Edgar Filing: VALLEY OF THE RIO DOCE CO

FORM 6-K/A

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K/A

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 2005

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 ü Form 40-F

(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 No ü

(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 No ü

(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 No ü

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

EXPLANATORY NOTE

This report on Form 6-K/A amends and restates in its entirety the Form 6-K (SEC Accession No. 0000950123-05-009894) filed by the registrant on August 12, 2005.

TABLE OF CONTENTS


2Q05 Financial Pages (US GAAP F Pages)
Signatures

Table of Contents

This report on Form 6-K is hereby incorporated by reference into the Registration Statement on Form F-3 of Vale Overseas Limited, File No. 333-110867-01 and the Registration Statement on Form F-3 of Companhia Vale do Rio Doce, File No. 333-110867 and shall be deemed to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

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

F-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

F-3

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

See notes to condensed consolidated financial information.

F-4

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


	Three-month									Six-month periods
	periods ended									ended June 30
	June			March			June
	30, 2005			31, 2005			30, 2004			2005			2004
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		3,077			1,748			1,520			4,825			2,774
Revenues from logistic services		316			232			220			548			411
Aluminum products		327			346			289			673			569
Other products and services		1			2			4			3			10

		3,721			2,328			2,033			6,049			3,764

Value-added tax		(185	)		(115	)		(113	)		(300	)		(188	)

Net operating revenues		3,536			2,213			1,920			5,749			3,576


Operating costs and expenses
Cost of ores and metals sold		(1,134	)		(912	)		(647	)		(2,046	)		(1,290	)
Cost of logistic services		(169	)		(143	)		(117	)		(312	)		(232	)
Cost of aluminum products		(203	)		(191	)		(143	)		(394	)		(290	)
Others		(2	)		(1	)		(5	)		(3	)		(8	)

		(1,508	)		(1,247	)		(912	)		(2,755	)		(1,820	)
Selling, general and administrative expenses		(135	)		(113	)		(106	)		(248	)		(207	)
Research and development		(54	)		(34	)		(27	)		(88	)		(50	)
Employee profit sharing plan		(24	)		(17	)		(17	)		(41	)		(30	)
Others		(44	)		(7	)		(26	)		(51	)		(54	)

		(1,765	)		(1,418	)		(1,088	)		(3,183	)		(2,161	)

Operating income		1,771			795			832			2,566			1,415


Non-operating income (expenses)
Financial income		27			29			19			56			31
Financial expenses		(51	)		(92	)		(106	)		(143	)		(248	)
Foreign exchange and monetary gains (losses), net		304			(2	)		(245	)		302			(287	)

		280			(65	)		(332	)		215			(504	)

Income before income taxes, equity results and minority interests		2,051			730			500			2,781			911


Income taxes
Current		(330	)		(160	)		(41	)		(490	)		(138	)
Deferred		(107	)		47			(23	)		(60	)		9

		(437	)		(113	)		(64	)		(550	)		(129	)


Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		220			133			150			353			236

Minority interests		(204	)		(52	)		(82	)		(256	)		(109	)

Net income		1,630			698			504			2,328			909


Income available to preferred stockholders		588			252			182			840			328
Income available to common stockholders		1,042			446			322			1,488			581

Basic and diluted earnings per Preferred Class A Share		1.41			0.61			0.44			2.02			0.79
Basic and diluted earnings per Common Share		1.41			0.61			0.44			2.02			0.79

Weighted average number of shares outstanding (thousands of shares)
Preferred Class A shares		415,716			415,716			415,713			415,716			415,713
Common shares		735,804			735,804			735,804			735,804			735,804

See notes to condensed consolidated financial information.

F-5

Condensed Consolidated Statements of Cash Flows
Expressed in millions of United States dollars (Unaudited)


										Six-month periods
	Three-month periods ended									ended June 30
	June			March			June
	30,2005			31,2005			30,2004			2005			2004
Cash flows from operating activities:
Net income		1,630			698			504			2,328			909
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		136			129			79			265			178
Dividends received		126			69			60			195			121
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(220	)		(133	)		(150	)		(353	)		(236	)
Deferred income taxes		107			(47	)		23			60			(9	)
Provisions for other contingencies		(8	)		(3	)		—			(11	)		—
Impairment of property, plant and equipment		12			4			—			16			—
Foreign exchange and monetary losses (gains)		(298	)		27			291			(271	)		336
Net unrealized derivative losses (gains)		(85	)		(5	)		(22	)		(90	)		32
Minority interests		204			52			82			256			109
Interest payable, net		38			(2	)		27			36			13
Others		(63	)		(17	)		27			(80	)		9
Decrease (increase) in assets:
Accounts receivable		(472	)		(92	)		(132	)		(564	)		(155	)
Inventories		(50	)		(20	)		(67	)		(70	)		(82	)
Others		(187	)		(74	)		67			(261	)		42
Increase (decrease) in liabilities:
Suppliers		142			45			(59	)		187			(84	)
Payroll and related charges		13			(35	)		(18	)		(22	)		(21	)
Taxes payable		325			(79	)		—			246			—
Others		76			(86	)		(12	)		(10	)		135

Cash provided by operating activities		1,426			431			700			1,857			1,297

Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions		(27	)		—			(6	)		(27	)		(6	)
Repayments		22			3			5			25			46
Others		—			1			4			1			19
Guarantees and deposits		(3	)		(17	)		(18	)		(20	)		(42	)
Additions to investments		(90	)		(1	)		(6	)		(91	)		(15	)
Additions to property, plant and equipment		(777	)		(661	)		(416	)		(1,438	)		(797	)
Proceeds Others from disposals of property, plant and equipment		1			2			—			3			—

Cash used in investing activities		(874	)		(673	)		(437	)		(1,547	)		(795	)

Cash flows from financing activities:
Short-term debt, net issuances (repayments)		216			21			(44	)		237			—
Loans
Related parties
Additions		3			4			3			7			6
Repayments		(9	)		(17	)		(1	)		(26	)		(7	)
Issuances of long-term debt
Related parties		11			4			—			15			—
Others		114			235			227			349			892
Repayments of long-term debt
Others		(432	)		(156	)		(201	)		(588	)		(671	)
Interest attributed to stockholders		(500	)		—			(269	)		(500	)		(269	)

Cash provided by (used in) financing activities		(597	)		91			(285	)		(506	)		(49	)

Increase (decrease) in cash and cash equivalents		(45	)		(151	)		(22	)		(196	)		453
Effect of exchange rate changes on cash and cash equivalents		(121	)		24			(2	)		(97	)		(5	)
Initial cash in new consolidated subsidiary		—			—			—			—			26
Cash and cash equivalents, beginning of period		1,122			1,249			1,083			1,249			585

Cash and cash equivalents, end of period		956			1,122			1,059			956			1,059

Cash paid during the period for:
Interest on short-term debt		—			—			—			—			(2	)
Interest on long-term debt		(35	)		(82	)		(51	)		(117	)		(131	)
Income tax		(171	)		(79	)		—			(250	)		—
Non-cash transactions
Interest capitalized		(9	)		(15	)		(6	)		(24	)		(11	)
Income tax paid with credits		(53	)		(27	)		(64	)		(80	)		(61	)

See notes to condensed consolidated financial information.

F-6

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


	Three-month periods ended									Six-month periods ended June 30
	June			March			June
	30, 2005			31, 2005			30, 2004			2005			2004
Preferred class A stock (including three special shares)
Beginning of the period		1,176			1,176			1,055			1,176			1,055
Transfer from appropriated retained earnings		974			—			121			974			121

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

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

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


Treasury stock

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

Additional paid-in capital
End of the period		498			498			498			498			498

Other cumulative comprehensive loss
Cumulative translation adjustments
Beginning of the period		(3,891	)		(3,869	)		(4,480	)		(3,869	)		(4,449	)
Change in the period		1,032			(22	)		(277	)		1,010			(308	)

End of the period		(2,859	)		(3,891	)		(4,757	)		(2,859	)		(4,757	)

Unrealized gain on available-for-sale securities
Beginning of the period		116			95			77			95			74
Change in the period		(1	)		21			(16	)		20			(13	)

End of the period		115			116			61			115			61

Total other cumulative comprehensive loss		(2,744	)		(3,775	)		(4,696	)		(2,744	)		(4,696	)

Appropriated retained earnings
Beginning of the period		4,126			4,143			3,016			4,143			3,035
Transfer (to) from retained earnings		362			(17	)		(175	)		345			(194	)
Transfer to capital stock		(2,659	)		—			(340	)		(2,659	)		(340	)

End of the period		1,829			4,126			2,501			1,829			2,501

Retained earnings
Beginning of the period		4,030			3,315			3,119			3,315			2,857
Net income		1,630			698			504			2,328			909
Interest attributed to stockholders
Preferred class A stock		(180	)		—			(48	)		(180	)		(106	)
Common stock		(320	)		—			(83	)		(320	)		(187	)
Appropriation (to) from reserves		(362	)		17			175			(345	)		194

End of the period		4,798			4,030			3,667			4,798			3,667

Total stockholders’ equity		10,249			8,088			5,179			10,249			5,179


Comprehensive income is comprised as follows:
Net income		1,630			698			504			2,328			909
Cumulative translation adjustments		1,032			(22	)		(277	)		1,010			(308	)
Unrealized gain on available-for-sale securities		(1	)		21			(16	)		20			(13	)

Total comprehensive income		2,661			697			211			3,358			588


Shares
Preferred class A stock (including three special shares)		415,727,739			415,727,739			415,727,739			415,727,739			415,727,739
Common stock		749,949,429			749,949,429			749,949,429			749,949,429			749,949,429
Treasury stock (1)
Beginning of the period		(14,157,325	)		(14,157,461	)		(14,158,059	)		(14,157,461	)		(14,158,059	)
Sales		12			136			—			148			—

End of the period		(14,157,313	)		(14,157,325	)		(14,158,059	)		(14,157,313	)		(14,158,059	)

		1,151,519,855			1,151,519,843			1,151,519,109			1,151,519,855			1,151,519,109


Interest attributed to stockholders (per share)
Preferred class A stock (including three special shares)		0.43			—			0.11			0.43			0.25
Common stock		0.43			—			0.11			0.43			0.25


(1)		As of June 30, 2005, 14,145,510 common shares and 11,803 preferred shares were held in treasury in the amount of US$ 88. The 14,145,510 common shares guarantee a loan of our subsidiary Alunorte.

See notes to condensed consolidated financial information.

F - 7

		Notes to the Condensed Consolidated Financial Information Expressed in millions of United States dollars, unless otherwise stated (Unaudited)

1		The Company and its operations

		Companhia Vale do Rio Doce (CVRD) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. Our operations are carried out through CVRD and its subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production and logistics, as well as energy, aluminum and steel activities. Further details of our joint ventures and affiliates are described in Note 7.

		The main operating subsidiaries we consolidate are as follows:

%voting

Subsidiary

% ownership

capital

Head office location

Principal activity

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

Brazil

Alumina

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

Brazil

Aluminum

CADAM S.A (CADAM) (1)

100

Brazil

Kaolin

CVRD Overseas Ltd.

100

Cayman Islands

Trading

Ferrovia Centro-Atlântica S. A.

100

Brazil

Logistics

Itabira Rio Doce Company Ltd. — ITACO

100

Cayman Islands

Trading

Minerações Brasileiras Reunidas S.A. — MBR (2)

Brazil

Iron ore

Navegação Vale do Rio Doce S.A. — DOCENAVE

100

Brazil

Shipping

Pará Pigmentos S.A. (1)

Brazil

Kaolin

Rio Doce International Finance Ltd. — RDIF

100

Bahamas

International finance

Rio Doce Manganês S.A.

100

Brazil

Manganese and Ferroalloys

Rio Doce Manganèse Europe — RDME

100

France

Ferroalloys

Rio Doce Manganese Norway — RDMN

100

Norway

Ferroalloys

Salobo Metais S.A.

100

Brazil

Copper

Urucum Mineração S.A.

100

Brazil

Iron ore, Ferroalloys and

Manganese


(1)		Through Caemi Mineração e Metalurgia S.A. CVRD holds 60.2% of the total capital and 100% of the voting capital.

(2)		Through Caemi Mineração e Metalurgia S.A. and Belém Administrações e Participações Ltda.

2		Basis of consolidation

		All majority-owned subsidiaries where we have both share and management control are consolidated, with elimination of all significant intercompany accounts and transactions. Additionally, variable interest entities in which we are the primary beneficiary (FASB Interpretation FIN No. 46 “Consolidation of Variable Interest Entities (revised December 2003)”) are consolidated as from January 1, 2004. Investments in unconsolidated affiliates and joint ventures are reported at cost plus our equity in undistributed earnings or losses. Included in this category are certain joint ventures in which we have majority ownership but, by force of shareholders’ agreements, do not have effective management control. We provide for losses on equity investments with negative stockholders’ equity where applicable.

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

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

		Investments in unincorporated joint ventures, formed for the purpose of investing in hydroelectric power projects, are proportionately consolidated.

F - 8

3		Summary of significant accounting policies

		Our condensed consolidated interim financial information for the three-month periods ended June 30, 2005, March 31, 2005 and June 30, 2004 and for the six-month periods ended June 30, 2005 and 2004 is unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods. The results of operations for the three and six month period ended June 30, 2005 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2005.

		In preparing the consolidated financial statements, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our 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 in business combinations, income tax valuation allowances, employee post-retirement benefits and other similar evaluations, actual results may vary from our estimates.

		Exchange rates at June 30, 2005, March 31, 2005 and December 31, 2004 were R$2,3504: US$1.00, R$2,6662: US$1.00 and R$2,6544: US$1.00, respectively.

4		Recently-issued accounting pronouncements

		In June 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” which sets reporting of a change in accounting principles or errors. We do not expect FASB No. 154 to have a significant impact on our financial position, results of operations or cash flows.

		In March 2005, the FASB issued FSP FIN 46(R)-5, “Consolidation of Variable Interests Entities” to address whether a reporting enterprise should consider whether it holds an implicit variable interest in a variable interest entity (VIE) or potential VIE when specific conditions exist. We adopted FIN 46R and we do not expect FSP FIN 46(R)-5 to have any impact on our financial position, results of operations or cash flows.

		In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” which refers to legal obligation to perform an asset retirement activity. We do not expect FASB Interpretation No. 47 to have a significant impact on our financial position, results of operations or cash flows.

		In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” which sets accounting requirements for “share-based” compensation to employees, including employee-stock-purchase-plans (ESPPs) and provides guidance on accounting for awards to non-employees. Which did not have a significant impact on our financial position, results of operations or cash flows.

		In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets” an amendment of APB No. 29. We will apply this Statement in the event exchanges of nonmonetary assets occur in fiscal periods beginning after June 15, 2005.

		In November 2004, the FASB issued SFAS No. 151, “Inventory Costs” an amendment of ARB No. 43, Chapter 4 that deals with inventory pricing. We have already adopted this new Statement, which did not have a significant impact on our financial position, results of operations or cash flows.

		In September 2004, the FASB issued FSP EITF Issue 03-1-1, which delayed the effective date of paragraphs 10-20 of EITF Issue No. 03-1, The Meaning of Other-Than-Temporary

F - 9

		Impairment and Its Application to Certain Investments. We do not expect EITF Issue No. 03-01 to have any impact on our financial position, results of operations or cash flows.

5		Income taxes

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

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


	Three-month									Six-month periods
	periods ended									ended June 30
	June 30,			March 31,			June 30,
	2005			2005			2004			2005			2004
Income before income taxes, equity results and minority interests		2,051			730			500			2,781			911


Federal income tax and social contribution expense at statutory enacted rates		(697	)		(248	)		(171	)		(945	)		(310	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		131			54			44			185			99
Exempt foreign income (expenses)		82			46			21			128			35
Difference on tax basis of equity investees		(17	)		(4	)		(16	)		(21	)		(30	)
Tax incentives		59			22			3			81			12
Valuation allowance reversal (provision)		—			—			52			—			52
Other non-taxable gains (losses)		5			17			3			22			13

Federal income tax and social contribution expense in consolidated statements of income		(437	)		(113	)		(64	)		(550	)		(129	)

		We have certain tax incentives relative to our iron ore and manganese operations in Carajás, potash in Sergipe and relative to alumina and aluminum in Barcarena. The incentives relative to iron ore and manganese comprise full income tax exemption on defined production levels up to 2005 and partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels which expires in 2010 and 2013, respectively, while the partial exemption incentives relative to aluminum 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.

6		Inventories


	June 30,		December
	2005		31, 2004
Finished products
Iron ore and pellets		224		205
Manganese and ferroalloys		164		156
Aluminum		53		54
Alumina		22		20
Kaolin		19		17
Others		31		11
Spare parts and maintenance supplies		520		386

		1,033		849

F - 10

Investments in affiliated companies and joint ventures


	June 30, 2005									Investments				Equity Adjustments															Dividends received
																																							Quoted
																							Six-month periods												Six-month periods				market
														Three-month periods ended									ended June 30						Three-month periods ended						ended June 30				value
	Participation in				Net		Net income for			June 30,		December		June 30,			March 31,			June 30,									June 30,		March 31,		June 30,						June 30,
	capital (%)				equity		the period			2005		31, 2004		2005			2005			2004			2005			2004			2005		2005		2004		2005		2004		2005
	voting		total
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (2)		51.11		51.00		67		28			34		30		11			2			5			13			7			—		—		—		—		—		n/a
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (2)		51.00		50.89		82		32			42		26		14			2			3			16			4			3		1		—		4		—		n/a
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		62		33			31		13		14			3			1			17			2			—		—		—		—		—		n/a
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (2)		51.00		50.90		69		29			35		18		13			1			3			14			4			—		—		—		—		—		n/a
Gulf Industrial Investment Company — GIIC		50.00		50.00		139		70			70		45		23			12			2			35			6			11		—		1		11		7		n/a
SAMARCO Mineração S.A. — SAMARCO (3)		50.00		50.00		588		182			340		261		56			34			20			90			45			35		20		30		55		49		n/a
Minas da Serra Geral S.A. — MSG		50.00		50.00		39		(2	)		19		18		(4	)		—			(2	)		(4	)		(2	)		—		—		—		—		—		n/a
Others		—		—		—		—			26		24		1			(2	)		—			(1	)		(1	)		—		—		—		—		—		n/a

											597		435		128			52			32			180			65			49		21		31		70		56		n/a

Logistics
MRS Logística S.A		37.23		29.35		261		—			75		78		12			10			8			22			14			5		—		—		5		—		n/a
Others		—		—		—		—			—		1		—			—			—			—			—			—		—		—		—		—		n/a

											75		79		12			10			8			22			14			5		—		—		5		—		n/a

Holdings

Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		22.99		11.46		2,013		864			231		140		57			42			16			99			34			34		—		—		34		13		425
Companhia Siderúrgica de Tubarão — CST (1)						—		—			—		—		—			—			61			—			78			—		—		—		—		—		n/a
California Steel Industries Inc. — CSI		50.00		50.00		324		32			162		149		5			11			15			16			14			—		20		2		20		2		n/a
SIDERAR (cost $15) — available for sale investments		4.85		4.85		—		—			130		110		—			—			—			—			—			—		—		—		—		—		130

											523		399		62			53			92			115			126			34		20		2		54		15		555

Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		362		80			145		171		17			15			14			32			25			30		28		20		58		41		n/a
Valesul Alumínio S.A. — VALESUL		54.51		54.51		114		7			62		55		1			3			4			4			7			8		—		7		8		9		n/a

											207		226		18			18			18			36			32			38		28		27		66		50		n/a

Coal
Henan Longyu Resources Co. Ltd(4)		—		—		—		—			86		—		—			—			—			—			—			—		—		—		—		—		n/a
Shandong Yankuang International Company Ltd(4)		—		—		—		—			10		10		—			—			—			—			—			—		—		—		—		—		n/a

											96		10		—			—			—			—			—			—		—		—		—		—		n/a

Other affiliates and joint ventures		—		—		—		—			10		10		—			—			—			—			(1	)		—		—		—		—		—		n/a

											836		645		80			71			110			151			157			72		48		29		120		65		555

Total											1,508		1,159		220			133			150			353			236			126		69		60		195		121		555


(1)		During 2004 we sold its interest in CST;

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

(3)		Investment includes goodwill of US$45 in periods presented;

(4)		Preoperating investiments.

F - 11

Pension costs


										Six-month periods
	Three month periods ended									ended June 30
	June 30,			March 31,			June 30,
	2005			2005			*2004 ()**			2005			*2004 ()**
Service cost — benefits earned during the period		1			—			—			1			1
Interest cost on projected benefit obligation		60			56			47			116			94
Expected return on assets		(75	)		(69	)		(53	)		(144	)		(106	)
Amortization of initial transitory obligation		2			3			2			5			4
Net deferral		(4	)		(4	)		(6	)		(8	)		(12	)

Net periodic pension cost		(16	)		(14	)		(10	)		(30	)		(19	)


(*)		Based on 2004 annual periodic pension cost.

		In addition to benefits provided under the Pension Plan, accruals have been made relative to supplementary health care benefits extended in previous periods as part of early-retirement programs. Such accruals included in long-term liabilities totaled US$229 and US$215, at June 30, 2005 and December 31, 2004, respectively, plus US$44 and US$34, respectively, in current liabilities.

		The cost recognized for the three-month ended June 30, 2005, March 31, 2005, and June 30, 2004 relative to the defined contribution element of the New Plan was US$2, in each period.

		We previously disclosed in our consolidated financial statements for the year ended December 31, 2004, that we expected to contribute US$16 to our defined benefit pension plan in 2005. As of June 30, 2005, US$9 of our contributions have been made. We do not expect any change in our previous estimate.

9		Commitments and contingencies

(a)		At June 30, 2005, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of US$6, as follows:

Amount of

Denominated

Final

Counter

Affiliate or Joint Venture

guarantee

currency

Purpose

maturity

guarantees

SAMARCO

US$

Debt guarantee

2008

None

VALESUL

Debt guarantee

2007

None

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

		We have not provided any significant guarantees since January 1, 2003 which would require fair value adjustments under FIN 45 — “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”.

(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 provision made against contingent losses is sufficient to cover probable losses in connection with such actions.

F - 12

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


	June 30, 2005				December 31, 2004
	Provision for		Judicial		Provision for		Judicial
	contingencies		deposits		contingencies		deposits
Labor claims		256		127		221		109
Civil claims		204		95		185		72
Tax — related actions		814		390		473		341
Others		44		10		35		9

		1,318		622		914		531

		Labor — related actions principally comprise employee claims for (i) payment of time spent travelling from their residences to the work-place, (ii) additional payments for alleged dangerous or unhealthy working conditions and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal.

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

		Tax — related actions principally comprise our challenges of certain income tax, revenue taxes, Value Added Tax and of the tax on checking account transaction – CPMF.

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

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

		Contingencies settled in the three-month period ended June 30, 2005, March 31, 2005 and june 30, 2004 aggregated US$56, US$4 and US$14, respectively, and additional provisions aggregated US$44, US$14 and US$39, respectively.

		In addition to the contingencies for which we have made provisions, we have possible losses in connection with tax contingencies totaling US$843 at June 30, 2005, for which, no provision is maintained.

(c)		We and BNDES entered into a contract, known as the Mineral Risk Contract, in March 1997, relating to prospecting authorizations for mining regions where drilling and exploration are still in their early stages. The Mineral Risk Contract provides for the joint development of certain unexplored mineral deposits in approximately two million identified hectares of land in the Carajás region, as well as proportional participation in any financial benefits earned from the development of such resources. Iron ore and manganese deposits already identified and subject to development are specifically excluded from the Mineral Risk Contract.

		Pursuant to the Mineral Risk Contract, we and BNDES each agreed to provide US$205, which represents half of the US$410 in expenditures estimated as necessary to complete geological exploration and mineral resource development projects in the region. We will oversee these projects and BNDES will advance us half of our costs on a quarterly basis. Under the Mineral Risk Contract, as of June 30, 2005, the remaining contributions towards exploration and development activities totaled US$44. In the event that either of us wishes to conduct further exploration and development after having spent such US$205, the contract provides that each party may either choose to match the other party’s contributions, or may choose to have its financial interest proportionally diluted. If a party’s participation in the project is diluted to an amount lower than 40% of the amount invested in connection with exploration and development projects, then the Mineral Risk Contract provides that the diluted party will lose all the rights and benefits provided for in the Mineral Risk Contract and

F - 13

		any amounts previously contributed to the project.

		Under the Mineral Risk Contract, BNDES has agreed to compensate us through a finder’s fee production royalty on their share of mineral resources that are discovered and placed into production. This finder’s fee is equal to 3.5% of the revenues derived from the sale of gold, silver and platinum group metals and 1.5% of the revenues derived from the sale of other minerals, including copper, except for gold and other minerals discovered at Serra Leste, for which the finder’s fee is equal to 6.5% of revenues.

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

		On March 22, 2005 we declared a distribution on these “debentures” in the amount of US$3, paid as from April 1, 2005.

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


	Three-month periods ended									Six-month periods
	(unaudited)									ended June 30
	June 30,			March 31,			June 30,
	2005			2005			2004			2005			2004
Environmental liabilities beginning of period		137			134			82			134			81
Accretion expense		10			4			4			14			6
Liabilities settled in the current period		(4	)		—			—			(4	)		—
Cumulative translation adjustment		16			(1	)		(4	)		15			(5	)

Environmental liabilities end of period		159			137			82			159			82

10		Segment and geographical information

		In 1999 we adopted 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. Our business segments are currently organized as follows:

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

		Non-ferrous products – comprises the production of non-ferrous minerals, including potash, kaolin, copper and research of others minerals, mainly nickel.

F - 14

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

		Holdings — divided into the following sub-groups:

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

	•		Steel — comprises our investments in joint ventures and affiliates operating in the steel industry.

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

F - 15

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations (Unaudited)


	As of and for the three-month periods ended
	June 30, 2005																					March 31, 2005																					June 30, 2004
										Holdings																					Holdings																					Holdings
				Non																					Non																					Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
Gross revenues — Export		3,539			206			17			422			—			(1,476	)		2,708			2,059			153			20			445			—			(1,001	)		1,676			1,875			81			22			398			—			(923	)		1,453
Gross revenues — Domestic		679			42			318			81			—			(107	)		1,013			386			49			228			93			—			(104	)		652			364			35			219			47			—			(85	)		580
Cost and expenses		(2,580	)		(203	)		(210	)		(392	)		(12	)		1,583			(1,814	)		(1,792	)		(162	)		(158	)		(397	)		—			1,105			(1,404	)		(1,591	)		(89	)		(142	)		(308	)		—			1,008			(1,122	)
Depreciation, depletion and amortization		(97	)		(17	)		(10	)		(12	)		—			—			(136	)		(97	)		(13	)		(9	)		(10	)		—			—			(129	)		(57	)		(6	)		(8	)		(8	)		—			—			(79	)

Operating income (loss)		1,541			28			115			99			(12	)		—			1,771			556			27			81			131			—			—			795			591			21			91			129			—			—			832
Financial income		78			—			11			3			1			(66	)		27			69			1			8			2			—			(51	)		29			63			—			2			20			1			(67	)		19
Financial expenses		(159	)		(4	)		(4	)		50			—			66			(51	)		(129	)		(1	)		(3	)		(10	)		—			51			(92	)		(139	)		(2	)		(5	)		(26	)		(1	)		67			(106	)
Foreign exchange and monetary gains (losses), net		201			3			(7	)		107			—			—			304			(5	)		3			—			—			—			—			(2	)		(202	)		(2	)		(1	)		(42	)		2			—			(245	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		128			—			12			18			62			—			220			52			—			10			18			53			—			133			32			—			8			18			92			—			150
Income taxes		(390	)		(1	)		(5	)		(40	)		(1	)		—			(437	)		(67	)		(2	)		(5	)		(39	)		—			—			(113	)		(87	)		(4	)		(1	)		31			(3	)		—			(64	)
Minority interests		(105	)		—			—			(99	)		—			—			(204	)		(24	)		—			—			(28	)		—			—			(52	)		(31	)		1			—			(52	)		—			—			(82	)

Net income		1,294			26			122			138			50			—			1,630			452			28			91			74			53			—			698			227			14			94			78			91			—			504


Sales classified by geographic destination:
Export market
America, except United States		334			—			11			81			—			(144	)		282			216			—			11			106			—			(145	)		188			172			—			18			41			—			(98	)		133
United States		166			—			—			42			—			(89	)		119			126			—			3			78			—			(109	)		98			121			—			—			7			—			(70	)		58
Europe		1,518			125			6			185			—			(685	)		1,149			824			50			6			132			—			(359	)		653			857			68			4			212			—			(435	)		706
Middle East/Africa/Oceania		277			34			—			—			—			(75	)		236			124			38			—			6			—			(51	)		117			87			1			—			—			—			(19	)		69
Japan		353			6			—			98			—			(133	)		324			192			6			—			97			—			(79	)		216			187			4			—			105			—			(99	)		197
China		641			10			—			—			—			(220	)		431			399			28			—			26			—			(174	)		279			300			5			—			33			—			(135	)		203
Asia, other than Japan and China		250			31			—			16			—			(130	)		167			178			31			—			—			—			(84	)		125			151			3			—			—			—			(67	)		87

		3,539			206			17			422			—			(1,476	)		2,708			2,059			153			20			445			—			(1,001	)		1,676			1,875			81			22			398			—			(923	)		1,453
Domestic market		679			42			318			81			—			(107	)		1,013			386			49			228			93			—			(104	)		652			364			35			219			47			—			(85	)		580

		4,218			248			335			503			—			(1,583	)		3,721			2,445			202			248			538			—			(1,105	)		2,328			2,239			116			241			445			—			(1,008	)		2,033


Assets:

Property, plant and equipment, net		7,511			1,478			827			1,572			126			—			11,514			6,192			1,403			690			1,255			1			—			9,541			4,542			1,020			483			826			1			—			6,872
Additions to Property, plant and equipment		525			46			52			153			1			—			777			368			29			42			109			—			—			548			165			62			153			35			1			—			416
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		597			—			75			207			629			—			1,508			466			—			66			217			473			—			1,222			330			—			56			195			385			—			966

Capital employed		6,468			1,001			827			1,079			22			—			9,397			5,275			918			682			975			(27	)		—			7,823			4,307			679			449			816			26			—			6,277

F-16

Operating income by product – after eliminations (unaudited)


	As of and for the three-month periods ended
	June 30, 2005																							March 31, 2005																								June 30, 2004
							Value											Depreciation,												Value												Depreciation,												Value											Depreciation,
	Revenues						added			Net		Cost and						depletion and			Operating			Revenues						added			Net			Cost and						depletion and			Operating			Revenues						added			Net		Cost and						depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues			expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income
Ferrous
Iron ore		1,694		472		2,166		(81	)		2,085		(682	)		1,403			(87	)		1,316			865		225		1,090		(30	)		1,060			(529	)		531			(84	)		447			732		211		943		(38	)		905		(394	)		511			(55	)		456
Pellets		462		107		569		(27	)		542		(333	)		209			(4	)		205			267		74		341		(11	)		330			(237	)		93			(3	)		90			251		68		319		(11	)		308		(207	)		101			—			101
Manganese		14		5		19		(1	)		18		(14	)		4			—			4			16		4		20		(2	)		18			(9	)		9			—			9			8		3		11		(2	)		9		(7	)		2			—			2
Ferroalloys		98		56		154		(14	)		140		(96	)		44			(5	)		39			102		51		153		(14	)		139			(82	)		57			(3	)		54			103		50		153		(13	)		140		(72	)		68			(3	)		65

		2,268		640		2,908		(123	)		2,785		(1,125	)		1,660			(96	)		1,564			1,250		354		1,604		(57	)		1,547			(857	)		690			(90	)		600			1,094		332		1,426		(64	)		1,362		(680	)		682			(58	)		624
Non ferrous
Potash		—		31		31		(2	)		29		(15	)		14			(2	)		12			—		30		30		(3	)		27			(14	)		13			(2	)		11			—		31		31		(6	)		25		(13	)		12			(1	)		11
Kaolin		38		7		45		(1	)		44		(24	)		20			(6	)		14			34		5		39		(2	)		37			(20	)		17			(10	)		7			34		5		39		(1	)		38		(21	)		17			(4	)		13
Copper		89		4		93		(1	)		92		(44	)		48			(9	)		39			61		14		75		(3	)		72			(40	)		32			(8	)		24			24		—		24		—			24		(4	)		20			(2	)		18

		127		42		169		(4	)		165		(83	)		82			(17	)		65			95		49		144		(8	)		136			(74	)		62			(20	)		42			58		36		94		(7	)		87		(38	)		49			(7	)		42
Aluminum
Alumina		94		16		110		(11	)		99		(95	)		4			(6	)		(2	)		114		22		136		(8	)		128			(98	)		30			(6	)		24			83		—		83		(4	)		79		(66	)		13			(5	)		8
Aluminum		194		10		204		(1	)		203		(93	)		110			(6	)		104			191		9		200		(1	)		199			(90	)		109			(4	)		105			197		1		198		(1	)		197		(67	)		130			(3	)		127
Bauxite		13		—		13		—			13		(12	)		1			—			1			10		—		10		—			10			(9	)		1			—			1			8		—		8		—			8		(8	)		—			—			—

		301		26		327		(12	)		315		(200	)		115			(12	)		103			315		31		346		(9	)		337			(197	)		140			(10	)		130			288		1		289		(5	)		284		(141	)		143			(8	)		135
Logistics
Railroads		—		232		232		(37	)		195		(124	)		71			(9	)		62			—		159		159		(27	)		132			(91	)		41			(8	)		33			—		153		153		(25	)		128		(81	)		47			(4	)		43
Ports		—		60		60		(10	)		50		(33	)		17			—			17			—		46		46		(9	)		37			(26	)		11			(1	)		10			—		45		45		(3	)		42		(21	)		21			(1	)		20
Ships		12		12		24		(2	)		22		(19	)		3			(2	)		1			15		12		27		(2	)		25			(25	)		—			—			—			10		12		22		(7	)		15		(25	)		(10	)		(1	)		(11	)

		12		304		316		(49	)		267		(176	)		91			(11	)		80			15		217		232		(38	)		194			(142	)		52			(9	)		43			10		210		220		(35	)		185		(127	)		58			(6	)		52
Others		—		1		1		3			4		(45	)		(41	)		—			(41	)		1		1		2		(3	)		(1	)		(19	)		(20	)		—			(20	)		3		1		4		(2	)		2		(23	)		(21	)		—			(21	)

		2,708		1,013		3,721		(185	)		3,536		(1,629	)		1,907			(136	)		1,771			1,676		652		2,328		(115	)		2,213			(1,289	)		924			(129	)		795			1,453		580		2,033		(113	)		1,920		(1,009	)		911			(79	)		832

F-17

Results by segment — before eliminations (Unaudited)


	Six-month periods ended June 30,
	2005																					2004
										Holdings																					Holdings
				Non																					Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
Gross revenues — Export		5.598			359			37			867			—			(2.477	)		4.384			3,437			115			41			761			—			(1,658	)		2,696
Gross revenues — Domestic		1.065			91			546			174			—			(211	)		1.665			651			63			403			106			—			(155	)		1,068
Cost and expenses		(4.372	)		(365	)		(368	)		(789	)		(12	)		2.688			(3.218	)		(2,960	)		(142	)		(270	)		(612	)		—			1,813			(2,171	)
Depreciation, depletion and amortization		(194	)		(30	)		(19	)		(22	)		—			—			(265	)		(135	)		(12	)		(15	)		(16	)		—			—			(178	)

Operating (loss) income		2.097			55			196			230			(12	)		—			2.566			993			24			159			239			—			—			1,415

Financial income		147			1			19			5			1			(117	)		56			107			—			6			3			2			(87	)		31
Financial expenses		(288	)		(5	)		(7	)		40			—			117			(143	)		(255	)		(3	)		(9	)		(67	)		(1	)		87			(248	)
Foreign exchange and monetary gains (losses), net		196			6			(7	)		107			—			—			302			(234	)		(2	)		(6	)		(48	)		3			—			(287	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		180			—			22			36			115			—			353			65			—			14			32			125			—			236
Income taxes		(457	)		(3	)		(10	)		(79	)		(1	)		—			(550	)		(141	)		(4	)		(3	)		22			(3	)		—			(129	)
Minority interests		(129	)		—			—			(127	)		—			—			(256	)		(45	)		—			—			(64	)		—			—			(109	)

Net income		1.746			54			213			212			103			—			2.328			490			15			161			117			126			—			909


Sales classified by geographic destination:
Export market
America, except United States		550			—			22			187			—			(289	)		470			330			—			33			111			—			(201	)		273
United States		292			—			3			120			—			(198	)		217			228			—			—			45			—			(136	)		137
Europe		2.342			175			12			317			—			(1.044	)		1.802			1,516			90			8			361			—			(747	)		1,228
Middle East/Africa/Oceania		401			72			—			6			—			(126	)		353			176			1			—			—			—			(45	)		132
Japan		545			12			—			195			—			(212	)		540			337			12			—			185			—			(166	)		368
China		1.040			38			—			26			—			(394	)		710			538			9			—			59			—			(232	)		374
Asia, other than Japan and China		428			62			—			16			—			(214	)		292			312			3			—			—			—			(131	)		184

		5.598			359			37			867			—			(2.477	)		4.384			3,437			115			41			761			—			(1,658	)		2,696
Domestic market		1.065			91			546			174			—			(211	)		1.665			651			63			403			106			—			(155	)		1,068

		6.663			450			583			1.041			—			(2.688	)		6.049			4,088			178			444			867			—			(1,813	)		3,764


Assets:

Property, plant and equipment, net		7.511			1.478			827			1.572			126			—			11.514			4,542			1,020			483			826			1			—			6,872
Additions to Property, plant and equipment		1.007			75			94			262			—			—			1.438			322			133			285			57			—			—			797
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		597			—			75			207			629			—			1.508			330			—			56			195			385			—			966

Capital employed		6.468			1.001			827			1.079			22			—			9.397			4,307			679			449			816			26			—			6,277

F-18

Operating income by product – after eliminations (unaudited)


	Six-month periods ended June 30,
	2005																							2004
	Revenues						Value											Depreciation,						Revenues						Value											Depreciation,
							added			Net		Cost and						depletion and			Operating									added			Net		Cost and						depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income
Ferrous
Iron ore		2,559		697		3,256		(111	)		3,145		(1,204	)		1,941			(178	)		1,763			1,384		385		1,769		(61	)		1,708		(779	)		929			(125	)		804
Pellets		729		181		910		(38	)		872		(570	)		302			(7	)		295			434		120		554		(19	)		535		(379	)		156			(3	)		153
Manganese		30		9		39		(3	)		36		(23	)		13			—			13			14		6		20		(3	)		17		(14	)		3			—			3
Ferroalloys		200		107		307		(28	)		279		(178	)		101			(8	)		93			194		81		275		(21	)		254		(158	)		96			(7	)		89

		3,518		994		4,512		(180	)		4,332		(1,975	)		2,357			(193	)		2,164			2,026		592		2,618		(104	)		2,514		(1,330	)		1,184			(135	)		1,049

Non ferrous
Potash		—		61		61		(5	)		56		(29	)		27			(4	)		23			—		54		54		(9	)		45		(22	)		23			(3	)		20
Kaolin		72		12		84		(3	)		81		(51	)		30			(9	)		21			68		10		78		(3	)		75		(43	)		32			(7	)		25
Copper		150		18		168		(4	)		164		(84	)		80			(17	)		63			24		—		24		—			24		(4	)		20			(2	)		18

		222		91		313		(12	)		301		(164	)		137			(30	)		107			92		64		156		(12	)		144		(69	)		75			(12	)		63

Aluminum
Alumina		208		38		246		(19	)		227		(193	)		34			(12	)		22			181		6		187		(9	)		178		(156	)		22			(9	)		13
Aluminum		385		19		404		(2	)		402		(183	)		219			(10	)		209			347		12		359		(1	)		358		(121	)		237			(7	)		230
Bauxite		23		—		23		—			23		(21	)		2			—			2			23		—		23		—			23		(21	)		2			—			2

		616		57		673		(21	)		652		(397	)		255			(22	)		233			551		18		569		(10	)		559		(298	)		261			(16	)		245

Logistics
Railroads		—		391		391		(64	)		327		(215	)		112			(17	)		95			—		286		286		(44	)		242		(147	)		95			(12	)		83
Ports		—		106		106		(19	)		87		(59	)		28			(1	)		27			—		83		83		(6	)		77		(44	)		33			(2	)		31
Ships		27		24		51		(4	)		47		(44	)		3			(2	)		1			21		21		42		(10	)		32		(52	)		(20	)		(1	)		(21	)

		27		521		548		(87	)		461		(318	)		143			(20	)		123			21		390		411		(60	)		351		(243	)		108			(15	)		93
Others		1		2		3		—			3		(64	)		(61	)		—			(61	)		6		4		10		(2	)		8		(43	)		(35	)		—			(35	)

		4,384		1,665		6,049		(300	)		5,749		(2,918	)		2,831			(265	)		2,566			2,696		1,068		3,764		(188	)		3,576		(1,983	)		1,593			(178	)		1,415

F-19

11		Derivative financial instruments

		Volatility of interest rates, exchange rates and commodity prices are the main market risks to which we are exposed — all three are managed through derivative instruments. These have the exclusive aim of reducing exposure to risk. We do not use derivatives for speculation purposes.

		We monitor and evaluate our derivative positions on a regular basis and adjust our strategy in response to market conditions. We also periodically review the credit limits and credit worthiness of our counter-parties in these transactions. In view of the policies and practices established for operations with derivatives, management considers the occurrence of non-measurable risk situations as unlikely.

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


	Interest
	rates
	(LIBOR)			Currencies			Gold			Alumina			Aluminum			Total
Unrealized gains (losses) at April 1, 2005		(12	)		3			(31	)		(50	)		(113	)		(203	)
Financial settlement		4			—			2			9			9			24
Unrealized gains (losses) in the period		—			(1	)		3			24			59			85
Effect of exchange rate changes		(1	)		—			(4	)		(5	)		(9	)		(19	)


Unrealized gains (losses) at June 30, 2005		(9	)		2			(30	)		(22	)		(54	)		(113	)


Unrealized gains (losses) at January 1, 2005		(17	)		4			(37	)		(55	)		(127	)		(232	)
Financial settlement		3			—			2			8			10			23
Unrealized gains (losses) in the period		2			(1	)		3			(3	)		4			5
Effect of exchange rate changes		—			—			1			—			—			1


Unrealized gains (losses) at March 31, 2005		(12	)		3			(31	)		(50	)		(113	)		(203	)


Unrealized gains (losses) at April 1, 2004		(48	)		1			(37	)		(36	)		(43	)		(163	)
Financial settlement		11			—			1			—			—			12
Unrealized gains (losses) in the period		5			—			9			4			4			22
Effect of exchange rate changes		2			—			2			2			2			8


Unrealized gains (losses) at June 30, 2004		(30	)		1			(25	)		(30	)		(37	)		(121	)


Unrealized gains (losses) at January 1, 2005		(17	)		4			(37	)		(55	)		(127	)		(232	)
Financial settlement		7			—			4			17			19			47
Unrealized gains (losses) in the period		2			(2	)		6			21			63			90
Effect of exchange rate changes		(1	)		—			(3)			(5	)		(9	)		(18	)


Unrealized gains (losses) at June 30, 2005		(9	)		2			(30	)		(22	)		(54	)		(113	)


Unrealized gains (losses) at January 1, 2004		(46	)		5			(32	)		(18	)		—			(91	)
Initial consolidation of Albras		—			—			—			—			(20	)		(20	)
Financial settlement		14			(2	)		1			—			—			13
Unrealized gains (losses) in the period		(1	)		(2	)		4			(14	)		(19	)		(32	)
Effect of exchange rate changes		3			—			2			2			2			9


Unrealized gains (losses) at June 30, 2004		(30	)		1			(25	)		(30	)		(37	)		(121	)

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

F-20

Final maturity dates for the above instruments are as follows:


Interest rates (LIBOR)		October 2007
Currencies		December 2011
Gold		December 2008
Alumina		December 2008
Aluminum		December 2008

* * *

F-21

Signatures

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


	COMPANHIA VALE DO RIO DOCE (Registrant)

Date: August 16, 2005	By:	/s/ Fabio de Oliveira Barbosa

		Fabio de Oliveira Barbosa Chief Financial Officer