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CVRD - The Global Seaborne Iron Ore Industry

Melbourne Mining Club8th June 2006, Melbourne - Australia

MINING LOGISTICS

VRD ENERGY

osé Carlos Martins – Executive Officer – Ferrous Minerals

Disclaimer

is presentation may contain statements that expressnagement’s expectations about future events or results rather thanorical facts. These forward-looking statements involve risks andertainties that could cause actual results to differ materially fromse projected in forward-looking statements, and CVRD cannot giveurance that such statements will prove correct. These risks andertainties include factors: relating to the Brazilian economy andurities markets, which exhibit volatility and can be adverselycted by developments in other countries; relating to the iron oreiness and its dependence on the global steel industry, which isical in nature; and relating to the highly competitive industries inch CVRD operates. For additional information on factors that couldse CVRD’s actual results to differ from expectations reflected in

ward looking statements please see CVRD’s reports filed with the

Natural vocation for mining activities

Mineral Resources presentin both countries

Importance of mining activityfor the country

Australia-Brazil

Iron Ore

Bauxite

Copper

Nickel

Gold

Uranium

Brazil: Mining sector contribution to total exports in 2005: 6.8% Mining* as a percentage of GDP in 2005: 4.3%Population 180 million

Australia: Mining sector contribution to total exports in 2005: 39.5% Mining and primary products as percentage of GDP in 2005: 8.3%Population 25 million

And, in times of World Cup, we must remember another similarity…

the colors of the uniforms!!

Australia-Brazil similarities

Brazil Australia

Coal

Iron Ore and Pellets

Logistics

Bauxite, Alumina and Aluminum

Non Ferrous

and Nickel

Non-Ferrous Minerals:

Copper, Gold and Nickel

Industrial Industrial Minerals:

Kaolin and Potash

CVRD

Manganese and

Ferro-alloys

CVRD’s main activities

Iron ore and pellets

255.2 million tons

Bauxite1.9 million

tons

Manganese Manganese ore

907 thousand tons

Kaolin1.2 million tons

Fe-alloys529 thousand

tons

General cargo26.9 billions of

tkus

Regardless diversification, iron ore is still CVRD’s

Potash 640 thousand

tons

Copper concentrate

398 thousand tons

Alumina 1.8 Alumina 1.8 million tons;

aluminum447 Ktons

Ferrous MineralsVRD Sales in 2005

7.1766.540

5.7615.034

3.9723.7223.289

2.912

1.587 1.686 1.780 1.825 1.890 2.000 2.130 2.431

Sixteen consecutive quarters of adjusted EBITDA growth

LTM* adjusted EBITDAUS$ billion

Ferrous minerals78.8%

on ferrous minerals

4.3%

uminum12.2%

Logistics4.7%

Composition1Q06

CAGR 02-05 = 54.3%

CVRD Cash Generation

A Broad Presence Around the Globe

Angola

MongoliaUlambaata

ar

Chile

Peru

Gabon

RDASIA Shangai

JapanRDASIA TokyoNew York

Rio Doce America-RDA

Los AngelesFontana

Steel Industries - CSI

NorwayRio Doce Manganese Norway - RDMN

FranceRio Doce Manganese Europe - RDME

SwitzerlandCVRD International

Mozambique

Argentina

Venezuela

China

South Africa Australia

Congo

Business

gy

mercial representatives

anese

rnia Steel Industries

IndiaNew Delhi

CVRD COMPETITIVENESS

FLEXIBILITY &EFFICIENCY

PRODUCT QUALITY

SIZE OF RESOURCES

INVESTMENTCAPACITY

THE FOUR PILLARS OF RELIABILITY

D Iron Ore Reserves & Production

D has the largest reserves and resource base in the industry, providing an excellent platform for sustained growth.

5 mines

Northern System

2.1 Bi

13 mines 4.6 Bi

Southern System

6 mines 1.2 BiMBR System

Reserves1

(Tons)

50 Mi

Production2005

73 Mi

111 Mi

8 0 Bi 234 MiTOTAL CVRD2

can produce and deliver high quality iron ore products, ing on value-in-use to customers

ron Ore and Pellets - Quality

67.40

66.00

63.58

63.41

58.41

57.50

58.79

0.033

0.026

0.072

0.071

0.04

0.05

0.042

1.60

5.32

6.34

6.29

5.80

7.45

Iron Content (%) Impurities (%)

Fe Content Phosphorus Content Silica + Alumina Content

Specifications of CVRD and Australian Fines

4.35

66.50 0.040 2.90

D iron ore production grew at 15% per annum from 2001 to With the new investments under implementation, it is cted to reach 300 Mtpy* in 2007.

300.0

264.4

233.8

211.3

188.3

167.8

133.8 001

002

003

004

005

06E

07E

tpy

RD - Iron Ore Production Growth

nthly Chinese Iron Ore Imports

Chinese iron ore imports

Chinese iron ore imports are growing at a very fast pace.Growth in the LTM* as of April ´06: 30% YoY!!

Jan-Apr 06 = 108Mt

owth in steel production is expected to continue in the coming

721 698 722 747 786 780 855 880

152 182 222280 349

475 525

127

´00 ´01 ´02 ´03 ´04 ´05 ´08f ´10f

1,330

848 850904

9691,066

CAGR 05-10

+4.5%

+8.5%

+2.4%

hi % f ld t l d ti 26% 31% 36%

t e d

Steel Production1,405

1,129

orld & China Steel Production

+11.2%

384 360 372 389 400 425 435

92 112148

203270

400460

389

70

´00 ´01 ´02 ´03 ´04 ´05 '08f '10f

454 452

670

484537

603

CAGR 05-10

+5.9%

+1.7%

d

of

d

a

895825

nd is expected to continue its strong growth and the seaborne volume shall be determined by supply conditions.

Iron Ore Seaborne Trade

Ore Seaborne Trade

0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 E E E E E0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 E E E E E

1Q06 = 10.2%

China Economic Growth

Urbanization effects

Urbanization effects

Housing

Infrastructure

Consumer behavior

Housing

Infrastructure

Consumer behavior

China Economic Growth

China Economic growth

eel Industry Global Trends

mic Development and Steel Consumption Growth will continue to be mainly Asian driven

4.0 billion

Population

ion

ion

12 trillion

GDP (US$)

lion

US$)

794 million

Steel Prod (t)

llion

rod (t)

608 million

Steel consumption (t)sumption (t)

?

Potential Growth for steel

Slow growth Fast growth37%

72%

29%

39%

63%

28%

71%

61%

Steel Consumption

bal Economic Expansion

United States

China

´04 ´05 ´06 ´075.3 4.8 4.9 4.7

WORLD TOTAL

Brazil

´04 ´05 ´06 07 4.2 3.5 3.4

3.3

Western Europe

India

Russia

ese and Indian GDP growth are detaching from worldge.

´04 ´05 ´06 ´07 2.1 1.3 2.0

1.9

´04 ´05 ´06 ´07 7.2 6.4 6.0

5.8

´04 ´05 ´06 ´07 10.1 9.9 9.5 9.0

´04 ´05 ´06 ´07 8.1 8.3 7.3

7.0´04 ´05 ´06

´07 4.9 2.3 3.5

3.5

Mt

Ore Seaborne Trade Forecast by on

Asia (Ex. China)

North America

China

´05 ´08f ´10f 670 825 895 +225

TOTAL

´05 ´08 ´10 270 400 460

+190

South America

´05 ´08 ´10 6 7 9

+3

´05 ´08 ´10 21 24 24

+3

´05 ´08 ´10 213 216 220

+7

Western Europe

´05 ´08 ´10 128 132 132

+4

Middle East / Africa´05 ´08 ´10 20 33 36

+16

E. Europe / CIS

´05 ´08 ´10 12 13 14

+2

orne iron ore trade to grow > 5% pa through 2010.

’s Iron Ore sales along 2005 reached 255* Mta. Europe is atural and biggest market but Asia accounts for 53% of our rts.

VRD Sales Breakdown 2005

Middle East3%

South Korea4% USA

2%

Others9%

Japan10%

China21%

Domestic23%

Europe28%

tails of the 2 most advanced projects:

Ceará Steel with Dong Kuk Korea

Capacity: 1.5 Mtpy CVRD Capex: US$ 25 million DR pellets consumption: 2.5 Mtpy Estimated start-up: 2009

CSA Atlantic Steel with Thyssen-Krupp Capacity: 4.4 Mtpy CVRD Capex: US$ 200 million Iron ore & pellets consumption: 7.1 Mtpy

Steel - Joint Ventures

ering iron ore consumption in Brazil by attracting steelmaking ects and taking advantage of the trend towards geographical

reallocation of global steel capacity.

r world-class assets and the efficient logistics infrastructure provide important competitive advantages for CVRD.

Total Capacity Start-upinvestment increaseUS$ million Mtpy

ajás 85 Mtpy 296 15 2006ajás 100 Mtpy 366 15 2007

ucutu 856 24¹ 2006/07bira 75 3 2007endão 100 14² 2007

brica 144 5 2007

on Ore Expansion Pipeline

mportant iron ore projects to reach 300 Mtpy in 7:

Global consumption of pellets to trend sharply higher:s productivity improvements, environmental restrictions on ring, decreasing lump ore supply, relevant growth on new DRI

capacities (mainly in Asia and Middle East).

Total Capacity Start-upinvestment increaseUS$ million Mtpy

biritos (Minas Gerais) 759 7.0 2008

arão VIII1 516 7.0 2008

marco2 1,183 7.6 2008

llets Expansion Pipeline

are developing 3 new pellet plants:

Conclusion

eaborne iron ore demand will continue to show strong owth at a higher rate than steel. The demand vspply curve will remain tight in the next years in spite the undergoing expansions.

ased on its competitive advantages of high quality, rge reserves, operational efficiency & flexibility and rong cash flow, CVRD is well positioned to develop

mportant expansion projects in order to support the owing steel industry.

emand for pellets will grow substantially. CVRD is ry well positioned to increase its leadership in this gment with new plants in Brazil and abroad taking vantage of high quality and low cost natural pellet

Conclusion

VRD believes Brazil, based on CVRD’s iron ore, perior logistics systems and deep water sea ports is e most suitable location for steel production in the estern World. CVRD will support customers initiatives locate capacity to Brazil.

VRD believes the benchmark price system in place for ecades is the best alternative for price fixing between e most interested parts on it: customer and ppliers, without interference of other agents and not lated interests.

VRD, as a diversified mining company, has been vesting heavily also in other steel related products an iron ore to become a one stop shop to the global

l i d t (I O P ll t M O

Conclusion

VRD believes Brazil, based on CVRD’s iron ore, perior logistics systems and deep water sea ports is e most suitable location for steel production in the estern World. CVRD will support customers initiatives locate capacity to Brazil.

VRD believes the benchmark price system in place for ecades is the best alternative for price fixing between e most interested parts on it: customer and ppliers, without interference of other agents and not lated interests.

VRD, as a diversified mining company, has been vesting heavily also in other steel related products an iron ore to become a one stop shop to the global

l i d t (I O P ll t M O