Edgar Filing: Companhia Vale do Rio Doce

6-K

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K

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

For the month of

August 2008

Companhia Vale do Rio Doce

Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil

(Address of principal executive office)

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

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

(Check One) Yes o No þ

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

(Check One) Yes o No þ

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

(Check One) Yes o No þ

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

Table of Contents

Press Release

Signature Page

COMPANHIA VALE DO RIO DOCE
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


	Page
Report of Independent Registered Public Accounting Firm		2

Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007		4

Condensed Consolidated Statements of Income for the three-month periods ended June 30, 2008, March 31, 2008 and June 30, 2007 and for the six-month periods ended June 30, 2008 and 2007		6

Condensed Consolidated Statements of Cash Flows for the three-month periods ended June 30, 2008, March 31, 2008 and June 30, 2007 and for the six-month periods ended June 30, 2008 and 2007		7

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended June 30, 2008, March 31, 2008 and June 30, 2007 and for the six-month periods ended June 30, 2008 and 2007		8

Notes to the Condensed Consolidated Financial Information		9

Supplemental Financial Information		32


		PricewaterhouseCoopers
		Rua da Candelária, 65 11°-15°
		20091-020 Rio de Janeiro, RJ — Brasil
		Caixa Postal 949
		Telefone (21) 3232-6112
		Fax (21) 2516-6319
		www.pwc.com/br

Report of Independent Registered
Public Accounting Firm

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

We have reviewed the accompanying condensed consolidated balance sheet of Companhia Vale do Rio Doce and its subsidiaries as of June 30, 2008, and the related condensed consolidated statements of income, of cash flows and of stockholders’ equity for each of the three-month periods ended June 30, 2008, and March 31, 2008 and June 30, 2007 and for the six-month periods ended June 30, 2008 and June 30, 2007. This interim financial information is the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board {United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2007, and the related consolidated statements of income, of cash flows and of stockholders’ equity for the year then ended (not presented herein), and in our report dated February 28, 2008, we expressed an unqualified opinion

on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2007, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

PricewaterhouseCoopers Auditores
Independentes

Rio de Janeiro, Brazil
August 6, 2008

Condensed Consolidated Balance Sheets Expressed in millions of United States Dollars


			December 31,
	June 30, 2008		2007
	(Unaudited)
Assets
Current assets
Cash and cash equivalents		2,154		1,046
Accounts receivable
Related parties		240		281
Unrelated parties		4,642		3,671
Loans and advances to related parties		154		64
Inventories		4,347		3,859
Deferred income tax		437		603
Recoverable taxes		1,164		1,159
Others		653		697

		13,791		11,380


Property, plant and equipment, net, and intangible assets		59,982		54,625
Investments in affiliated companies, joint ventures and other investments		3,124		2,922
Other assets
Goodwill on acquisition of subsidiaries		3,702		3,791
Loans and advances
Related parties		—		3
Unrelated parties		102		127
Prepaid pension cost		1,457		1,009
Prepaid expenses		197		200
Judicial deposits		1,273		1,124
Advances to suppliers — energy		618		574
Recoverable taxes		235		199
Unrealized gains on derivative instruments		1,238		673
Others		213		90

		9,035		7,790

TOTAL		85,932		76,717

The accompanying notes are an integral part of this condensed consolidated financial information.

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

(Continued)


				December 31,
	June 30, 2008			2007
	(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Suppliers		2,758			2,430
Payroll and related charges		708			734
Minimum annual dividends attributed to stockholders		1,747			2,683
Current portion of long-term debt — unrelated parties		730			1,249
Short-term debt		46			167
Loans from related parties		36			6
Provision for income taxes		1,022			1,198
Taxes payable and royalties		203			322
Employees post retirement benefits		151			131
Sub-concession		225			210
Unrealized losses on derivative instruments		397			346
Provisions for asset retirement obligations		68			64
Others		504			543

		8,595			10,083

Long-term liabilities
Employees post retirement benefits		2,102			2,204
Long-term debt — unrelated parties		19,560			17,608
Provisions for contingencies (Note 15 (b))		1,957			2,453
Unrealized losses on derivative instruments		—			5
Deferred income tax		6,040			5,725
Provisions for asset retirement obligations		1,033			911
Sub-concession		225			210
Others		1,745			1,687

		32,662			30,803

Minority interests		2,970			2,555


Commitments and contingencies (Note 15)

Stockholders’ equity (Note 11)
Preferred class A stock - 7,200,000,000 no-par-value shares authorized and 1,919,516,400 issued		4,953			4,953
Common stock - 3,600,000,000 no-par-value shares authorized and 2,999,797,716 issued		7,742			7,742
Treasury stock - 30,341,012 preferred and 56,582,040 common shares		(389	)		(389	)
Additional paid-in capital		498			498
Mandatory convertible notes in common shares		1,288			1,288
Mandatory convertible notes in preferred shares		581			581
Other cumulative comprehensive income		3,125			1,655
Undistributed retained earnings		17,021			15,317
Unappropriated retained earnings		6,886			1,631

		41,705			33,276

TOTAL		85,932			76,717

The accompanying notes are an integral part of this condensed consolidated financial information.

Condensed Consolidated Statements of Income
Expressed in millions of United States Dollars
(Except per share amounts)


										Six-month period ended
	Three-month period ended (unaudited)									(unaudited)
	June 30, 2008			March 31, 2008			June 30, 2007			June 30, 2008			June 30, 2007
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		9,445			6,857			7,667			16,302			14,301
Revenues from logistic services		462			362			414			824			745
Aluminum products		728			646			724			1,374			1,373
Other products and services		262			183			94			445			160

		10,897			8,048			8,899			18,945			16,579
Taxes on revenues		(297	)		(216	)		(207	)		(513	)		(398	)

Net operating revenues		10,600			7,832			8,692			18,432			16,181


Operating costs and expenses

Cost of ores and metals sold		(3,834	)		(3,440	)		(3,075	)		(7,274	)		(6,888	)
Cost of logistic services		(256	)		(212	)		(227	)		(468	)		(415	)
Cost of aluminum products		(561	)		(493	)		(431	)		(1,054	)		(800	)
Others		(112	)		(97	)		(51	)		(209	)		(71	)

		(4,763	)		(4,242	)		(3,784	)		(9,005	)		(8,174	)
Selling, general and administrative expenses		(344	)		(322	)		(266	)		(666	)		(534	)
Research and development		(269	)		(190	)		(152	)		(459	)		(265	)
Others		11			(163	)		(111	)		(152	)		(127	)

		(5,365	)		(4,917	)		(4,313	)		(10,282	)		(9,100	)

Operating income		5,235			2,915			4,379			8,150			7,081

Non-operating income (expenses)
Financial income		23			55			77			78			198
Financial expenses		(349	)		(560	)		(676	)		(909	)		(1,420	)
Gains (losses) on derivatives, net		724			(318	)		168			406			253
Foreign exchange and monetary gains, net		769			112			932			881			1,702
Gain on sale of investments		—			80			674			80			674

		1,167			(631	)		1,175			536			1,407

Income before income taxes, equity results and minority interests		6,402			2,284			5,554			8,686			8,488

Income taxes
Current		(1,173	)		(654	)		(1,483	)		(1,827	)		(2,316	)
Deferred		(333	)		296			87			(37	)		278

		(1,506	)		(358	)		(1,396	)		(1,864	)		(2,038	)

Equity in results of affiliates, joint ventures and other investments		260			119			156			379			294
Minority interests		(147	)		(24	)		(219	)		(171	)		(432	)

Net income		5,009			2,021			4,095			7,030			6,312

Basic and diluted earnings per share
Earnings per preferred share		1.01			0.41			0.85			1.41			1.31
Earnings per common share		1.01			0.41			0.85			1.41			1.31
Earnings per convertible notes linked to preferred share (*)		1.52			0.66			—			2.18			—
Earnings per convertible notes linked to common share (*)		1.54			0.74			—			2.28			—


(*)		Basic earnings per share only as dilution assumes conversion.

The accompanying notes are an integral part of this condensed consolidated financial information.

Condensed Consolidated Statements of Cash Flows
Expressed in millions of United States Dollars


										Six-month period ended
	Three-month period ended (unaudited)									(unaudited)
	June 30, 2008			March 31, 2008			June 30, 2007			June 30, 2008			June 30, 2007
Cash flows from operating activities:
Net income		5,009			2,021			4,095			7,030			6,312
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		760			766			525			1,526			917
Dividends received		223			48			153			271			243
Equity in results of affiliates, joint ventures and other investments		(260	)		(119	)		(156	)		(379	)		(294	)
Deferred income taxes		333			(296	)		(87	)		37			(278	)
Loss on disposal of property, plant and equipment		86			37			240			123			263
Gain on sale of investments		—			(80	)		(674	)		(80	)		(674	)
Foreign exchange and monetary losses (gains), net		(1,231	)		(146	)		(1,224	)		(1,377	)		(1,996	)
Unrealized derivative losses (gains), net		(724	)		318			(168	)		(406	)		(253	)
Minority interests		147			24			219			171			432
Unrealized interest (income) expense, net		(45	)		81			(57	)		36			116
Others		(3	)		(18	)		(265	)		(21	)		(265	)
Decrease (increase) in assets:
Accounts receivable		(802	)		202			(492	)		(600	)		(389	)
Inventories		(283	)		(64	)		(264	)		(347	)		409
Others		79			(155	)		499			(76	)		95
Increase (decrease) in liabilities:
Suppliers		320			(54	)		428			266			474
Payroll and related charges		177			(248	)		104			(71	)		(57	)
Income taxes		750			(718	)		503			32			449
Others		(455	)		(191	)		251			(646	)		408

Net cash provided by operating activities		4,081			1,408			3,630			5,489			5,912

Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions		(34	)		—			(1	)		(34	)		(1	)
Repayments		—			25			—			25			10
Others		1			—			(1	)		1			(1	)
Judicial deposits		(2	)		(34	)		(31	)		(36	)		(63	)
Additions to investments		(11	)		(13	)		(42	)		(24	)		(94	)
Additions to property, plant and equipment		(2,105	)		(1,625	)		(1,633	)		(3,730	)		(2,739	)
Proceeds from disposal of investments		—			134			908			134			908
Cash used to acquire subsidiaries, net of cash acquired		—			—			(903	)		—			(2,926	)

Net cash used in investing activities		(2,151	)		(1,513	)		(1,703	)		(3,664	)		(4,906	)

Cash flows from financing activities:
Short-term debt, additions		209			801			1,493			1,010			1,990
Short-term debt, repayments		(449	)		(672	)		(2,485	)		(1,121	)		(2,691	)
Loans
Related parties
Additions		3			18			136			21			253
Repayments		(2	)		(2	)		(121	)		(4	)		(234	)
Issuances of long-term debt
Others		236			1,330			49			1,566			6,512
Repayments of long-term debt
Others		(647	)		(105	)		(3,940	)		(752	)		(10,145	)
Mandatorily proceeds convertible notes		—			—			1,869			—			1,869
Interest attributed to stockholders		(1,250	)		—			(825	)		(1,250	)		(825	)
Dividends to minority interest		(87	)		—			(224	)		(87	)		(285	)

Net cash provided by (used in) financing activities		(1,987	)		1,370			(4,048	)		(617	)		(3,556	)

Increase (decrease) in cash and cash equivalents		(57	)		1,265			(2,121	)		1,208			(2,550	)
Effect of exchange rate changes on cash and cash equivalents		(53	)		(47	)		(59	)		(100	)		(124	)
Cash and cash equivalents, beginning of period		2,264			1,046			3,954			1,046			4,448

Cash and cash equivalents, end of period		2,154			2,264			1,774			2,154			1,774

Cash paid during the period for:
Interest on short-term debt		(5	)		(5	)		(39	)		(10	)		(40	)
Interest on long-term debt		(357	)		(279	)		(399	)		(636	)		(604	)
Income tax		(320	)		(1,672	)		(1,255	)		(1,992	)		(1,861	)

Non-cash transactions
Interest capitalized		(14	)		(17	)		(21	)		(31	)		(43	)

The accompanying notes are an integral part of this condensed consolidated financial information.

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


	Three-month period ended (unaudited)									Six-month period ended (unaudited)
	June 30, 2008			March 31, 2008			June 30, 2007			June 30, 2008			June 30, 2007
Preferred class A stock (including twelve special shares)
Beginning of the period		4,953			4,953			4,702			4,953			4,702
Transfer from undistributed retained earnings		—			—			251			—			251

End of the period		4,953			4,953			4,953			4,953			4,953

Common stock
Beginning of the period		7,742			7,742			3,806			7,742			3,806
Transfer from undistributed retained earnings		—			—			3,936			—			3,936

End of the period		7,742			7,742			7,742			7,742			7,742

Treasury stock
Beginning and end of the period		(389	)		(389	)		(389	)		(389	)		(389	)

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

Mandatory convertible notes in common shares
Beginning and end of the period		1,288			1,288			1,288			1,288			1,288

Mandatory convertible notes in preferred shares
Beginning and end of the period		581			581			581			581			581

Other cumulative comprehensive income (deficit)
Cumulative translation adjustments
Beginning of the period		1,135			1,340			(1,672	)		1,340			(1,628	)
Change in the period		1,707			(205	)		1,208			1,502			1,164

End of the period		2,842			1,135			(464	)		2,842			(464	)

Unrealized gain on available-for-sale securities
Beginning of the period		205			211			586			211			271
Change in the period		(94	)		(6	)		(381	)		(100	)		(66	)

End of the period		111			205			205			111			205

Surplus accrued pension plan
Beginning of the period		60			75			344			75			353
Change in the period		104			(15	)		128			89			119

End of the period		164			60			472			164			472

Cash flow hedge
Beginning of the period		2			29			(10	)		29			—
Change in the period		6			(27	)		24			(21	)		14

End of the period		8			2			14			8			14

Total other cumulative comprehensive income		3,125			1,402			227			3,125			227

Undistributed retained earnings
Beginning of the period		15,508			15,317			9,992			15,317			9,555
Transfer from unappropriated retained earnings		1,513			191			428			1,704			865
Transfer to capital stock		—			—			(4,187	)		—			(4,187	)

End of the period		17,021			15,508			6,233			17,021			6,233

Unappropriated retained earnings
Beginning of the period		3,435			1,631			4,285			1,631			2,505
Net income		5,009			2,021			4,095			7,030			6,312
Interest attributed to mandatory convertible debt
Preferred class A stock		(15	)		(8	)		—			(23	)		—
Common stock		(30	)		(18	)		—			(48	)		—
Appropriation to undistributed retained earnings		(1,513	)		(191	)		(428	)		(1,704	)		(865	)

End of the period		6,886			3,435			7,952			6,886			7,952

Total stockholders’ equity		41,705			35,018			29,085			41,705			29,085


Preferred class A stock (including twelve special shares)		1,919,516,400			1,919,516,400			1,919,541,400			1,919,516,400			1,919,541,400
Common stock		2,999,797,716			2,999,797,716			2,999,797,716			2,999,797,716			2,999,797,716
Treasury stock
Beginning of the period		(86,923,052	)		(86,923,184	)		(86,923,328	)		(86,923,184	)		(86,927,072	)
Sales		—			132			—			132			3,744

End of the period		(86,923,052	)		(86,923,052	)		(86,923,328	)		(86,923,052	)		(86,923,328	)

		4,832,391,064			4,832,391,064			4,832,415,788			4,832,391,064			4,832,415,788

The accompanying notes are an integral part of this condensed consolidated financial information

Notes to the Condensed Consolidated Financial Information
Expressed in millions of United States Dollars, unless otherwise stated

1		The Company and its operation

		Companhia Vale do Rio Doce (Vale) is a limited liability company, duly organized under the laws of the Federative Republic of Brazil. Operations are carried out through Vale and our subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production, logistics and steel activities.

		On June 30, 2008, the main operating subsidiaries we consolidate are described as follows:

% voting

Head office

Subsidiary

% ownership

capital

location

Principal activity

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

57.03

59.02

Brazil

Alumina

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

51.00

Brazil

Aluminum

CADAM S.A (CADAM)

61.48

100.00

Brazil

Kaolin

CVRD Overseas Ltd.

100.00

Cayman Islands

Trading

Ferrovia Centro-Atlântica S. A.

100.00

Brazil

Logistics

Mineração Onça Puma Ltda

100.00

Brazil

Nickel

Minerações Brasileiras Reunidas S.A. — MBR

92.99

Brazil

Iron ore

Pará Pigmentos S.A. (“PPSA”)

86.17

85.57

Brazil

Kaolin

PT International Nickel Indonesia Tbk (“PT Inco”)

61.16

Indonesia

Iron ore

Rio Doce Manganês S.A.

100.00

Brazil

Manganese and Ferroalloys

Rio Doce Manganèse Europe — RDME

100.00

France

Ferroalloys

Rio Doce Manganese Norway — RDMN

100.00

Norway

Ferroalloys

Vale Australia Pty Ltd.

100.00

Australia

Coal

Vale Inco Limited

100.00

Canada

Nickel

Vale International S.A (formerly CVRD International S.A)

100.00

Swiss

Trading

Valesul Aumínio S.A.

100.00

Brazil

Aluminum

2		Basis of consolidation

		All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are accounted for under the equity method (Note 8).

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

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

		Our participation in hydroelectric projects are made via consortium contracts under which we have an undivided interests in assets and are liable for our proportionate share of liabilities and expenses, which are based on our proportionate share of power output. We do not have joint liability for any obligations, and all our recorded costs, income, assets and liabilities relate to the entities within our group. Since there is no separate legal entity for these projects, there are no separate financial statements, income tax return, net income or shareholders’ equity. Brazilian corporate law explicitly states that no separate legal entity arises from consortium contract. Accordingly, we recognize our proportionate share of costs and our undivided interest in assets relating to hydroelectric projects.

3		Basis of Presentation

		Our condensed consolidated interim financial information for the three-month periods ended June 30, 2008, March 31, 2008, and June 30, 2007 and for the six-month periods ended June 30, 2008 and June 30, 2007, prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), are unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods. The results of operations for the three-month and six-month periods ended June 30, 2008, are not necessarily indicative of the actual results expected for the full fiscal year ending December 31, 2008.

		These condensed consolidated financial information should be read in conjunction with our consolidated financial statements as of and for the year ended December 31, 2007, prepared in accordance with US GAAP.

		In preparing the condensed consolidated financial information, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our condensed consolidated financial statements therefore include various estimates concerning the selection of useful lives of property, plant and equipment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired and assumed in business combinations, income tax uncertainties, employee post-retirement benefits and other similar evaluations. Actual results may vary from our estimates.

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

		We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$1.5919 and R$1.7713 at June 30, 2008 and December 31, 2007, respectively to US$1.00 or the first available exchange rate if exchange on the last day of the period, was not available), and all accounts in the statements of income (including amounts relating to local currency indexation and exchange gains or losses on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remeasurement process is included in the cumulative translation adjustments account in stockholders’ equity.

4		Recently-issued accounting pronouncements

		In June 2008, the Financial Accounting Standards Board (FASB) issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”. The objective of this FSP is to addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings per Share. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early application is not permitted. We are currently studying the effects of this pronouncement.

		In May 2008, the Financial Accounting Standards Board (FASB) issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”. This FASB Staff Position (FSP) clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently studying the effects of this pronouncement.

		In May 2008, the Financial Accounting Standards Board (FASB) issued FSP FAS 162, “The Hierarchy of Generally Accepted Accounting Principles”. The objective of this FSP is to identify the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement shall be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. There are no specific disclosure requirements with this statement.

		In April 2008, the Financial Accounting Standard s Board (FASB) issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”. The objective of this FSP is to address situations of renewing or extending the useful life of a recognized intangible asset. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early application is not permitted. We are currently studying the effects of this pronouncement.

5		Major acquisitions and disposals

		In February 2008, we sold all of our interest in Jubilee Mines N.L. (held by our subsidiary Vale Inco), corresponding to 4.83% of its common shares, for US$134 generating a gain of US$80.

		In October, 2007 we were awarded, in a public auction, a 30-year sub-concession agreement, under which we purchased the right to use the Ferrovia Norte Sul S.A. — FNS for US$837, payable in three installments. The first installment, equivalent to US$412 and corresponding to 50% was paid in December 2007. The second and third installments, each one representing 25% of the total amount, are to be paid in December 2008, and 2009, upon the completion of the railroad. The outstanding installments are indexed to the general price index (IGP-DI) and accrue interest of 12% p.a.

		In July 2007, we sold our interest in Lion Ore Mining International Ltd.(held by our subsidiary Vale Inco), corresponding to 1.8% of its common shares for US$105, generating a gain of US$80.

		In June 2007, we sold through primary and secondary public offerings, 25,213,664 common shares, representing 57.84% of the total capital of our subsidiary Log-In Logística Intermodal S.A. (“Log-In”) for US$179, recording a gain of US$155.

		In July 2007, we sold an additional 5.1% stake in Log-In for US$24 recording a gain of US$21. At December 31, 2007, we held 31.33% of the voting and total capital of this entity, which is accounted for as at the equity method.

		In May 2007, we sold in a public offering, part of our stockholding in Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS, an available-for-sale investee, for US$728, recording a gain of US$456. We have retained the minimum number of shares required to participate in the current shareholders agreement of the investee.

		In May 2007, we acquired a further 6.25% of the total share capital of Empreendimentos Brasileiros de Mineração S.A. (EBM), which main asset is its interest in MBR, for US$231 and as a result, our direct and indirect stake in MBR increased to 92.99% of total and voting capital. We simultaneously entered into an usufruct agreement with minority shareholders whereby they transferred to us all rights and obligations with respect to their EBM shares, including rights to dividends for the next 30 years, for which we will make an initial payment of US$61 plus an annual fee of US$48 for each of the next 29 years. The present value of the future obligation is recorded as a liability and the corresponding charge recorded to minority interests in the balance sheet.

		In April 2007, we concluded the acquisition of 100% of Vale Australia (former AMCI Holdings Australia Pty — AMCI HA), a private company domiciled in Australia, which owns and operates coalmines in that country, for US$656.

6		Income taxes

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

		In other countries where we have operations, the applicable tax rates vary from 1.67% to 40%.

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


	Three-month period ended (unaudited)
	June 30, 2008									March 31, 2008									June 30, 2007
	Brazil			Foreign			Total			Brazil			Foreign			Total			Brazil			Foreign			Total
Income before income taxes, equity results and minority interests		4,067			2,335			6,402			522			1,762			2,284			2,807			2,747			5,554

Federal income tax and social contribution expense at statutory enacted rates		(1,383	)		(794	)		(2,177	)		(177	)		(599	)		(776	)		(954	)		(934	)		(1,888	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		7			—			7			169			—			169			118			—			118
Difference on tax rates of foreign income		—			315			315			—			258			258			—			198			198
Difference on tax basis of equity investees		—			(13	)		(13	)		—			(20	)		(20	)		71			12			83
Tax incentives		72			—			72			15			—			15			65			—			65
Other non-taxable gains (losses)		358			(68	)		290			(59	)		55			(4	)		39			(11	)		28

Federal income tax and social contribution expense in consolidated statements of income		(946	)		(560	)		(1,506	)		(52	)		(306	)		(358	)		(661	)		(735	)		(1,396	)


	Six-month period ended (unaudited)
	June 30, 2008									June 30, 2007
	Brazil			Foreign			Total			Brazil			Foreign			Total
Income before income taxes, equity results and minority interests		4,589			4,097			8,686			4,408			4,080			8,488

Federal income tax and social contribution expense at statutory enacted rates		(1,560	)		(1,393	)		(2,953	)		(1,499	)		(1,387	)		(2,886	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		176			—			176			221			—			221
Difference on tax rates of foreign income		—			573			573			—			391			391
Difference on tax basis of equity investees		—			(33	)		(33	)		7			44			51
Tax incentives		87			—			87			117			—			117
Other non-taxable gains (losses)		299			(13	)		286			84			(16	)		68

Federal income tax and social contribution expense in consolidated statements of income		(998	)		(866	)		(1,864	)		(1,070	)		(968	)		(2,038	)

		We have certain income tax incentives relating to our manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relating to manganese comprise partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels, which expires in 2009 and 2013, respectively, while the partial exemption incentives relative to aluminum and kaolin expire in 2013. An amount equal to the tax saving must be appropriated to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends.

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

		Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

		We are subject to examination by the tax authorities for up to five years regarding our operations in Brazil, ten years for Indonesia, and five and six years for Canada, except for Newfoundland which has no limit.

		Brazilian tax loss carryforwards have no expiration date though offset is restricted to 30% of annual income before tax.

		The reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: See note 15 (b).


	June 30, 2008
	(Unaudited)			December 31, 2007
Beginning of the period		1,046			663

Increase resulting from tax positions taken		333			264
Decrease resulting from tax positions taken		(342	)		(47	)
Changes in tax legislation		2			29
Effects of translation from Brazilian Reais into U.S.		75			137

End of the period		1,114			1,046

Inventories


	June 30, 2008		December 31, 2007
	(Unaudited)
Finished products
Nickel (co-products and by-products)		1,846		1,812
Iron ore and pellets		712		588
Manganese and ferroalloys		166		106
Aluminum products		188		176
Kaolin		43		42
Copper concentrate		31		15
Coal		33		38
Others		61		36
Spare parts and maintenance supplies		1,267		1,046

		4,347		3,859

There was no write down recorded in the periods presented.

Investments in affiliated companies and joint ventures


	June 30, 2008									Investments				Equity in results of affiliates, joint ventures and other investments															Dividends received
							(Unaudited)
																							Six-month period ended												Six-month period ended
														Three-month period ended (unaudited)									June 30, (unaudited)						Three-month period ended (unaudited)						June 30, (unaudited)
							Net income
	Participation in				Net		(loss) for the			June 30,		December		June 30,			March 31,			June 30,									June 30,		March 31,		June 30,
	capital (%)				equity		period			2008		31, 2007		2008			2008			2007			2008			2007			2008		2008		2007		2008		2007
	voting		total							(Unaudited)
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)		51.11		51.00		193		58			98		61		34			(4	)		(1	)		30			5			—		—		—		—		—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		166		69			85		43		33			2			4			35			10			—		—		16		—		16
Companhia Coreano-Brasileira de Pelotização — KOBRASCO (1)		50.00		50.00		144		42			72		45		19			2			5			21			10			—		—		—		—		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)		51.00		50.90		104		3			53		46		1			1			3			2			7			—		—		8		—		8
Minas da Serra Geral S.A. — MSG		50.00		50.00		69		2			34		30		—			1			1			1			2			—		—		—		—		—
SAMARCO Mineração S.A. — SAMARCO (2)		50.00		50.00		1,213		392			674		546		148			48			59			196			119			138		—		50		138		100
Others		—		—		—		—			35		30		1			2			(1	)		3			—			—		—		—		—		—

											1,051		801		236			52			70			288			153			138		—		74		138		124

Logistics
LOG-IN Logística Intermodal S.A. (3)		31.33		31.33		392		20			127		107		6			5			(2	)		11			(2	)		3		—		—		3		—
MRS Logística S.A		37.86		41.51		715		(44	)		297		342		(47	)		29			29			(18	)		52			34		—		27		34		27

											424		449		(41	)		34			27			(7	)		50			37		—		27		37		27

Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (cost $180) available-for-sale (5)		—		—		—		—			471		465		10			—			24			10			24			10		—		24		10		24
California Steel Industries Inc. — CSI		50.00		50.00		381		55			191		163		22			6			4			28			5			—		—		—		—		11
THYSSENKRUPP CSA Companhia Siderúrgica (Cost $431) — available-for-sale		11.05		11.05		—		—			463		388		—			—			—			—			—			—		—		—		—		—

											1,125		1,016		32			6			28			38			29			10		—		24		10		35

Bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		268		54			107		184		8			14			20			22			42			38		48		28		86		57

											107		184		8			14			20			22			42			38		48		28		86		57

Coal
Henan Longyu Resources Co. Ltd		25.00		25.00		637		144			159		115		19			17			13			36			22			—		—		—		—		—
Shandong Yankuang International Company Ltd		25.00		25.00		100		1			25		23		1			(1	)		(2	)		—			(2	)		—		—		—		—		—

											184		138		20			16			11			36			20			—		—		—		—		—

Nickel
Heron Resources Inc (cost $25) — available-for-sale		—		—		—		—			12		34		—			—			—			—			—			—		—		—		—		—
Jubilee Mines N.L (cost $5) (4) — available-for-sale		—		—		—		—			—		126		—			—			—			—			—			—		—		—		—		—
Mirabela Nickel Ltd (cost $24) — available-for-sale		—		—		—		—			70		72		—			—			—			—			—			—		—		—		—		—
Skye Resources Inc (cost $36) — available-for-sale		—		—		—		—			47		44		—			—			—			—			—			—		—		—		—		—
Others		—		—		—		—			22		23		—			—			—			—			—			—		—		—		—		—

											151		299		—			—			—			—			—			—		—		—		—		—

Other affiliates and joint ventures
Others		—		—		—		—			82		35		5			(3	)		—			2			—			—		—		—		—		—

											82		35		5			(3	)		—			2			—			—		—		—		—		—

											1,649		1,672		65			33			59			98			91			48		48		52		96		92


Total											3,124		2,922		260			119			156			379			294			223		48		153		271		243


(1)		Although Vale held a majority of the voting interest of investees accounted for under the equity method, existing veto rights held by minority shareholders under shareholder agreements preclude consolidation;

(2)		Investment includes goodwill of US$ 67 in 2008 and US$ 61 in 2007;

(3)		Investment non consolidated since June, 2007;

(4)		Sold in February, 2008 (note 5);

(5)		Equity in refers to dividends received.

9		Short-term debt

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

		Average interest rates on short-term borrowings were 4.18%, and 5.5% at June 30, 2008 and December 31, 2007, respectively.

10		Long-term debt


	Current liabilities				Long-term liabilities
			December				December
	June 30, 2008		31, 2007		June 30, 2008		31, 2007
	(Unaudited)				(Unaudited)
Foreign debt

Loans and financing denominated in the following currencies:
United States Dollars		231		212		5,933		5,927
Others		43		64		211		214

Fixed Rate Notes — US$ denominated		—		—		6,678		6,680
Debt securities — export sales (*) — US$ denominated		54		53		178		205
Perpetual notes		—		—		83		87
Accrued charges		243		282		—		—

		571		611		13,083		13,113


Local debt

Denominated in Long-Term Interest Rate — TJLP/CDI		42		586		2,728		1,148
Denominated in General Price Index-Market (IGPM)		—		1		1		1
Basket of currencies		1		2		5		6
Non-convertible debentures		—		—		3,743		3,340
Accrued charges		116		49		—		—

		159		638		6,477		4,495

Total		730		1,249		19,560		17,608

(*) Debt securities secured by future receivables arising from export sales.

The long-term portion at June 30, 2008 falls due as follows:


2009			156
2010			2,612
2011			2,628
2012			1,131
2013 and thereafter			12,660
No due date (Perpetual notes and non-convertible debentures)			373

			19,560

At June 30, 2008 annual interest rates on long-term debt were as follows:


Up to 3%			30
3.1% to 5%			6,225
5.1% to 7%			6,237
7.1% to 9%			2,125
9.1% to 11%			138
Over 11% (*)			5,452
Variable (Perpetual notes)			83

			20,290


(*)		Includes non-convertible debentures and other Brazilian-reais denominated debt that bear interest at CDI (Brazilian interbank certificate of deposit) rate plus spread. For these operations we have entered into derivative transactions to hedge our exposure on the floating rate debt denominated in reais. The total outstanding amount for these transactions is US$ 4,428 and the average cost of such debt after the hedge transactions is 5.40%.

The indexes applied to our debt were as follows (unaudited):


	As of - %
	June 30, 2008			March 31, 2008			December 31, 2007
TJLP — Long-Term Interest Rate (effective rate)		1.5			1.5			1.5
IGP-M — General Price Index — Market		4.3			2.4			3.5
Devaluation of United States Dollar against Real		(9.0	)		(1.3	)		(3.7	)

		In January, 2008 we entered into a trade finance agreement with local Brazilian bank in the amount of US$ 1.1 billion with final maturity in 2018.

		In April 2008 we entered into a contract for a committed credit facility totaling US$ 4.2 billion with Banco Nacional de Desenvolvimento Econômico e Social — BNDES, the Brazilian National Development Bank, available for 60 months and with a 10-year tenor. In May 2008, we entered into agreements with Japan Bank for International Cooperation — JBIC (which considers providing its support by financing up to US$ 3 billion) and Nippon Export and Investment Insurance — NEXI (which will provide loan insurance in an amount not exceeding US$ 2 billion). Vale International and Vale Inco have available lines of credits of US$ 1.15 billion and US$ 750, respectively. The total amount of the available lines of credits is US$ 11.1 billion with a view to financing part of our investment plan for 2008 to 2012, in the amount of US$ 59 billion.

		On June 30, 2008 the US Dollar denominated Fixed Rate Notes of US$ 6,678 (December 31, 2007 — US$ 6,680) and other debt of US$ 12,992 (December 31, 2007 — US$ 11,511) are unsecured. The export securitization of US$ 232 (December 31, 2007 — US$ 258) is debt securities collateralized by future receivables arising from certain export sales of our subsidiary CVRD Overseas Ltd. Loans from International lenders of US$ 70 (December 31, 2007 — US$ 82) are guaranteed by Brazilian Federal Government, to which we have provided counter guarantees in the same amount. The remaining long-term debt of US$ 318 (December 31, 2007 — US$ 326) is collateralized mainly by receivables of our subsidiaries.

		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. We were in full compliance with our financial covenants as of June 30, 2008.

11		Stockholders’ equity

		Each holder of common and preferred class A stock is entitled to one vote for each share on all matters resolved at the stockholders’ meetings, except for the election of the Board of Directors, which is restricted to the holders of common stock. The Brazilian Government holds twelve preferred special shares which confer to it permanent veto rights over certain matters.

		Both common and preferred stockholders are entitled to receive a mandatory minimum dividend of 25% of annual adjusted net income based on the statutory accounting records, upon approval at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the statutory book equity value per share. For the year ended December 31, 2007, this annual minimum dividend corresponded to US$ 2,691 of which US$ 8 was paid on October 2007 and therefore we accrued the remaining value of US$ 2,683 with a direct charge to stockholders’ equity. In April 2008 we paid US$ 1,250 related to the accrued amounts for 2007, and the remaining balance will be paid in October, 2008.

		In October 2007, we paid US$1,050 to stockholders. The distribution was made in the form of interest on stockholders’ equity and dividends. In April 2007, we paid US$825 to stockholders. The distribution was made in the form of interest attributable to stockholders’ equity and dividends.

		In September 2007, a stock split was effected and each existing, common and preferred, share was split into two shares. After the split our capital comprises 4,919,314,116 shares, of which 1,919,516,400 are class “A” preferred shares and 2,999,797,716 are common shares, including twelve special class shares without par value (“Golden Shares”). All numbers of share and per share amounts included herein reflect retroactive application of the stock split.

		In June 2007, we issued US$1,880 Mandatorily Convertible Notes due June 15, 2010 for total proceeds of US$1,869 net of commissions. The Notes bear interest at 5.50% per year payable quarterly and additional interest which will be payable based on the net amount of cash distribution paid to ADS holders. The US$1,296 Notes are mandatorily convertible into an aggregate maximum of 56,582,040 common shares and the US$584 Notes are mandatorily convertible into an aggregate maximum of 30,295,456 preferred class A shares. On the maturity date (whether at stated maturity or upon acceleration following an event of default), the Series RIO Notes will automatically convert into ADSs, each ADS representing one common share of Vale, and the Series RIO P Notes will automatically convert into ADSs, each ADS representing one preferred class A share of Vale. We currently hold the shares to be issued on conversion in treasury stock. The Notes are not repayable in cash. Holders of notes will have no voting rights. We will pay to the holders of our Series RIO Notes or RIO P Notes additional interest in the event that Vale makes cash distributions to all holders of RIO ADSs or RIO P ADSs, respectively. We determined, using a statistical model, that the potential variability in the number of shares to be converted is not a predominant feature of this hybrid financial instrument and thus classified it as an equity instrument within our stockholders’ equity. Other than during the cash acquisition conversion period, holders of the notes have the right to convert their notes, in whole or in part, at any time prior to maturity in the case of the Series RIO Notes, into RIO ADSs at the minimum conversion rate of 0.8664 RIO ADSs per Series RIO Note, and in the case of Series RIO P Notes, into RIO P ADSs at the minimum conversion rate of 1.0283 RIO P ADSs per Series RIO P Note.


Note	Twenty Day Market Value	Conversion Rate
Rio P	Less than or equal to US$ 19.30	2.5914
	Between US$ 24.31 and US$ 24.31	US$ 50.00 divided by the twenty day market value
	Equal to or greater than US$ 24.31	2.0566

Rio	Less than or equal to US$ 22.90	2.1834
	Between US$ 22.90 and US$ 28.86	US$ 50.00 divided by the twenty day market value
	Equal to or greater than US$ 28.86	1.7328

		In May 2008 we paid additional interest to holders of the mandatorily convertible notes (notes) RIO and RIO P, equal to US$ 19.

		In April 2007, at an Extraordinary Shareholders´ Meeting the paid-up capital was increased by US$4,187 through transfer of reserves, without issuance of shares, to US$12,695.

		In December 2007, significant changes were made to Brazilian Corporate law to permit Brazil to converge with International Financial Reporting Standards (IFRS). Such changes will be effective for the fiscal year ended December 31, 2008. These changes may affect the method of calculating and amortizing goodwill on business combinations, the recognition of exchange gain an losses in foreign subsidiaries, joint ventures and affiliates and related tax effects, among others. These changes have yet to be codified by the regulator, we are currently studying the possible effects, which may arise upon adoption this law.

		Basic and diluted earnings per share

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


									Six-month period ended June 30,
	Three-month period ended (unaudited)								(unaudited)
	June 30, 2008			March 31, 2008			June 30, 2007		2008			2007
Net income for the period		5,009			2,021			4,095		7,030			6,312


Interest attributed to preferred convertible notes		(15	)		(8	)		—		(23	)		—
Interest attributed to common convertible notes		(30	)		(18	)		—		(48	)		—

Net income for the period adjusted		4,964			1,995			4,095		6,959			6,312

Basic and diluted earnings per share

Income available to preferred stockholders		1,906			766			1,601		2,672			2,468
Income available to common stockholders		2,970			1,193			2,494		4,163			3,844
Income available to convertible notes linked to preferred shares		31			12			—		43			—
Income available to convertible notes linked to common shares		57			24			—		81			—
Weighted average number of shares outstanding (thousands of shares) — preferred shares		1,889,175			1,889,173			1,889,176		1,889,173			1,889,172
Weighted average number of shares outstanding (thousands of shares) — common shares		2,943,216			2,943,216			2,943,216		2,943,216			2,943,216
Treasury preferred shares linked to mandatorily convertible notes		30,295			30,295			3,330		30,295			3,330
Treasury common shares linked to mandatorily convertible notes		56,582			56,582			6,218		56,582			6,218

Total		4,919,268			4,919,266			4,841,940		4,919,266			4,841,936

Earnings per preferred share		1.01			0.41			0.85		1.41			1.31
Earnings per common share		1.01			0.41			0.85		1.41			1.31
Earnings per convertible notes linked to preferred share (*)		1.52			0.66			—		2.18			—
Earnings per convertible notes linked to common share (*)		1.54			0.74			—		2.28			—


		(*) Basic earnings per share only as dilution assumes conversion.

Were the conversion of the convertible notes considered in the calculation of diluted earnings per share they would generate a minor antidilutive effect as shown below:


							Six-month period ended June 30,
	Three-month period ended (unaudited)						(unaudited)
	June 30, 2008		March 31, 2008		June 30, 2007		2008		2007
Income available to preferred stockholders		1,952		786		1,603		2,738		2,469
Income available to common stockholders		3,057		1,235		2,492		4,292		3,843
Weighted average number of shares outstanding (thousands of shares) — preferred shares		1,919,470		1,919,468		1,892,506		1,919,468		1,892,502
Weighted average number of shares outstanding (thousands of shares) — common shares		2,999,798		2,999,798		2,949,434		2,999,798		2,949,434
Earnings per preferred share		1.02		0.41		0.85		1.43		1.31
Earnings per common share		1.02		0.41		0.85		1.43		1.31

Other cumulative comprehensive income


										Six-month period ended June
	Three-month period ended (unaudited)									30, (unaudited)
	June 30, 2008			March 31, 2008			June 30, 2007			2008			2007
Comprehensive income is comprised as follows:
Net income		5,009			2,021			4,095			7,030			6,312
Cumulative translation adjustments		1,707			(205	)		1,208			1,502			1,164
Unrealized gain on available-for-sale securities		(94	)		(6	)		(381	)		(100	)		(66	)
Surplus (deficit) accrued pension plan		104			(15	)		128			89			119
Hedge/Cash flow hedge		6			(27	)		24			(21	)		14

Total comprehensive income		6,732			1,768			5,074			8,500			7,543


Tax effect on other comprehensive income allocated to each component
Unrealized gain on available-for-sale securities Gross balance as of the period end		152			294			314			152			314
Tax (expense) benefit		(41	)		(89	)		(109	)		(41	)		(109	)

Net balance as of the period end		111			205			205			111			205

Surplus accrued pension plan
Gross balance as of the period end		289			108			716			289			716
Tax (expense) benefit		(125	)		(48	)		(244	)		(125	)		(244	)

Net balance as of the period end		164			60			472			164			472

13		Pension cost

		We previously disclosed in our consolidated financial statements for the year ended December 31, 2007, that we expected to contribute US$ 324 to our defined benefit pension plan in 2008. As of June 30, 2008, total contributions of US$ 197 had been made. We do not expect any significant change in our previous estimate.


	Three-month period ended (unaudited)
	June 30, 2008
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		3			16			8
Interest cost on projected benefit obligation		82			66			20
Expected return on assets		(137	)		(68	)		—
Amortization of initial transitory obligation		4			—			(3	)
Net deferral		(1	)		—			—

Net periodic pension cost		(49	)		14			25


	March 31, 2008
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		2			16			6
Interest cost on projected benefit obligation		54			62			23
Expected return on assets		(90	)		(65	)		—
Amortization of initial transitory obligation		3			—			(1	)
Net deferral		(1	)		—			—

Net periodic pension cost		(32	)		13			28


	June 30, 2007
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		3			15			5
Interest cost on projected benefit obligation		73			52			18
Expected return on assets		(135	)		(60	)		—
Amortization of initial transitory obligation		3			—			—
Net deferral		(5	)		—			—

Net periodic pension cost		(61	)		7			23


	Six-month period ended June 30,(unaudited)
	2008									2007
				Underfunded									Underfunded
	Overfunded			pension			Underfunded			Overfunded			pension			Underfunded
	pension plans			plans			other benefits			pension plans			plans			other benefits
Service cost — benefits earned during the period		5			32			14			4			29			9
Interest cost on projected benefit obligation		136			128			43			119			100			34
Expected return on assets		(227	)		(133	)		—			(221	)		(115	)		—
Amortization of initial transitory obligation		7			—			(4	)		5			—			—
Net deferral		(2	)		—			—			(7	)		—			—

Net periodic pension cost		(81	)		27			53			(100	)		14			43

14		Long-term incentive compensation plan

		In 2008, with the purpose of introducing a “shareholders vision” to certain of our executives, as well as improving retention and reinforcing our culture of sustainable performance, the Board of Directors approved a long-term incentive compensation plan, which was implemented in April 2008, in respect with a three-year cycle (2008 to 2010).

		Under the terms of the plan, the participants, restricted to certain executives, may elect to allocate part of their annual bonus to the plan. That portion of the bonus allocated to the plan is in fact used by the executive to purchase preferred shares of Vale, through a defined financial institution, at market conditions and with no benefit provided by Vale.

		The shares purchased by each executive have no restrictions and may, at the participant’s discretion, be sold at any time. However, in order to be entitled to the long-term incentive compensation plan to be provided by Vale, the amount of shares initially purchased by the executives on the plan’s adoption, must be held for a three-year period, and, the executive must retain its employment relationship with Vale during that period.

		Upon meeting these two conditions described above (keeping the number of shares purchased, and, remaining Vale’s employees, over three years), the participant become entitled to receive from Vale, a cash payment equivalent to the total amount of shares held, based on market rates.

		We account for the compensation cost provided to our executives under this long-term incentive compensation plan, following the requirements of FAS 123(R) — “Accounting for Stock-Based Compensation”. Liabilities are measured at each reporting date at fair value, based on market rates. Compensation costs incurred are recognized, over the defined three-year vesting period. At June 30, 2008, we have recognized a long-term liability of US$4, relating to 714,081 shares.

15		Commitments and contingencies

(a)		We provided 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 additional guarantees covering the amounts payable by Goro regarding (a) amounts exceeding the Maximum Amount in connection with the indemnity and (b) certain other amounts under lease agreements.

		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 this share 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.

		We provided guarantees covering certain termination payments by 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 occurs as a result of a default by Goro and the date of such an early termination. If Goro defaults under the ESA prior to the anticipated start date for electricity supply, the termination payment, which currently is at its maximum amount, 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.

(b)		We and our subsidiaries are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the amounts recognized are sufficient to cover probable losses in connection with such actions.

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


	June 30, 2008 (Unaudited)				March 31, 2008
	Provision for				Provision for
	contingencies		Judicial deposits		contingencies		Judicial deposits
Labor and social security claims		592		464		519		372

Civil claims		338		275		311		135

Tax — related actions		1,009		530		1,605		613

Others		18		4		18		4

		1,957		1,273		2,453		1,124

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

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

		Tax — tax-related actions principally comprise challenges initiated by us, on certain revenue taxes and value added taxes and uncertain tax positions. We continue to vigorously pursue our interests in all the above actions but recognize that we probably will incur some losses in the final instance, for which we have made provisions.

		Judicial deposits are made by us following the courts requirements, in order to be entitled to either initiate or continue a legal action. These amounts are eventually released to us, upon receipt of a final favorable outcome from the legal action; in the case of unfavorable outcome, the deposits are delivered to the prevailing party.

		Contingencies settled in June 30, 2008, March 31, 2008 and June 30, 2007 totaled US$ 569, US$ 128 and US$ 114, respectively. Additional provisions totaled US$ 73, US$ 22 and US$ 133, respectively, classified in other operating expenses.

		In addition to the contingencies for which we have made provisions we are defendants on claims where in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible but not probable, in the total amount of US$ 2,843 at June 30, 2008, and for which no provision has been made.

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

		On April 2008 we paid as remuneration of these “debentures” participatives the amounts of US$ 5.

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

The changes in the provisions for asset retirement obligations are as follows:


										Six-month period ended
	Three-month period ended (unaudited)									June 30, (unaudited)
	June 30,			March 31,			June 30,
	2008			2008			2007			2008			2007
Beginning of period		975			975			699			975			676
Accretion expense		53			16			7			69			19
Liabilities settled in the current period		(2	)		(3	)		(2	)		(5	)		(5	)
Revisions in estimated cash flows		9			(11	)		56			(2	)		70
Cumulative translation adjustment		66			(2	)		—			64			—

End of period		1,101			975			760			1,101			760

16		Assets and liabilities measured at fair value on a recurring basis

		From January 1, 2008, we adopted SFAS No. 157 — “Fair value measurements”. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. However, on February 12,2008, the FASB issued Staff Position 157-2 which delays the effective date of Statement 157 for all non financial assets and non financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. For items within its scope, this Staff Position defers the effective date of Statement 157 to fiscal years beginning after November 15, 2008. The adoption of Statement 157 did not generate a material impact on our financial position, except for required disclosures about fair value measurements.

		In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of SFAS No. 115” (“SFAS 159”). SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value in order to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement shall be effective as of the beginning of each reporting entity’s first fiscal year that begins after November 15, 2007. The adoption of such pronouncement did not generate a material impact on the Company’s financial position.

		As required by SFAS 157, the following table discloses the assets and liabilities measured at fair value on a recurring basis (Unaudited):


	Fair value at the reporting date using
				Quoted prices in active			Quoted prices in active
				markets for identical			markets for identical
				assets or liabilities,			assets or liabilities,
	Carrying amount			(Level 1)			(Level 2)
Available-for-sale securities		1,085			1,085			—
Unrealized gains on derivatives		841			841			—
Short-term debt		(46	)		—			(46	)
Long-term debt		(20,290	)		(6,408	)		(13,882	)
Other financial liabilities		(597	)		—			(597	)
Long-term incentive compensation plan		4			4			—

17 Segment and geographical information

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

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations (Aggregated)


	Three-month period ended (unaudited)
	June 30, 2008																					March 31, 2008																								June 30, 2007
				() Non*																					() Non*																						() Non*
	Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous				ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Foreign		8,674			2,939			934			10			101			(3,652	)		9,006			5,578			2,861			859			21			72			(2,727	)		6,664			5,158				3,976			975			14			48			(2,622	)		7,549
Gross revenues — Domestic		1,176			196			217			481			59			(238	)		1,891			880			91			193			365			56			(201	)		1,384			859				159			164			405			—			(237	)		1,350
Cost and expenses		(5,677	)		(1,454	)		(951	)		(308	)		(133	)		3,890			(4,633	)		(4,500	)		(1,302	)		(925	)		(244	)		(134	)		2,928			(4,177	)		(4,010	)			(1,507	)		(866	)		(253	)		(66	)		2,859			(3,843	)
Research and development		(89	)		(76	)		—			(33	)		(71	)		—			(269	)		(50	)		(70	)		—			(20	)		(50	)		—			(190	)		(31	)			(80	)		—			(3	)		(38	)		—			(152	)
Depreciation, depletion and amortization		(292	)		(382	)		(44	)		(38	)		(4	)		—			(760	)		(288	)		(399	)		(42	)		(30	)		(7	)		—			(766	)		(222	)			(248	)		(28	)		(24	)		(3	)		—			(525	)

Operating income		3,792			1,223			156			112			(48	)		—			5,235			1,620			1,181			85			92			(63	)		—			2,915			1,754				2,300			245			139			(59	)		—			4,379
Financial income		577			196			5			2			—			(757	)		23			665			217			3			2			—			(832	)		55			668				209			4			3			—			(807	)		77
Financial expenses		(712	)		(383	)		(10	)		(1	)		—			757			(349	)		(988	)		(379	)		(20	)		(3	)		(2	)		832			(560	)		(1,085	)			(319	)		(76	)		(1	)		(2	)		807			(676	)
Gains (losses) on derivatives, net		685			51			(12	)		—			—			—			724			(68	)		(123	)		(127	)		—			—			—			(318	)		228				(47	)		(13	)		—			—			—			168
Foreign exchange and monetary gains (losses), net		638			9			113			(1	)		10			—			769			134			(28	)		20			(2	)		(12	)		—			112			888				(13	)		61			(5	)		1			—			932
Gain on sale of investments		—			—			—			—			—			—			—			—			80			—			—			—			—			80			—				—			—			217			457			—			674
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		236			—			8			(41	)		57			—			260			52			—			14			34			19			—			119			70				—			20			27			39			—			156
Income taxes		(1,007	)		(424	)		(75	)		—			—			—			(1,506	)		(21	)		(331	)		(17	)		—			11			—			(358	)		(655	)			(661	)		(73	)		(7	)		—			—			(1,396	)
Minority interests		10			(61	)		(85	)		—			(11	)		—			(147	)		2			(46	)		20			—			—			—			(24	)		(14	)			(150	)		(56	)		1			—			—			(219	)

Net income		4,219			611			100			71			8			—			5,009			1,396			571			(22	)		123			(47	)		—			2,021			1,854				1,319			112			374			436			—			4,095

Sales classified by geographic destination:
Foreign market
America, except United States		546			378			302			—			—			(295	)		931			323			341			192			1			—			(203	)		654			363				342			281			14			—			(297	)		703
United States		211			541			107			—			—			(92	)		767			80			583			104			1			—			(75	)		693			120				731			42			—			18			(66	)		845
Europe		2,903			710			330			—			—			(1,294	)		2,649			1,883			689			373			16			1			(1,067	)		1,895			1,667				687			482			—			—			(958	)		1,878
Middle East/Africa/Oceania		516			91			22			—			39			(215	)		453			240			58			44			—			—			(130	)		212			235				66			15			—			30			(89	)		257
Japan		985			399			164			—			34			(382	)		1,200			618			341			136			1			39			(260	)		875			517				651			155			—			—			(212	)		1,111
China		2,703			218			—			10			—			(1,047	)		1,884			1,874			296			10			1			—			(796	)		1,385			1,889				503			—			—			—			(796	)		1,596
Asia, other than Japan and China		810			602			9			—			28			(327	)		1,122			560			553			—			1			32			(196	)		950			367				996			—			—			—			(204	)		1,159
		8,674			2,939			934			10			101			(3,652	)		9,006			5,578			2,861			859			21			72			(2,727	)		6,664			5,158				3,976			975			14			48			(2,622	)		7,549

Domestic market		1,176			196			217			481			59			(238	)		1,891			880			91			193			365			56			(201	)		1,384			859				159			164			405			—			(237	)		1,350

		9,850			3,135			1,151			491			160			(3,890	)		10,897			6,458			2,952			1,052			386			128			(2,928	)		8,048			6,017				4,135			1,139			419			48			(2,859	)		8,899


(*)		Other than Aluminum.

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	June 30, 2008
	Revenues
																								Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
							Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		4,242		706		4,948		(85	)		4,863		(1,508	)		3,355			(245	)		3,110			18,825		913		69
Pellets		966		216		1,182		(49	)		1,133		(656	)		477			(39	)		438			1,455		41		982
Manganese		70		13		83		(3	)		80		(20	)		60			(3	)		57			84		—		—
Ferroalloys		223		159		382		(40	)		342		(123	)		219			(9	)		210			171		1		—
Pig iron		57		—		57		—			57		(32	)		25			(1	)		24			209		1		—

		5,558		1,094		6,652		(177	)		6,475		(2,339	)		4,136			(297	)		3,839			20,744		956		1,051
Non ferrous
Nickel and other products (*)		2,363		12		2,375		—			2,375		(1,040	)		1,335			(342	)		993			23,733		544		151
Potash		—		105		105		(5	)		100		(40	)		60			(6	)		54			162		3		—
Kaolin		44		10		54		(3	)		51		(61	)		(10	)		(9	)		(19	)		286		2		—
Copper concentrate		248		69		317		(15	)		302		(139	)		163			(21	)		142			2,204		69		—
Aluminum products		640		88		728		(21	)		707		(560	)		147			(43	)		104			5,294		197		107

		3,295		284		3,579		(44	)		3,535		(1,840	)		1,695			(421	)		1,274			31,679		815		258
Logistics
Railroads		—		381		381		(64	)		317		(218	)		99			(30	)		69			2,012		23		297
Ports		—		81		81		(10	)		71		(47	)		24			(7	)		17			1,912		41		—
Ships		—		—		—		—			—		—			—			—			—			33		—		127

		—		462		462		(74	)		388		(265	)		123			(37	)		86			3,957		64		424
Others		153		51		204		(2	)		202		(161	)		41			(5	)		36			3,602		270		1,391

		9,006		1,891		10,897		(297	)		10,600		(4,605	)		5,995			(760	)		5,235			59,982		2,105		3,124


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	March 31, 2008
	Revenues
																								Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
							Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		2,606		510		3,116		(73	)		3,043		(1,467	)		1,576			(245	)		1,331			17,304		664		61
Pellets		506		173		679		(40	)		639		(470	)		169			(29	)		140			766		12		798
Manganese		31		9		40		(2	)		38		(20	)		18			(1	)		17			82		1		—
Ferroalloys		177		113		290		(28	)		262		(124	)		138			(6	)		132			160		2		—
Pig iron		29		—		29		—			29		(14	)		15			(2	)		13			198		—		—

		3,349		805		4,154		(143	)		4,011		(2,095	)		1,916			(283	)		1,633			18,510		679		859
Non ferrous
Nickel and other products (*)		2,378		13		2,391		—			2,391		(980	)		1,411			(372	)		1,039			23,376		481		148
Potash		—		64		64		(4	)		60		(29	)		31			(7	)		24			218		3		—
Kaolin		42		11		53		(2	)		51		(56	)		(5	)		(7	)		(12	)		264		7		—
Copper concentrate		222		1		223		—			223		(106	)		117			(17	)		100			1,898		52		—
Aluminum products		561		85		646		(17	)		629		(510	)		119			(42	)		77			4,703		104		99

		3,203		174		3,377		(23	)		3,354		(1,681	)		1,673			(445	)		1,228			30,459		647		247
Logistics
Railroads		—		296		296		(37	)		259		(172	)		87			(25	)		62			1,748		13		375
Ports		11		55		66		(5	)		61		(45	)		16			(6	)		10			1,677		44		—
Ships		—		—		—		—			—		—			—			—			—			34		—		110

		11		351		362		(42	)		320		(217	)		103			(31	)		72			3,459		57		485
Others		101		54		155		(8	)		147		(158	)		(11	)		(7	)		(18	)		2,951		242		1,351

		6,664		1,384		8,048		(216	)		7,832		(4,151	)		3,681			(766	)		2,915			55,379		1,625		2,942


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	June 30, 2007
	Revenues
																								Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
							Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		2,384		515		2,899		(64	)		2,835		(1,052	)		1,783			(186	)		1,597			14,691		632		49
Pellets		563		118		681		(26	)		655		(450	)		205			(20	)		185			778		44		591
Manganese		16		5		21		(1	)		20		(17	)		3			(2	)		1			72		1		—
Ferroalloys		80		53		133		(13	)		120		(102	)		18			(7	)		11			191		4		—
Pig iron		18		—		18		—			18		(13	)		5			—			5			—		—		—

		3,061		691		3,752		(104	)		3,648		(1,634	)		2,014			(215	)		1,799			15,732		681		640
Non ferrous
Nickel and other products (*)		3,514		58		3,572		—			3,572		(1,203	)		2,369			(220	)		2,149			22,070		439		372
Potash		—		39		39		(3	)		36		(24	)		12			(6	)		6			197		3		—
Kaolin		47		8		55		(2	)		53		(62	)		(9	)		(7	)		(16	)		292		1		—
Copper concentrate		217		50		267		(11	)		256		(116	)		140			(19	)		121			1,612		41		—
Aluminum products		652		72		724		(18	)		706		(438	)		268			(26	)		242			3,702		441		142

		4,430		227		4,657		(34	)		4,623		(1,843	)		2,780			(278	)		2,502			27,873		925		514
Logistics
Railroads		—		333		333		(52	)		281		(165	)		116			(21	)		95			793		5		346
Ports		—		66		66		(12	)		54		(45	)		9			(7	)		2			1,061		13		—
Ships		5		10		15		(1	)		14		(15	)		(1	)		—			(1	)		39		4		—
		5		409		414		(65	)		349		(225	)		124			(28	)		96			1,893		22		346

Others		53		23		76		(4	)		72		(86	)		(14	)		(4	)		(18	)		2,200		5		946

		7,549		1,350		8,899		(207	)		8,692		(3,788	)		4,904			(525	)		4,379			47,698		1,633		2,446


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	Six-month period ended June 30, (unaudited)
	2008																					2007
				() Non*																					() Non*
	Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Foreign		14,252			5,800			1,793			31			173			(6,379	)		15,670			9,573			7,458			1,788			28			70			(4,826	)		14,091
Gross revenues — Domestic		2,056			287			410			846			115			(439	)		3,275			1,629			268			323			736			—			(468	)		2,488
Cost and expenses		(10,177	)		(2,756	)		(1,876	)		(552	)		(267	)		6,818			(8,810	)		(7,417	)		(4,071	)		(1,563	)		(473	)		(86	)		5,294			(8,316	)
Research and development		(139	)		(146	)		—			(53	)		(121	)		—			(459	)		(47	)		(139	)		—			(5	)		(74	)		—			(265	)
Depreciation, depletion and amortization		(580	)		(781	)		(86	)		(68	)		(11	)		—			(1,526	)		(419	)		(397	)		(48	)		(49	)		(4	)		—			(917	)

Operating income		5,412			2,404			241			204			(111	)		—			8,150			3,319			3,119			500			237			(94	)		—			7,081
Financial income		1,242			413			8			4			—			(1,589	)		78			1,196			292			8			5			25			(1,328	)		198
Financial expenses		(1,700	)		(762	)		(30	)		(4	)		(2	)		1,589			(909	)		(2,224	)		(422	)		(96	)		(3	)		(3	)		1,328			(1,420	)
Gains (losses) on derivatives, net		617			(72	)		(139	)		—			—			—			406			364			(104	)		(7	)		—			—			—			253
Foreign exchange and monetary gains (losses), net		772			(19	)		133			(3	)		(2	)		—			881			1,623			(21	)		106			(8	)		2			—			1,702
Gain on sale of investments		—			80			—			—			—			—			80			—			—			—			217			457			—			674
Equity in results of affiliates and joint ventures and investments		288			—			22			(7	)		76			—			379			153			—			42			50			49			—			294
Income taxes		(1,028	)		(755	)		(92	)		—			11			—			(1,864	)		(1,049	)		(861	)		(118	)		(10	)		—			—			(2,038	)
Minority interests		12			(107	)		(65	)		—			(11	)		—			(171	)		(35	)		(238	)		(158	)		(1	)		—			—			(432	)

Net income		5,615			1,182			78			194			(39	)		—			7,030			3,347			1,765			277			487			436			—			6,312
Sales classified by geographic destination:
Foreign market
America, except United States		869			719			494			1			—			(498	)		1,585			663			718			484			20			—			(514	)		1,371
United States		291			1,124			211			1			—			(167	)		1,460			215			1,381			111			—			40			(145	)		1,602
Europe		4,786			1,399			703			16			1			(2,361	)		4,544			3,040			1,238			830			3			—			(1,692	)		3,419
Middle East/Africa/Oceania		756			149			66			—			39			(345	)		665			429			177			59			—			30			(192	)		503
Japan		1,603			740			300			1			73			(642	)		2,075			942			1,177			304			—			—			(426	)		1,997
China		4,577			514			10			11			—			(1,843	)		3,269			3,551			771			—			4			—			(1,491	)		2,835
Asia, other than Japan and China		1,370			1,155			9			1			60			(523	)		2,072			733			1,996			—			1			—			(366	)		2,364

		14,252			5,800			1,793			31			173			(6,379	)		15,670			9,573			7,458			1,788			28			70			(4,826	)		14,091
Domestic market		2,056			287			410			846			115			(439	)		3,275			1,629			268			323			736			—			(468	)		2,488

		16,308			6,087			2,203			877			288			(6,818	)		18,945			11,202			7,726			2,111			764			70			(5,294	)		16,579


(*)		Other than Aluminum.

Operating segment — after eliminations (Disaggregated)


	Six-month period ended June 30, (unaudited)
	2008
	Revenues																							Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
							Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		6,848		1,216		8,064		(158	)		7,906		(2,975	)		4,931			(490	)		4,441			18,825		1,577		69
Pellets		1,472		389		1,861		(89	)		1,772		(1,126	)		646			(68	)		578			1,455		53		982
Manganese		101		22		123		(5	)		118		(40	)		78			(4	)		74			84		1		—
Ferroalloys		400		272		672		(68	)		604		(247	)		357			(15	)		342			171		3		—
Pig iron		86		—		86		—			86		(46	)		40			(3	)		37			209		1		—

		8,907		1,899		10,806		(320	)		10,486		(4,434	)		6,052			(580	)		5,472			20,744		1,635		1,051

Non ferrous
Nickel and other products (*)		4,741		25		4,766		—			4,766		(2,020	)		2,746			(714	)		2,032			23,733		1,025		151
Potash		—		169		169		(9	)		160		(69	)		91			(13	)		78			162		6		—
Kaolin		86		21		107		(5	)		102		(117	)		(15	)		(16	)		(31	)		286		9		—
Copper concentrate		470		70		540		(15	)		525		(245	)		280			(38	)		242			2,204		121		—
Aluminum products		1,201		173		1,374		(38	)		1,336		(1,070	)		266			(85	)		181			5,294		301		107

		6,498		458		6,956		(67	)		6,889		(3,521	)		3,368			(866	)		2,502			31,679		1,462		258

Logistics
Railroads		—		677		677		(101	)		576		(390	)		186			(55	)		131			2,012		36		297
Ports		11		136		147		(15	)		132		(92	)		40			(13	)		27			1,912		85		—
Ships		—		—		—		—			—		—			—			—			—			33		—		127

		11		813		824		(116	)		708		(482	)		226			(68	)		158			3,957		121		424
Others		254		105		359		(10	)		349		(319	)		30			(12	)		18			3,602		512		1,391

		15,670		3,275		18,945		(513	)		18,432		(8,756	)		9,676			(1,526	)		8,150			59,982		3,730		3,124


		(*) Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

Operating segment — after eliminations (Disaggregated)


	Six-month period ended June 30, (unaudited)
	2007
	Revenues																							Property,		Addition to
																								Plant and		Property,
																								Equipment,		Plant and
																		Depreciation,						Net and		Equipment
							Value			Net		Cost and						depletion and			Operating			Intangible		and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Assets		Intangible		Investments
Ferrous
Iron ore		4,359		990		5,349		(136	)		5,213		(1,852	)		3,361			(359	)		3,002			14,691		979		49
Pellets		1,071		224		1,295		(49	)		1,246		(859	)		387			(38	)		349			778		54		591
Manganese		19		8		27		(2	)		25		(26	)		(1	)		(3	)		(4	)		72		1		—
Ferroalloys		174		96		270		(24	)		246		(209	)		37			(11	)		26			191		7		—
Pig iron		—		—		—		—			—		—			—			—			—			—		—		—

		5,623		1,318		6,941		(211	)		6,730		(2,946	)		3,784			(411	)		3,373			15,732		1,041		640

Non ferrous
Nickel and other products (*)		6,670		101		6,771		—			6,771		(3,536	)		3,235			(346	)		2,889			22,070		873		372
Potash		—		71		71		(5	)		66		(45	)		21			(11	)		10			197		9		—
Kaolin		89		16		105		(4	)		101		(112	)		(11	)		(14	)		(25	)		292		32		—
Copper concentrate		338		75		413		(16	)		397		(193	)		204			(30	)		174			1,612		81		—
Aluminum products		1,229		144		1,373		(36	)		1,337		(802	)		535			(46	)		489			3,702		570		142

		8,326		407		8,733		(61	)		8,672		(4,688	)		3,984			(447	)		3,537			27,873		1,565		514

Logistics
Railroads		—		575		575		(93	)		482		(276	)		206			(42	)		164			793		13		346
Ports		3		129		132		(24	)		108		(83	)		25			(10	)		15			1,061		20		—
Ships		16		22		38		(3	)		35		(38	)		(3	)		(2	)		(5	)		39		12		—

		19		726		745		(120	)		625		(397	)		228			(54	)		174			1,893		45		346

Others		123		37		160		(6	)		154		(152	)		2			(5	)		(3	)		2,200		88		946

		14,091		2,488		16,579		(398	)		16,181		(8,183	)		7,998			(917	)		7,081			47,698		2,739		2,446


		(*) Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

18		Derivative financial instruments

		We address some market risks through the use of derivative instruments. Considering the nature of our business and operations, the principal market risks we face are:

	•		interest rate risk,

	•		exchange rate risk, and

	•		product price risk.

		We hedge our market risk only when considered necessary to support our corporate strategy or to maintain our target level of financial flexibility. Our risk management activities are conducted in accordance with the risk management policy, which generally prohibits speculative trading. We monitor and evaluate our overall position regularly in order to evaluate financial results and impact on our cash flow.

		Considering the derivatives entered into since January 1, 2007, the contracts set with the objective of protecting against aluminum price volatility were designated as cash flow hedges. The effect of hedge accounting was not relevant to date.

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


	Interest
	rates						Products of
	(LIBOR) /						aluminum
	Currencies			Gold			area			Copper			Nickel			Platinum			Total
Unrealized gains (losses) at April 1, 2008		600			(34	)		(248	)		(244	)		6			(31	)		49
Financial settlement		(137	)		10			63			76			(15	)		11			8
Unrealized gains (losses) in the period		655			5			16			24			44			2			746
Effect of exchange rate changes		83			(2	)		(20	)		(22	)		2			(3	)		38


Unrealized gains (losses) at June 30, 2008		1,201			(21	)		(189	)		(166	)		37			(21	)		841


Unrealized gains (losses) at January 1, 2008		626			(36	)		(98	)		(188	)		42			(24	)		322
Financial settlement		(27	)		11			25			61			—			9			79
Unrealized gains (losses) in the period		(10	)		(8	)		(174	)		(117	)		(36	)		(16	)		(361	)
Effect of exchange rate changes		11			(1	)		(1	)		—			—			—			9


Unrealized gains (losses) at March 31, 2008		600			(34	)		(248	)		(244	)		6			(31	)		49


Unrealized gains (losses) at April 1, 2007		155			(46	)		(293	)		(306	)		(20	)		(26	)		(536	)
Financial settlement		(82	)		4			39			69			24			4			58
Unrealized gains (losses) in the period		273			8			(18	)		(117	)		24			(2	)		168
Effect of exchange rate changes		17			(3	)		(20	)		(1	)		—			—			(7	)


Unrealized gains (losses) at June 30, 2007		363			(37	)		(292	)		(355	)		28			(24	)		(317	)


Unrealized gains (losses) at January 1, 2008		626			(36	)		(98	)		(188	)		42			(24	)		322
Financial settlement		(164	)		21			88			137			(15	)		20			87
Unrealized gains (losses) in the period		645			(3	)		(158	)		(93	)		8			(14	)		385
Effect of exchange rate changes		94			(3	)		(21	)		(22	)		2			(3	)		47


Unrealized gains (losses) at June 30, 2008		1,201			(21	)		(189	)		(166	)		37			(21	)		841


Unrealized gains (losses) at January 1, 2007		(10	)		(53	)		(318	)		(298	)		16			(20	)		(683	)
Financial settlement		(80	)		16			68			107			12			4			127
Unrealized gains (losses) in the period		432			5			(10	)		(166	)		—			(8	)		253
Effect of exchange rate changes		21			(5	)		(32	)		2			—						(14	)


Unrealized gains (losses) at June 30, 2007		363			(37	)		(292	)		(355	)		28			(24	)		(317	)


Final maturity dates for the above instruments are as follows:
Gold		December 2008
Interest rates/ Currencies		December 2019
Products of the aluminum area		December 2008
Copper concentrate		December 2008
Nickel		August 2010
Platinum		December 2008

		We consider the effective management of risk a key objective to support our growth strategy and financial flexibility. In furtherance of this objective, the Board of Directors has established an enterprise market risk management policy and a risk management committee. Under the policy, we measure, monitor, and manage risk at the portfolio level, using a single framework, and consider the natural diversification of our portfolio. We hedge our market risk only when considered necessary to support our corporate strategy or to maintain our target level of financial flexibility. The risk management committee assists our Executive Directors in overseeing and reviewing information regarding our enterprise risk management and framework, including the significant policies, procedures and practices employed to manage risk. Our 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.

		Under US GAAP, all derivatives, whether designated in hedging relationships or not, are required to be recorded in the balance sheet at fair value. A derivative must be designated in a hedging relationship in order to qualify for hedge accounting. These requirements include a determination of what portions of hedges are deemed to be effective versus ineffective. In general, a hedging relationship is effective when a change in the fair value of the derivative is offset by an equal and opposite change in the fair value of the underlying hedged item. In accordance with these requirements, effectiveness tests are performed in order to assess effectiveness and quantify ineffectiveness for all designated hedges. At June 30, 2008, we had outstanding cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in expected future cash flows that is attributable to a particular risk such as a forecasted purchase or sale. If a derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in earnings when the hedged item affects earnings. Ineffective portions of changes in the fair value of the derivatives designated as hedges are recognized in earnings. Under US GAAP, if a portion of a derivative contract is excluded for purposes of effectiveness testing, such as time value, the value of such excluded portion is included in earnings. At June 30, 2008, unrealized net gains in respect of derivative instruments which were not qualified for hedge accounting under US GAAP amounted to US$ 406.

		Over-the-counter (OTC) forward and zero-cost collar aluminum contracts are used to reduce the effect of fluctuations in the price of aluminum with respect to forecasted sales of aluminum and alumina. These contracts have been designated as a hedge to our exposure to variability in future cash flows associated with our aluminum and alumina sales. There was no hedge ineffectiveness regarding these contracts since the inception of our cash flow hedge accounting program. At June 30, 2008, US$ 21 of deferred net losses on derivative instruments was recorded in other comprehensive income. The maximum term over which cash flows are hedged is 24 months.

19		Subsequents events

		In July, 2008, we issued 80,079,223 common ADS, 176,847,543 common shares, 63,506,751 preferred ADS and 100,896,048 preferred shares through a global offering. As a consequent we capitalized US$ 11,561, with an increase in the preferred stock of US$ 4,110, corresponding to 164,402,799 shares and an increase in the common stock of US$ 7,451, corresponding to 256,926,766 shares. In August, 2008, we issued additional 24,660,419 preferred shares, representing an increase of US$ 628. After the closing of the operation, the social capital increased by US$ 12,189.

Supplemental Financial Information (Unaudited)

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

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

(a)

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

(b)

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

(c)

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

(d)

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

Selected financial indicators for the main affiliates and joint ventures are available on our website, www.vale.com, under “investor relations”

Indexes on Vale’s Consolidated Debt (Supplemental information — unaudited)


	Three-month period ended									Six-month period ended June 30,
	June 30, 2008			March 31, 2008			June 30, 2007			2008			2007
Current debt
Current portion of long-term debt — unrelated parties		730			1,301			755			730			755
Short-term debt		46			291			—			46			—
Loans from related parties		36			22			35			36			35

		812			1,614			790			812			790

Long-term debt
Long-term debt — unrelated parties		19,560			18,909			18,284			19,560			18,284
Loans from related parties		—			—			1			—			1

		19,560			18,909			18,285			19,560			18,285

Gross debt (current plus long-term debt)		20,372			20,523			19,075			20,372			19,075

Interest paid over:
Short-term debt		(5	)		(5	)		(39	)		(10	)		(40	)
Long-term debt		(357	)		(279	)		(399	)		(636	)		(604	)

Interest paid		(362	)		(284	)		(438	)		(646	)		(644	)
EBITDA		6,218			3,729			5,057			9,947			8,241
Stockholders’ equity		41,705			35,018			29,085			41,705			29,085
LTM (2) EBITDA / LTM (2) Interest paid		13.04			11.52			13,00			13.04			13,00
Gross Debt / LTM (2) EBITDA		1.17			1.26			1,40			1.17			1,40
Gross debt / Equity Capitalization (%)		33			37			40			33			40

Financial expenses
Third party — local debt		(179	)		(153	)		(140	)		(332	)		(263	)
Third party — foreign debt		(73	)		(159	)		(220	)		(232	)		(462	)
Related party debt		(2	)		(1	)		(1	)		(3	)		(3	)

Gross interest		(254	)		(313	)		(361	)		(567	)		(728	)
Labor and civil claims and tax-related actions		(8	)		(45	)		(25	)		(53	)		(40	)
Tax on financial transactions — CPMF		—			(3	)		(32	)		(3	)		(85	)
Others		(87	)		(199	)		(258	)		(286	)		(567	)

		(349	)		(560	)		(676	)		(909	)		(1,420	)


Financial income
Cash and cash equivalents		22			29			33			51			57
Others		1			26			44			27			141

		23			55			77			78			198


Derivatives
Derivatives (Interest rate / Currencies)		655			(10	)		273			645			432
Derivatives (Gold / Aluminium Products / Copper / Energy )		69			(308	)		(105	)		(239	)		(179	)

		724			(318	)		168			406			253

Financial income (expenses), net		398			(823	)		(431	)		(425	)		(969	)

Foreign exchange and monetary gain (losses), net (1)		769			112			932			881			1,702

Financial result, net		1,167			(711	)		501			456			733


(1)		Includes foreign exchange gains on derivatives in the amount of US$7, US$7, US$14, US$15 and US$24 for the three-month period ended June 30, 2008, March 31, 2008, June 30, 2007 and for the six-month periods June 30, 2008 and June 30, 2007, respectively.

(2)		Last twelve months

Calculation of EBITDA (Supplemental information — Unaudited)


				Three-month period ended						Six-month period ended June 30,
	June 30, 2008			March 31, 2008			June 30, 2007			2008			2007
Operating income		5,235			2,915			4,379			8,150			7,081
Depreciation		760			766			525			1,526			917

		5,995			3,681			4,904			9,676			7,998
Dividends received		223			48			153			271			243

EBITDA		6,218			3,729			5,057			9,947			8,241

Net operating revenues		10,600			7,832			8,692			18,432			16,181

Margin EBITDA		58.7	%		47.6	%		58.2	%		54.0	%		50.9	%

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


	Three-month period ended
	June 30, 2008						March 31, 2008						June 30, 2007
				Operating						Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows
Net income		5,009			5,009			2,021			2,021			4,095			4,095
Income tax — deferred		333			333			(296	)		(296	)		(87	)		(87	)
Income tax — current		1,173			—			654			—			1,483			—
Equity in results of affiliates and joint ventures and other investments		(260	)		(260	)		(119	)		(119	)		(156	)		(156	)
Foreign exchange and monetary gains, net		(769	)		(1,231	)		(112	)		(146	)		(932	)		(1,224	)
Financial expenses, net		(398	)		(45	)		823			81			431			(57	)
Minority interests		147			147			24			24			219			219
Gain on sale of investments		—			—			(80	)		(80	)		(674	)		(674	)
Net working capital		—			(214	)		—			(1,228	)		—			1,029
Others		—			(641	)		—			337			—			(193	)

Operating income		5,235			3,098			2,915			594			4,379			2,952
Depreciation, depletion and amortization		760			760			766			766			525			525
Dividends received		223			223			48			48			153			153

		6,218			4,081			3,729			1,408			5,057			3,630


Operating cash flows					4,081						1,408						3,630
Income tax					1,173						654						1,483
Foreign exchange and monetary gains (losses)					462						34						292
Financial expenses					(353	)					742						488
Net working capital					214						1,228						(1,029	)
Others					641						(337	)					193

EBITDA					6,218						3,729						5,057


				Six-month period ended June 30,
	2008						2007
				Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows
Net income		7,030			7,030			6,312			6,312
Income tax — deferred		37			37			(278	)		(278	)
Income tax — current		1,827			—			2,316			—
Equity in results of affiliates and joint ventures and other investments		(379	)		(379	)		(294	)		(294	)
Foreign exchange and monetary gains, net		(881	)		(1,377	)		(1,702	)		(1,996	)
Financial expenses, net		425			36			969			116
Minority interests		171			171			432			432
Gain on sale of investments		(80	)		(80	)		(674	)		(674	)
Net working capital		—			(1,442	)		—			1,389
Others		—			(304	)		—			(255	)

Operating income		8,150			3,692			7,081			4,752
Depreciation, depletion and amortization		1,526			1,526			917			917
Dividends received		271			271			243			243

		9,947			5,489			8,241			5,912


Operating cash flows					5,489						5,912
Income tax					1,827						2,316
Foreign exchange and monetary gains (losses)					496						294
Financial expenses					389						853
Net working capital					1,442						(1,389	)
Others					304						255

EBITDA					9,947						8,241

Board of Directors, Fiscal Council, Advisory committees and Executive Officers

Board of Directors

Sérgio Ricardo Silva Rosa
Chairman

Mário da Silveira Teixeira Júnior
Vice-President

Francisco Augusto da Costa e Silva
João Batista Cavaglieri
Jorge Luiz Pacheco
José Ricardo Sasseron
Luciano Galvão Coutinho
Masami lijima
Oscar Augusto de Camargo Filho
Renato da Cruz Gomes
Sandro Kohler Marcondes

Advisory Committees of the Board of Directors

Controlling Committee
Luiz Carlos de Freitas
Paulo Ricardo Ultra Soares
Paulo Roberto Ferreira de Medeiros

Executive Development Committee
João Moisés de Oliveira
José Ricardo Sasseron
Oscar Augusto de Camargo Filho

Strategic Committee
Roger Agnelli
Mário da Silveira Teixeira Júnior
Oscar Augusto de Camargo Filho
Sérgio Ricardo Silva Rosa

Finance Committee
Fabio de Oliveira Barbosa
Ivan Luiz Modesto Schara
Luiz Maurício Leuzinger
Wanderlei Viçoso Fagundes

Governance and Sustainability Committee
Jorge Luiz Pacheco
Renato da Cruz Gomes
Ricardo Simonsen

Fiscal Council

Marcelo Amaral Moraes
Chairman

Aníbal Moreira dos Santos
Antônio José de Figueiredo Ferreira
Bernard Appy

Alternate
Marcos Coimbra
Marcus Pereira Aucélio
Oswaldo Mário Pêgo de Amorim Azevedo

Executive Officers

Roger Agnelli
Chief Executive Officer

Carla Grasso
Executive Officer for Human Resources and Corporate Services

Demian Fiocca
Executive Officer for Management and Sustainability

Eduardo de Salles Bartolomeo
Executive Officer for Logistics

Fabio de Oliveira Barbosa
Chief Financial Officer and Investor Relations

José Carlos Martins
Executive Officer for Ferrous Minerals

Murilo de Oliveira Ferreira
Executive Officer for Nickel and Basic Metals Commercialization

Tito Botelho Martins
Executive Officer for Non Ferrous and Energy

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.


Date: August 6, 2008	COMPANHIA VALE DO RIO DOCE (Registrant)
	By:	/s/ Roberto Castello Branco
		Roberto Castello Branco
		Director of Investor Relations