Companhia Vale do Rio Doce

Reaping the fruits of the long cycle

Rio de Janeiro, August 25, 2005

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

CVRD launches dividend reinvestment planCVRD launches dividend reinvestment plan

Automatic purchase of CVRD shares with

dividends received by shareholders.

Mechanism designed for retail investors.

Stimulates savings at low costs.

Purchase of small number of shares with

transaction costs equivalent of large operations.

4

AgendaAgenda

Riding high

Market fundamentals strengthen

5

Riding highRiding high

6

CVRD delivered the best quarterly results of its history CVRD delivered the best quarterly results of its history

YoY

Iron ore production 60.7 Mt 17.8%

Iron ore & pellets sales 62.4 Mt 11.8%

Gross revenues US$ 3.7 billion 83.0%

Adjusted EBIT US$ 1.8 billion 112.9%

Adjusted EBITDA US$ 2.0 billion 109.4%

Net earnings US$ 1.6 billion 223.4%

records

7

ª Proforma data for 2002 and 2003. It includes Caemi data to facilitate comparison.

62.459.861.860.555.8

53.055.7

53.151.450.3

11.8%14.7%

5.1%

2.6%5.1% 5.2%

8.6%

14.0%

11.0%12.9%

0

10

20

30

40

50

60

70

1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05

mill

ion t

ons

0%

5%

10%

15%

20%

25%

30%

% y

oy g

row

th

São Luís

Carajás70 Mtpy

CapãoXavier

A strong global demand and investment in capacity expansion allowed CVRD to achieve a new all-time high in iron ore & pellets shipments

A strong global demand and investment in capacity expansion allowed CVRD to achieve a new all-time high in iron ore & pellets shipments

FábricaNova

8

The flip side of the long cycle: cost pressures. However, price pressures on cost are easingThe flip side of the long cycle: cost pressures. However, price pressures on cost are easing

¹ COGS + SG&A² US$ 625 million³ US$ 283 million

41.3%

3.7%

13.5%14.0%

27.5%

33.7%

10.7%

35.2%

0.0%

20.4%

BRL appreciation Volumes Iron ore purchases Depreciation Prices

2T05 vs 2T04² 2T05 vs 1T05³

Contribution to cost increase¹

9

Revenue growth was the main driver of yoyadjusted EBITDA increaseRevenue growth was the main driver of yoyadjusted EBITDA increase

2,033

US$ million

2Q04 2Q05

BRLappreciationvolumes

prices

others

971

173 66(44)

dividends received

57

983 depreciation and

amortization

(173)

(1)(1)

10

5.034

3.9723.7223.289

2.912

1.515 1.587 1.686 1.780 1.825 1.890 2.000 2.1302.431

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05

Thirteen consecutive quarters of adjusted EBITDA growth

Thirteen consecutive quarters of adjusted EBITDA growth

LTM adjusted EBITDAUS$ billion

Others1.1%

Logistics6.4%

Non ferrous minerals

2.2%

Aluminum7.3%

Ferrous minerals83.0%

2Q05 adjusted EBITDAUS$ 2.033 billion

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We believe CVRD cash generation will be more diversified in the futureWe believe CVRD cash generation will be more diversified in the future

Ferrous minerals

65%

Aluminum13%

Non ferrous minerals

10%

Logistics9%

Coal3%

EBITDA composition estimated for 2010EBITDA composition estimated for 2010

12

Starting to benefit from the investment grade ratingStarting to benefit from the investment grade rating

75

100

125

150

175

07-J

ul10

-Jul

13-J

ul16

-Jul

19-J

ul22

-Jul

25-J

ul28

-Jul

31-J

ul03

-Ago

06-A

go09

-Ago

12-A

go15

-Ago

18-A

gosp

reads

in b

asi

s poin

ts

CVRD 2013 CVRD 2034¹

Source: JP Morgan ¹ Spreads between the Brazilian sovereign debt and bonds issued by CVRD with

maturity in 2013 and 2034.

8-Jul => rating announcement

97 bp

172 bp

110 bp151 bp

Moody’s Baa3

DBRS BBB low

13

Green light for VermelhoGreen light for Vermelho

R&DUS$ 71 million

ProjectsUS$ 1,018

millionStay-in-businessUS$ 303 million

1H05 Capex – US$ 1.4 billion

Vermelho nickel projectCapex: US$ 1.2 billionStart up: 4Q08Capacity: 46,000 tpy nickel

2,800 tpy cobaltOpex: US$ 1.67/lb Ni

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The new value creation platform: infrastructure improvementThe new value creation platform: infrastructure improvement

Ponta da MadeiraFourth shiploader and third car dumper.

AimorésFull operation in October.

85 85 MtpyMtpy capacitycapacitymore flexibilitymore flexibility

Meeting the Southern Meeting the Southern System energy needsSystem energy needs

15

The new value creation platform: production capacity expansionThe new value creation platform: production capacity expansion

Potash- Taquari–Vassouras: ramp up to increase the mine to 850,000 tpy.

Alumina- Alunorte stages 4&5: additional capacity of 1.8 Mtpy, ramp up will start in 1Q06.

710,000 t in 2005 and 850,000 t in 2006 710,000 t in 2005 and 850,000 t in 2006

3.8 Mt in 2006 and 4.3 Mt in 2007 3.8 Mt in 2006 and 4.3 Mt in 2007

16

0

100

200

300

400

500

600

Jan-98 Aug-98 Mar-99 Oct-99 May-00 Dec-00 Jul-01 Feb-02 Sep-02 Apr-03 Nov-03 Jun-04 Jan-05 Aug-05

US$

per

ton

0%

5%

10%

15%

20%

25%

30%

%

Alumina spot prices % of LME 3 month aluminum price

CVRD alumina expansion, a low cost project in a high price environment: global alumina shortage is not expected to be corrected in 2006

CVRD alumina expansion, a low cost project in a high price environment: global alumina shortage is not expected to be corrected in 2006

Sources: Metal Bulletin, LME and Bloomberg

17

Iron ore capacity expansion, supported by LT contracts, will allow CVRD production to reach 275 Mt in 2007

Iron ore capacity expansion, supported by LT contracts, will allow CVRD production to reach 275 Mt in 2007

2004 2007E

Carajás

BrucutuFábricaNova

FazendãoFábrica Itabira

30211

2415

11 5 3275

Estimated production increasemillion tons

DepletionRamp up

(10)(14)

1H05 output: 112.1 Mt

18

38.2

35.2

30.131.4

24.9

2001 2002 2003 2004 2005¹

1,5

2

2,5

3

3,5

4

BRL/USD

CVRD ROIC remains high, despite the strong BRL appreciationCVRD ROIC remains high, despite the strong BRL appreciation

ROIC%

¹ LTM ended at June 30, 2005

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Shaping the future – CVRD is starting to develop a global portfolio of mineral exploration projectsShaping the future – CVRD is starting to develop a global portfolio of mineral exploration projects

Bayóvarphosphates²

Australia

Peru

Francevillemanganese²

Belvedere coal²

Gabon

Rio Colorado potash¹

Argentina

Moatize coal³

Mozambique

Piauí – SJ Piauí nickel¹

Carajás – Cristalino copper³

Pará – bauxite¹

Pará – copper¹

Goiás – Agua Branca nickel¹

Minas Gerais – iron ore³

Brazil

legend

1 - conceptual study

2 - pre-feasibility study

3 - feasibility study

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Market fundamentals strengthenMarket fundamentals strengthen

21

40

45

50

55

60

65

2002 2003 2004 2005

index

USA JapanEuroland Global

Leading indicators are signaling a synchronized acceleration of global IP growth, supporting a strong demand for mineral products

Leading indicators are signaling a synchronized acceleration of global IP growth, supporting a strong demand for mineral products

Sources: JPMorgan and ISM

manufacturing PMIs

22

0

10

20

30

40

2000 2001 2002 2003 2004 2005

mill

ion t

ons

0

10

20

30

40

50

60

70

YoY %

Apparent steel consumption

Fixed asset investments (FAI)

Chinese GDP is growing above 9% for the eighth consecutive quarter. FAI high growth anticipates domestic steel consumption to remain stronger forlonger

Chinese GDP is growing above 9% for the eighth consecutive quarter. FAI high growth anticipates domestic steel consumption to remain stronger forlonger

23

-2

-1

0

1

2

3

4

5

Jan-

04Fe

b-04

Mar-0

4Ap

r-04

May-0

4Ju

n-04

Jul-0

4Au

g-04

Sep-

04Oct

-04

Nov-

04Dec

-04

Jan-

05Fe

b-05

Mar-0

5Ap

r-05

May-0

5Ju

n-05

Jul-0

5

mill

ion t

ons

net imports

Chinese steel exports are loosing strength, reflecting the internal consumption increaseChinese steel exports are loosing strength, reflecting the internal consumption increase

net imports = imports - exports

net exports

24

Iron ore spot prices continue to stay above benchmark prices. Lower freight rates are offsetting the effect of iron ore price increases for 2005

Iron ore spot prices continue to stay above benchmark prices. Lower freight rates are offsetting the effect of iron ore price increases for 2005

0

20

40

60

80

100

120

June/04 July/04 Aug/04 Sept/04 Oct/04 Nov/04 Dec/04 Jan/05 Feb/05 March/05 Apr/05 May/05 Jun/05 Jul-05

US

$/to

n

SSF C&F Beilun prices

Hebei spot prices

$52.7 $18.4

$30.5 $26.0

$20.5

Sources: CVRD, Clarksons and mysteel.com

25

0

25

50

75

100

125

150

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E 2007E

mill

ion

DW

T

-5%

-3%

0%

3%

5%

8%

10%

13%

15%

18%

20%

Capesize bulkcarrier fleet YoY % chg

The downturn trend in freight rates is mainly determined by the expansion of the global shipping fleet

The downturn trend in freight rates is mainly determined by the expansion of the global shipping fleet

CAGR 1996 – 2003 = 3.7%CAGR 2003 – 2007E = 10.2%

Source: Clarksons

26

0

5

10

15

20

25

30

Jan-02 Abr-02 Jul-02 Out-02 Jan-03 Abr-03 Jul-03 Out-03 Jan-04 Abr-04 Jul-04 Out-04 Jan-05 Abr-05 Jul-05

mill

ion t

ons

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

Chinese iron ore imports YoY % chg

Chinese iron ore imports are growing at a very fast paceChinese iron ore imports are growing at a very fast pace

Source: CEIC

Jan/Jul 2005 = 150.0 Mt (+29.4%)

27

The long term outlook: steel consumption in China has a long way to grow before peakingThe long term outlook: steel consumption in China has a long way to grow before peaking

Taiwan1993

Korea2003

Japan1973

Germany1974

USA1973

France1973

UK1970

China2004

0

200

400

600

800

1000

1200

0 5 10 15 20 25Per capita income²

000' US$

Kg /

capita¹

¹ per capita steel consumption² PPPSources: IISI, World Bank and CVRD

Steel consumption peaks and incomes

28

Bulk ferroalloy prices - Europe

Source: CRU

The upward trend in Mn alloys prices was reversed due to excess capacity buildup The upward trend in Mn alloys prices was reversed due to excess capacity buildup

300

600

900

1200

1500

1800

2100

2003 2004 2005

US

$/to

n

MCFeMn

HCFeMn

SiFeMn

29

10,382 9,077

8,132 7,398

2001 2002 2003 2004

Global Mn alloys output overreacted to demand stimulus. 60% of the increase between 2001 and 2004 was due to China. CVRD is shutting down temporarily one third of its capacity

Global Mn alloys output overreacted to demand stimulus. 60% of the increase between 2001 and 2004 was due to China. CVRD is shutting down temporarily one third of its capacity

Global Mn alloys productionin ‘000 tonsCAGR 12%

Source: International Manganese Institute

30

Copper prices are tracking higher due to a strong Chinese demand, concentrate bottlenecks and all-time low inventories

Copper prices are tracking higher due to a strong Chinese demand, concentrate bottlenecks and all-time low inventories

Sources: LME, Comex, SFE and Bloomberg

0

200

400

600

800

1000

1200

1400

1600

1999 2000 2001 2002 2003 2004 2005

'00

0 o

f to

ns

1000

1400

1800

2200

2600

3000

3400

3800

US

D/to

n

Total stocks - LME, Comex and SHFE

Copper prices LME-3 month

31

0

500

1000

1500

2000

Jul-99 Apr-00 Jan-01 Oct-01 Jul-02 Apr-03 Jan-04 Oct-04 Jul-05

'00

0 o

f to

ns

1000

1200

1400

1600

1800

2000

US

$ /

to

n

Inventories (LME + Comex + SHFE) Aluminum prices LME 3 month

Global IP growth acceleration and high power costs in the US and Europe may keep aluminum prices at relatively high levels

Global IP growth acceleration and high power costs in the US and Europe may keep aluminum prices at relatively high levels

Sources: LME, Comex and Bloomberg

32

CVRDA global leader

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

Companhia Vale do Rio Doce

33

AppendixAppendixReconciliation of non-GAAP information and comparable GAAP information

(1) adjusted EBITDA (US$ million)

Reconciliation between adjusted EBITDA vs. operating cash flow

1Q05 2Q052Q04

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