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

Valley of the Rio Doce Company

(Translation of Registrant’s name into English)

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

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

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark 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-                    .)

 

 

US GAAP

REAPING THE FRUITS OF THE LONG CYCLE
CVRD’s performance in the second quarter of 2005

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

Rio de Janeiro, August 10, 2005 - Excellence in strategy execution, supported mainly by discipline in capital allocation, has enabled CVRD to successfully take advantage of the opportunities offered by the long cycle of mining and metals. The results of the second quarter of 2005 (2Q05) reflect this process, with the achievements of new records: shipments of iron ore and pellets, gross revenues, operational performance, cash generation and net earnings. The quality of the result is highlighted by production records –112.157 million tons of iron ore in 1H05, capital expenditure of US$ 2.5 billion in the last 12 months and the achievement of the investment grade rating.

Roberto Castello Branco
Alessandra Gadelha
Barbara Geluda
Daniela Tinoco
Eduardo Mello Franco
Rafael Azevedo
Tel: (5521) 3814-4540

•

62.386 million tons of iron ore and pellets shipped in 2Q05, beating the 4Q04 record of 61.824 million tons.

•

Gross revenues of US$3.721 billion, 53.3% higher than the previous quarterly record, of US$2.428 billion for 4Q04.

•

Operating profit, measured by adjusted EBIT(1), reached US$1.771 billion, 112.9% more than in 2Q04.

•

Adjusted EBIT margin of 50.1%, 680 basis points (bp) higher than the previous record of 43.3% in 2Q04.

•

Adjusted EBITDA(2), at US$2.033 billion, more than doubled the value of 2Q04, passing the US$2 billion mark for the first time in CVRD’s history.

•		LTM adjusted EBITDA amounted to US$5.034 billion, showing its thirteenth consecutive quarter of growth.
•		Net earnings of US$ 1.630 billion, 223.4% yoy growth, and 72.9% higher than the previous record of US$ 943 million, registered in 3Q04.

SELECTED FINANCIAL INDICATORS

																		US$ million
		2Q04				1Q05				2Q05				1S04				1S05
Gross revenues			2,033				2,328				3,721				3,764				6,049
Adjusted EBIT			832				795				1,771				1,415				2,566
Adjusted EBIT margin (%)			43.3				35.9				50.1				39.6				44.6
Adjusted EBITDA			971				993				2,033				1,714				3,026
Net earnings			504				698				1,630				909				2,328
Earnings per share (US$)			0.44				0.61				1.41				0.79				2.02
Annualized ROE (%)			31.8				35.4				39.0				31.8				39.0
Total debt/ adjusted LTM EBITDA (3) (x)			1.55				1.05				0.83				1.55				0.83
Capex			488.3				570.3				821.3				846.3				1,391.6

2Q05

US GAAP

BUSINESS OUTLOOK

The global economy appears to be close to completion of a transition toward a more sustainable long-term rate of expansion. In spite of the adverse effect of the shock in oil prices – whose persistence at high levels, indeed, reflects the strength of demand – there are good indications that the world economic growth is robust and should continue over the coming quarters.

In 2Q05 the US economy completed its ninth consecutive quarter with an annual expansion rate above 3%. At the same time, China’s annualized GDP growth rate has been above 9% since 3Q03 and was 9.5% in 2Q05.

Leading indicators of manufacturing industry activity are showing signals that suggest a strong recovery, as new wholesale orders, production, purchasing orders/inventories have been growing significantly since June.

There was substantial accumulation of inventories in the US in 4Q04 and 1Q05, leading companies to reduce them in 2Q05. Therefore, the ISM (Institute of Supply Management) indicator for the industry reached in May 2005 its lowest point of a downtrend which begun in 2Q04. Since then, its behavior reversed markedly, indicating acceleration of industrial growth in the next two quarters.

The adjustment in the US economy coincided with a similar industrial movement in other important economies, in terms of consumption of inventories of commodities and processed raw materials, which had reached excessive levels in response to the increase in prices and supply-side uncertainties in 2004.

With this phase completed, there is a recovery in the Purchasing Manager Indices (PMIs) in practically all the world’s regions, suggesting the start of a globally synchronized recovery in economic activity. This synchronization had been broken down since the middle of 2004, with the slow growth of Japan and the Eurozone.

The dynamics of the cycle now translate into new purchase orders, increased international trade flows, industrial growth, and recovery in commodity prices. Symptomatically, copper prices reached 20-year record highs in June and July, and primary aluminum prices interrupted their downtrend initiated since last March, accumulating a fall of 15.5% until the first week of July.

In the steel industry, the International Iron and Steel Institute (IISI) figure of 7.6% for global expansion of production in the first half of the year hides the disparity between the very strong Chinese growth of 28.3% and a soft patch in the rest of the world, where production increased by only 0.6%, as a result of the marginal cuts since February. Indeed, building of inventories in the hands of consumers of steel products forced the industry to slow down production, primarily in the EU and North America – where crude steel output decreased, respectively, by 1.7% and 2.6%.

In the developing economies, which are less subject to cyclical variations, being China and India typical examples, steel production continued to grow vigorously, with increases of 28.3% and 12%, respectively, in the first half of 2005.

In the coming months we expect to see the differences between steel production growth in the various regions of the world diminishing – with more moderate expansion in China, where there appears to be a short term excess supply in long steels, and a recovery in the European Union and the US, reflecting the reduction of inventories over recent months. It is important to point out that the urbanization process in large scale in China is expected to continue for at least the next 10 years. Thus, strong demand for long steel, used in civil construction, should prevail.

2Q05

US GAAP

In China, fixed assets investments, a good leading indicator for steel consumption, has been growing at annual rates above 25% since March, and was 27.1% in June. Thus, the strong outlook for consumption combined with the probably more moderate increase in production indicates lower availability for exports, setting the stage for a recovery in steel production in other regions of the world.

A scenario in which there is persistent economic growth in China, strengthening of the US, European and Japanese economies, and a slow response from supply given the restraints on supply of equipment, makes it possible to foresee lengthening of the present mining and metals cycle.

The continuity of the global economic growth — with strong liquidity in the financial markets and solid demand for commodities – tends to benefit Brazil and sustain the appreciation of the Real against the US dollar.

As a result of the performance of steel production, Chinese imports of iron ore reached 131.2 million tons in the first half of 2005 (1H05), 34.1% higher yoy. China’s volume of imports in 1H05 was equal to the annual imports of the whole of the European Union, for example.

In spite of record imports, inventories of iron ore in the Chinese ports in July continued to be low. Spot market prices started rising again, remaining above benchmark prices. Thus, all the signs indicate that excess global demand for iron ore will continue.

In July, the China National Development & Reform Commission issued its Steel Industry Development Policy, aiming to restructure the steel industry turning it more efficient and competitive in the global market. The steel industry in China is still very fragmented: according to the China Iron & Steel Association (CISA) in 2004 there were 871 steel mills in operation, but only 15 with capacity of 5 million tons per year or more, and the top 10 companies were producing 35% of the total output. The Chinese government’s target is to increase this percentage to 50% in 2005 and 70% in 2010, through mergers and expansion of the more competitive operations.

Since the directives of the new policy do not apply to projects that have already been approved, we believe their effects will not be felt in the short term. It is possible, however, to predict that the focus on consolidation, productivity gains and product quality improvements will tend to benefit an iron ore supplier such as CVRD, which has large scale, high quality products, capacity to develop specific solutions, and whose clients are among the players with the largest scale, financial capacity and advanced technological development.

The market for alumina continues to show signs of disequilibrium between supply and demand. Chinese imports in 1H05 were 3.7 million tons, 30% more than in 1H04, and prices have passed the US$ 400/ton mark. Our expectation is that this scenario will not change significantly over the next 18 months.

The situation in the ferro alloys market is different from that of the other mineral products. After a strong rise which began in 4Q03, prices entered a downtrend starting around the middle of 2004, with the exception of medium carbon ferro-manganese alloy, whose price fall is more recent, becoming pronounced in 1Q05.

The imbalance in the alloys market was caused by the strong expansion of capacity – which, according to data from the International Manganese Institute, was 12.3% in 2003 and 15.4% in 2004 – and in global production, which grew 20% in 2004, put in place mainly by the higher-cost, non-integrated producers. The expansion of Chinese production – from 20% of global alloys production in 2000 to 35% in

2Q05

US GAAP

2004, supported by a considerable increase in imports of manganese ore since 2001– was a key factor in this context of excess supply.

Due to the context of accumulation of inventories and falling prices, CVRD is shutting down temporarily the two furnaces of its Mo I Rana plants, in Norway, and running the Dunkerque unit, in France, at half-capacity – these two actions should reduce the company’s output of alloys by an estimated 200,000 tons in an annualized basis. At the same time, other players are also reducing production, some recently re-activated plants are being closed, and the Chinese government is eliminating export incentives.

As a consequence, we expect alloy prices to stabilize in the near future. Manganese ore and ferro alloys provided 4.2% of CVRD’s total sales revenue in 2Q05.

IMPORTANT RECENT EVENTS

•

CVRD rated investment grade

On July 8, Moody’s Investors Service upgraded CVRD foreign currency rating from Ba1 to Baa3. According to Moody’s rating scale, Baa3 qualifies the Company as a moderate credit risk issuer, without speculative elements, corresponding to investment grade.

The upgrade of CVRD’s rating is a landmark in its growth path, characterized by the Company’s strong commitment to shareholder value creation. CVRD is the first Brazilian company to obtain the investment grade rating.

•

Dividend payment

On April 29, CVRD distributed to its shareholders a total of US$ 500 million, equivalent to US$ 0.435 per share, as the first installment of the minimum dividend for the year of 2005, set at US$ 1.0 billion.

Payment of the second tranche of the minimum dividend is scheduled for October 31.

•

Development of the Vermelho nickel project approved

In July, CVRD’s Board of Directors gave the go-ahead for development of the Vermelho nickel project, located in the Carajás mineral province, in the Brazilian state of Pará. This project will mark the Company’s entry into the global nickel market. The Vermelho project will have production capacity for approximately 46,000 tons per year (tpy) of metallic nickel and 2,800 tpy of cobalt. The useful life of the project is estimated to be 40 years.

The estimated investment is up to US$ 1.2 billion, with startup scheduled for the fourth quarter of 2008.

•

CVRD begins mineral exploration in Australia

In July CVRD signed agreement with the Australian mining companies Aquila Resources Limited and AMCI Holdings for an exploration study of the Belvedere Coal Underground Project (Belvedere). Belvedere is an estimated 2.7 billion ton hard coking coal resource located in the state of Queensland, Australia.

At the conclusion of the pre-feasibility study, CVRD has the option to acquire a 51% interest in Belvedere at a price of US$ 90 million. CVRD has further options to increase its stake in the project up to 100% by acquiring its partners’ interests at a fair market value determined at the time of the exercising of each option.

With this project, CVRD now has mineral exploration investments in four continents: South America, Africa, Asia and Australasia.

2Q05

US GAAP

•

First iron ore shipment to Ukraine

In August, CVRD concluded its first iron ore shipment to Ukraine. Ukraine is the world seventh largest steel producer. This shipment represents the conquest of a new frontier of the iron ore seaborne market.

•

Divestment of QCM

CVRD’s subsidiary Caemi sold its shareholding in Quebec Cartier Mining Company (QCM), an iron ore and pellets producer with operations in Quebec, Canada, for US$ 125 million, to Dofasco Inc, on July 22.

This transaction completed CVRD’s compliance with its undertakings to the antitrust authorities of the European Union.

NEW RECORD OF REVENUES: US$ 3.7 BILLION

CVRD’s gross revenues in 2Q05, of US$ 3.721 billion, was 83.0% higher yoy, and exceeded the previous quarterly revenue record of US$ 2.428 billion achieved in 4Q04. The increase of US$ 1.688 billion in comparison to 2Q04 is mainly due to higher sales prices (85%), of which US$ 1.294 billion was related to the annual price increase of iron ore and pellets.

Increase in volume sold contributed US$ 261 million for the revenues increase – US$ 190 million of this coming from iron ore and US$ 63 million from copper concentrate, which began to be shipped to clients only in June 2004.

Ferrous minerals accounted to 78.2% of gross revenues, aluminum products 8.8%, logistics services 8.5% and non-ferrous minerals 4.5%.

The main destinations of CVRD’s sales in the 1Q05 were: Europe (30.9%), Brazil (27.2%) and Asia (24.8%). Of the total revenue of US$ 1.013 billion accounted as sales to the Brazilian market, US$ 216 million were sales of pellet feed to the Tubarão joint ventures (Nibrasco, Itabrasco, Hispanobras and Kobrasco), which process them into pellets and sell to other markets. After Brazil itself, China was the Company’s largest single destination market, representing 11.6% of total revenues.

•

Ferrous minerals

Record shipments of iron ore and pellets

In 2Q05 CVRD shipped 62.386 million tons of iron ore and pellets, 11.8% more than in 2Q04, and 0.9% higher than the previous quarterly record (4Q04), of 61.824 million tons.

Shipments of iron ore totaled 56.167 million tons, and shipments of pellets totaled 6.219 million tons. The reduction in pellet sales in comparison with the 7.459 million tons shipped in 2Q04 was due to the maintenance stoppage at the São Luís plant, whose production was reduced by 472,000 tons in 2Q05, and distribution of shipments between quarters of the year. Thus, total shipments of pellets in 1H05, 13.532 million, were only marginally less than the total of 13.584 million in 1H04.

In 2Q05, CVRD purchased 4.140 million tons of iron ore from other mining companies located in the Iron Ore Quadrangle in the Brazil’s State of Minas Gerais to complement its own production in the quarter – a new record, of 60,692 million tons – and enable it to fulfill client contracts. Total purchases from third party suppliers in 1H05 were 8.496 million tons, 10.5% more than the 7.687 million tons of 1H04.

2Q05

US GAAP

Of the total of iron ore and pellets sold in 2Q05, 11.747 million tons or 18.8% went to China, 10.4% to Germany, 10.0% to Japan, 5.0% to Italy and 4.6% to France.

Sales to Brazilian steelmakers and pig iron producers totaled 9.038 million tons, 14.5% of total shipments; and shipments to the Tubarão joint ventures were 5.359 million tons, 8.6% of the total.

CVRD’s average sale prices in 2Q05 were US$ 38.58 per ton for iron ore and US$ 90.69 per ton for pellets, an yoy growth of 97.8% and 121.8%, respectively. It should be noted that 2Q05 revenues contains approximately 90% of the retroactive adjustment for the January — March period for price increases. This adjustment distorts the figure for the average price in the period.

Sales of manganese ores amounted to 194,000 tons, 4.4% less yoy and 2.0% less qoq, mainly reflecting reduction in Chinese demand.

Sales of ferro alloys reached 147,000 tons, 7.3% more than in 2Q04, and 11.4% more than in the previous quarter.

The average price of manganese ore was US$ 97.94 per ton, 3.0% down from 1Q05, and maintaining the downtrend, which started in 4Q04 – but still 80.7% higher than the price level of 2Q04. The reduction in price was more accentuated in ferro alloys: this quarter’s average price of US$ 939 per ton was 12.7% less than in 1Q05 and 6.7% less than in 2Q04.

The global market for alloys is in a typical oversupply phase, after production growth of 20% in 2004. With the accumulation of inventories and falling prices, CVRD has decided to shut down temporarily its Mo I Rana plants in Norway, and reduce capacity utilization at Dunkerque, France, to 50% – these actions together will reduce output of alloys by an estimated 200,000 tons in an annualized basis.

Various swing producers – plants with high costs, which produce at the top of the cycle and close in the low part of the cycle – have shut down operations due to the price fall, and, therefore, the rate of production growth fell in 1Q05, from 20% to 15% per year. Supply – and as a result, prices – are expected to stabilize in the coming quarters.

CVRD’s sales of ferrous minerals – iron ore, pellets, manganese and ferro alloys in 2Q05 was US$ 2.908 billion, 103.9% higher than 2Q04, US$ 1.426 billion, and 81.3% more than 1Q05, US$ 1.604 billion.

Iron ore shipments produced revenues of US$ 2.167 billion, pellets US$ 564 million, operating services for the Tubarão pelletizing plants US$ 6 million, manganese ore US$ 19 million and ferro alloys US$ 138 million.

•

The aluminum chain

Given the stabilization of the production capacity in the short term, there were no remarkable changes in the quarterly sales volumes of bauxite, alumina and aluminum. Considerable portion of the quarter variations was caused by reschedule of shipments.

Sales of bauxite were 475,000 tons in the quarter, compared to 361,000 tons in 1Q05 and 365,000 in 2Q04.

Alumina sales volume was 402,000 tons, 19.6% higher than the 336,000 tons produced in 2Q04, but 15.9% lower than the volume produced in 1Q05.

CVRD’s sales volume of primary aluminum, 110,000 tons, was in line with its 109,000 tons sold in 1Q05, and slightly lower than the 119,000 tons sold in 2Q04.

2Q05

US GAAP

The operational improvements in the Barcarena smelter increased the production of primary aluminum to 220,000 tons in 1H05, enabling CVRD to benefit from the increase in prices.

CVRD’s average selling prices in 2Q05 were US$ 27.37 per ton for bauxite, US$ 274 per ton for alumina and US$ 1,855 per ton for aluminum. Compared to average prices for 2Q04, these prices were 24.9% higher for bauxite, 10.8% higher for alumina and 12.6% higher for primary aluminum.

Revenues from aluminum products in 2Q05 totaled US$ 327 million, 13.2% more than the 2Q04 revenues of US$ 289 million. The increase in prices of products was responsible for 86.8% of this difference.

•

Copper

CVRD sold 105,000 tons of copper concentrate in 2Q05, 20,000 tons more than in the previous quarter, 85,000 tons, and 71,000 tons more than in 2Q04, when shipments began.

Output of the Sossego copper mine continues to be lower than programmed, since the drilling equipments acquired this year have not yet been delivered – delivery is now expected in the second half of the year. The resulting expected production of copper in concentrate in 2005 should be approximately 130,000 tons.

The average price of copper concentrate in 2Q05, US$ 886 per ton, was 25.5% more than in 2Q04, US$ 706 per ton, and slightly higher than the average price of US$ 882 per ton in 1Q05. LME copper prices continue to be at record levels, reflecting strong Chinese demand, the slowdown in the increase of smelters’ production, and the extremely low level of reported inventories.

CVRD’s revenue from copper concentrates in the quarter was US$ 93 million. This was US$ 69 million more than in 2Q04. The volume increase was responsible for 91% of this increase in revenue, and higher prices for 9%.

•

Industrial minerals

The Company sold 303,000 tons of kaolin in 2Q05, which compares to 293,000 tons in 2Q04, and 280,000 tons in 1Q05. The increase reflects new contracts with clients as already antecipated.

CVRD’s average sale price of kaolin in 2Q05 was US$ 149 per ton, an increase of 6.6% qoq and of 11.6% yoy. Sales revenues was US$ 45 million, which exceeded the sales revenue of 2Q04 and 1Q05 – US$ 39 million in both quarters – by US$ 6 million.

Shipments of potash, 129,000 tons, were 22% less yoy. In the first half of the year, as well as the adverse seasonal effect, Brazilian consumption of potash fell year-on-year for the first time since 1998 due to crop losses caused by the strong drought in the South of Brazil.

In the second half of 2005, with the effects of the drought overcome, and with the planting for the new crop, especially coffee — which uses potash intensively as a soil nutrient — we expect a strong expansion in sales. Such increase will be enabled by the capacity expansion of the Taquari-Vasouras mine. With the ramp-up of the new installations, CVRD should produce 710,000 tons in 2005 against 638,000 in 2004. In 2006, operating at full capacity, estimated production is 850,000 tons of potash.

2Q05

US GAAP

The average market price of potash, which is settled in the international market, was US$ 240 per ton in 2Q05, 28.7% more than in 2Q04 and 10.5% more than in 1Q05.

Sales of potash contributed US$31 million to CVRD’s total revenue in 2Q05.

•

Logistics

Logistics services generated revenues of US$ 316 million in 2Q05, 43.6% more than the revenues of US$ 220 million verified in 2Q04, and 36.2% more than the US$ 232 million of 1Q05. It provided 8.5% of the Company’s total revenues in the quarter.

General cargo carried by the Carajás (EFC), Vitória-Minas (EFVM) and Centro-Atlântica (FCA) railroads contributed with revenues of US$ 233 million, while port services produced US$ 59 million, and coastal shipping and port support services US$ 24 million.

CVRD’s railroads transported 7.418 billion net ton kilometers (ntk) of general cargo, an increase of 4.0% against 2Q04, when 7.135 billion ntk were transported. The main types of cargo were agricultural products, 39.9% of the total, steel industry inputs and products 36.3%, and building materials and forest products 6.7%.

The Company’s ports and maritime terminals handled 8.336 million tons of general cargo, compared to 7.614 million tons in 2Q04.

VOLUME SOLD: IRON ORE AND PELLETS

																		Thousands of tons
		2Q04				%				1Q05				%				2Q05				%
Iron ore			48,357				86.6				52,483				87.8				56,167				90.0
Pellets			7,459				13.4				7,313				12.2				6,219				10.0
Total			55,816				100.0				59,796				100.0				62,386				100.0

IRON ORE AND PELLET SALES BY DESTINATION

																		Thousands of tons
		2Q04				%				1Q05				%				2Q05				%
EU			17,577				31.5	%			17,403				29.1	%			20,016				32.1	%
Germany			6,199				11.1	%			5,816				9.7	%			6,466				10.4	%
France			3,088				5.5	%			2,424				4.1	%			2,850				4.6	%
Belgium			2,047				3.7	%			1,907				3.2	%			1,779				2.9	%
Italy			1,883				3.4	%			1,920				3.2	%			3,148				5.0	%
Others			4,360				7.8	%			5,336				8.9	%			5,773				9.3	%
China			8,400				15.0	%			10,857				18.2	%			11,747				18.8	%
Japan			6,818				12.2	%			5,693				9.5	%			6,249				10.0	%
South Korea			1,823				3.3	%			2,455				4.1	%			1,237				2.0	%
Middle East			1,136				2.0	%			1,314				2.2	%			2,063				3.3	%
USA			1,755				3.1	%			1,276				2.1	%			1,083				1.7	%
Brazil			13,985				25.1	%			14,210				23.8	%			14,397				23.1	%
Steel mills and pig iron producers			9,167				16.4	%			8,820				14.8	%			9,038				14.5	%
Pelletizing joint ventures			4,818				8.6	%			5,390				9.0	%			5,359				8.6	%
RoW			4,322				7.7	%			6,588				11.0	%			5,595				9.0	%
Total			55,816				100.0	%			59,796				100.0	%			62,387				100.0	%

US GAAP

VOLUME SOLD: MINERALS AND METALS

										Thousands of tons
		2Q04				1Q05				2Q05
Manganese ore			203				198				194
Ferro alloys			137				132				147
Alumina			336				478				402
Primary aluminum			119				109				110
Bauxite			365				361				475
Potash			166				138				129
Kaolin			293				280				303
Copper concentrates			34				85				105

LOGISTICS SERVICES – GENERAL CARGO

		2Q04				1Q05				2Q05
Railroads (million ntk)			7,135				5,679				7,418
Ports (thousand tons)			7,614				6,355				8,336

AVERAGE PRICES REALIZED

										US$ / ton
		2Q04				1Q05				2Q05
Iron ore			19.50				20.73				38.58
Pellets			40.89				43.89				90.69
Manganese			54.19				101.01				97.94
Ferro alloys			1,007.30				1,075.76				938.78
Alumina			247.02				284.52				273.63
Aluminum			1,647.06				1,834.86				1,854.55
Bauxite			21.92				27.70				27.37
Potash			186.75				217.39				240.31
Kaolin			133.11				139.29				148.51
Copper concentrates			705.88				882.35				885.71

GROSS REVENUE BY PRODUCT

																						US$ million
		2Q04				%				1Q05				%				2Q05				%
Ferrous minerals			1,426				70.2				1,604				68.9				2,908				78.2
Iron ore			943				46.4				1,088				46.7				2,167				58.2
Pellet plant operation services			15				0.7				20				0.9				6				0.2
Pellets			304				15.0				321				13.8				564				15.2
Manganese ore			11				0.5				20				0.9				19				0.5
Ferro alloys			139				6.8				142				6.1				138				3.7
Others			14				0.7				13				0.6				14				0.4
Non ferrous minerals			94				4.6				144				6.2				169				4.5
Potash			31				1.5				30				1.3				31				0.8
Kaolin			39				1.9				39				1.7				45				1.2
Copper concentrates			24				1.2				75				3.2				93				2.5
Aluminum products			289				14.2				346				14.9				327				8.8
Primary aluminum			197				9.7				200				8.6				204				5.5
Alumina			82				4.0				136				5.8				110				3.0
Bauxite			8				0.4				10				0.4				13				0.3
Others			2				0.1				0				—				0				—
Logistics services			220				10.8				232				10.0				316				8.5
Railroads			153				7.5				159				6.8				233				6.3
Ports			45				2.2				47				2.0				59				1.6
Shipping			22				1.1				26				1.1				24				0.6
Others			4				0.2				2				0.1				1				0.0
Total			2,033				100.0				2,328				100.0				3,721				100.0

2Q05

US GAAP

GROSS REVENUE BY DESTINATION

																						US$ million
		2Q04				%				1Q05				%				2Q05				%
Europe			706				34.7				653				28.0				1,149				30.9
Brazil			580				28.5				652				28.0				1,013				27.2
China			203				10.0				279				12.0				431				11.6
Japan			197				9.7				216				9.3				324				8.7
Emerging Asia (ex China)			87				4.3				125				5.4				167				4.5
USA			58				2.9				98				4.2				119				3.2
Rest of the World			202				9.9				305				13.1				518				13.9
Total			2,033				100.0				2,328				100.0				3,721				100.0

OPERATING COSTS AND EXPENSES

Globally, the mining and metals industry is suffering pressures in costs of energy, equipment, parts, various raw materials and labor. At the same time, the currencies of commodity producing countries have appreciated significantly against the US dollar. Although the weakness of the US dollar contributes, over time, to increasing dollar prices of mining and metals, it has a negative, and almost immediate, effect on costs.

Since 70% of CVRD’s operational costs and expenses are denominated in Reais, the 18.6% appreciation of the Real against the US dollar from 2Q04 to 2Q05, alone, produced a negative effect of US$ 169 million in the operational results.

Cost of goods sold (COGS) in 2Q05 was US$ 1.508 billion, an increase of US$ 261 million over 1Q05, and US$ 596 million more than in 2Q04.

The largest individual item in the difference in COGS from 2Q04 was outsourced services – an increase of US$ 164 million, mainly due to higher sales volumes (US$ 41 million), the increase in rail freight charges (US$ 37 million), the appreciation of the Brazilian currency (US$ 34 million), increased waste material removal in the mines (US$ 24 million), and higher prices (US$ 18 million).

Part of CVRD’s iron ore production is transported through MRS, which impacts outsourced services expenses. In 2Q05 CVRD spent US$ 104 million with railroad freights, totaling US$ 202 million in the first half of the year. To speed up production in the high part of the cycle and prepare reduction of costs for the low part of the cycle, the Company has increased the rate of waste material removal – which is carried out by outsourced service companies.

Cost of materials increased by US$ 130 million, with a strong element from higher costs of spare parts. Besides that, the increase in price of iron ore and pellets also had a significant impact on COGS. Expenditure on the acquisition of these products increased by US$ 99 million.

Energy costs, which are 17.6% of COGS, increased by US$ 95 million, reflecting higher fuel prices – the effects of the oil shock, passed through to the Brazilian market – and higher prices of electricity. In the new long-term contract for supply of electricity to the aluminum smelter in Barcarena, the price is denominated in Reais with a portion indexed to the LME metal price. Thus the appreciation of the Real against the US dollar and the increase in the price of the metal from 2Q04 both contributed to an increase in CVRD’s energy costs.

Due to the increase in the value of the Company’s asset base, depreciation and amortization expenses were US$ 42 million higher yoy. In the last 30 months, CVRD invested US$ 5.4 billion and the Brazilian Real has appreciated 50.3% against the US dollar. These events caused an increase in property plant and

2Q05

US GAAP

equipment, from US$ 3.3 billion in December 2002 to US$ 11.5 billion in June 2005. Depreciation increased to US$ 249 million in 1H05, from US$ 375 million in 2004 and US$ 205 million in 2002.

Demurrage expenses were US$ 16 million in the quarter. This is higher than the total of US$ 14 million in 2Q04, but there was a considerable reduction from the US$ 21 million of demurrage expenses in 1Q05.

CVRD has been working strongly to improve its logistic processes in order to optimize the mine-railway-port integration.

Simultaneously, the Company is investing considerable resources in its logistics infrastructure. One of the results of these efforts is the minimization of waiting time suffered by vessels at its ports and maritime terminals.

One example is the second ship loader of Pier III at the Company’s port of Ponta da Madeira (PDM), which started operation in July, increasing its operational capacity and flexibility. In the same month, PDM’s third car dumper came into operation – this will speed up unloading of the iron ore trains from Carajás. The operation of the second ship loader of Pier III and the third car dumper enables PDM iron ore loading capacity to reach 85 million tpy.

SG&A expenses of US$ 135 million in 1Q05 were US$ 29 million more than in 2Q04 – basically reflecting the increase in salaries, put in place in July 2004, and increased disbursement on social projects, US$ 7.5 million, and on general expenses.

In 2Q05 CVRD donated US$ 3.6 million to its foundation, Fundação Vale do Rio Doce — institution that finances projects aimed at elementary education and at promotion of citizenship in low income communities, spent US$ 2.0 million in projects for indigenous communities and invested US$ 6.9 million to complete the construction of physical infrastructure in the Canaã dos Carajás municipality, in the State of Pará, where the Sossego copper mine is located. In 1H05, CVRD spent US$ 16.3 million to improve economic and social welfare in the regions where it operates.

Intensification of investments in mineral exploration resulted in research and development expenditure of US$ 54 million in 2Q05, twice its value of US$ 27 million in 2Q04.

COST OF GOODS SOLD – BREAKDOWN

																						US$ million
		2Q04				%				1Q05				%				2Q05				%
Personnel			92				10.1				98				7.9				117				7.8
Material			149				16.3				231				18.5				279				18.5
Fuels			102				11.2				130				10.4				148				9.8
Electric energy			68				7.5				97				7.8				117				7.8
Outsourced services			178				19.5				290				23.3				342				22.7
Acquisition of iron ore and pellets			116				12.7				115				9.2				215				14.3
Acquisition of other products			83				9.1				87				7.0				81				5.4
Depreciation and exhaustion			85				9.3				122				9.8				127				8.4
Others			39				4.3				77				6.2				82				5.4
Total			912				100.0				1.247				100.0				1.508				100.0

2Q05

US GAAP

THE EXCELLENCE OF CVRD’S OPERATIONAL PERFORMANCE

Operating profit measured by adjusted EBIT was a record US$ 1.771 billion, 112.9% higher than in 2Q04 and 122.8% higher than in 1Q05. For the half-year it was US$ 2.566 billion, 81.3% more than in 1H04.

EBIT margin, in spite of the 18.6% yoy appreciation in the Real against the dollar, as measured by the average exchange rate, was 50.1%, higher than its previous record value, of 43.3%, in 2Q04.

Adjusted EBIT in 2Q05 was US$ 939 million more than in 2Q04, reflecting the increase of US$ 1.616 billion in net revenues, which was partially offset by the increase of US$ 596 million in COGS.

The adjusted EBIT margin of the ferrous minerals division was 56.2%, 1,040 basis points higher than its value of 45.8% in 2Q04, reflecting the 2005 increase in prices for iron ore and pellets.

The aluminum business posted an adjusted EBIT margin of 32.7%, which compares with 47.5% in 2Q04. In spite of the increase in average price between the two quarters, there was a fall in margin mainly due to the appreciation of the Real against the US dollar and the increase in costs of electricity.

The adjusted EBIT margin of the logistics services was 30.0%, 190 bp higher yoy, helped by the appreciation of the Real – since logistics transactions are Real denominated.

The EBIT margin of the non-ferrous minerals division, at 36.9% in 2Q05, was lower than in 2Q04 (48.3%), due to increased depreciation expenses and increased cost of production of copper concentrate. The previously mentioned operational problems at Sossego are resulting in production below expected levels and in temporary increase in operational costs.

ADJUSTED EBIT MARGIN BY BUSINESS AREA

		2Q04				1Q05				2Q05
Ferrous minerals			45.8	%			38.8	%			56.2	%
Non ferrous minerals			48.3	%			30.9	%			39.4	%
Aluminum			47.9	%			38.6	%			32.7	%
Logistics			28.1	%			22.2	%			30.0	%
Total			43.3	%			35.9	%			50.1	%

ANOTHER MILESTONE: QUARTERLY EBITDA ABOVE US$ 2 BILLION

CVRD’s 2Q05 adjusted EBITDA moved to a new level – above US$ 2 billion – at US$ 2.033 billion. It was more than the double of values for 2Q04 and 1Q05, US$ 971 million and US$ 993 million, respectively.

In the twelve-month period to June 2005, adjusted EBITDA amounted to US$ 5.034 billion. 2Q05 was the thirteenth consecutive quarterly result in which the LTM adjusted EBITDA increased and was 72.9% higher yoy.

The difference of US$ 1.062 billion between cash generation of 2Q05 and 2Q04 is made up of an increase of US$ 939 million in adjusted EBIT, a raise of US$ 57 million in depreciation, and an increment of US$ 66 million in dividends received.

2Q05

US GAAP

The dividends received from affiliated companies and joint ventures totaled US$ 126 million in 2Q05 against US$ 60 million in 2Q04. CVRD received US$ 35 million from Samarco, US$ 34 million from Usiminas, US$ 30 million from MRN, US$ 11 million from GIIC, US$ 8 million from Valesul, and US$ 3 million from Hispanobras.

The 2Q05 cash generation by business unit was: ferrous minerals 83.0%, aluminum products 7.3%, logistics 6.4%, and non-ferrous minerals 2.2%.

QUARTERLY ADJUSTED EBITDA

										US$ million
		2Q04				1Q05				2Q05
Net operating revenues			1.920				2.213				3.536
COGS			(912	)			(1,247	)			(1,508	)
SG&A			(106	)			(113	)			(135	)
Research and development			(27	)			(34	)			(54	)
Other operational expenses			(43	)			(24	)			(68	)
Adjusted EBIT			832				795				1.771
Depreciation, amortization & exhaustion			79				129				136
Dividends received			60				69				126
Adjusted EBITDA			971				993				2,033

ADJUSTED EBITDA BY BUSINESS AREA

																						US$ million
		2Q04				%				1Q05				%				2Q05				%
Ferrous minerals			678				69.8				674				67.9				1.687				83.0
Non ferrous minerals			28				2.9				40				4.0				45				2.2
Logistics			99				10.2				90				9.1				130				6.4
Aluminum			164				16.9				169				17.0				149				7.3
Others			2				0.2				20				2.0				22				1.1
Total			971				100.0				993				100.0				2.033				100.0

FINANCIAL REVENUES/EXPENSES

CVRD posted net financial expenses of US$ 24 million in 2Q05. In relation to 2Q04 this was an improvement of US$ 63 million. Financial revenues, at US$ 27 million, were US$ 8 million higher than in 2Q04; and financial expenses, at US$ 51 million, were US$ 55 million lower.

The lower financial expenses reflected an increase of US$ 33 million in the result of derivatives transactions made for protection against market risks — interest rate, currency and commodity price – which had generated a gain of US$ 56 million in 2Q05, compared to a gain of US$ 23 million in 2Q04. The main driver was the gains from hedging of alumina and aluminum prices of the order of US$ 73 million.

The effect on the Company’s net foreign currency liability of the 11.8% appreciation of the Real against the US dollar from 31 March to 30 June, 2005 generated a positive accounting gain of US$ 304 million in the 2Q05 result.

2Q05

US GAAP

INCOME FROM SHAREHOLDINGS

Equity income from affiliates and joint ventures totaled US$ 220 million, 46.7% or US$ 70 million higher yoy. The pelletizing companies, benefiting from the increase in prices of their products, were the main responsible for the raise, being its equity income US$ 131 million in 2Q05, against US$ 34 million in 2Q04.

The contribution of the shareholdings in steel, on the other hand, at US$ 62 million, was lower than in 2Q04 (US$ 92 million), reflecting the divestment of CVRD’s interest in CST in the second half of 2004.

RECORD NET EARNINGS: US$ 1.630 BILLION

CVRD’s net earnings in 2Q05 was a record, US$ 1.630 billion, 223.4% higher than in 2Q04 and 133.5% higher than in 1Q05. Net earnings in the half-year were US$ 2.328 billion, compared to US$ 909 million in 1H04.

The principal element in this excellent performance was operational profit, US$ 939 million higher than in 2Q04.

The appreciation of the Real, while having an adverse impact on operational costs and expenses, resulting in compressing margins, operational profit and cash generating, on the other hand caused a positive accounting gain of US$ 304 million on currency variations.

Of the difference of US$ 1.126 billion between net profit in 2Q04 and 2Q05, the lower net financial expenses contributed to US$ 63 million, and the increase in equity income to US$ 70 million.

The Company’s good operational and financial results more than offset the US$ 373 million increase in income tax and social contribution, arising from higher taxable earnings base.

PARADIGM SHIFT: THE INVESTMENT GRADE CONQUEST

On July 8, 2005 Moody’s Investors Service upgraded CVRD’s foreign currency credit rating from Ba1 to Baa3 – which on Moody’s scale means credit of moderate risk, without speculative elements, identified as investment grade.

This upgrade is the result of continuous effort to implement a long-term strategy focused on the value creation, which has been responsible for CVRD’s strong cash flow, supported by excellence in financial management, oriented toward minimization of risks and the strengthening of the Company’s capacity to assume financial commitments.

The improvement of CVRD’s credit risk classification is a historic benchmark in the Company’s growth trajectory, characterized as it has been by firm commitment to value creation for its shareholders.

CVRD is now one of the rare cases in which a company that has the vast majority of its assets in a non-investment grade country is itself promoted to investment grade – thus breaking a previous paradigm, and becoming the only company in Brazil with this position.

2Q05

US GAAP

CVRD’s total debt on June 30, 2005 was US$ 4.168 billion, compared to US$ 4.182 billion on March 2005 and to US$ 4.088 billion in the end of 2004. Net debt(4) at the end of June 2005 was US$ 3.212 billion, slightly higher than the US$ 3.060 billion verified at the end of March 2005.

The average maturity of CVRD’s debt on June 30, 2005 was 6.57 years, with 50% of the total debt at fixed rates and 50% at floating rates.

The rapid growth in adjusted EBITDA has been reflected in the improving trend of the Company’s leverage and interest coverage indicators. Cash generation growth enables the financing of investments and distribution of dividends with only marginal increases in debt levels, leading to a decline in leverage and an increase in interest coverage. This trend is expected to be even higher in 2H05 given the expectation of decrease in total debt due to its amortization.

Total debt/LTM adjusted EBITDA fell from 2.05x on December 31, 2001 to 0.83x on June 30, 2005. Interest coverage, expressed as LTM adjusted EBITDA / interest paid⁽⁵⁾ increased significantly to 17.73x on June 30, 2005 from 7.58x.

In June, CVRD used part of its free cash flow and the prepayment of some bank loans contracted at floating rates, in a transaction with total value of US$ 240.6 million. This aimed to reduce risks – refinancing risk and interest rate risk – and also the Company’s average cost of debt.

In isolation, these transactions reduced the proportion of floating-rate debt from 53% to 50% of CVRD’s total, and also produced a marginal positive impact on the debt’s cost and average maturity.

The effect of the debt amortization was not fully reflected in the Company’s total debt because CVRD contracted in April export finance credit lines to deal with short-term cash management. Such credit lines will be liquidated during 2H05, US$ 129 million in 3Q05 and US$ 186 million in 4Q05, reducing debt levels.

FINANCIAL EXPENSES

										US$ million
Financial expenses on:		2Q04				1Q05				2Q05
Debt with third parties			(79	)			(48	)			(57	)
Debt with related parties			(5	)			(2	)			(4	)
Total debt related financial expenses			(84	)			(50	)			(61	)

Gross interest on:		2Q04				1Q05				2Q05
Tax and labour contingencies			(9	)			(11	)			(13	)
Tax on financial transactions (CPMF)			(14	)			(9	)			(16	)
Derivatives			23				5				56
Others			(22	)			(27	)			(17	)
Total gross interest			(22	)			(42	)			10
Total			(106	)			(92	)			(51	)

DEBT INDICATORS

										US$ million
		2Q04				1Q05				2Q05
Gross debt			4.514				4.182				4.168
Net debt			3.455				3.060				3.212
Gross debt / adjusted LTM EBITDA (x)			1.55				1.05				0.83
Adjusted LTM EBITDA / LTM interest expenses (x)			12.94				13.24				17.73
Gross debt / EV (6) (x)			0.22				0.11				0.11

Enterprise Value = market capitalization + net debt

2Q05

US GAAP

GREEN LIGHT FOR VERMELHO

CVRD’s priority for the use of its strong cash flow is to finance investments that constitute platforms for shareholder value creation. At this point of the economic cycle, which is characterized, among other factors, by a significant increase in the price of equipments, raw materials and services, the choice of the right investment opportunities, that are truly capable of adding value, became an even greater challenge for the managers of a mining company.

Based on rigorous criteria, CVRD continues to invest a considerable volume of funds in the quest for profitable growth.

Total capital expenditure in 2Q05 was US$ 821.3 million, 44.0% more than in 1Q05. US$ 658.4 million of this total was spent on organic growth – projects and R&D, and US$ 162.9 million on “stay-in-business capex” — maintaining existing operations¹.

CVRD’s total capex in the first half of 2005 was US$ 1.392 billion, 41.8% of the total of US$ 3.332 billion budgeted for the year.

The amount spent on research and development in 2Q05 was US$ 42.7 million, more than 50% higher than the US$ 28.2 million spent in the previous quarter. Mineral exploration efforts were focused on identifying new deposits of copper, coal, nickel, gold and manganese.

CVRD has various studies in progress. Highlights are: the Cristalino copper project in Carajás, in the Brazilian state of Pará; the São João do Piauí nickel project in the Brazilian state of Piauí; the coal project at Moatize in Mozambique; the manganese project at Franceville in Gabon; the phosphates project in Bayóvar, Peru; and the potash project at Rio Colorado in Argentina. The Company will start studies for the Belvedere coal project in Queensland, Australia.

The acquisition of 25% of the Chinese anthracite producer Henan Long Energy Resources Ltd. was concluded in this quarter, on payment of US$ 86.3 million. Henan is expected to produce 1.7 million tons in 2005.

At the beginning of July, CVRD’s Board of Directors approved investment in development of the Vermelho nickel project with estimated production capacity of 46,000 tpy of metallic nickel and 2,800 tpy of cobalt. The estimated total investment is up to US$ 1.2 billion, for startup scheduled for the last quarter of 2008.

• Main CVRD projects currently in progress

Area		Project		Budgeted 2005				Status
				US$ million
Ferrous minerals		Expansion of the Carajás iron ore mines by 85 Mtpa – Northern System			140			For completion in 2006, this will add 15 million tons to CVRD’s annual production capacity. The second ship loading system of Pier III is in test phase.
		Brucutu iron ore mine – Southern System			205			Phase I should be completed in 2006, increasing nominal production capacity to 15 million tpy. Phase II is scheduled for completion in 2007, to bring production capacity to 24 million tpy. A further expansion, to 30 million tpy is currently under study.
		Itabira iron ore mines – Southern System			16			Modernization of operations and expansion of production capacity to 46 million tpy, for conclusion and startup in 2006.

2Q05

US GAAP

Area		Project		Budgeted 2005				Status
				US$ million
		Fazendão iron ore mine – Southern System			52			Project to produce 14 million tons run-of-mine (ROM) iron ore/year. Works to begin in second half 2005, for completion and operational startup in 2007.
		Fábrica iron ore mine – Southern System			38			Project for expansion of production capacity by 5 million tons, from 12 to 17 million tpy. Startup scheduled for 2007.
		Timbopeba iron ore mine – Southern System			25			Extension of the mine’s working life to 2008, with estimated annual production capacity of 2.7 million tons. US$7.8 million will be invested in development, purchase of small scale equipment and new access for the crushing facilities; a further US$17.6 million will be spent on rolling stock for the EFVM railroad.
		Tubarão Port expansion – Southern System			22			Expansion of the conveyor belt and dockside machinery, and construction of new dockside storage patios.
		Expansion of the São Luis pelletizingplant			18			Expansion of capacity from 6 to 7 million tpy. The expansion will be completed by January 2006. Production this year is estimated at 6.25 million tons.
Coal		Anthracite			86			Acquisition of 25% of the Chinese anthracite producer Henan Longyu Energy Resources Ltd., in partnership with Yoncheng and Baosteel, has been completed. The mine will produce 1.7 million tons of high quality anthracite in 2005.
		Metallurgical coke			16			Acquisition of 25% stake in the Chinese coal producer Shandong Yankuang International Coking Ltd. – for production of metallurgical coke – in association with Yankuang. The project has estimated production capacity of 2 million tpy of coke, and 200,000 tpy of methanol. Startup is planned for 2006.
Non-ferrous minerals		Expansion of the Taquari-Vassouras potash mine			9			Project to expand nominal potash production capacity from 600,000 to 850,000 tpy. The ramp-up period has begun and production of 710,000 tons is expected this year.
		118 copper mine			32			Project for production of 36,000 tons of copper cathode/year.
		Vermelho nickel mine			34			Project for production of 46,000 tons of metallic nickel and 2,800 tons of cobalt, per year. Approved in July 2005; conclusion planned for 4Q08.
Aluminum		Alumina: Alunorte Modules 4 and 5			306			Modules 4 and 5 will increase the refinery’s production capacity to 4.2 million tons of alumina/year. Completion is planned for 1Q06.
		Paragominas I bauxite mine			154			Will produce 4.5 million tpy of bauxite starting early in 2007. Tubes are currently being delivered for construction of the 244-km ore delivery pipeline to transport bauxite from Paragominas to the alumina refinery in Barcarena, in the Brazilian state of Pará. Earthmoving work has been completed for start of construction.
Logistics		Acquisition of locomotives and railcars for EFVM, EFC and FCA railroads			559			2,288 railcars and 63 locomotives were bought in the first half of 2005.
Electric energy		Aimorés hydroelectric power plant			12			This power plant on the Doce river in the Brazilian state of Minas Gerais will have generation capacity of 330MW. The first turbine started up in July 2005; the other two are programmed to startup by October. CVRD owns 51.0% stake in the project.
		Capim Branco I and II hydroelectric power plants			73			Both plants are on the Araguari river in the Brazilian state of Minas Gerais. Scheduled to start operating in 2006, they have generating capacity of 240MW and 210MW, respectively. Works are 68% completed on Capim Branco I, and 41% on Capim Branco II. CVRD has a 48.4% stake in both projects.

2Q05

US GAAP

CAPEX BY BUSINESS AREA

														US$ million
Business area		2Q05								Realized 2005
Ferrous minerals			340.2				41.4	%			540.1				38.8	%
Non ferrous minerals			53.1				6.5	%			88.8				6.4	%
Logistcs			128.6				15.6	%			282.5				20.3	%
Aluminum			151.0				18.4	%			277.7				19.9	%
Coal			91.5				11.1	%			94.0				6.8	%
Electric energy			35.7				4.4	%			59.5				4.3	%
Others			21.1				2.6	%			49.1				3.5	%
Total			821.3				100.0	%			1,391.6				100.0	%

THE SARBANES-OXLEY LAW: ADAPTING THE BYLAWS

CVRD’s Extraordinary General Shareholders Meeting held on June 19, 2005 made changes to the Bylaws to introduce and provide for compliance with the principles and concepts of the Sarbanes-Oxley Act of 2002, Rule 10A-3 of the Securities and Exchange Act of 1934, and Rule 303A.06 of the New York Stock Exchange Listed Company Manual, with necessary adaptations to Brazilian legislation. Also in accordance with the rules of the Sarbanes-Oxley Act, CVRD created an internal complaints channel.

TELECONFERENCE AND WEBCAST

CVRD will hold a conference call and webcast on Friday, August 12, 2005, at 12:00 p.m. Rio de Janeiro time, 11:00 a.m. US Eastern Standard time, and 4:00 p.m. UK time. To participate, see the instructions on CVRD’s website www.cvrd.com.br, in the Investor Relations subsection. A playback of the call and webcast will be available on the site for 90 days following August 12.

SELECTED FINANCIAL INDICATORS OF THE MAIN NON-CONSOLIDATED COMPANIES

Selected financial indicators of the principal non-consolidated companies can be found in CVRD’s quarterly accounts, which are available on its website, www.cvrd.com.br, in the Investor Relations subsection.

2Q05

US GAAP

BALANCE SHEET

										US$ million
		06/30/04				03/31/05				06/30/05
Assets
Current			3,069				3,923				4,634
Long-term			1,527				1,688				1,911
Fixed			7,838				10,763				13,022
Total			12,434				16,374				19,567
Liabilities
Current			1,980				2,391				3,002
Long term			5,275				5,895				6,316
Shareholders’ equity			5,179				8,088				10,249
Paid-up capital			3,707				3,707				6,366
Reserves			1,472				4,381				3,883
Total			12,434				16,374				19,567

FINANCIAL STATEMENTS

										US$ million
		2Q04				1Q05				2Q05
Gross operating revenues			2,033				2,328				3,721
Taxes			(113	)			(115	)			(185	)
Net operating revenue			1,920				2,213				3,536
Cost of goods sold			(912	)			(1,247	)			(1,508	)
Gross profit			1,008				966				2,028
Gross margin (%)			52.5				43.7				57.4
Selling, general and administrative expenses			(106	)			(113	)			(135	)
Research and development expenses			(27	)			(34	)			(54	)
Employee profit-sharing			(17	)			(17	)			(24	)
Others			(26	)			(7	)			(44	)
Operating profit			832				795				1,771
Financial revenues			19				29				27
Financial expenses			(106	)			(92	)			(51	)
Monetary variation			(245	)			(2	)			304
Tax and social contribution (Current)			(41	)			(160	)			(330	)
Tax and social contribution (Deferred)			(23	)			47				(107	)
Equity income and provision for losses			150				133				220
Minority interest			(82	)			(52	)			(204	)
Net earnings			504				698				1,630

2Q05

US GAAP

CASH FLOW STATEMENT

										US$ million
		2Q04				1Q05				2Q05
Cash flows from operating activities:
Net income			504				698				1,630
Adjustments to reconcile net income with cash provided by operating activities:
Depreciation, depletion and amortization			79				129				136
Dividends received			60				69				126
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments			(150	)			(133	)			(220	)
Deferred income taxes			23				(47	)			107
Provisions for contingencies			—				(3	)			(8	)
Impairment of property, plant and equipment			—				4				12
Foreign exchange and monetary losses			291				27				(298	)
Net unrealized derivative losses			(22	)			(5	)			(85	)
Minority interest			82				52				204
Net interest payable			27				(2	)			38
Others			27				(17	)			(63	)
Decrease (increase) in assets:
Accounts receivable			(132	)			(92	)			(472	)
Inventories			(67	)			(20	)			(50	)
Others			67				(74	)			(187	)
Increase (decrease) in liabilities:
Suppliers			(59	)			45				142
Payroll and related charges			(18	)			(35	)			13
Income Tax			—				(79	)			325
Others			(12	)			(86	)			76
Net cash provided by operating activities			700				431				1,426
Cash flows from investing activities:
Loans and advances receivable			3				4				(5	)
Guarantees and deposits			(18	)			(17	)			(3	)
Additions to investments			(6	)			(1	)			(90	)
Additions to property, plant and equipment			(416	)			(661	)			(777	)
Proceeds from disposals of property, plant and equipment			—				2				1
Net cash used in investing activities			(437	)			(673	)			(874	)
Cash flows from financing activities:
Short-term debt, net issuances (repayments)			(44	)			21				216
Loans			2				(13	)			(6	)
Long-term debt			227				239				125
Repayments of long-term debt			(201	)			(156	)			(432	)
Interest attributed to stockholders			(269	)			—				(500	)
Net cash used in financing activities			(285	)			91				(597	)
Increase (decrease) in cash and cash equivalents			(22	)			(151	)			(45	)
Effect of exchange rate changes on cash and cash equivalents			(2	)			24				(121	)
Cash and cash equivalents, beginning of period			1,083				1,249				1,122
Cash and cash equivalents, end of period			1,059				1,122				956
Cash paid during the period for:
Interest on long-term debt			(51	)			(82	)			(35	)
Income tax			—				(79	)			(171	)
Non-cash transactions
Interest capitalized			(6	)			(15	)			(9	)
Income tax paid with credits			(64	)			(27	)			(53	)

2Q05

US GAAP

APPENDIX

Reconciliation of “non-GAAP” information with corresponding US GAAP figures

(1) Adjusted EBIT

										US$ million
		2Q04				1Q05				2Q05
Net operating revenues			1,920				2,213				3,536
COGS			(912	)			(1,247	)			(1,508	)
SG&A			(106	)			(113	)			(135	)
Research & development			(27	)			(34	)			(54	)
Other operating expenses			(43	)			(24	)			(68	)
Adjusted EBIT			832				795				1,771

(2) Adjusted EBITDA

The term “EBITDA” refers to a financial measure that is defined as earnings (losses) before interest, taxes, depreciation and amortisation; we use the term “Adjusted EBITDA” to reflect that our financial measure also excludes monetary gains/losses, equity in results of affiliates and joint ventures less dividends received from those companies, changes in provision for losses on equity investments, adjustments for changes in accounting practices, minority interests and non-recurring expenses. However, Adjusted EBITDA is not a measure determined under GAAP in the United States of America and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA should not be construed as a substitute for operating income or as a better measure of liquidity than cash flow from operating activities, which are determined in accordance with GAAP. We have presented Adjusted EBITDA to provide additional information with respect to our ability to meet future debt service, capital expenditure and working capital requirements. The following schedule reconciles Adjusted EBITDA to net cash provided by (used in) operating activities reported on our Consolidated Statements of Cash Flows, which we believe is the most directly comparable GAAP measure:

RECONCILIATION BETWEEN ADJUSTED EBITDA VS. OPERATING CASH FLOW

										US$ million
		2Q04				1Q05				2Q05
Operating cash flow			700				431				1,426
Income tax			41				160				330
Monetary and foreign exchange losses			(46	)			(25	)			(6	)
Financial expenses			60				65				(14	)
Net working capital			221				341				153
Unrealized losses with derivatives			22				5				85
Others			(27	)			16				59
Adjusted EBITDA			971				993				2,033

(3) Gross debt / last 12 months adjusted EBITDA

		2Q04				1Q05				2Q05
Total debt / adjusted LTM EBITDA (x)			1.55				1.05				0.83
Total debt / LTM operating cash flow (x)			2.01				1.27				1.03

2Q05

US GAAP

(4) Net debt

RECONCILIATION BETWEEN GROSS DEBT VS, NET DEBT

										US$ million
		2Q04				1Q05				2Q05
Gross debt			4,514				4,182				4,168
Cash and cash equivalents			1,059				1,122				956
Net debt			3,455				3,060				3,212

(5) Adjusted LTM EBITDA / LTM interest expenses

		2T04				1T05				2T05
Adjusted LTM EBITDA / LTM interest expenses (x)			12.94				13.24				17.73
LTM operating income / LTM interest expenses (x)			10.26				11.12				15.05

(6) Total debt / enterprise value

		2Q04				1Q05				2Q05
Total debt / EV (x)			21.74				11.06				10.98
Total debt / total assets (x)			36.30				25.54				21.30

Entreprise value = net debt + market capitalization

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

2Q05

COMPANHIA VALE DO RIO DOCE

INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION

		Page
Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004			F-3
Condensed Consolidated Statements of Income for the three-month periods ended June 30, 2005 and 2004 and March 31, 2005 and for the six-month periods ended June 30, 2005 and 2004			F-5
Condensed Consolidated Statements of Cash Flows for the three-month periods ended June 30, 2005 and 2004 and March 31, 2005 and for the six-month periods ended June 30, 2005 and 2004			F-6
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended June 30, 2005 and 2004 and March 31, 2005 and for the six- month periods ended June 30, 2005 and 2004			F-7
Notes to the Condensed Consolidated Financial Information			F-8
Supplemental Financial Information			S-1

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars

		June 30,				December 31,
		2005				2004
		(unaudited)
Assets
Current assets
Cash and cash equivalents			956				1,249
Accounts receivable, net
Related parties			252				124
Unrelated parties			1,486				905
Loans and advances to related parties			82				56
Inventories			1,033				849
Deferred income tax			215				203
Recoverable taxes			250				285
Others			360				219
			4,634				3,890
Property, plant and equipment, net			11,514				9,063
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments			1,508				1,159
Other assets
Goodwill on acquisition of subsidiaries			546				486
Loans and advances
Related parties			44				55
Unrelated parties			58				56
Prepaid pension cost			248				170
Deferred income tax			33				70
Judicial deposits			622				531
Unrealized gain on derivative instruments			2				4
Others			358				231
			1,911				1,603
TOTAL			19,567				15,715

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

(Continued)

		June 30,				December 31,
		2005				2004
		(unaudited)
Liabilities and stockholders’ equity
Current liabilities
Suppliers			971				689
Payroll and related charges			132				141
Interest attributed to stockholders			16				11
Current portion of long-term debt — unrelated parties			685				730
Short-term debt			346				74
Loans from related parties			50				52
Provision for taxes			382				459
Provision for operational expenses			157				64
Others			263				235
			3,002				2,455
Long-term liabilities
Employees post-retirement benefits			229				215
Long-term debt — unrelated parties			3,072				3,214
Loans from related parties			15				18
Provisions for contingencies (Note 9)			1,318				914
Unrealized loss on derivative instruments			115				236
Provisions for environmental liabilities			159				134
Others			339				350
			5,247				5,081
Minority interests			1,069				788
Stockholders’ equity
Preferred class A stock - 1,800,000,000 no-par-value shares authorized and 415,727,739			2,150				1,176
Common stock - 900,000,000 no-par-value shares authorized and 749,949,429 issued			3,806				2,121
Treasury stock - 11,803 (2004 - 11,951) preferred and 14,145,510 common shares			(88	)			(88	)
Additional paid-in capital			498				498
Other cumulative comprehensive loss			(2,744	)			(3,774	)
Appropriated retained earnings			1,829				4,143
Unappropriated retained earnings			4,798				3,315
			10,249				7,391
TOTAL			19,567				15,715