		(113	)		(38	)		(12	)		(46	)
Transfer of advance for future capital increase to investments		—			—			—			—			—			(105	)		(282	)

The notes and attachment I are an integral part of the financial statements

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

6- Statement of Value Added


Years ended December 31	In millions of reais
	Consolidated												Parent Company
	2007			%			2006			%			2007			%			2006			%
Generation of Value Added

Gross revenue		66,385			100			46,746			100			23,029			100			19,874			100

Less: Acquisition of products		(4,890	)		(7	)		(3,308	)		(7	)		(2,958	)		(13	)		(1,901	)		(10	)
Outsourced services		(5,236	)		(8	)		(4,556	)		(10	)		(3,024	)		(13	)		(2,925	)		(15	)
Materials		(4,833	)		(7	)		(3,524	)		(8	)		(2,145	)		(9	)		(1,945	)		(10	)
Fuel oil and gas		(3,115	)		(5	)		(2,361	)		(5	)		(1,183	)		(5	)		(951	)		(5	)
Research and development, selling and administrative		(2,031	)		(3	)		(1,642	)		(4	)		(850	)		(4	)		(669	)		(3	)
Other costs and expenses		(4,011	)		(6	)		(3,672	)		(8	)		(191	)		(1	)		(962	)		(5	)

Gross Value Added		42,269			64			27,683			58			12,678			55			10,521			52

Depreciation, amortization and depletion		(4,170	)		(6	)		(2,530	)		(5	)		(1,483	)		(6	)		(1,407	)		(7	)


Net Value Added		38,099			58			25,153			53			11,195			49			9,114			45

Received from third parties

Financial revenue (a)		4,517			7			701			1			4,177			18			470			2
Equity results		(2,405	)		(4	)		(199	)		—			11,447			50			9,325			47

Non operating results		40,211			61			25,655			54			26,819			117			18,909			94


Total Value Added to be distributed
Employees		5,021			12			3,311			13			1,596			6			1,397			7
Government		9,678			24			5,693			22			4,571			17			2,799			15
Third parties’ capital (interest and monetary and exchange variances, net) (b)		3,952			10			2,111			8			646			2			1,282			7
Stockholders’ remuneration		5,138			13			3,218			13			5,138			19			3,218			17
Minority interest		1,554			4			1,109			4			—			—			—			—
Retained earnings		14,868			37			10,213			40			14,868			56			10,213			54

Total Value added distributed		40,211			100			25,655			100			26,819			100			18,909			100

The notes and attachment I are an integral part of the financial statements

(a) Includes monetary and exchange rate variation losses from assets;

(b) Includes monetary and exchange rate variations gains from liabilities.

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

7- Notes to the Financial Statements at December 31, 2007 and 2006

Expressed In million of reais

7.1- Operations

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

7.2- Presentation of Financial Statements

The Financial Statements have been prepared in accordance with accounting practices followed in Brazil, based on corporate legislation, as well as the rules and guidelines issued by the Comissão de Valores Mobiliários — CVM (Brazilian Securities Commission) and also in the cases that there is no conflict according to the International Accounting Practices.

As part of the Financial statements, the Company present as additional information the calculation of the earnings before financing results, equity results, income tax and social contribution, depreciation and amortization – EBITDA.

Although the EBITDA, as defined before, does not offer valuation for operational cash flow for Brazilian accounting principles, is often used by financial analysts on valuation of our business and Management uses this indicator to measure our operational performance.

Some figures related to the Financial Statements as of 2006 were reclassified to improve the comparability.

7.3- Accounting Pronouncements Recently-issued by Comissão de Valores Mobiliários

On December 28, 2007 was enacted the Law 11.638/07 that changes the Corporate Law mainly related to accounting aspects, with the aim to align the Brazilian accounting rules with the international accounting rules, and also give Brazilian Securities Commission — CVM the power/duty to issue rules to the public companies in accordance with international standards issued by International Accounting Standards Board.

The main changes included in the new Law from 2008 onwards were: replacement of the Statement of Changes in Financial Position (DOAR) by the Statement of Cash Flow, inclusion of the Statement of Value Added (DVA), requirement for the Company to periodically analyze the recoverability of the amounts booked at permanent, intangible and deferred assets, adjustment to market value of financial instruments and others, practices already substantially adopted by the Company.

CVM intends to conclude by the end of 2008, the entire regulatory process for items amended in the Law. The convergence of International Accounting Standards still depends of regulatory process to be develop by CVM. As a result of this regulatory process CVM issued on 01/29/08 the Deliberation CVM No 534, which approved the Technical Decision CPC 02, that settles the effects of changes in exchange rates and conversion of Financial Statements.

The company believes that the main effects of International Rules on our Financial Statements will be the accounting treatment of goodwill amortization on acquired companies (effect in 2007 of R$1,304 of expense) and the treatment of exchange rate on the investments abroad (effect in 2007 of R$2,469 of expense), as well as the tax effect.

7.4- Principles and Practices of Consolidation

(a)		The consolidated Financial Statements show the balances of assets and liabilities on 12/31/07 and 12/31/06 and the operations of the Parent Company, its direct and indirect subsidiaries and its jointly-controlled companies;

(b)		Intercompany balances and the Parent Company’s investments in its direct and indirect subsidiaries and jointly-controlled companies were eliminated in the consolidation. Minority interest is shown separately on the balance sheet and statement of income;

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

(d)		The principal figures of the subsidiaries and jointly-controlled companies included in the consolidation are presented in Attachment I; and

(e)

The investments in hydroelectric projects are made via consortium contracts under which the company has an undivided interest in assets and are liable for its proportionate share of liabilities and expenses, which are based on the proportionate share of power output. The company has not joint liability for any obligations, and all the recorded costs, income, assets and liabilities relate to the entities within the 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 the company ´s external legal counsel has confirmed this conclusion. So, the company recognizes its proportionate share of costs and its undivided interest in assets relating to hydroelectric projects.

7.5- Summary of significant Accounting Policies

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

(b)		The preparation of financial statements requires management to make estimates to record some assets, liabilities and transactions. As a result, the financial statements of the Company include some estimates for useful lives of property, plant and equipment, provisions necessary for assets, contingent liabilities, operational provisions and other similar evaluations. Actual results could differ from those estimates;

(c)		The information presented to the management with the performance of each segment is usually derived on the accounting records, with some relocation between segments. We analyze the information by segment as follows:

	•		Ferrous products — comprise 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 – comprise the production of non-ferrous minerals, including potash, kaolin, copper and nickel (co-products and by-products).

	•		Logistics – comprise 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.

	•		Other — comprises our investments in joint ventures and affiliates engaged in other business.

(d)		Assets and liabilities that are realizable or due more than 12 months after the financial statements date are classified as non-current;

(e)		Revenues are recognized in the results when all the risks and benefits of the product or service are transferred to the customer. The income is not recognized when there is significant uncertainty of its realization;

(f)		The accounts receivable are recorded and stated in the balance sheet by the nominal value increased by monetary or exchange variations, when applicable, reduced by provisions to cover extraordinary loss on its realization;

		The allowance for doubtful accounts is set up at in amount considered sufficient by the management to cover eventual loss on the realization of these credits. The estimated value of the allowance for doubtful accounts can be modified based on the expectation of the management about the possibility to recover the amounts or changes in the financial situation of the customers;

(g)		Marketable securities, classified as cash and cash equivalents are represented by less than 90 days applications and are stated at cost plus accrued income earned to the financial statements date, limited to the market value;

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

(i)		Assets and liabilities in foreign currencies are translated at exchange rates in effect at the financial statements date, being US$1.00 equivalent to R$1.7713 at 12/31/07 (US$1.00 equivalent to R$2.1380 at 12/31/06) and those in local currency, when applicable, are restated based on contractual indices;

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

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

(l)		Property, plant and equipment, including interest incurred during the construction period, are recorded at historical cost (the assets acquired in Brazil are also increased by monetary restatement up to 1995) and depreciated on the straight-line method, based on the estimated useful lives of the assets. Depletion of mineral reserves is based on the ratio between effective production and the total probable and proven reserves.

		The company revised the accounting value of the long-term assets used in their operations at least annually or in a period shorter than this every time there is an event in the circumstances that may indicate that the value of an asset or a group of assets maybe not be recovered.

		If the discounted future cash flow of an asset or a group of assets indicate that its recoverability may not be possible, the company adjusts the accounting value of this asset by recording a loss in the amount that exceed the probably recovered amount. The probably recovered amount is based on the higher value between (a) the estimated value of the assets less the estimate costs to sell it and (b) the use value based on the present value of the future cash flows on the cash generation unit in which the asset is included.

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

(n)		During the development of a mine, stripping costs registered are capitalized as part of developing costs. Post-production stripping costs are recorded as production costs;

(o)		Intangibles are recorded at acquisition cost, deducted by accumulated amortization and provisions for losses if applicable. They refers basically to goodwill on acquisitions based on expectation of future profitability of Vale Inco, Caemi, MBR and Vale Australia;

(p)		The assets and liabilities of deferred taxes are based: (a) on the temporary differences between the accounting value and the fiscal bases of our assets and liabilities; (b) the tax loss of income tax; (c) on the negative basis on the calculation of social contribution, based on the assumption of future taxable profits. If the Company generate futures loss, or if it is not able to generate future profit, or if there is a significant change in the effective tax rates or in the necessary time to these deferred taxes been deductible or taxable, the management may considered to be necessary to constitute a provison for losses of these deferred assets;

(q)		The derivatives contracts used to manage the associated risks on the variation of exchange rates, interest rates and are commodities prices recorded on the accrual basis of accounting and the gain and loss are recorded in financial income or expenses and exchange variation;

(r)		The Company follows the accounting practices laid down by Deliberation CVM 371/00 related to the recognition of liabilities and results from actuarial valuation of employees ´ pension plan;

(s)		The expenditures of the environmental impact caused by the activities of the Company are booked as asset retirement obligations;

(t)		The financial statements of the Parent Company reflect the Board of Directors’ proposal for appropriation of the net income for the year, on the assumption of the approval of the Annual General Meeting of Stockholders’; and

(u)		The approval of the Financial Statements by the Executive Ofiicers was on 02/25/08. There were no events subsequent to the Balance Sheet date that should be reported.

7.6- Independent Auditors Policy

The Company developed and formalized internal rules and procedures of pre-approval of the services contracted with its external auditors, for the purpose avoiding the conflict of interest, loss of independence or objective of its independent external auditors.

The policy concerning independent auditors in relation to non-audit services is based on the maintenance of their independence. According to best practices of corporate governance, all services rendered by independent auditors are pre-approved by the Fiscal Council.

According to CVM rule 381/2003, the services contracted with the prsent auditors of the Company, Deloitte Touche Tohmatsu Auditores Independentes, during 2007 to Vale and its direct and indirect subsidiaries and its jointly-controlled companies were as follows:


	2007
Audit Fees		1.5

Audit — Related Fees		0.1

Rewiew of DIPJ (Income tax return)		1.3

Other		0.2


Total Fees		3.1

7.7- Acquisitions and divestments

(a)		In October 2007 the Company won the auction for commercial exploitation of a 720 km stretch of the North-South railroad (FNS), during 30 years, running from Açailândia, state of Maranhão, to Palmas, state of Tocantins in the amount of R$1,478. The amount of R$ 739 was already paid, which represents 50% of the sub concession. The second installment, equal to 25% of the amount is scheduled to be paid in December 2008, while the last installment shall be paid at the time of the completion of the last part of the railroad, increased by IGP-DI until the payment date;

(b)		In July 2007, the Company sold its participation of 1.8% of the ordinary shares of Lion Ore Mining International Ltd. (Lion Ore), held by its subsidiary Vale Inco for R$197 with a gain of R$153;

(c)		In June 2007, the Company sold through a primary and secondary public offering 25,213,664 common shares of Log-In Logística Intermodal S/A. (Log-In), representing 57.84% of total capital, for R$347 with a gain on sale of R$301 and gain on capital of R$116. In July the company sold 5.1% additional stake for R$44 with a gain of R$38. Currently the Company holds 31.27% of total capital of this entity, which is recognized as an equity investee, since June 2007.

(d)		In May 2007, the Company sold in a public offering 13,802,499 Usiminas shares not subject to the shareholders’ agreement and received total proceeds of R$1,475 generating a gain of R$839. The Company retained 6,608,608 shares which are bound by the current shareholders agreement of Usiminas.

(e)		In May 2007, the Company acquired 6.25% of EBM for R$467. On this occasion an agreement was entered into that grants us, during the next 30 years, the control of MBR, including the right to dividends. In exchange, Vale will pay a total of US$ 61 for the year of 2007 and 29 annual amounts of US$ 48 from 2008 onwards.

(f)		In April 2007, Vale acquired 100% of Vale Australia (formerly denominated AMCI Holdings Australia Pty – AMCI), a private company held in Australia, which operates and controls coal assets through joint ventures, for R$1,328.

(g)		In March 2007, Vale acquired the remaining 18% interest in Ferro Gusa held by Nucor do Brasil S.A. for R$41. As a result Vale now owns 100% of Ferro Gusa’s shares;

(h)		In January 2007, the Company finalized the process of acquisition of Inco with the acquisition of the additional participation of 12.27% for R$4 billion. The total acquisition reached the amount of R$36 billion. The special meeting of shareholders of Inco, approved the amalgamation of Inco with Itabira Canada Inc. (Itabira Canadá), a wholly owned indirect subsidiary of the Company. Pursuant to the amalgamation, Inco became a wholly owned subsidiary and change its name to “CVRD Inco Limited” (actually Vale Inco).

To improve comparability the company presents, the consolidated statement of income as if the acquisition had been made at the beginning of 2006.

Summarized Consolidated Statement of Income of Vale and Vale Inco (unaudited)


	Accumulated
	2006
	VALE			INCO			Total
Net operating revenues		45,291			11,694			56,985

Cost of products and services		(20,756	)		(7,022	)		(27,778	)


Gross profit		24,535			4,672			29,207

Operating expenses		(4,446	)		(787	)		(5,233	)

Operating profit before financial results and results of equity investments		20,089			3,885			23,974


Results of equity investments		(199	)		(557	)		(756	)
Financial results, net		(1,745	)		(1,687	)		(3,432	)
Non-operating income		(215	)		316			101

Income before income tax and social contribution		17,930			1,957			19,887
Income tax and social contribution		(3,390	)		(725	)		(4,115	)

Income before minority interests		14,540			1,232			15,772
Minority interest		(1,109	)		(35	)		(1,144	)

Net income for the period		13,431			1,197			14,628

7.8- Cash and Cash Equivalents


	Consolidated				Parent Company
	2007		2006		2007		2006
Cash and bank accounts		795		3,404		71		68

Marketable securities linked to the interbank deposit certificate rate		343		645		49		135
Time deposits / Overnight		990		5,729		—		—

		2,128		9,778		120		203

7.9- Accounts Receivable


	Consolidated						Parent Company
	2007			2006			2007			2006
Domestic		1,162			1,793			1,166			994
Export		6,173			6,258			1,293			4,006

		7,335			8,051			2,459			5,000

Allowance for doubtful accounts		(181	)		(123	)		(64	)		(55	)
Allowance for ore weight credits		(18	)		(36	)		(16	)		(33	)

		7,136			7,892			2,379			4,912

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

7.10- Related Parties

Non eliminated related parties operations, derived from sales and purchases of products and services or from loans under normal market conditions as follows:


	Assets								Liabilities
	2007				2006				2007				2006
	Customers		Related party		Customers		Related party		Suppliers		Related party		Suppliers		Related party

Companhia Nipo-Brasileira de Pelotização — NIBRASCO		60		10		73		10		26		—		40		—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		45		6		60		1		40		—		51		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		46		—		53		—		43		—		16		3
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		21		1		42		—		12		—		10		3
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		52		9		62		52		—		—		1		—
Samarco Mineração S.A.		4		5		5		—		—		—		—		—
MRS Logistica S.A.		2		—		—		—		30		—		9		15
Baovale Mineração S.A.		14		—		1		—		36		—		25		—
Mitsui & Co., Ltd		—		—		—		—		37		—		39		—
Mineração Rio do Norte S.A.		—		—		—		—		30		—		27		—
Minas da Serra Geral S.A.		—		—		—		—		10		3		10		5
Taiwan Nickel Refining Corporation		—		—		774		—		—		—		—		—
Korea Nickel Corporation		16		—		120		—		—		—		—		—
Others		37		10		11		9		10		12		10		5

Total		297		41		1,201		72		274		15		238		31


Registered as:
Current		297		36		1,201		61		274		15		238		30
Non-current		—		5		—		11		—		—		—		1

		297		41		1,201		72		274		15		238		31

The principal results arising from commercial and financial transactions carried out by the Parent Company with related parties, classified in the statement of income as revenue and costs of sales and services and financial income and expenses, are as follows:


	Income				Expense / Cost
	2007		2006		2007		2006
Baovale Mineração S.A.		—		—		16		15
Gulf Industrial Investment Co.-GIIC (*)		—		80		—		3
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		216		216		327		332
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		203		192		292		119
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		197		224		331		383
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		334		350		540		548
Mineração Rio do Norte S.A.		—		—		271		280
MRS Logística S.A.		2		18		674		693
Samarco Mineração S.A.		112		81		—		—
Usinas Siderúrgicas de Minas Gerais — USIMINAS		886		912		—		—
Other		15		19		34		41

		1,965		2,092		2,485		2,414

Additionally the Company has balances with Mitsui & Co, Bradesco, Banco Nacional de Desenvolvimento Social and, BNDES Participações in the amounts of R$23, R$5,566, R$418 and, R$666 in December 31, 2007 related to loans received at market interest conditions, with maturity at November, 2013. This amounts are booked at loans and financing, as described in note 7.17.

The Company also has cash equivalents with Bradesco in the amount of R$32 in 2007.


(*)		Company sold in May 2006.

7.11- Inventories


	Consolidated				Parent Company
	2007		2006		2007		2006
Finished products
. Nickel, co-products and sub products Inco		3,209		2,793		—		—
. Iron ore and pellets		1,110		765		967		388
. Manganese and ferroalloys		186		199		—		—
. Aluminum products		327		321		60		—
. Copper		27		10		27		10
. Steel products		59		74		—		—
. Other		206		134		6		5

		5,124		4,296		1,060		403

Spare parts and maintenance supplies		2,134		2,073		872		702

		7,258		6,369		1,932		1,105

7.12- Taxes to recover or offset


	Consolidated				Parent Company
	2007		2006		2007		2006
Income tax		1,293		517		378		131
Value-added tax — ICMS		591		612		432		453
PIS and COFINS		712		618		115		53
INSS		32		24		31		22
Others		102		41		29		24

Total		2,730		1,812		985		683

Current		2,230		1,003		792		463
Non-current		500		809		193		220

		2,730		1,812		985		683

7.13- Deferred Income Tax and Social Contribution

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


	Net Deferred
	Consolidated						Parent Company
	12/31/07			12/31/06			12/31/07			12/31/06
Tax loss carryforward		832			218			—			—

Temporary differences:
• Pension Plan		1,101			2,116			242			220
• Contingent liabilities		861			895			783			648
• Provision for losses on assets		323			402			295			328
• Goodwill from propety, plan and equipaments acquired		(8,073	)		(4,319	)		—			—
• Others		(1,551	)		13			(472	)		(311	)

		(7,339	)		(893	)		848			885


Total		(6,507	)		(675	)		848			885


Current		1,084			885			611			404

Non-current		482			2,759			237			481


ASSETS		1,566			3,644			848			885


Non-current		(8,073	)		(4,319	)		—			—


LIABILITIES		(8,073	)		(4,319	)		—			—

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


	Consolidated															Parent Company
	Quarter (Unaudited)									Accumulated						Accumulated
	4Q/07			3Q/07			4Q/06			2007			2006			2007			2006
Income before income tax and social contribution		4,877			6,676			5,159			28,645			17,930			22,519			14,403
Results of equity investment		574			643			144			2,405			199			(11,447	)		(9,325	)

		5,451			7,319			5,303			31,050			18,129			11,072			5,078

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


Federal income tax and social contribution at statutory rates		(1,853	)		(2,489	)		(1,803	)		(10,557	)		(6,164	)		(3,764	)		(1,727	)

Adjustments that affects the basis of taxes:

Income tax benefit from interest on stockholders’ equity		204			209			178			839			734			839			734

Fiscal incentives		63			64			75			306			318			129			33
Results of overseas companies taxed by different rates wich diference than the parent company rate		1,406			555			330			2,549			1,739			—			—
Reduced incentive rate		18			18			18			80			96			—			—
Others		(21	)		10			(218	)		(302	)		(113	)		284			(12	)


Income tax and social contribution		(183	)		(1,633	)		(1,420	)		(7,085	)		(3,390	)		(2,512	)		(972	)

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

These temporary differences will be realized upon the occurrence of the corresponding taxable events, expected to be as follows:


	Net amount of credits
Years	Consolidated			Parent Company
2008		1,084			611
2009		(359	)		144
2010		(214	)		144
2011		(272	)		144
2012		(478	)		41
2013		(432	)		45
2014		(433	)		45
2015		(477	)		45
2016		(441	)		45
2017		(4,485	)		(416	)

		(6,507	)		848

Vale has certain tax incentives of reduction and exemption of income taxes. The incentives are calculated based on exploitation profit and are based on the production levels recognized and incentive to the defined periods of each product and expire from 2008 to 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.

Vale also has also tax 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. Vale is 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, there has been no 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.

7.14- Investments — Consolidated and Parent Company

Consolidated


					Equity results
	Investments				Quarter (Unaudited)							Accumulated
	2007		2006		4Q/07		3Q/07		4Q/06			2007		2006
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (a)		307		949		—		13		108			26		317
Shandong Yankuang International Company Ltd.		41		49		4		—		(9	)		1		(9	)
Henan Longyu Resources Co. Ltd.		204		239		22		19		19			89		65
Logística intermodal S/A		189		—		12		7		—			15		—
ThyssenKrupp CSA — Cia Siderúrgica (b)		686		195		—		—		—			—		—
Quadrem International Holdings Ltd. (b)		8		10		—		—		—			—		—
Jubilee Mines N.L ( b )		90		103		—		—		—			—		—
Lion Ore Mining International Ltd ( b )		—		52		—		—		—			—		—
Mirabela Nickel Ltd ( b )		51		21		—		—		—			—		—
Skye Resources Inc ( b )		139		114		—		—		—			—		—
Heron Resources Inc ( b )		42		18		—		—		—			—		—
Other		112		106		8		5		—			11		16

		1,869		1,856		46		44		118			142		389


(a)		Investment accounted for based on the equity method until December 2006, and at cost thereafter it, when this equity is dividends received. This participation valued at market price on the balance sheet date is R$822.772; and

(b)		Investments at cost.

PARENT COMPANY


			Adjusted			Adjusted net												Results of equity			Dividends
	Partici-		stockholders’			income (loss) for			Investments						investments						received
Accounted by the equity method	tion %		equity			the year			12/31/07			12/31/06			12/31/07			12/31/06			2007
ALBRAS — Alumínio Brasileiro S.A.		51.00		1,775			564			906			713			288			231			94
ALUNORTE — Alumina do Norte do Brasil S.A.		57.03		4,121			783			2,350			1,815			447			365			83
Belém — Administrações e Participações LTDA.		100.00		229			76			229			213			76			124			60
Cadam S. A.		61.48		309			(35	)		190			211			(21	)		—			—
Companhia Coreano-Brasileira de Pelotização - KOBRASCO		50.00		160			65			80			48			32			40			38
Companhia Hispano-Brasileira de Pelotização - HISPANOBRÁS		50.89		150			38			76			73			19			32			32
Companhia ítalo-Brasileira de Pelotização - ITABRASCO		50.90		160			40			82			65			20			26			16
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		51.00		211			44			108			85			23			42			—
Companhia Portuária da Baía de Sepetiba — CPBS		100.00		392			172			392			303			172			129			83
CVRD International S.A. (a), (e)		100.00		49,040			12,075			49,040			42,807			10,914			6,103			—
Ferro-Gusa Carajás		100.00		383			38			383			41			55			(55	)		—
Ferrovia Norte Sul S.A.		100.00		739			(4	)		739			—			(4	)		—			—
Logística Intermodal S/A (c)		31.27		605			111			189			90			37			35			7
Minas da Serra Geral S.A. — MSG		50.00		105			11			53			53			1			5			—
Mineração Rio do Norte S.A.		40.00		592			437			236			235			175			138			135
MineraçãoTacumã Ltda		100.00		(144	)		23			(144	)		(182	)		23			(31	)		—
AFAC Mineração Tacumã Ltda		—		—			—			1,788			1,788			—			—			—
Minerações Brasileiras Reunidas S.A. — MBR (b), (e)		87.94		3,659			1,502			3,218			3,568			1,308			1,987			1,007
MRS Logística S.A. (b)		10.89		1,201			548			131			99			60			59			13
Rio Doce Manganês S.A.		100.00		538			124			538			414			124			(220	)		—
Salobo Metais S.A. (d)		100.00		298			—			298			276			—			—			—
AFAC Salobo Metais S.A.		—		—			—			99			17			—			—			—
Samarco Mineração S.A.		50.00		823			972			412			451			486			499			289
Valesul Alumínio S.A. (b)		56.44		649			56			366			134			(122	)		37			20
Outras										(14	)		11			(230	)		25			27

Accounted by the cost of acquisition
Thyssenkrupp CSA Companhia Siderúrgica										686			195			—			—			—
Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS (c)										307			949			—			317			58

										62,738			54,472			13,883			9,888			1,962


(a)		The net equity of companies located abroad is converted into local currency at rates in effect on the financial statements date. The equity method comprises the difference due to the exchange rate variations as well as participation in results;

(b)		This percentage refers only to the direct participation of Vale;

(c)		Investment in companies that were listed on stock exchanges in 2007. The market value of these investment does not necessarily reflect the value that could be realized from selling a representative group of shares;

(f)		Company in pre-operating phase; and

(e)		From the original stockholders’ equity the goodwill on subsidiaries was excluded and is mentioned on note 7.15.

7.15- Intangible

This assets refers basically to goodwill based on future results expectative.


							Goodwill amortization
	Intangible						Quarter (Unaudited)									Accumulated
	2007			2006			4Q/07			3Q/07			4Q/06			2007			2006
Intangible by segment
Iron ore and pellets (c)
Goodwill of Caemi Mineração e Metalurgia S.A (a)		4,287			4,806			(130	)		—			(130	)		(520	)		(435	)
Goodwill of incorporated companies (a)		—			51			—			(130	)		—			—			—
Goodwill of Minerações Brasileiras Reunidas — MBR		328			—			(9	)		(9	)		—			(20	)		—
Goodwill of Sociedade de Mineração Estrela do Apolo		25			25			—			—			—			—			—
Other companies (b)		8			26			(3	)		(2	)		(13	)		(9	)		(9	)

		4,648			4,908			(142	)		(141	)		(143	)		(549	)		(444	)
Nickel
Goodwill of Inco Limited (c)		7,366			4,624			(189	)		(203	)		(119	)		(753	)		(119	)
Other rights Vale Inco		691			—			—			—			—			—			—

		8,057			4,624			(189	)		(203	)		(119	)		(753	)		(119	)
Coal

Goodwill of Vale Australia (c)		129			—			(2	)		—			—			(2	)		—


Total consolidated		12,834			9,532			(333	)		(344	)		(262	)		(1,304	)		(563	)

Intangible not recorded at the parent company		(691	)		(25	)		—			—			—			—			—

Total parent company		12,143			9,507			(333	)		(344	)		(262	)		(1,304	)		(563	)


(a)		Merged companies (Caemi and Ferteco) — amortization of goodwill of incorporated operating companies is recorded in the cost of products sold of the Parent Company;

(b)		Goodwill not recorded in the parent company; and

(c)		Goodwill based on future results expectation (stated period of amortization of 10 years).

7.16- Property, Plant and Equipment

(a) By type of asset:


			Consolidated									Parent Company
	Average		2007							2006		2007							2006
	depreciation				Accumulated									Accumulated
	rates		Cost		depreciation			Net		Net		Cost		depreciation			Net		Net
Lands		—		195		—			195		195		99		—			99		99
Buildings		3.65%		6,274		(355	)		5,919		4,263		2,853		(843	)		2,010		1,479
Installations		3.78%		21,987		(6,422	)		15,565		13,569		11,721		(3,574	)		8,147		6,586
Equipment		7.36%		8,739		(1,234	)		7,505		5,162		3,951		(1,328	)		2,623		2,106
Information technology equipment		20.00%		1,578		(767	)		811		813		1,457		(665	)		792		723
Railroads		3.03%		11,936		(3,941	)		7,995		6,222		9,166		(3,617	)		5,549		5,272
Mineral rights (note 7.4 (n))		3.25%		32,723		(8,595	)		24,128		19,202		1,538		(283	)		1,255		1,218
Others		7.30%		8,678		(356	)		8,322		3,116		2,696		(1,145	)		1,551		1,411

				92,110		(21,670	)		70,440		52,542		33,481		(11,455	)		22,026		18,894
Construction in progress				21,519		—			21,519		25,069		6,071		—			6,071		6,771


Total				113,629		(21,670	)		91,959		77,611		39,552		(11,455	)		28,097		25,665

(b) By business area:


	Consolidated
	2007							2006
			Accumulated
	Cost		depreciation			Net		Net
Ferrous
In operation		29,645		(11,514	)		18,131		17,660
Construction in Progress		6,914		—			6,914		5,939

		36,559		(11,514	)		25,045		23,599

Non — Ferrous
In operation		43,140		(3,578	)		39,562		26,518
Construction in Progress		10,241		—			10,241		15,544

		53,381		(3,578	)		49,803		42,062

Logistics
In operation		9,004		(2,598	)		6,406		2,891
Construction in Progress		523		—			523		284

		9,527		(2,598	)		6,929		3,175

Holdings
In operation		8,777		(3,341	)		5,436		4,649
Construction in Progress		3,072		—			3,072		2,616

		11,849		(3,341	)		8,508		7,265

Corporate Center
In operation		1,544		(639	)		905		824
Construction in Progress		769		—			769		686

		2,313		(639	)		1,674		1,510

Total		113,629		(21,670	)		91,959		77,611

7.17- Loans and Financing

Current


	Consolidated				Parent Company
	2007		2006		2007		2006
Trade finance		1,007		1,842		297		1,511
Working capital		—		193		—		—

		1,007		2,035		297		1,511

Non-current


			Consolidated								Parent Company
			Current liabilities				Long-term liabilities				Current liabilities				Long-term liabilities
			2007		2006		2007		2006		2007		2006		2007		2006
Foreign operations
Loans and financing in:
U.S. dollars	1	)		411		444		11,472		23,423		312		374		1,081		19,323
Other currencies				114		8		379		28		10		8		18		28
Notes in U.S. dollars	2	)		—		238		11,841		14,484		—		—		—		—
Export securitization				94		184		363		552		—		—		—		—
Perpetual notes				—		—		155		183		—		—		—		—
Accrued charges				499		298		—		—		33		64		—		—

				1,118		1,172		24,210		38,670		355		446		1,099		19,351


Local operations

Indexed by TJLP, TR, IGP-M and CDI				1,146		131		2,243		1,224		1,040		39		2,034		1,089
Basket of currencies				3		3		10		21		3		3		10		15
Loans in U.S. dollars				—		241		66		172		—		—		—		—
Non-convertible debentures	3	)		—		—		5,916		5,917		—		—		5,500		5,558
Accrued charges				87		79		—		—		85		27		—		—

				1,236		454		8,235		7,334		1,128		69		7,544		6,662

				2,354		1,626		32,445		46,004		1,483		515		8,643		26,013

Pursuant to the acquisition of Vale Inco we carried out various financial operations to repay the initial US$14.6 billion bridge loan, used to finance the acquisition, as follows:

	1)		On December, 2006, an agreement was celebrated with a bank syndicate to enter in a a pre-export finance transaction of US$6.0 billion. 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.

	2)		On November, 2006, the Company issued US$3.75 billion with maturity of 10 and 30 years. The US$1.25 billion notes due in 2017 bear a coupon rate of 6.25% per year, payable semi-annually, and were priced with a yield to maturity of 6.346% per year. The US$2.50 billion notes due in 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.

	3)		On December, 2006 the Company issued in the Brazilian market non-convertible debentures in an amount of R$5.5 billion, in two series. The first series, due on November 20, 2010, R$1.5 billion, 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, R$4.0 billion, 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).

			In 2007, the company settled the balance of the bridge in the amount of US$2.25 billion, US$2.1 of pre-export finance with the bank syndicate with cash availability.

			Additionally, the Company liquidated US$380 of its debt.

(a)

At December 31, 2007, the consolidated debt was secured as follows:

	•		Loans guaranteed by the Federal Government with a value of R$146 for which we offered counter-guarantees;

	•		Securitization program of R$463; and

	•		Receivables in a amount of R$578.

(b)

Amortization of principal and financing charges incurred on long-term loans and financing obtained abroad and domestically maturing as follows, as of 12/31/07:


	Consolidated			Parent Company
2009		715	2%		350	4%
2010		4,462	14%		1,843	21%
2011		4,965	15%		270	3%
2012		2,135	7%		152	2%
2013 onwards		19,597	60%		6,028	70%
No due date (perpetual notes and debentures)		571	2%		—	0%

		32,445	100%		8,643	100%

(c)		Some of our long-term debt instruments contain financial covenants. Our principal covenants require us to maintain certain ratios, such as debt to EBITDA and interest coverage. The Company is in full compliance with our financial covenants as of December 31, 2007.

(d)		Long-term foreign and domestic loans and financing are subject to annual interest rates (plus exchange rate and monetary variation) in 2007 as follows:


Rates	Consolidated			Parent Company
3.1 to 5%		1,369	4%		30	0%
5.1 to 7%		20,814	60%		1,459	14%
7.1 to 9%		4,331	12%		1,053	10%
9.1 to 11%		210	1%		1	0%
Over 11%		7,583	22%		7,583	76%
Variable (perpetual notes)		492	1%		—	0%

		34,799	100%		10,126	100%


(*)		Included in these amounts the convertible debentures and other loans in Reais (R$) with a remuneration equal of accumulated variation of Brazilian CDI plus spread. For these operations some derivative financial instruments were contracted in order to protect the exposure of the company to the variations of CDI to US dollars. The average cost of these operations after the contract of hedge is 5.7%.

The Company has credit lines in the amount of US$1.9 billion.

7.18- Contingent Liabilities

		The Company and its subsidiaries are party to labor, civil, tax and other suits and have been contesting these matters both administratively and in court. When applicable, these are backed by judicial deposits. Provisions for losses are estimated and restated monetarily and backed by management opinions and of the Legal Department and outside counsel.

		At the Financial Statements dates the contingent liabilities of the Company were:

(a)		Provisions for contingencies net from judicial deposits, considered by management and its legal counsel as sufficient to cover losses from any type of lawsuit, as follows:


	Consolidated						Parent Company
	12/31/07			12/31/06			12/31/07			12/31/06
a) Tax contingencies		3,269			2,218			1,805			1,404
(-) Judicial deposits		(1,346	)		(1,046	)		(803	)		(742	)

		1,923			1,172			1,002			662

b) Civil contingencies		575			565			419			378
(-) Judicial deposits		(277	)		(265	)		(202	)		(201	)

		298			300			217			177

c) Labor contingencies		937			826			757			642
d) Environmental contingencies		31			65			3			27

Total accrued liabilities		3,189			2,363			1,979			1,508


	2007			2007
Balance at the beginning of the period		2,363			1,508
Provisions, net of reversals		752			71
Payment		(56	)		(45	)
Monetary update		442			507
Judicial deposits		(312	)		(62	)

Balance at the end of period		3,189			1,979

Tax Contingencies:

The major suits are:

	•		Value-Added Tax on Sales and Services (ICMS) — The contingent figure refers to the credit right of differential rates regarding the transfer of assets between company branches;

	•		Services Tax (ISS) — The major claims are regarding local tax collecting disputes;

	•		Tax for Social Security Financing (COFINS) — The major contingencies, related to merged companies refer to the increase of the rate from 2% to 3% between 1999 and 2000;

	•		Import Duty (II) — The provision made is related to the Fiscal classification of equipment importation by merged companies;

	•		Additional Compensation to harbour workers (AITP) — Amounts regarding the collection of compensation amounts for public harbour workers equalized to Private Harbour;

	•		Income Tax and Social Contribution — Essentially regarding a fiscal loss compensation and negative bases of social contribution disputing the limit of 30% of taxable earnings and monetary variations of asset from merged companies; and

	•		Others — Regarding dispute of tax credit compensations and basis of calculation of Finance Compensation by Exploration of Mineral Resources — CFEM.

Civil Contingencies:

The civil actions are 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, accidents and return of land.

Labor Contingencies:

Labor and social security — related actions principally comprise claims for (a) payment of time spent traveling from their residences to the work-place, (b) additional health and safety related payments and (c) disputes about the amount of indemnities paid upon dismissal and the one-third extra holiday pay.

In addition to the contingencies for which we have made provisions, we have possible losses totaling R$4,541 (R$2,813 parent company) based on the advice of our legal counsel, it was not necessary to constitute any provision.

(b)		The company gave to its jointly controlled company Samarco a guarantee in the amount of R$1 (R$6 in 2006) related to debt guarantee to IFC, with maturity in 2008 in US$, for witch we have no counter-guarantees.

(c)		In connection with the Girardin Financing, the Company provides certain guarantees on behalf of Goro pursuant to which we guaranteed payments due from Goro of up to a maximum amount of $100 million (“Maximum Amount”) in connection with an indemnity. We also provided an additional guarantee covering the payments due from Goro of (a) amounts exceeding the Maximum Amount in connection with the indemnity and (b) certain other amounts payable by Goro under a lease agreement covering certain assets.

		Sumic Nickel Netherlands B.V. ( Sumic), a 21% shareholder of Goro, has a put option to sell to Vale Inco 25%, 50%, or 100% of the shares they own of Goro. The put option can be exercised if the defined cost of the initial Goro project exceeds $4.2 billion at project rates and an agreement cannot be reached on how to proceed with the project.

		The company provides a guarantee covering certain termination payments due from Goro to the supplier under an electricity supply agreement (“ESA”) entered into in October 2004 for the Goro nickel-cobalt project. The amount of the termination payments guaranteed depends upon a number of factors, including whether any termination of the ESA is as a result of a default by Goro and the date on which an early termination of the ESA were to occur. If Goro defaults under the ESA prior to the anticipated start date for supply of electricity to the project, the termination payment, which currently is at its maximum, would be 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. The Company expects such guarantees to be not executed and therefore no provisions for losses have been made.

(d)		At the time of our privatization in 1997, the Company issued debentures to its then-existing shareholders, including the Brazilian Government. The terms of the debentures, were set to ensure that the pre-privatization shareholders, including the Brazilian Government, would participate in possible future financial benefits that could be obtained from exploiting certain mineral resources.

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

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

		According to the Debenture Issue Deed, the amount of the premium must include interest up to the month prior to that of effective payment, plus 1% in the month in which the funds are made available to the debenture holder.

		The accumulated sales of iron ore of the mines covered by the debentures, in the period between May 1997 and June 30, 2007, were 500 million metric tons in the Southeast System and 579 million metric tons in the North System, Carajas. In the event of the annual sales of iron ore remain equal to the level achieved in the last twelve months, the levels mentioned in the Issue Deed to start payment of premium of 1.7 billion metric tons for the Southeast and System 1, 2 billion metric tons to the North System, would be achieved in 2027 and 2015 , respectively. However, this prediction could not be confirmed and may the dates mentioned to achieve the levels of production of 1.7 billion tons (Southeast System) and 1.2 billion tons (System North) are anticipated or neglected.

		We made available payment related to debentures in the amount of R$22 in 2007 and R$12 and 2006.

7.19- Provision for asset retirement obligations

Expenditures relating to ongoing compliance with environmental regulations are charged to production costs or capitalized as incurred. The Company manages its relations with the environment as a strategic factor, having the assumption the full compliance with applicable government and internal rules, established by its environmental management system. The Company maintains ongoing programs to minimize the environmental impact of its mining operations as well as to reduce the costs that will be incurred upon termination of activities at each mine. On 12/31/07, the provision for asset retirement obligations correspond the amount of R$1,649 (R$743 parent company), was accounted for in “Provision for asset retirement obligations” in non-current liabilities and R$114 (R$47 parent company) in “Other” in current liabilities. The Company adopts the concepts of the Accounting for Asset Retirement Obligations, as follows:

	•		The asset retirement obligations are recorded as part of the cost of these assets and the counter part is the provision that will suport the expenditures;

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

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

7.20- Pension Plan

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

In May 2000, was implemented a new complementary pension plan, with a variable contribution characteristic regarding the programmed retirement income and the risk benefits (death pension, disability retirement and health care help). At the time of launching of the “New Plan” (Plano de Benefícios — Vale Mais), it was offered to our active employees the opportunity of transferring to it. Over 98% of our active employees opted for the transference. The Old Plan continues in existence, covering almost exclusively retired participants and their beneficiaries.

Additionally the Company provides a specific group of ex-employees, covered by Resolutions 05/87 and 07/89, with supplementary benefit payments through the “Abono Complementação” plus a post-retirement medical, odontological and pharmaceutical benefit for this especific group, in an equal model of those practiced to actual employees.

Upon the acquisition of Vale Inco, were assumed commitments through pension plans with deffined benefits that cover essentially all its employees and post retirement benefits other than pensions that also provide certain health care and life insurance benefits for retired employees.

The following information details the status of the defined benefit elements of the Company plans in accordance with Deliberation CVM 371/00.

(a) Benefit plan

The results of the actuarial valuation are presented as follows:

Fair value of assets development


	2007									2006
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Fair value of assets at the begining of the year		7,483			6,386			9			6,506			—			—
Asset recognized upon consolidation of Vale Inco		—			—			—			—			6,250			9
Actual return of assets		447			131			2			1,298			416			—
Contribution from sponsor		63			631			109			55			96			—
Benefits paid		(576	)		(481	)		(101	)		(376	)		(124	)		—
Effect of exchange rate changes		—			(262	)		(1	)		—			(252	)		—

Fair value of assets at the end of the year		7,417			6,405			18			7,483			6,386			9

Changes in present value of obligations


	2007									2006
	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		5,402			7,293			2,523			4,174			—			—
Liabilities recognized upon consolidation of Vale Inco		—			214			455			—			7,735			2,618
Cost of current service		17			119			39			12			30			9
Cost of interest		588			368			127			534			98			33
Benefits paid		(576	)		(481	)		(101	)		(376	)		(126	)		(33	)
Plan amendment		—			7			—			—			(165	)		—
Hypotheses changes		—			—			—			993			—			—
Actuarial loss		198			(64	)		(220	)		65			(2	)		—
Effect of exchange rate changes		—			(329	)		(155	)		—			(277	)		(104	)


Fair value of plan assets at end of year		5,629			7,127			2,668			5,402			7,293			2,523

Reconciliation of assets and liabilities of the balance sheet


	Consolidated
	2007									2006
	*() Overfunded**			Underfunded			Underfunded			*() Overfunded**			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits

Fair value of plan assets at the end of the year		(5,629	)		(7,127	)		(2,668	)		(5,402	)		(7,293	)		(2,523	)
Fair value of assets at the end of the year		7,417			6,405			18			7,483			6,386			9
Net gains not recognized on the balance sheet		—			—			—			—			(280	)		—

Actuarial assets / (liabilities) recorded in the balance sheet		1,788			(722	)		(2,650	)		2,081			(1,187	)		(2,514	)


(*)		The Company has not recorded the actuarial asset on its balance sheet, since there is no clear evidence to its realization, as established by item 49 of NPC 26.

Investment target and composition of plan assets

The asset fair value of these plans is R$18,840 and R$13,878 at the end of 2007 and 2006, respectively. The assets allocations for the Company pension plan at the end of 2007 and 2006 and the target allocation for 2008, by asset category are as follows:


	Brazil
	Target allocation for 2008		Percentage of plan assets
Type of assets	(Unaudited)		2007		2006
Equity securities		27%		29%		28%
Real estate		6%		3%		4%
Loans		6%		4%		4%
Fixed income		61%		64%		64%

Total		100%		100%		100%

Foreign

Target allocation for 2008

Percentage of plan assets

Type of assets

(Unaudited)

2007

2006

Equity securities

61%

Fixed income

39%

Total

100%

		The fixed income allocation target was established in order to match the asset with the benefit payments. The proposal for 2008 is to reestablish the investments in inflation-indexed funds. The remaining investments in fixed income will be used for the payment of short-term plan benefits.

		The increase of allocation target reflects the expected appreciation of the Brazilian Stock Markets (IBOVESPA) as well as the Brazilian interest rates.

(b)		Actuarial liability

		“Abono Complementação” and Health Care Plan

		Refers to the responsibility of the Company to complement the retirements, pensions and health assistance related to the incentive to the disconnecting of some employees occurred between 1987 and 1989.

		The results of the actuarial evaluation of this liability are as follows:

		*Change of fair value of assets ()**


	“Abono Complementação”
	2007			2006
Fair value of assets at the begining of the year		196			146
Actual return of assets		32			23
Contribution from sponsor		93			88
Benefits paid in the period		(62	)		(61	)


Fair value of assets at the end of the year		259			196


(*)		Does not apply to fair value of assets to health plan.

Change in the present value of obligations


	Health care						“Abono Complementação”
	2007			2006			2007			2006
Fair value of plan assets at beginning of year		229			183			708			584
Cost of interest		25			24			76			74
Benefits paid in the period		(21	)		(14	)		(62	)		(61	)
Hypotheses changes		—			27			—			111
Loss (Gain) on liabilities		59			9			10			—


Fair value of plan assets at end of year		292			229			732			708

Changes in assets and liabilities recognized on the balance sheet


	Health care						“Abono Complementação”
	2007			2006			2007			2006
Present value of totally or partially covered actuarial obligations		(292	)		(229	)		(732	)		(708	)
Fair value of asets		—			—			259			196
Net (gains) loss not recognized on the balance sheet		24			23			73			71


Actuarial assets and liabilities acrrued in the balance sheet		(268	)		(206	)		(400	)		(441	)

Costs recognized in the income statement


	Health care				“Abono Complementação”
	2007		2006		2007			2006
Cost of interest		25		24		76			74
Actual return of assets		—		—		(32	)		(23	)


Total of costs, net		25		24		44			51

(c) Sponsor contributions


	2007			2006
Benefit plan — “VALE MAIS” — income		(40	)		(29	)
Benefit plan — “VALE MAIS” — risk and proportional benefit		(63	)		(55	)
Pension plans in the foreign		(740	)		(363	)
Complementary value (*)		(93	)		(88	)
Health care plan for retired employee (*)		(21	)		(14	)

Total contributions		(957	)		(549	)


(*)		Refers to actuarial liabilities

(d)		Actuarial and economic hypotheses

		All calculation includes future projections in relation to certain parameters, for example: salaries, interest, inflation, benefits from social security, mortality, invalidity and others. No actuarial results can be analyzed without knowledge of the scenarios utilized in the evaluation.

		The actuarial economic hypotheses were considering the long-term for their maturity, and must be analyzed from this point of view. They not necessarily are realizable in the short-term.

		The evaluation was based on the following economic hypotheses:

2007

2006

Economic assumptions

Local pension

Foreign pension

Local pension

Foreign pension

plans

Discount rate

10.24% p.a.

5.21% p.a.

11.30% p.a.

5.00% p.a.

Rate expected return of assets

12.78% p.a.

7.18% p.a.

14.98% p.a.

7.50% p.a.

Rate of compensation increase — up to 47 years

7.12% p.a.

4.01% p.a.

8.15% p.a.

3.00% p.a.

Rate of compensation increase — over 47 years

4.00% p.a.

4.01% p.a.

5.00% p.a.

3.00% p.a.

Inflation

4.00% p.a.

2.00% p.a.

5.00% p.a.

1.80% p.a.

Health care cost trend rate

7.64% p.a.

6.35% p.a.

8.67% p.a.

5.05% p.a.

All assumptions were revised in 2007.

7.21- Paid-up Capital

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

At the Extraordinary Shareholders’ Meeting held on April 27, 2007 the capital stock was increased to R$28,000. The capital increase is due through capitalization of the expansion/ investment reserve in the amount of R$7,673 capitalization of the legal reserve in the amount of R$752, and capitalization of the fiscal incentives reserve in the amount of R$83 without new stock issue.
On August 30, 2007 the Extraordinary General Shareholders ´ Meeting approved the forward-stock split. Since September 2007, each existing share, both common and preferred, became two shares.

For comparative purposes, the effects of the split were considered retroactively in the calculation of net income per share presented in the statement of income.

On December 31, 2007 the total capital reaches R$28,000, corresponding of 4,919,314,116 shares, being R$17,074 divided in 2,999,797,716 commom shares and R$10,926 divided in 1,919,516,400 class “A” preferred shares, including twelve special class shares without par value.

The Board of Directors has the power, without the necessity of a statutory change, to deliberate the issue of new shares (authorized capital) including the capitalization of revenue and reserves until the authorized limit of 3,600,000,000 commom shares and 7,200,000,000 preferred shares without par value.

On 12/31/07 the Company’s capital is held as follows:


	Number of shares
Stockholders	Common		%		Preferred		%		Total		%
Valepar S.A.		1,568,588,532		52		—		—		1,568,588,532		32
Brazilian Government (National Treasury / BNDES/ INSS / FPS)		56,712		—		60,904,104		3		60,960,816		1
American Depositary Receipts — ADRs		721,535,449		25		873,934,823		46		1,595,470,272		32
FMP — FGTS		132,148,778		4		—		—		132,148,778		3
PIBB — BNDES		4,423,079		—		3,891,711		—		8,314,790		—
BNDESPar		201,157,719		7		1,457,339		—		202,615,058		4
Institutional investors in Brazilian market		69,476,186		2		296,500,708		15		365,976,894		7
Institutional investors		191,340,167		6		297,372,736		15		488,712,903		10
Retail investors in Brazilian market		54,489,054		2		355,113,835		19		409,602,889		8
Treasury stock in Brazil		56,582,040		2		30,341,144		2		86,923,184		3

Total		2,999,797,716		100		1,919,516,400		100		4,919,314,116		100

The members of the Board of Directors and Executive Board together own 127,924 common shares and 596,705 preferred shares.

On 12/31/07, the Company after the proposed appropriations of the net income for the year, the Company does not have excess profit reserves in relation to the share capital.

7.22- Resources linked to future mandatory conversion in shares

In June, 2007, the Company issued mandatory convertible notes in the amount of R$3,601, net of interest R$3,064, with maturity in 2010. The notes, pay a coupon of 5.50% a.a quarterly and the right to receive the participation of the additional equivalent for the distribution in cash paid to the ADS ´s holders. These notes were classified as a capital instrument, mainly because of the fact that there is no option, from the part of the Company or from the part of the holders to liquidate, totally or in part this operation with financial resources, being the conversion mandatory.

In alignment with the international practices and after analysis, was concluded that the Mandatory convertible notes are similar to equity notes and for this reason are recognized as a specific part of the equity, net of financial changes.

The resources linked to future mandatory conversion, net of interest, are represented by a maximum of 56,582,040 common shares are equivalent to R$2,111 and the ones represented by a maximum of 30,295,456 preferred shares are equivalent to R$926. All the shares are currently in treasury stock (see note 7.24).

7.23- ADR Program — American Depositary Receipts

The Company is registered with the United States Securities and Exchange Commission (SEC), that permits its preferred shares and common shares to be traded on the New York Stock Exchange (NYSE) as ADR — American Depositary Receipts since June, 2000 and March, 2002, respectively. As consequence of share split, each ADR was also split, maintaining thus the proportion of 1 (one) class “A” preferred share or common, traded with codes “RIOPR” and “RIO”, respectively.

For maintenance of this registration the Company also discloses its financial statements according to U.S.A. Principles — USGAAP showing a net income for 2007 of R$22,870 which has differences from the net income presented according to Brazilian Principles in respect of non-amortization of goodwill and the recognition of exchange variation of foreign investments with functional currency different from that of the parent company directly into shareholders equity.

7.24- Treasury Stock

On 06/21/06 the Board of Directors approved a buy-back program of its preferred shares, during a maximum term of 180 days. By the end of the program, 30,299,200 preferred shares have been acquired.

On 12/31/07, the Company had 56,582,040 common shares and 30,341,144 preferred shares, which are held in treasury in the amount of R$790.


Shares
	Quantity				Unit acquisition cost						Average quoted market price
Class	2007		2006		Average		Low		High		2007		2006
Preferred		30,341,144		30,341,144		43.45		41.13		45.15		39.46		44.84
Common		56,582,040		56,582,040		4.63		3.34		8.68		46.73		52.21

		86,923,184		86,923,184

7.25- Remuneration of Stockholders

In 10/31/07, Vale made available to its shareholders, in the form of interest on stockholders equity the amount of R$370,050, as additional remuneration for the year of 2006.

The total remuneration proposed to stockholders’ in 2007 was calculated as follows:


Net income for the year	20,006
Legal reserve	(1,000	)
Realization of unrealized income reserve (*)	62

Adjusted net income	19,068

Mandatory dividend amount - 25% (R$0.99 per outstanding share)	4,767

Statutory dividend on preferred shares (3% of net equity, R$0.36 per outstanding share)	688

Statutory dividend on preferred shares (6% of paid-up capital, R$0.35 per outstanding share)	656


Dividends/ Interest on stockholders’ equity — Total	4,767
Antecipated dividends	(15	)

Dividends/ Interest on stockholders’ equity Proposed	4,752


(*)		The realization is based on the dividends received, write-off or disposal of investments and depreciation, write-off and disposal of property, plant and equipment.

7.26- Financial Results

Consolidated


	Quarter (Unaudited)
	4Q/07									3Q/07									4Q/06
				Monetary and									Monetary and									Monetary and
				exchange rate									exchange rate									exchange rate
	Financial			variation on						Financial			variation on						Financial			variation on
	expenses			liabilities			Total			expenses			liabilities			Total			expenses			liabilities			Total
Foreign debt		(327	)		208			(119	)		(363	)		(233	)		(596	)		(583	)		(32	)		(615	)
Local debt		(243	)		(12	)		(255	)		(237	)		42			(195	)		(74	)		19			(55	)
Related parties		18			(6	)		12			1			—			1			(1	)		—			(1	)

		(552	)		190			(362	)		(599	)		(191	)		(790	)		(658	)		(13	)		(671	)
Labor, tax and civil contingencies		(70	)		(189	)		(259	)		(37	)		(142	)		(179	)		(61	)		(20	)		(81	)
Derivatives, net of gain/losses (interest and currencies)		308			(36	)		272			533			(25	)		508			(109	)		—			(109	)
Derivatives, net of gain/losses (gold, aluminum, alumina, copper, nickel and platinum)		281			36			317			165			100			265			(104	)		11			(93	)
Call option premium		—			—			—			—			—			—			—			—			—
CPMF		(52	)		—			(52	)		(42	)		—			(42	)		(186	)		—			(186	)
Others		(522	)		(646	)		(1,168	)		(418	)		(187	)		(605	)		(308	)		264			(44	)

		(607	)		(645	)		(1,252	)		(398	)		(445	)		(843	)		(1,426	)		242			(1,184	)


				Monetary and									Monetary and							Monetary and
				exchange rate									exchange rate							exchange rate
	Financial			variation on						Financial			variation on				Financial			variation on
	income			assets			Total			income			assets		Total		income			assets			Total
Related parties		4			(5	)		(1	)		3			—		3		2			—			2
Marketable securities		63			—			63			36			22		58		198			(17	)		181
Others		195			1,390			1,585			25			895		920		210			20			230

		262			1,385			1,647			64			917		981		410			3			413

Financial income (expenses), net		(345	)		740			395			(334	)		472		138		(1,016	)		245			(771	)


	Accumulated
	2007									2006
				Monetary and									Monetary and
				exchange rate									exchange rate
	Financial			variation on						Financial			variation on
	expenses			liabilities			Total			expenses			liabilities			Total
Foreign debt		(1,640	)		711			(929	)		(950	)		265			(685	)
Local debt		(1,039	)		410			(629	)		(191	)		77			(114	)
Related parties		16			(6	)		10			(7	)		—			(7	)

		(2,663	)		1,115			(1,548	)		(1,148	)		342			(806	)
Labor, tax and civil contingencies		(188	)		(345	)		(533	)		(236	)		(163	)		(399	)
Derivatives, net of gain/losses (interest and currencies)		1,741			(81	)		1,660			(33	)		1			(32	)
Derivatives, net of gain/losses (gold, aluminum, alumina, copper, nickel and platinum)		(42	)		235			193			(283	)		61			(222	)
Call option premium		—			—			—			(187	)		—			(187	)
CPMF		(275	)		—			(275	)		(320	)		—			(320	)
Others		(2,002	)		(1,725	)		(3,727	)		(702	)		57			(645	)

		(3,429	)		(801	)		(4,230	)		(2,909	)		298			(2,611	)


				Monetary and							Monetary and
				exchange rate							exchange rate
	Financial			variation on				Financial			variation on
	income			assets		Total		income			assets			Total
Related parties		9			—		9		9			(1	)		8
Marketable securities		225			22		247		425			(65	)		360
Others		562			3,689		4,251		327			171			498

		796			3,711		4,507		761			105			866

Financial income (expenses), net		(2,633	)		2,910		277		(2,148	)		403			(1,745	)

Parent company


	Accumulated
	2007									2006
				Monetary and									Monetary and
				exchange									exchange
	Financial			rate variation						Financial			rate variation
	expenses			on liabilities			Total			expenses			on liabilities			Total
Foreign debt		(276	)		651			375			(489	)		(105	)		(594	)
Local debt		(930	)		288			(642	)		(68	)		(57	)		(125	)
Related parties		(1,936	)		6,182			4,246			(415	)		680			265

		(3,142	)		7,121			3,979			(972	)		518			(454	)
Labor, tax and civil contingencies		(171	)		(336	)		(507	)		(225	)		(158	)		(383	)
		1,625			(72	)		1,553			3			—			3
Derivatives, net of gain/losses (interest and currencies)
Derivatives, net of gain/losses (gold)		(74	)		11			(63	)		10			5			15
CPMF		(204	)		—			(204	)		(246	)		—			(246	)
Others		(1,209	)		(160	)		(1,369	)		(311	)		106			(205	)

		(3,175	)		6,564			3,389			(1,741	)		471			(1,270	)


				Monetary									Monetary
				and exchange									and exchange
	Financial			rate variation						Financial			rate variation
	income			on assets			Total			income			on assets			Total
Related parties		27			(581	)		(554	)		71			(165	)		(94	)
Marketable securities		47			22			69			56			—			56
Others		30			386			416			26			217			243

		104			(173	)		(69	)		153			52			205

Financial income (expenses), net		(3,071	)		6,391			3,320			(1,588	)		523			(1,065	)

7.27- Financial Instruments — Derivatives

The main market risks the Company faces are interest rate risk, exchange rate risk and commodity price risk.

These risks are managed through the use of derivative instruments. The risk management activities follow the risk management policy, which requires diversification of transactions and counter-parties. The company monitors and evaluates its overall position regularly in order to evaluate financial results and impact on the cash flow. Also periodically the credit limits are review and creditworthiness of our hedging counter-parties.

Risk Management Policy

The Company considers the effective management of risk is a key objective to support the growth strategy and the financial flexibility. In furtherance of this objective, the Board of Directors has established an enterprise risk management policy and a Risk Management Committee. Under the policy, the Company measures, monitors, and manages risk at the portfolio level, using a single framework, and considers the natural diversification of our portfolio. The market risk is hedged only when considered necessary to support the company corporate strategy or to maintain its target level of financial flexibility.

The Risk Management Committee assists the Executive Directors of the Company in overseeing and reviewing information regarding our enterprise risk management and framework, including the significant policies, procedures and practices employed to manage risk. The enterprise risk management policy is designed to promote an effective risk management system and to ensure that enterprise-level risks are reported at least quarterly to the risk management committee.

The company addresses some of the risks through the use of derivative instruments. The risk management activities follow the risk management policy, which generally prohibits speculative trading and short selling and requires diversification of transactions and counter-parties.

The Company monitors and evaluates its overall position regularly in order to evaluate financial results and impact on its cash flow. Also, periodically the credits limits are reviewed and so the creditworthiness of the hedging counter-parties.

Interest rate risk

The Company is exposed to interest rate risk on its outstanding borrowings. The floating rate debt consists principally of U.S. Dollar borrowings related to trade finance and loans from commercial banks and multilateral organizations and Real-denominated borrowings related to the debentures and the property and services acquisition financing issued in the Brazilian market. In general, our foreign currency floating rate debt is principally subject to changes in the London Interbank Offered Rate (USD LIBOR). Consequently, fluctuations in the USD LIBOR may adversely impact our cash flows. To mitigate the effects of interest rate volatility Vale makes uses of natural hedges derived from the correlation between U.S. Dollar floating interest rates and metals prices. When natural hedges are not present, the Company may opt to realize the same effect with the aid of financial instruments. Our floating rate debt denominated in Reais is mainly subject to changes in the CDI and TJLP.

The interest rate derivative transactions are entered into primarily to hedge the exposure of Brazilian Reais floating rate debt. The interest rate derivatives portfolio consists of interest rate swaps to convert Reais floating rate exposures to U.S. Dollar fixed rate exposures.

Currency risk

The Company is exposed to exchange rate risk associated with the denomination of its debt in currencies other than the Brazilian Real. On the other hand, a substantial proportion of its revenues are denominated in U.S. Dollar. This provides a natural hedge against any changes in the Brazilian Real against the U.S. Dollar. For instance, when a devaluation of the Brazilian Real occurs, the immediate negative impact on the non-Brazilian Real-denominated debt is offset over time by the positive effect of devaluation on future cash flows. In light of this framework, the Company generally does not use derivative instruments to manage the currency exposure on its long-term Dollar-denominated debt. However, derivatives may occasionally be used to minimize the effects of the volatility of the exchange rates between Reais and U.S. Dollars in the cash flow.

The cash flows are also exposed to the volatility of other currencies against the U.S. Dollar. While prices for most of our products are primarily in U.S. Dollars, a substantial portion of the costs, expenses and investments are in currencies other than the U.S. Dollar, in particular the Brazilian Real and the Canadian Dollar. In projects developed outside Brazil and Canada, the Company is also exposed to other currencies, such as the Euro, Australian Dollar and the Chinese Renminbi.

Vale has other exposures associated with our outstanding debt portfolio. The Euro exposure is associated with a credit line extended by KFW (Kreditanstalt Für Wiederaufbau). To mitigate the foreign currency risk, the company entered into currency forwards.

Product Price Risk

We are also exposed to various market risks relating to the volatility in world market prices for the following products:

	•		Iron ore and pellets, which represented 42.8% of the 2007 gross consolidated revenues;

	•		Nickel, which represented 29.7% of the 2007 gross consolidated revenues;

	•		Manganese ore and ferroalloys, which represented 2.3% of the 2007 gross consolidated revenues;

	•		Aluminum products, which represented 8.3% of the 2007 gross consolidated revenues; and

	•		Copper concentrate, which represented 2.3% of the 2007 gross consolidated revenues.

Other products, such as platinum-group metals, kaolin and potash, represented a minor percentage of the consolidated revenues.

The Company does not enter into derivative transactions to hedge its iron ore, pellets, and manganese ore or ferroalloys exposure. The risk management policy permits to hedge market risk only when necessary to support the corporate strategy or maintain financial flexibility. Currently, the derivatives transactions include nickel forward purchase and sale contracts, aluminum forward contracts and options, copper options, as well as positions in gold, platinum and fuel oil derivative instruments.

The Executive Board approved the hedging of a portion of our aluminum and copper production for 2007 and 2008 to reduce cash flow risk in connection with the change in the capital structure and the significant increase in the debt position after the acquisition of Vale Inco.

Nickel — Generally derivative instruments are used to hedge the exposure to fluctuations in nickel prices. However, the company enters into LME forward purchase contracts, which are substantially offset by fixed-price customer contracts, in order to maintain exposure to nickel price risk. Also the company enters into LME forward sales contracts to minimize nickel price risk associated with purchased nickel inventories of intermediates and finished nickel products.

Aluminum — In order to manage the risk associated with fluctuations in aluminum prices, hedging transactions are made involving put and call options, as well as forward contracts. These derivative instruments allowed to establish minimum average profits for the future aluminum production in excess of the expected production costs and therefore ensure stable cash generation. However, they also have the effect of reducing potential gains from price increases in the spot market for aluminum. The policy

has been to settle all commodity derivatives contracts in cash without physical delivery of product.

Copper — The Company has outstanding put option contracts, giving us the right but not the obligation to sell copper, and sells call option contracts, giving the buyer the right but not the obligation to purchase copper for time periods extending to 2008. A major part of the copper derivative position was added to our books as a result of the acquisition Vale Inco.

PGMs and other precious metals — The Company currently holds a small position in gold derivative instruments, structured to manage the risks related to gold price fluctuations, inherent from the content of gold associated with copper concentrate production. Vale enter into platinum hedging contracts in order to manage the risk associated with the volatility of platinum prices. These contracts are generally swap contracts or options and are intended to provide certain minimum price realizations for a portion of the future production of such metals. Under these swap contracts, the Company receives fixed prices for platinum and pay a floating price based on monthly average spot prices.

Fuel oil — The Company uses fuel oil swap contracts to minimize the impact of fluctuations in the prices of the energy requirements. Under these contracts, we pay fixed prices for energy and receive amounts based on monthly average spot prices.

There is an embedded derivative related to energy in the subsidiary Albras on which the Company has an unrealized gain of R$30 million as of December 31, 2007 and R$163 million as of December 31, 2006.

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


	Consolidated
	Quarter (Unaudited)
	4Q/07
										Products by
	Interest									aluminum
	rates (libor)			Currencies			Gold			area			Copper			Nickel			Platinum			Total
Gains / (losses) unrealized on 09/30/07		(2	)		1,194			(74	)		(320	)		(653	)		6			(47	)		104
Financial settlement		(4	)		(352	)		18			29			112			46			9			(142	)
Financial expenses, net		(3	)		311			(12	)		107			187			23			(7	)		606
Monetary variations, net		—			(36	)		3			11			22			(1	)		2			1

Gains / (losses) unrealized on 12/31/07		(9	)		1,117			(65	)		(173	)		(332	)		74			(43	)		569


	3Q/07
										Products by
	Interest									aluminum
	rates (libor)			Currencies			Gold			area			Copper			Nickel			Platinum			Total
Gains / (losses) unrealized on 06/30/07		16			684			(71	)		(563	)		(682	)		54			(46	)		(608	)
Financial settlement		(6	)		(11	)		13			55			133			(143	)		7			48
Financial expenses, net		(12	)		545			(19	)		175			(132	)		96			(10	)		643
Monetary variations, net		—			(24	)		3			13			28			(1	)		2			21

Gains / (losses) unrealized on 09/30/07		(2	)		1,194			(74	)		(320	)		(653	)		6			(47	)		104


	4Q/06
										Products by
	Interest									aluminum
	rates (libor)			Currencies			Gold			area			Copper			Nickel .			Platinum .			Total
Gains / (losses) unrealized on 09/30/06		(3	)		77			(111	)		(422	)		6			—			—			(453	)
Gains / (Losses) recognized upon consolidation of Inco		9			20			—			—			(778	)		132			(47	)		(664	)
Financial settlement		—			(14	)		14			48			(1	)		(188	)		—			(141	)
Financial expenses, net		7			(116	)		(20	)		(314	)		135			90			5			(213	)
Monetary variations, net		—			—			2			9			—			—			—			11

Gains / (losses) unrealized on 12/31/06		13			(33	)		(115	)		(679	)		(638	)		34			(42	)		(1,460	)


	Consolidated
	2007
										Products by
	Interest									aluminum
	rates (libor)			Currencies			Gold			area			Copper			Nickel			Platinum			Total
Gains / (losses) unrealized on 12/31/06		13			(33	)		(115	)		(679	)		(638	)		34			(42	)		(1,460	)
Financial settlement		(10	)		(520	)		65			222			458			(77	)		23			161
Financial expenses, net		(10	)		1,751			(30	)		191			(269	)		115			(33	)		1,715
Monetary variations, net		(2	)		(81	)		15			93			117			2			9			153

Gains / (losses) unrealized on 12/31/07		(9	)		1,117			(65	)		(173	)		(332	)		74			(43	)		569


	2006
										Products by
	Interest									aluminum
	rates (libor)			Currencies			Gold			area			Copper			Nickel			Platinum			Total
Gains / (losses) unrealized on 12/31/05		(9	)		2			(107	)		(494	)		—			—			—			(608	)
Gains / (Losses) recognized upon consolidation of Inco		9			20			—			—			(778	)		132			(47	)		(664	)
Financial settlement		4			(14	)		41			224			(1	)		(188	)		—			66
Financial expenses, net		8			(41	)		(58	)		(461	)		141			90			5			(316	)
Monetary variations, net		1			—			9			52			—			—			—			62

Gains / (losses) unrealized on 12/31/06		13			(33	)		(115	)		(679	)		(638	)		34			(42	)		(1,460	)


	Parent Company
	2007
	Interest rates
	(libor)		Currencies			Gold			Copper			Total
Gains / (losses) unrealized on 12/31/06		—		5			(69	)		46			(18	)
Financial settlement		—		(493	)		41			(2	)		(454	)
Financial expenses, net		—		1,625			(28	)		(46	)		1,551
Monetary variations, net		—		(73	)		11			—			(62	)

Gains / (losses) unrealized on 12/31/07		—		1,064			(45	)		(2	)		1,017


	2006
	Interest rates
	(libor)		Currencies		Gold			Copper		Total
Gains / (losses) unrealized on 12/31/05		—		2		(63	)		—		(61	)
Financial settlement		—		—		25			—		25
Financial expenses, net		—		3		(36	)		46		13
Monetary variations, net		—		—		5			—		5

Gains / (losses) unrealized on 12/31/06		—		5		(69	)		46		(18	)

Non-realized gains, are registered in account Others Long Assets in an amount of R$106, R$83 and R$2 in December 31, 2007, September 30, 2007 and December 31, 2006, respectively on the consolidated and in the amount of R$51 and R$2 at December 31, 2006 and December 31, 2005 respectively to the parent company.

Final maturity dates for the above instruments are as follows:


Gold		December 2008
Interest rates (LIBOR)		December 2011
Currencies		December 2011
Aluminum products		December 2008
Copper		December 2008
Nickel		December 2009
Platinum		December 2008

7.28- Selling, Administrative, Other Operating Expenses and Non Operating Income


	Consolidated										Parent Company
	Quarter (Unaudited)						Accumulated				Accumulated
Administrative	4Q/07		3Q/07		4Q/06		2007		2006		2007		2006
Personnel		197		154		181		721		613		359		309
Services (consulting, infrastructure and others)		132		116		110		448		331		174		133
Advertising and publicity		144		59		38		275		144		266		141
Depreciation		76		71		73		288		241		218		168
Travel expenses		12		13		10		44		47		26		38
Rents and taxes		21		32		21		132		60		26		27
Community aborigine		7		4		5		19		21		19		21
Others		31		30		43		183		111		61		36
*Sales ()**		179		102		121		440		384		10		8

Total		799		581		602		2,550		1,952		1,159		881

(*) Expenses with offices abroad and allowance for doubtful accounts.


	Consolidated											Parent Company
	Quarter (Unaudited)							Accumulated				Accumulated
Other operating expenses (income), net	4Q/07		3Q/07		4Q/06			2007		2006		2007			2006
Provisions for contingencies		89		38		77			249		226		105			112
Provision for loss on ICMS credits		42		68		31			127		159		57			88
Provision for profit sharing		158		70		347			537		563		347			312
Fundação Vale do Rio Doce — FVRD		11		24		26			61		47		54			38
Asset retirement obligation		—		—		264			—		264		—			178
Others		308		196		(4	)		444		194		(70	)		128

Total		608		396		741			1,418		1,453		493			856


	Consolidated												Parent Company
	Quarter (Unaudited)							Accumulated					Accumulated
Non operating results — gain on sale of assets	4Q/07		3Q/07		4Q/06			2007		2006			2007		2006
Usiminas		—		6		135			846		135			846		135
Gulf Investment Co. — GIIC		—		—		—			—		737			—		—
Log-In		—		38		—			454		—			454		—
Lion Ore		—		153		—			153		—			—		—
Nova Era Silicon — NES		—		—		—			—		20			—		20
Gerdau		—		—		89			—		123			—		123
Siderar		—		—		197			—		197			—		—
Others		—		—		—			5		—			—		—

		—		197		421			1,458		1,212			1,300		278
Non operating expenses from company acquired		—		—		(1,427	)		—		(1,427	)		—		—

Total		—		197		(1,006	)		1,458		(215	)		1,300		278

7.29- Concessions, Subconcessions and Leases

	(a)		Railroad Companies

			The Company and some companies of the Group entered with the Brazilian government, through the Ministry of Transportation, agreements for concession to exploitation and development of public rail cargo transport services and for lease of the assets used to provide this services.

The concessions periods are, for railroad:


Railroad		End of concession period
Vitória-Minas and Carajás (direct) (*)		June 2027
Malha Centro-Leste (indirect via FCA)		August 2026
Malha Sudoeste (indirect via MRS)		December 2026
Ferrovia Norte Sul S.A. (FNS)		December 2037


(*)		Concessions with no disbursement

			The concessions will expire upon one of the following events: termination of the contractual term, cancellation, forfeiture, rescission, annulment and bankruptcy or extinction of the concessionaire.

			Concessions, subconcessions and leasing from controlled companies are treated as operating leasing and present the following characteristics:

FNS

FCA

MRS

1) Total installments

112

117

2) Frequency of payment

)

Quarterly

3) Update index

IGP-DI FGV

4) Total installment paid

5) Installment current value

Concession

369

Leasing

369


(*)		According to the delivery of each part of the railroad.

	(b)		Ports

			The Company owns specialized port terminals as follow:


		End of concession
*Terminal ()**	Localization	period
Tubarão, Praia Mole and Liquid Bulk Terminal	Vitória — ES		2020
Sundry Products Terminal	Vitória — ES		2020
Ponta da Madeira Maritime Terminal — Pier I and III	São LuÍs — MA		2018
Ponta da Madeira Maritime Terminal — Pier II	São LuÍs — MA		2010
Inácio Barbosa Maritime Terminal	Aracaju — SE		2012


(*)		Concessions with no disbursement.

(c)		Hydroelectric Projects

		The Company develops projects of electricity generation with the aim of self-supply. The projects in which the Company has investments are:


	Concession		% Participation on
Project	beginning date		energy generation
Engenheiro José Mendes Júnior e Eliezer Batista (formely denominated Funil and Aimorés)		2000		51.00
Risoleta Neves (formely denominated Candonga)		2000		50.00
Igarapava		1998		38.15
Porto Estrela		1997		33.33
Amador Aguiar I e II (formely denominated Capim Branco I and II)		2001		48.42
Machadinho		2000		9.98
Balambano, Larona and Karebbe (*)		1978, 2000 an 2000		60.80
Estreito		2002		30.00


(*)		Participation indirect holds though Vale Inco

7.30- Effects on the Statements if Price-Level Restatement were Applied (unaudited)

The main difference between the financial statements prepared according to Corporate Legislation and those according to the price-level restatement method is due to the recognition of the net monetary restatement of permanent assets and stockholders’ equity.

The Balance Sheet and the Statement of Income by monetary restatement, at December 31, 2007 price levels were prepared shortly indexed by the IGP-M of FGV.:

BALANCE SHEET


Years ended December 31
	Consolidated				Parent Company
	2007		2006		2007		2006
Assets
Current assets		21,006		27,022		7,893		8,522
Non-Current
Long — Term Receivable		5,228		6,957		5,983		1,964
Investments		4,511		4,147		84,489		70,371
Intangible		16,432		12,066		16,704		12,960
Property, plant and equipment		123,690		100,951		39,796		34,587
Deferred charges		1,167		1,109		—		—

		151,028		125,230		146,972		119,882

		172,034		152,252		154,865		128,404


Liabilities and stockholders’ equity
Current assets		19,402		16,644		16,620		12,484
Non-Current
Income tax		5,919		761		4,234		2,830
Other		50,963		64,285		43,122		48,566
Deferred income		93		7		—		—
Minority interest		4,768		6,031		—		—
Stockholders’ equity
Paid-up capital		28,000		19,492		28,000		19,492
Capital reserves		9,408		7,019		9,408		7,019
Revenue reserves		53,481		38,013		53,481		38,013

		90,889		64,524		90,889		64,524

		172,034		152,252		154,865		128,404

STATEMENT OF INCOME


Years ended December 31
	Consolidated						Parent Company
	2007			2006			2007			2006
Operating revenues		69,809			47,914			24,154			20,383
Value Added taxes		(1,701	)		(1,491	)		(1,273	)		(1,078	)


Net operating revenues		68,108			46,423			22,881			19,305
Cost of products and services		(31,581	)		(21,281	)		(13,572	)		(10,908	)


Gross profit		36,527			25,142			9,309			8,397

Gross margin		53.6%			54.2%			40.7%			43.5%

Operating expenses, net		(2,606	)		(4,355	)		3,892			(2,194	)


Operating profit before financial results and results of equity investments		33,921			20,787			13,201			6,203

Results of equity investments		(2,173	)		(202	)		12,205			9,583


Operating profit		31,748			20,585			25,406			15,786

Non operating income		1,547			(218	)		1,381			285


Income before income tax and social contribution		33,295			20,367			26,787			16,071

Income tax and social contribution		(8,925	)		(4,237	)		(4,055	)		(1,076	)


Income before minority interest		24,370			16,130			22,732			14,995

Minority interest		(1,638	)		(1,135	)		—			—


Net income for the year		22,732			14,995			22,732			14,995

7.31- Insurance

Operational Risks

The Company has an extensive risk management program that provides coverage and protection for all its assets as well as against possible losses from production interruptions, through All Risks policy. This program includes on-site inspection and training carried out by the various risk committees constituted by the Company, its subsidiaries and associated companies. Vale tries to harmonize risks in all areas and provide single and uniform treatment, and also seeking coverage in the domestic and international markets at levels compatible with an enterprise its size.

Insurance

In order to mitigate the risks, Vale contracts many types of insurances polices, as operational risks and comprehensive general liability, risks besides a life insurance to its employees. The cover insurance of these policies are contracted in accordance with the company Risk Management Policy and are similar to the ones contracted by other mining companies. As one of the management risk instruments Vale used since 2002 a a captive reinsure that allowed us to contact insurances on competitive basis as well the direct access to the main international markets of insurance and reisuranance.

The management of insurance policies is realized in Vale with the support of the insurances committees in the operational areas of the Company that are composed by many professionals of these units.

7.32- Profit Sharing Plan

The Company’s profit sharing plan for the employees consists of a portion that is subject to the financial results measured through indicators as operating cash flow and for the achievement of the performance target of the units and individuals.

7.33- Information by segment

The informations by business segment, additionally presented, were prepared according to International Accounting rules.

The financial statements by business area are structured in accordance with the following segments: Ferrous products, Non-ferrous, Logistics, Aluminum , Steel, Corporate and other participation.

Consolidated Statement of Income by segment


Years ended December 31	In millions of reais
										Holdings											2007
	Ferrous			Non-ferrous															Corporate
	minerals			minerals			Logistics			Aluminium			Steel			Others			Center		TOTAL
Operating revenues
Sales of ore and metals		29,915			25,417			—			—			—			—			—		55,332
Transport services		—			—			3,497			—			—			—			—		3,497
Sales of aluminum-related products		—			—			—			5,529			—			—			—		5,529
Sales of steel products		—			—			—			—			1,248			—			—		1,248
Other products and services		118			182			—			18			—			461			—		779

		30,033			25,599			3,497			5,547			1,248			461			—		66,385

Vale Added taxes		(837	)		(97	)		(550	)		(137	)		—			—			—		(1,621	)

Net operational revenues		29,196			25,502			2,947			5,410			1,248			461			—		64,764

Ores and metals		(10,896	)		(11,918	)		—			—			—			—			—		(22,814	)
Transport services		—			—			(2,146	)		—			—			—			—		(2,146	)
Aluminum-related products		—			—			—			(3,246	)		—			—			—		(3,246	)
Steel products		—			—			—			—			(1,199	)		—			—		(1,199	)
Other products and services		(189	)		—			—			(3	)		—			(487	)		—		(679	)

Cost of products and services		(11,085	)		(11,918	)		(2,146	)		(3,249	)		(1,199	)		(487	)		—		(30,084	)

Gross profit		18,111			13,584			801			2,161			49			(26	)		—		34,680

Gross margin		62.0%			53.3%			27.2%			39.9%			3.9%			-5.6%			—		53.5%

Operational expenses

Selling and admnistrative		(1,604	)		(526	)		(106	)		(191	)		(28	)		(95	)		—		(2,550	)
Research and development		(332	)		(635	)		(71	)		—			—			(359	)		—		(1,397	)
Other operating expenses		(1,154	)		(164	)		(36	)		(63	)		(1	)		—			—		(1,418	)

		(3,090	)		(1,325	)		(213	)		(254	)		(29	)		(454	)		—		(5,365	)

Operating profit (loss) before financial results and result of equity investments		15,021			12,259			588			1,907			20			(480	)		—		29,315

Results of equity investments		(549	)		(1,926	)		15			—			26			29			—		(2,405	)

Financial result		—			—			—			—			—			—			277		277

Operating profit (loss)		14,472			10,333			603			1,907			46			(451	)		277		27,187

Non operating income		—			153			459			—			—			846			—		1,458

Income (loss) before income tax and social contribution		14,472			10,486			1,062			1,907			46			395			277		28,645

Income tax and social contribution		(3,569	)		(2,929	)		(144	)		(461	)		1			17			—		(7,085	)

Income (loss) before minority interests		10,903			7,557			918			1,446			47			412			277		21,560
Minority interest		(76	)		(864	)		(2	)		(613	)		—			1			—		(1,554	)

Income (loss) for the year		10,827			6,693			916			833			47			413			277		20,006


	2006
										Holdings
	Ferrous			Non-ferrous															Corporate
	minerals			minerals			Logistics			Aluminium			Steel			Others			Center			Total
Operating revenues

Sales of ore and metals		27,635			8,500			—			—			—			—			—			36,135
Transport services		—			—			3,405			—			—			—			—			3,405
Sales of aluminum-related products		—			—			—			5,533			—			—			—			5,533
Sales of steel products		—			—			—			—			1,478			—			—			1,478
Other products and services		55			—			—			13			—			127			—			195

		27,690			8,500			3,405			5,546			1,478			127			—			46,746

Vale Added taxes		(714	)		(80	)		(548	)		(112	)		—			—			—			(1,454	)

Net operational revenues		26,976			8,420			2,857			5,434			1,478			127			—			45,292

Ores and metals		(10,632	)		(3,946	)		—			—			—			—			—			(14,578	)
Transport services		—			—			(1,770	)		—			—			—			—			(1,770	)
Aluminum-related products		—			—			—			(3,013	)		—			—			—			(3,013	)
Steel products		—			—			—			—			(1,231	)		—			—			(1,231	)
Other products and services		(59	)		—			—			—			—			(105	)		—			(164	)

Cost of products and services		(10,691	)		(3,946	)		(1,770	)		(3,013	)		(1,231	)		(105	)		—			(20,756	)

Gross profit		16,285			4,474			1,087			2,421			247			22			—			24,536

Gross margin		60.4%			53.1%			38.0%			44.6%			16.7%			—			—			54.2%

Operational expenses

Selling and admnistrative		(1,424	)		(244	)		(92	)		(160	)		(15	)		(17	)		—			(1,952	)
Research and development		(269	)		(361	)		(22	)		—			—			(390	)		—			(1,042	)
Other operating expenses		(1,307	)		(136	)		—			(17	)		(19	)		26			—			(1,453	)

		(3,000	)		(741	)		(114	)		(177	)		(34	)		(381	)		—			(4,447	)

Operating profit (loss) before financial results and result of equity investments		13,285			3,733			973			2,244			213			(359	)		—			20,089

Results of equity investments		(435	)		(102	)		—			—			335			3			—			(199	)

Financial result		—			—			—			—			—			—			(1,745	)		(1,745	)

Operating profit (loss)		12,850			3,631			973			2,244			548			(356	)		(1,745	)		18,145

Non operating income		954			(1,427	)		—			—			135			123			—			(215	)

Income (loss) before income tax and social contribution		13,804			2,204			973			2,244			683			(233	)		(1,745	)		17,930

Income tax and social contribution		(1,931	)		(805	)		(144	)		(427	)		(79	)		(4	)		—			(3,390	)

Income (loss) before minority interests		11,873			1,399			829			1,817			604			(237	)		(1,745	)		14,540
Minority interest		(33	)		(301	)		(278	)		(497	)		—			—			—			(1,109	)

Income (loss) for the year		11,840			1,098			551			1,320			604			(237	)		(1,745	)		13,431

7.34- Social Report

The social report presents the social indicators, environmental, the functional quantitative and relevant information about the exercise of business citizenship and was prepared in accordance with the resolution of Conselho Federal de Contabilidade – CFC no. 1003. The information presented was obtained from the auxiliary records and some management information of the Company, direct and indirect subsidiaries and jointly controlled companies.


	Consolidated												Parent Company
	2007						2006						2007						2006
Basis of calculation
Gross revenue						66,385						46,746						23,029						19,874
Operating income before financial results and equity results						18,962						20,089						6,451						5,865
Gross payroll						3,995						2,025						1,098						868

			% of						% of						% of						% of
					Operating						Operating						Operating						Operating
	Amount		Payroll		income		Amount		Payroll		income		Amount		Payroll		income		Amount		Payroll		income
Labor indicators
Nutrition		185		5%		1%		150		7%		1%		128		12%		2%		91		10%		2%
Compulsory payroll charges		710		18%		4%		524		26%		3%		424		39%		7%		332		38%		6%
Transportation		116		3%		1%		109		5%		1%		81		7%		1%		63		7%		1%
Pension Plan		400		10%		2%		260		13%		1%		111		10%		2%		99		11%		2%
Health		243		6%		1%		150		7%		1%		86		8%		1%		70		8%		1%
Education		68		2%		0%		112		6%		1%		81		7%		1%		69		8%		1%
Employee profit sharing plan		606		15%		3%		563		28%		3%		508		46%		8%		312		36%		5%
Others		147		4%		1%		119		6%		1%		70		6%		1%		59		7%		1%

Total — Labor indicators		2,475		62%		13%		1,283		104%		10%		1,489		136%		23%		1,095		126%		19%


			% of						% of						% of						% of
			Operating		Net operating				Operating		Net operating				Operating		Net operating				Operating		Net operating
	Amount		income		revenue		Amount		income		revenue		Amount		income		revenue		Amount		income		revenue
Social Indicators
Taxes (excluding payroll charges)		6,127		32%		9%		5,980		30%		13%		4,265		66%		19%		2,566		44%		13%
Citizenship investments		465		2%		1%		341		2%		1%		275		4%		1%		285		5%		1%
Social actions and projects		446		2%		1%		310		2%		1%		257		4%		1%		265		5%		1%
Native community		19		0%		—		31		—		—		18		0%		0%		20		—		—
Environmental investments		761		4%		1%		474		2%		1%		366		6%		2%		317		5%		2%

Total - Social Indicators		7,353		39%		11%		6,795		34%		15%		4,906		76%		21%		3,168		54%		16%


Workforce Indicators
Number of employees at the end of the period						60,405						55,819						33,392						26,006
Number of admittances during the period						6,954						8,117						3,969						5,364


Social and environmental projects developed by the company are defined by:	( ) directors	(x) directors and managers	( ) all of employees

Occupational health and safety standards were defined by:	(x) directors and managers	( ) all of employees	( ) all + CIPA

Concerning Unions and the right to negotiate collectively and have internal representation of the employees, the Company:	(x) is not involved in	( ) follows the standards of ILO	( ) encourages and follows the ILO

The pension plan system covers:	( ) directors	( ) directors and managers	(x) all of employees

Profits sharing covers:	( ) directors	( ) directors and managers	(x) all of employees

On selecting suppliers, the same ethical standards of social and environmental responsibility adopted by the company:	( ) are not considered	( ) are recommended	(x) are required

Concerning the participation of employees in voluntary work programs, the Company:	( ) is not involved in	( ) support	(x) organizes and encourages

Social responsibility criteria to select suppliers

Besides technical and economic aspects, the Company considers legal, environment, and health and security aspects in the selection of its suppliers. From the legal point of view, it is required a regular situation on tax aspects and labour and social social security aspects. The environment aspect is verified through documments which confirm the regular situation for the suppliers with the governmental agencies, besides evidence of preservation and environment policies. The engagement with health and security is evaluated through questionary form which considers action of preventive policies . Also it is taken in consideration the performance of the suppliers with the local community. The Company contracts suppliers considering the criteria above, and also implemented “ Programa de Desenvolvimento de Fornecedores ( PDF). Promoting suppliers’s development, the PDF extends the benefits to the local community and the business of the region, supporting the socioeconomic development.

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


Period ended december 31, 2007													In millions of reais
													Accounting information
	Participation (%)				Assets						Liabilities and stockholders’ equity							Statement of income
							Non-current
									Investments,				Non-current
									property plant				Long-term,
									and equipment				deferred income		Adjusted					Cost of			Operating						Income tax
									and deferred				and minority		stockholders’					products and			income			Non-operating			and Social			Adjusted net
	Total		Voting		Circulante		Long-term		charges		Current		interest		equity			Net revenues		services			(expenses)			result			contribution			income (loss)
Jointly-controlled companies
ALBRAS — Alumínio Brasileiro S.A.		51.00		51.00		510		1,319		1,095		480		668		1,775			2,411		(1,658	)		75			(5	)		(259	)		564
ALUNORTE — Alumina do Norte do Brasil S.A.		57.03		61.74		801		12		4,971		483		1,181		4,121			2,709		(1,805	)		36			—			(156	)		783
Brasilux S.A.		100.00		100.00		4		29		—		12		—		20			—		—			(1	)		—			(1	)		(2	)
Cadam S.A		61.48		100.00		143		45		230		30		79		309			265		(243	)		(55	)		—			(2	)		(35	)
Companhia Paulista de Ferro Ligas		100.00		100.00		69		174		2		139		96		10			—		—			10			2			(7	)		5
Companhia Portuária Baia de Sepetiba — CPBS		100.00		100.00		268		6		162		45		—		392			352		(105	)		12			—			(88	)		172
CVRD International S.A.		100.00		100.00		9,103		53,877		46,241		6,309		46,454		56,457			21,112		(15,600	)		6,759			1			(197	)		12,075
CVRD Overseas Ltd.		100.00		100.00		443		363		908		1,263		36		416			3,241		(2,280	)		(139	)		—			—			822
Docepar S.A.		100.00		100.00		8		297		—		31		266		8			—		—			(22	)		—			—			(22	)
Ferro Gusa Carajás S.A.		100.00		100.00		147		1		347		111		1		383			161		(158	)		35			—			—			38
Ferrovia Centro — Atlântica S.A.		100.00		100.00		318		110		1,566		142		1,980		(128	)		774		(667	)		(63	)		—			(20	)		23
Ferrovia Norte Sul S.A.		100.00		100.00		—		2		1,482		372		372		740			—		—			(5	)		—			2			(4	)
Florestas Rio Doce S.A.		99.90		100.00		21		27		4		21		8		24			—		—			8			—			(3	)		5
Mineração Tacumã Ltda.		100.00		100.00		—		—		1,662		17		1,788		(144	)		—		—			23			—			—			23
Minerações Brasileiras Reunidas S.A. — MBR (a)		92.99		92.99		908		31		4,922		404		934		4,522			3,124		(1,613	)		501			19			(530	)		1,502
Para Pigmentos S.A		86.17		85.57		115		11		265		142		162		87			209		(197	)		(11	)		—			(7	)		(7	)
Rio Doce Manganês S.A.		100.00		100.00		669		114		352		340		257		538			798		(533	)		(129	)		(22	)		10			124
Rio Doce Manganèse Europe — RDME		100.00		100.00		259		53		51		138		7		218			466		(383	)		(60	)		5			(11	)		17
Rio Doce Manganése Norway AS		100.00		100.00		180		12		55		71		75		101			327		(191	)		(50	)		—			(28	)		58
Salobo Metais S.A.		100.00		100.00		57		—		986		3		741		298			—		—			—			—			—			—
Urucum Mineração S.A.		100.00		100.00		95		15		58		16		108		44			102		(66	)		(27	)		(8	)		(4	)		(3	)
Valesul Alumínio S.A. (a)		100.00		100.00		129		85		526		61		30		649			530		(411	)		(36	)		2			(28	)		57
Vale Australia Pty Ltd.		100.00		100.00		260		90		1,743		154		1,510		428			302		(366	)		(175	)		1			21			(217	)
Vale Inco		100.00		100.00		8,192		136		49,783		4,647		40,614		12,849			23,244		(10,599	)		(5,333	)		(878	)		(2,921	)		3,512
Vale Overseas Ltd.		100.00		100.00		219		10,174		—		219		10,174		—			—		—			—			—			—			—

Jointly-controlled companies
Baovale Mineração S.A.		50.00		100.00		57		—		56		14		—		99			31		(5	)		—			—			(3	)		22
California Steel Industries, Inc.		50.00		50.00		651		11		438		210		313		577			2,496		(2,432	)		(191	)		—			2			(126	)
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		96		48		251		155		80		160			654		(557	)		6			—			(38	)		65
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		50.89		51.00		196		48		135		179		50		150			655		(548	)		(46	)		—			(22	)		38
Companhia Italo-Brasileira de Pelotização — ITABRASCO		50.90		51.00		198		59		157		190		64		160			602		(524	)		(6	)		—			(32	)		40
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		51.00		51.11		279		69		365		440		62		211			1,075		(963	)		(41	)		—			(27	)		44
Minas da Serra Geral S.A. — MSG		50.00		50.00		28		28		71		2		20		105			25		(10	)		(1	)		—			(3	)		11
Mineração Rio do Norte S.A.		40.00		40.00		144		537		944		577		455		592			1,024		(543	)		2			(1	)		(45	)		437
MRS Logística S.A. (a)		41.50		37.86		767		296		1,918		1,011		769		1,201			2,167		(1,147	)		(175	)		(22	)		(274	)		548
Samarco Mineração S.A.		50.00		50.00		743		392		3,173		1,751		1,735		823			2,461		(1,063	)		(182	)		(8	)		(237	)		972

Observations


(a)		Includes direct and indirect participation.

Additional information of the main operational investee companies are available on the Vale website www.vale.com, investor relations.

9- Report of the Independent Accountants


			De!oitte Touche Tohmatsu Av. Pres. Wilson, 231 22’, 25° e 26° andares 20030-905 - Rio de Janeiro - Rj Brasil

			Tel.: +55 (21) 3981-0500
			Fax: +55 (21) 3981-0600
			www.deloitte.com.br

(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of
Companhia Vale do Rio Doce
Rio de Janeiro — RJ

	1.		We have audited the accompanying balance sheets of Companhia Vale do Rio Doce (“Company”), holding company and consolidated, as of December 31, 2007 and 2006, and the related statements of income, changes in stockholders’ equity, and changes in financial position Tor the years then ended, prepared under the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The audits of the financial statements for the years ended December 31, 2007 and 2006 of certain subsidiaries, which investments were accounted for by the equity method were conducted under the responsibility of other independent auditors and out opinion, in regard to these investments of the holding company as of December 31, 2007 in the amount of R$12.849 million (2006 — R$22,042 million), the earnings therefrom for the year 2007 in the amount of R$3,512 million (2006 — R$2,746 million) and related to the total assets of R$50,621 million as of December 31, 2007 (2006 — R$47,295 million) equivalent to 38% of the total assets consolidated of the Company on that date (2006 — 38%) and net operating revenues for the year ended December 31, 2007 in the amount of R$23,244 million (2006 — R$6,025 million) equivalent to 36% of the Company’s consolidated net operating revenues for the year then ended (2006 — 13%), is based exclusively on those other auditors’ reports.

	2.		Our audits were conducted in accordance with auditing standards generally accepted in Brazil and included: (a) planning of the audit, considering the materiality of the amounts presented, the volume of transactions and the Company’s and its investees accounting and internal control systems; (b) examining, on a test basis, the evidence supporting the amounts and disclosures in the financial statements; and (c) the evaluation of the accounting practices followed and significant estimates made by management, as well as the presentation of the financial statements taken as a whole.

	3.		In our opinion, based on our audits and on the reports of the other auditors, the financial statements referred to in paragraph 1 present fairly, in all material respects, the financial position of Companhia Vale do Rio Doce, holding company and consolidated, as of December 31, 2007 and 2006, the results of its operations, the changes in its stockholders,’ equity and the changes in its financial position for the years then ended, in conformity with accounting practices followed in Brazil.

Our audits were conducted for the purpose of forming an opinion on the financial statements referred to in paragraph 1, taken as a whole. The statements of cash flows (holding company and consolidated), of value added (holding company and consolidated) and of labor and social indicators (holding company and consolidated), are presented for purposes of additional information on Companhia Vale do Rio Doce and are not a required part of the basic financial statements according to the accounting practices followed in Brazil. The statements of cash flows (holding company and consolidated), of value added (holding company and consolidated) and of labor and social indicators (holding company and consolidated), have been subjected to the same audit procedures as those described in paragraph 2 and, in our opinion, based on our audits and on the reports of the other auditors, this additional information is fairly presented in all material respects in relation to the financial statements for the years ended December 31, 2007 and 2006, taken as a whole.

Rio de Janeiro, February 28, 2008



	DELOITTE TOUCHE TOHMATSU Independent Auditors		Marcelo Cavalcanti Almeida Accountant

10- Opinion of the Fiscal Council on the Annual Report and Financial Statements at December 31, 2007

The Fiscal Council of Companhia Vale do Rio Doce, in carrying out its legal and statutory duties, after examining the Company’s Annual Report, Balance Sheet, Statement of Income, Statement of Changes in Financial Position, Statement of Changes in Stockholders’ Equity and the respective Notes to the Financial Statements relative to the fiscal year ended December 31, 2007, and based on the opinion of the independent auditors, is of the opinion that the mentioned information, examined in accordance of applicable corporate legislation should be approved by the Annual Stockholders’ General Meeting.

Rio de Janeiro, February 28, 2008


	Marcelo Amaral Moraes		Anibal Moreira dos Santos
	Chairman

	Bernardo Appy		José Bernardo de Medeiros Neto

11- Opinion of the Board of Directors on the Annual Report and Financial Statements at December 31, 2007

The Board of Directors of Companhia Vale do Rio Doce, after examined the Annual Report, Balance Sheet and other Financial Statements of the Company related to the fiscal year ended December 31, 2007, unanimously approved mentioned proposal.

In view of this, the Board is of the opinion that the above mentioned documents should be approved by the Annual Stockholders’ General Meeting.

Rio de Janeiro, February 28, 2008


	Sérgio Ricardo Silva Rosa		Mário da Silveira Teixeira Júnior
	Chairman		Vice President

	José Ricardo Sasseron		Oscar Augusto de Camargo Filho
	Member		Member

	Sandro Kohler Marcondes		Luciano Galvão Coutinho
	Member		Member

	João Batista Cavaglieiri		Francisco Augusto da Costa e Silva
	Member		Member

	Hiroshi Tada		Jorge Luiz Pacheco
	Member		Member

	Renato da Cruz Gomes
	Member

B- Additional Information

12- Cash generation (unaudited)

The consolidated operating cash generation measured by EBITDA (earnings before financial results, results of equity investments, interest, income tax and depreciation, amortization and depletion increased by dividends received) was R$33,619 in 2007 against R$22,759 in 2006, an increase of 47.7%. The effect of the consolidation of Vale Inco was of R$ 10,291 (R$ 3,183 in 2006 against R$ 13,474 in 2007).

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

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

EBITDA


	Quarter (Unaudited)									Accumulated
	4Q/07			3Q/07			4Q/06			2007			2006
Operating profit — EBIT		5,056			6,985			7,080			29,315			20,089
Depreciation / amortization of goodwill		1,300			999			873			4,170			2,530

		6,356			7,984			7,953			33,485			22,619
Dividends received		75			13			4			134			140

EBITDA (LAJIDA)		6,431			7,997			7,957			33,619			22,759

Depreciation / amortization of goodwill		(1,300	)		(999	)		(873	)		(4,170	)		(2,530	)
Dividends received		(75	)		(13	)		(4	)		(134	)		(140	)
Equity results		(574	)		(644	)		(144	)		(2,405	)		(199	)
Non operational results		—			197			(1,006	)		1,458			(215	)
Financial results, net		395			138			(771	)		277			(1,745	)
Income tax and social contribution		(183	)		(1,632	)		(1,420	)		(7,085	)		(3,390	)
Minority interests		(284	)		(385	)		(371	)		(1,554	)		(1,109	)

Net income		4,410			4,659			3,368			20,006			13,431

Consolidated EBITDA by segment


	EBITDA
	Quarter (Unaudited)									Accumulated
Segments	4Q/07			3Q/07			4Q/06			2007			2006

Ferrous minerals		3,741			4,353			3,665			16,087			14,706
Non-ferrous minerals		2,155			2,822			3,347			14,241			4,231

Logistics		309			418			384			1,508			1,400

Holdings

Aluminum		309			537			631			2,101			2,435

Steel		(12	)		21			24			91			336

Others		(71	)		(154	)		(94	)		(409	)		(349	)


		6,431			7,997			7,957			33,619			22,759

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


Board of Directors		Fiscal Council

Sérgio Ricardo Silva Rosa		Marcelo Amaral Moraes
Chairman		Chairman

Mário da Silveira Teixeira Júnior		Aníbal Moreira dos Santos
Vice-President		Bernard Appy
		José Bernardo de Medeiros Neto
Luciano Galvão Coutinho
Francisco Augusto da Costa e Silva		Alternate
Hiroshi Tada		Oswaldo Mário Pêgo de Amorim Azevedo
João Batista Cavaglieri		Tarcísio José Massote de Godoy
Jorge Luiz Pacheco		Marcos Coimbra
José Ricardo Sasseron
Oscar Augusto de Camargo Filho
Renato da Cruz Gomes
Sandro Kohler Marcondes		Executive Officers

		Roger Agnelli
Advisory Committees of the Board of Directors		Chief Executive Officer and Investor Relations

Controlling Committee		Carla Grasso
Antonio José Figueiredo Ferreira		Executive Officer for Human Resources and Corporate
Luiz Carlos de Freitas		Services
Paulo Roberto Ferreira de Medeiros
		Eduardo de Salles Bartolomeo
Executive Development Committee		Executive Officer for Logistics
João Moisés de Oliveira
José Ricardo Sasseron		Fabio de Oliveira Barbosa
Oscar Augusto de Camargo Filho		Chief Financial Officer and Investor Relations

Strategic Committee		Gabriel Stoliar
Roger Agnelli		Executive Officer for Planning and Business Development
Gabriel Stoliar
Luciano Siani Pires		José Carlos Martins
Mário da Silveira Teixeira Júnior		Executive Officer for Ferrous Minerals
Oscar Augusto de Camargo Filho
Sérgio Ricardo Silva Rosa		José Lancaster
		Executive Officer for Copper, Coal and Aluminum
Finance Committee
Fabio de Oliveira Barbosa		Murilo de Oliveira Ferreira
Ivan Luiz Modesto Schara		Executive Officer for Nickel and Basic Metals
Luiz Maurício Leuzinger		Comercialization
Wanderlei Viçoso Fagundes
		Tito Botelho Martins
Governance and Sustainability Committee		Executive Officer for Corporate Affairs and Energy
Jorge Luiz Pacheco
Renato da Cruz Gomes		Demian Fiocca
Ricardo Simonsen		Executive Officer for Technology and Management

		Marcus Vinícius Dias Severini
		Chief Officer of Accounting and Control Department

		Vera Lúcia de Almeida Pereira Elias
		Chief Accountant
		CRC-RJ — 043059/O-8

SIGNATURES

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


	COMPANHIA VALE DO RIO DOCE
	(Registrant)


Date: March 5, 2008	By:	/s/ Fabio de Oliveira Barbosa

		Fabio de Oliveira Barbosa
		Chief Financial Officer