1. 2 disclaimer this presentation may contain statements that express managements expectations about...

1

2

DisclaimerDisclaimer

”This presentation may contain statements that express management’s

expectations about future events or results rather than historical facts.

These forward-looking statements involve risks and uncertainties that could

cause actual results to differ materially from those projected in forward-

looking statements, and CVRD cannot give assurance that such statements

will prove correct. These risks and uncertainties include factors: relating to

the Brazilian economy and securities markets, which exhibit volatility and

can be adversely affected by developments in other countries; relating to

the iron ore business and its dependence on the global steel industry, which

is cyclical in nature; and relating to the highly competitive industries in

which CVRD operates. For additional information on factors that could cause

CVRD’s actual results to differ from expectations reflected in forward-looking

statements, please see CVRD’s reports filed with the Brazilian Comissão de

Valores Mobiliários and the U.S. Securities and Exchange Commission.”

3

AgendaAgenda

Performance highlights

Business outlook

Performance highlights

Business outlook

4

Performance highlightsPerformance highlights

5

The challengeThe challenge

A dramatic global demand growth for minerals and metals

posed a major challenge.

Asset operation at record production levels, maximizing

performance.

At the same time, CVRD managed to anticipate the low cost

Carajás expansion jointly with the building of Pier III of PDM

maritime terminal.

6

An excellent performance in 2003An excellent performance in 2003

An all-time high top line – US$ 5.545 billion (+29.5%).

Growth driven by larger volumes (63.3%) and higher prices

(36.7%).

Record net earnings - US$ 1.548 billion (+127.6%).

A record operational profit – EBIT equal to US$ 1.644 billion

(+15.1%) – but lower margins (30.7% vs. 34.7% in 2002).

7

A good earnings performance compared to other metals and mining companiesA good earnings performance compared to other metals and mining companies

Source: Bloomberg LP and companies reports

12.1

17.218.921.8

32.532.9

38.4

55.8

BHPB

Rio T

into

Alcoa

Anglo A

mer

ican

CVRD

Newm

ont

Alcan

Barric

k

Market Capas of December 31, 2003

US$ billion

2003 Net Earnings

US$ million

476

200 167

1,034

1,3821,548

1,694

2,202*

BHPB

Anglo A

mer

ican

CVRD

Rio T

into

Alcoa

Newm

ont

Barric

k

Alcan

* 2003 CY

8

Explaining EBIT margin declineExplaining EBIT margin decline

400 bps

59 bps

66 bps

28 bps

92 bps

155 bps

Margin reduction2002-2003

Caemi a

consolidation15%

FCAconsolidation

23%

Asset b

impairment16%

Tax c

provisions7%

OperationalPerformance

39%

a non-recurring, non-cash asset impairment contributed to a 630 bps reduction in Caemi´s EBIT margin, 25.8% to 19.5%.

b non-recurring non-cash events.c without any contemporaneous cash effect.

9

2,0001,8901,8251,780

1,6861,587

1,515

2,130

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03

A record cash generation in 2003 – adjusted EBITDA equal to US$ 2.130 billion (+19.7%)A record cash generation in 2003 – adjusted EBITDA equal to US$ 2.130 billion (+19.7%)

LTM adjusted EBITDA

US$ million

a Caemi contribution to 2003 EBITDA = US$ 88 millionb FCA contribution to 2003 EBITDA = -US$ 28 million

10

Kaolin, Potash and

Other4.7%

Manganese and Ferro-

Alloys6.3%

Aluminum, Alumina

and Bauxite15.4%

Logistics10.9%

Gold0.4%

Pellets14.3%

Iron Ore48.0%

Sales revenues and adjusted EBITDASales revenues and adjusted EBITDA

By productBy product By marketBy market

2003 Adjusted EBITDA 2003 Adjusted EBITDA

US$ 2.130 billionUS$ 2.130 billion

2003 Gross Revenues US$ 5.545 billion2003 Gross Revenues US$ 5.545 billion

USA3.4%

Domestic Market30.7%

RoW11.1%

J apan7.6%

China10.5%

Europe32.2% Emerging

Asia4.5% Other

3.4%

Aluminum9.3%

Logistics8.5%

Non Ferrous Minerals

1.5%

Ferrous Minerals77.3%

11

Disciplined capital spendingDisciplined capital spending

ROIC equal to 30.6%, staying above market average and

last five years average of 21.2%.

Capex budget for 2004 equal to US$ 1.8 billion.

Growth capex of US$ 1.2 billion focused on iron ore,

bauxite, alumina, copper, potash and port capacity

expansions besides purchases of 88 locos and 3,178

railcars.

A US$ 78 million multicommodity and global mineral

exploration program.

12

Main projects coming on stream in 2004Main projects coming on stream in 2004

Carajás 70 Mtpy

Capacity increase: 14 Mtpy of iron ore.

Capex cost of US$ 10.28 per ton – includes investment

in mine, plant, railroad equipment and port.

Already in operation.

Sossego

Capacity: 140,000 ktpy of copper, 3 tpy of gold.

Capex cost: US$ 2,760 per ton.

Cash cost: US$ 0.30/ lb approximately.

The only greenfield copper project to come on stream in

the world in 2004 and the largest up to 2007.

Ramping up, full commercial production starts in July.

13

Average debt life rose from 2.98 years in Dec 2002 to 6.47 years in Jan 2004 without an increase in average debt cost.

15.98

26.01

28.71

25.14

22.91

11.51

8.77

8.77

7.587.53

14

18

22

26

30

1999 2000 2001 2002 2003

%

6

8

10

12

X

Total Debt / EV (% ) Adjusted EBITDA / Interest coverage (x)

Continued improvement in balance sheet – low leverage, high interest coverage, longer debt maturity

Continued improvement in balance sheet – low leverage, high interest coverage, longer debt maturity

14

Average debt life rose from 2.98 years in Dec 2002 to 6.47 years in Jan 2004 without an increase in average debt cost.

1.891.87

2.05

1.78

2.01

1

2

3

1999 2000 2001 2002 2003

Continued improvement in balance sheet – low leverage, high interest coverage, longer debt maturity

Continued improvement in balance sheet – low leverage, high interest coverage, longer debt maturity

Total debt / Adjusted EBITDA (x)

15

Sales volumes boomedSales volumes boomed

2003 vs 2002

16.4%

5.1%

98.2%

-7.8%

30.8%

7.1%

168.3%

5.5%

33.1%

14.8%

13.3%

-81.4%

I ron Ore

Pellets

Gold

Manganese ore

Ferro Alloys

Alumina

Primary Aluminum

Bauxite

Potash

Kaolin

Railroads

Ports

186.3 million tons

26,295 million NTK

a

a - without CAEMI = 172.4 million tonsb - without CAEMI = 423,000 tons

b

Record

16

Iron ore and pellets - growth still constrained by capacityIron ore and pellets - growth still constrained by capacity

38.437.736.336.437.137.536.232.8

3.4

10.5

3.9

4.9 4.8 6.9 6.1 5.2

5.5

6.8

1Q 02 2Q 02 3Q 02 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03

I ron Ore Pellets

million tons

36.7

41.142.3 44.0 42.5

46.6

55.7

Caemi41.5

All-time high

17

Productivity gains allowed CVRD to maintain its leadership in the global iron ore marketProductivity gains allowed CVRD to maintain its leadership in the global iron ore market

2003 global seaborne iron ore trade537.1 million tons

BHPB16.3%Rio Tinto

19.9%

Others22.3%

CVRD32.9%

Kumba3.8%

SNIM1.8%

LKAB3.0%Source: CVRD

18

CVRD is also one of the leading players in the global seaborne manganese ore tradeCVRD is also one of the leading players in the global seaborne manganese ore trade

2003 global seaborne manganese ore trade8.2 million tons

BHPB23%

CVRD11% Eramet

10%

Ore & Metals8%

Ghana Mining5%

Autlan3%

Others40%

Source: CVRD

19

26.325.021.320.1

2000 2001 2002 2003

CVRD logistics services decoupled from Brazil´s GDP growthCVRD logistics services decoupled from Brazil´s GDP growth

Railroad transportationCAGR = 9.4%

billion ntkBrazil GDPCAGR = 1.8%

20

Business outlookBusiness outlook

21

A structural disequilibrium A structural disequilibrium

Mining industry underinvested since the mid-nineties.

There is a secular Chinese demand growth.

Combination of Chinese growth, a synchronized global

recovery and a weak USD contributes to extend the length

of the current price cycle, making it similar to the late

eighties.

CVRD, with large mineral deposits, is one of the main

beneficiaries of the current disequilibrium.

There is a structural disequilibrium between demand and

supply for several minerals and metals, that won’t be corrected

in the short term.

22

706 759 780 831 884 9361,041

0

200

400

600

800

1000

1200

1999 2000 2001 2002 2003 2004E 2007E

mill

ion t

ons

Global steel consumption

Global steel consumption is growing fast, generating strong demand for iron and manganese ores

Global steel consumption is growing fast, generating strong demand for iron and manganese ores

Source: IISI

Global consumption is expected to increase 5.8% in 2004, China will be

responsible for 64%

CAGR 99-03 =5.8%CAGR 04E-07E =3.6%

a

IISI mid-case projectiona

23

0

5

10

15

20

25

01/89 01/90 01/91 01/92 01/93 01/94 01/95 01/96 01/97 01/98 01/99 01/00 01/01 01/02 01/03 01/04

US

$ /

ton

Source: Clarksons

02/04

Brazil-Japan and Australia-Japan freight rates differential

Freight rate differentials behavior signals a global excess demand for iron oreFreight rate differentials behavior signals a global excess demand for iron ore

2-digit iron ore price

increase

iron ore price increase

iron ore price increase

2-digit iron ore price

decrease

9% price increase

18% price increase

Jan/Feb 04Chinese iron imports +36.7% yoyWorld steel output +10.4% yoy

24

Freight rates are expected to remain high for long. However, CVRD iron ore remains highly competitive in Asia.

Freight rates are expected to remain high for long. However, CVRD iron ore remains highly competitive in Asia.

CVRD has the largest and the highest quality reserves

allowing flexibility to increase capacity at a relatively

rapid pace.

Lowest opex and capex costs. Capex costs are

approximately half of the competition.

Long term contracts and capability to customize products.

As it modernizes, value-in-use is becoming more

important to the Chinese steel industry, meaning further

demand growth for the high Fe low silica CVRD iron ore.

25

We expect global iron ore seaborne trade to grow 7.1% in 2004

We expect global iron ore seaborne trade to grow 7.1% in 2004

55 70 92 112148

175

411454 450

487537

575

660

1999 2000 2001 2002 2003 2004E 2007E

Chinese imports

Global imports

World: CAGR 99-03=6.9% - CAGR 04E-07E=4.7%

China: CAGR 99-03=26.8%

World: CAGR 99-03=6.9% - CAGR 04E-07E=4.7%

China: CAGR 99-03=26.8%

13.4% 15.4% 20.4% 23.0% 27.6% 30.4%China’s share

Source: CVRD

million tons

26

World aluminum demand is expected to increase by 7.5 Mt between 2003 and 2008. This mean an additional demand for 17 Mt of alumina, making it hard to correct current disequilibrium

World aluminum demand is expected to increase by 7.5 Mt between 2003 and 2008. This mean an additional demand for 17 Mt of alumina, making it hard to correct current disequilibrium

0

100

200

300

400

500

jan/ 9

8

apr/

98

jul/

98

oct/

98

jan/ 9

9

apr/

99

jul/

99

oct/

99

jan/ 0

0

apr/

00

jul/

00

oct/

00

jan/ 0

1

apr/

01

jul/

01

oct/

01

jan/ 0

2

apr/

02

jul/

02

oct/

02

jan/ 0

3

apr/

03

jul/

03

oct/

03

jan/ 0

4

US$ p

er

ton

0%

5%

10%

15%

20%

25%

30%

%

Alumina spot prices % of LME 3 month aluminum price

Source: Metal Bulletin and LME

27

Global IP growth, declining metal inventories, supply constraints and USD weakness help to support copper prices.

Global IP growth, declining metal inventories, supply constraints and USD weakness help to support copper prices.

0

200

400

600

800

1000

1200

1400

1600

1999 2000 2001 2002 2003 2004

00

0 t

on

s

1000

1500

2000

2500

3000

3500

USD/ton

LME+SFE+COMEX inventories Copper prices LME-3 month

Source: LME

Copper prices and inventories

28

World copper market is expected to remain in deficit until 2007World copper market is expected to remain in deficit until 2007

Source: CRU and CVRD

69

-290

-559

-250 -210

-100

-800

-600

-400

-200

0

200

400

2002 2003 2004E 2005E 2006E 2007E

1.0

00 t

ons

Surplus (+) / Deficit (-) in 1,000 tons

29

Short term outlook for logistics servicesShort term outlook for logistics services

Purchase in 2003/2004 of 139 locos and 3,600 wagons for

general cargo transportation adds a good deal of capacity

to meet existing demand.

Steel output, agricultural crops and Brazilian exports are

expected to continue to grow at relatively high rates

expanding demand for logistics services.

Good performance of Brazilian agricultural output in 2004

– 8% expected growth – generates a strong demand for

potash.

30

www.cvrd.com.bre-mail: rio@cvrd.com.br

www.cvrd.com.bre-mail: rio@cvrd.com.br

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