Edgar Filing: VALLEY OF THE RIO DOCE CO

VALLEY OF THE RIO DOCE COMPANY

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

For the month of

August 2004

Valley of the Rio Doce Company

(Translation of Registrant’s name into English)

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

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

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

(Check One) Yes o No þ

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

(Check One) Yes o No þ

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(Check One) Yes o No þ

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

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333-110867 and shall be deemed to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.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
Report on Form 6-K

Table of Contents


INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION (US GAAP)
SIGNATURES

COMPANHIA VALE DO RIO DOCE
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


	Page
Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003		F-3
Consolidated Statements of Income for the three-month periods ended June 30, 2004 and 2003 and March 31, 2004 and for the six-month periods ended June 30, 2004 and 2003		F-5
Consolidated Statements of Cash Flows for the three-month periods ended June 30, 2004 and 2003 and March 31, 2004 and for the six-month periods ended June 30, 2004 and 2003		F-6
Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended June 30, 2004 and 2003 and March 31, 2004 and for the six-month periods ended June 30, 2004 and 2003		F-7
Notes to the Condensed Consolidated Financial Information		F-8

F-1

[ Intentionally Left Blank ]

F-2

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars


	June		December
	30, 2004		31, 2003
Assets	(unaudited)
Current assets
Cash and cash equivalents		1,059		585
Accounts receivable
Related parties		121		115
Unrelated parties		782		703
Loans and advances to related parties		36		56
Inventories		609		505
Deferred income tax		66		91
Others		396		419

		3,069		2,474

Property, plant and equipment, net and mining rights		6,872		6,484
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments		966		1,034
Other assets
Goodwill on acquisition of subsidiaries		419		451
Loans and advances
Related parties		33		40
Unrelated parties		61		68
Prepaid pension cost		70		82
Deferred income tax		369		234
Judicial deposits		419		407
Unrealized gain on derivative instruments		1		5
Others		155		155

		1,527		1,442

TOTAL		12,434		11,434

F-3

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

(Continued)


	June			December
	30, 2004			31, 2003
Liabilities and stockholders’ equity	(unaudited)
Current liabilities
Suppliers		364			482
Payroll and related charges		84			78
Interest attributed to stockholders		142			118
Current portion of long-term debt — unrelated parties		853			1,009
Short-term debt		127			129
Loans from related parties		45			119
Others		365			318

		1,980			2,253

Long-term liabilities
Employees post-retirement benefits		192			198
Long-term debt — unrelated parties		3,488			2,767
Loans from related parties		1			4
Provisions for contingencies (Note 10)		658			635
Unrealized loss on derivative instruments		122			96
Others		281			268

		4,742			3,968

Minority interests		533			329

Stockholders’ equity
Preferred class A stock - 600,000,000 no-par-value shares authorized and 138,575,913 issued		1,176			1,055
Common stock - 300,000,000 no-par-value shares authorized and 249,983,143 issued		2,121			1,902
Treasury stock - 4,183 (2003 - 4,183) preferred and 4,715,170 common shares		(88	)		(88	)
Additional paid-in capital		498			498
Other cumulative comprehensive loss		(4,696	)		(4,375	)
Appropriated retained earnings		2,501			3,035
Unappropriated retained earnings		3,667			2,857

		5,179			4,884

TOTAL		12,434			11,434

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 months
	periods ended									ended June 30
	June			March			June
	30, 2004			31, 2004			30, 2003			2004			2003
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals
Iron ore and pellets		1,262			1,061			761			2,323			1,507
Kaolin		39			39			14			78			30
Manganese and ferroalloys		164			131			89			295			164
Potash		31			23			21			54			42
Copper		24			—			—			24			—
Others		—			—			7			—			16

		1,520			1,254			892			2,774			1,759
Revenues from logistic services		220			191			138			411			253
Aluminum products		289			280			188			569			355
Other products and services		4			6			1			10			5

		2,033			1,731			1,219			3,764			2,372
Value-added tax		(113	)		(75	)		(49	)		(188	)		(92	)

Net operating revenues		1,920			1,656			1,170			3,576			2,280

Operating costs and expenses
Cost of ores and metals sold		(647	)		(643	)		(438	)		(1,290	)		(866	)
Cost of logistic services		(117	)		(115	)		(73	)		(232	)		(143	)
Cost of aluminum products		(143	)		(147	)		(157	)		(290	)		(299	)
Others		(5	)		(3	)		(2	)		(8	)		(3	)

		(912	)		(908	)		(670	)		(1,820	)		(1,311	)
Selling, general and administrative expenses		(106	)		(101	)		(45	)		(207	)		(94	)
Research and development		(27	)		(23	)		(12	)		(50	)		(23	)
Employee profit sharing plan		(17	)		(13	)		(9	)		(30	)		(21	)
Others		(26	)		(28	)		(46	)		(54	)		(80	)

		(1,088	)		(1,073	)		(782	)		(2,161	)		(1,529	)

Operating income		832			583			388			1,415			751

Non-operating income (expenses)
Financial income		19			12			29			31			57
Financial expenses		(106	)		(142	)		(64	)		(248	)		(146	)
Foreign exchange and monetary gains (losses), net		(245	)		(42	)		257			(287	)		307

		(332	)		(172	)		222			(504	)		218

Income before income taxes, equity results and minority interests		500			411			610			911			969

Income taxes
Current		(41	)		(97	)		(135	)		(138	)		(141	)
Deferred		(23	)		32			(25	)		9			(90	)

		(64	)		(65	)		(160	)		(129	)		(231	)

Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		150			86			35			236			129
Minority interests		(82	)		(27	)		(29	)		(109	)		(47	)

Income from continuing operations		504			405			456			909			820

Change in accounting pratice for asset retirement obligations (Note 4)		—			—			—			—			(10	)

Net income for the period		504			405			456			909			810

Basic earnings per Preferred Class A Share		1.31			1.06			1.19			2.37			2.11

Basic earnings per Common Share		1.31			1.06			1.19			2.37			2.11

Weighted average number of shares outstanding (thousands of shares)
Common shares		245,268			245,268			245,268			245,268			245,268
Preferred Class A shares		138,571			138,571			138,571			138,571			138,571

See notes to condensed consolidated financial information.

F-5

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


	Three-month									Six months
	periods ended									ended June 30
	June			March			June
	30, 2004			31, 2004			30, 2003			2004			2003
Cash flows from operating activities:
Net income		504			405			456			909			810
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		79			99			54			178			97
Dividends received		60			61			36			121			72
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(150	)		(86	)		(35	)		(236	)		(129	)
Deferred income taxes		23			(32	)		25			(9	)		90
Provisions for other contingencies		—			—			—			—			9
Impairment of property, plant and equipment		—			—			12			—			12
Change in accounting pratice for asset retirement obligations (Note 4)		—			—			—			—			10
Pension plan		3			3			2			6			5
Foreign exchange and monetary losses (gains)		291			45			(257	)		336			(399	)
Net unrealized derivative losses (gains)		(22	)		54			(1	)		32			2
Minority interests		82			27			29			109			47
Others		51			(35	)		(3	)		16			3
Decrease (increase) in assets:
Accounts receivable		(132	)		(23	)		65			(155	)		129
Inventories		(67	)		(15	)		(27	)		(82	)		(3	)
Others		67			(25	)		23			42			22
Increase (decrease) in liabilities:
Suppliers		(59	)		(25	)		28			(84	)		(65	)
Payroll and related charges		(18	)		(3	)		13			(21	)		7
Others		(12	)		147			39			135			96

Net cash provided by operating activities		700			597			459			1,297			815

Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions		(6	)		—			(54	)		(6	)		(77	)
Repayments		5			41			—			46			29
Others		4			15			1			19			17
Guarantees and deposits		(18	)		(24	)		(152	)		(42	)		(164	)
Additions to investments		(6	)		(9	)		(61	)		(15	)		(61	)
Additions to property, plant and equipment		(416	)		(381	)		(305	)		(797	)		(503	)
Proceeds from disposal of investments		—			—			37			—			37

Net cash used in investing activities		(437	)		(358	)		(534	)		(795	)		(722	)

Cash flows from financing activities:
Short-term debt, net issuances (repayments)		(44	)		44			60			—			(33	)
Loans
Related parties
Additions		3			3			—			6			—
Repayments		(1	)		(6	)		(6	)		(7	)		(22	)
Issuances of long-term debt
Related parties		—			—			—			—			2
Others		227			665			40			892			217
Repayments of long-term debt
Related parties		—			—			(4	)		—			(4	)
Others		(201	)		(470	)		(175	)		(671	)		(276	)
Interest attributed to stockholders		(269	)		—			(215	)		(269	)		(215	)

Net cash provided by (used in) financing activities		(285	)		236			(300	)		(49	)		(331	)

Increase (decrease) in cash and cash equivalents		(22	)		475			(375	)		453			(238	)
Effect of exchange rate changes on cash and cash equivalents		(2	)		(3	)		57			(5	)		113
Initial cash in new consolidated subsidiary		—			26			—			26
Cash and cash equivalents, beginning of period		1,083			585			1,284			585			1,091

Cash and cash equivalents, end of period		1,059			1,083			966			1,059			966

Cash paid during the period for:
Interest on short-term debt		—			(2	)		(1	)		(2	)		(7	)
Interest on long-term debt		(51	)		(80	)		(33	)		(131	)		(86	)
Income tax		—			—			(27	)		—			(33	)
Non-cash transactions
Conversion of loans receivable to investments		—			—			76			—			87

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 months ended June 30
	June 30,			March 31,			June 30,
	2004			2004			2003			2004			2003
Preferred class A stock (including one special share)
Beginning of the period		1,055			1,055			904			1,055			904
Transfer from appropriated retained earnings		121			—			151			121			151

End of the period		1,176			1,055			1,055			1,176			1,055

Common stock
Beginning of the period		1,902			1,902			1,630			1,902			1,630
Transfer from appropriated retained earnings		219			—			272			219			272

End of the period		2,121			1,902			1,902			2,121			1,902

Treasury stock
Beginning and end of the period		(88	)		(88	)		(88	)		(88	)		(88	)

Additional paid-in capital
Beginning and end of the period		498			498			498			498			498

Other cumulative comprehensive loss
Cumulative translation adjustments
Beginning of the period		(4,480	)		(4,449	)		(4,999	)		(4,449	)		(5,185	)
Change in the period		(277	)		(31	)		593			(308	)		779

End of the period		(4,757	)		(4,480	)		(4,406	)		(4,757	)		(4,406	)

Unrealized gain on available-for-sale securities
Beginning of the period		77			74			13			74			—
Change in the period		(16	)		3			5			(13	)		18

End of the period		61			77			18			61			18

Adjustments relating to investments in affiliates
Beginning and end of the period		—			—			10			—			10

Total other cumulative comprehensive loss		(4,696	)		(4,403	)		(4,378	)		(4,696	)		(4,378	)

Appropriated retained earnings
Beginning of the period		3,016			3,035			2,351			3,035			2,230
Transfer (to) from retained earnings		(175	)		(19	)		364			(194	)		485
Transfer to capital stock		(340	)		—			(423	)		(340	)		(423	)

End of the period		2,501			3,016			2,292			2,501			2,292

Retained earnings
Beginning of the period		3,119			2,857			3,321			2,857			3,288
Net income		504			405			456			909			810
Interest attributed to stockholders
Preferred class A stock		(48	)		(58	)		(48	)		(106	)		(120	)
Common stock		(83	)		(104	)		(84	)		(187	)		(212	)
Appropriation (to) from reserves		175			19			(364	)		194			(485	)

End of the period		3,667			3,119			3,281			3,667			3,281

Total stockholders’ equity		5,179			5,099			4,562			5,179			4,562

Comprehensive income is comprised as follows:
Net income for the period		504			405			456			909			810
Cumulative translation adjustments		(277	)		(31	)		593			(308	)		779
Unrealized gain (loss) on available-for-sale securities		(16	)		3			5			(13	)		18

Total comprehensive income		211			377			1,054			588			1,607

Shares
Preferred class A stock (including one special share)		138,575,913			138,575,913			138,575,913			138,575,913			138,575,913

Common stock		249,983,143			249,983,143			249,983,143			249,983,143			249,983,143

Treasury stock (1)
Beginning of the period		(4,719,353	)		(4,719,353	)		(4,719,635	)		(4,719,353	)		(4,719,651	)
Sales		—			—			230			—			246

End of the period		(4,719,353	)		(4,719,353	)		(4,719,405	)		(4,719,353	)		(4,719,405	)

		383,839,703			383,839,703			383,839,651			383,839,703			383,839,651

Interest attributed to stockholders (per share)
Preferred class A stock (including one special share)		0.78			0.42			0.52			0.78			0.52
Common stock		0.78			0.42			0.52			0.78			0.52

(1)

As of June 30, 2004, 4,715,170 common shares and 4,183 preferred shares were held in treasury in the amount of $ 88. The 4,715,170 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 operations and those of our joint ventures and affiliates are described in Note 8.

		The main operating subsidiaries we consolidate are as follows:


			Head office	Principal
Subsidiary	% ownership		location	activity
Alumina do Norte do Brasil S.A. — Alunorte		57	Brazil	Aluminum
Alumínio Brasileiro S.A. — Albras (8)		51	Brazil	Aluminum
CADAM S.A. (2) (4)		37	Brazil	Kaolin
CELMAR S.A. — Indústria de Celulose e Papel (3)		100	Brazil	Forestry
CVRD Overseas Ltd.		100	Cayman Island	Trading
Ferrovia Centro-Atlântica S.A. (4)		100	Brazil	Logistics
Ferteco Mineração S.A. — FERTECO (3)		100	Brazil	Iron ore and Pellets
Itabira Rio Doce Company Ltd. — ITACO		100	Cayman Island	Trading
Mineração Serra do Sossego S.A. (1) (5)		100	Brazil	Copper
Minerações Brasileiras Reunidas S.A. — MBR (4) (7)		56	Brazil	Iron ore
Navegação Vale do Rio Doce S.A. — DOCENAVE		100	Brazil	Shipping
Pará Pigmentos S.A.		76	Brazil	Kaolin
Rio Doce International Finance Ltd. — RDIF		100	Bahamas	International finance
Rio Doce Manganèse Europe — RDME		100	France	Ferroalloys
Rio Doce Manganese Norway — RDMN		100	Norway	Ferroalloys
Salobo Metais S.A. (1)		100	Brazil	Copper
Rio Doce Manganês S.A. (6)		100	Brazil	Manganese and Ferroalloys
Urucum Mineração S.A.		100	Brazil	Iron ore, Ferroalloys and Manganese
Vale do Rio Doce Alumínio S.A. — ALUVALE (5)		100	Brazil	Aluminum

	(1)		Development stage companies

	(2)		Through Caemi Mineração e Metalurgia S.A.

	(3)		Merged with CVRD on August 29, 2003

	(4)		Consolidated as from September 2003

	(5)		Merged with CVRD on December 30, 2003

	(6)		Formerly Sibra-Eletrosiderúrgica Brasileira S.A.

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

	(8)		Consolidated as from January 1, 2004 (See Note 4)

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. 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 (see Note 8).

		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

F-8

		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 electrical energy projects, are proportionately consolidated.

3		Summary of significant accounting policies

		Our condensed consolidated interim financial information for the three-month periods ended June 30, 2004 and 2003 and March 31, 2004 and for the six month periods ended June 30, 2004 and 2003 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 month period ended June 30, 2004 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2004.

		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, 2004, March 31, 2004 and December 31, 2003 were R$ 3,1075: US$ 1,00, R$ 2,9086: US$ 1,00 and R$ 2,8892: US$ 1,00, respectively.

4		Change in accounting practices

		In June 2001, the FASB issued SFAS 143 — “Accounting for Asset Retirement Obligations”. We adopted SFAS 143 as from January 1, 2003, and as a consequence an additional $26 for asset retirement obligations was recorded as “Others — long-term liabilities”, a net increase of $11 in mine development costs was registered within “Property, plant and equipment” and a resulting charge of $10 was registered as “Change in Accounting Practice for Asset Retirement Obligations” on the Statement of Income, net of income tax ($15 gross of deferred income tax). Over time the liabilities will be accreted for the change in their present value and initial capitalized costs will be amortized over the useful lives of the related assets.

		In December 2003, the FASB issued FIN 46R – “Consolidation of Variable Interest Entities, (revised December 2003)”. The primary objectives of FIN 46R are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (variable interest entities or VIEs) and how to determine when and which business enterprise should consolidate the VIE (the primary beneficiary). This new model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, FIN 46R requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures regarding the nature, purpose, size and activities of the VIE and the enterprise’s maximum exposure to loss as a result of its involvement with the VIE. Alumínio Brasileiro S.A – ALBRAS was identified as a VIE and was consolidated as from January 1, 2004.

F-9

5		Recently-issued accounting pronouncements

		Emerging Issue Task Force No. 04-03 (EITF 04-03), Mining assets: Impairment and Business Combinations and No. 03-01 (EITF 03-01), The Meaning of Other – Than – Temporary Impairment and its Application to Certain Investments were issued in March, 2004.

		The Company does not expect any significant impacts on its financial statements arising from these new pronouncements.

6		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 consolidated financial statements is reconciled to the statutory rates as follows:


	Three-month									Six months
	periods ended									ended June 30
	June 30,			March 31,			June 30,
	2004			2004			2003			2004			2003
Income before income taxes, equity results and minority interests		500			411			610			911			969

Federal income tax and social contribution expense at statutory enacted rates		(171	)		(139	)		(207	)		(310	)		(329	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		44			55			59			99			122
Exempt foreign income (expenses)		21			14			(26	)		35			(42	)
Difference on tax basis of equity investees		(16	)		(14	)		—			(30	)		—
Tax incentives		3			9			40			12			40
Valuation allowance reversal		52			—			—			52			9
Other non-taxable gains (losses)		3			10			(26	)		13			(31	)

Federal income tax and social contribution expense in consolidated statements of income		(64	)		(65	)		(160	)		(129	)		(231	)

We have certain tax incentives relative to our iron ore and manganese operations in Carajás and relative to alumina 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. Both incentives relative to alumina expire in 2010. 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.

F-10

Inventories


	June 30,		December 31,
	2004		2003
Finished products
Iron ore and pellets		147		146
Manganese and ferroalloys		92		78
Alumina		25		20
Aluminum		34		—
Copper		10		—
Kaolin		18		16
Others		7		8
Spare parts and maintenance supplies		276		237

		609		505

F-11

Investments in affiliated companies and joint ventures


	June 30, 2004									Investments				Equity Adjustments																	Dividends received
														Three Months							periods				Six months						Three Months					periods			Six months					Quoted
																				ended				ended June 30											ended			ended June 30					market
							Net income
	Participation in				Net		(loss) for			June 30,		December		June			March				June										June		March			June								June 30,
	capital (%)				equity		the period			2004		31, 2003		30, 2004			31, 2004				30, 2003				2004			2003			30, 2004		31, 2004			30, 2003			2004		2003			2004
	voting		total
Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		22.99		11.46		436		297			50		31		16			18				10				34			20			—		13			—			13		—			216
Companhia Siderúrgica de Tubarão — CST (1)		26.93		28.79		503		280			141		86		61			17				6				78			12			—		—			—			—		5			406
California Steel Industries Inc. — CSI		50.00		50.00		232		28			116		103		15			(1	)			—				14			3			2		—			3			2		3			—
SIDERAR (costs $15) — available for sale investments		4.85		4.85		—		—			72		89		—			—				—				—			—			—		—			—			—		—			72

											379		309		92			34				16				126			35			2		13			3			15		8			694
Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		380		62			152		168		14			11				6				25			10			20		21			—			41		5			—
Valesul Alumínio S.A. — VALESUL		54.51		54.51		80		13			43		49		4			3				1				7			5			7		2			3			9		3			—
Alumínio Brasileiro S.A. — ALBRAS (5)		—		—		—		—			—		112		—			—				40				—			79			—		—			—			—		—			—
Alumínio Brasileiro S.A. — ALBRAS — change in provision for losses (5)											—		—		—			—				—				—			1			—		—			—			—		—			—

											195		329		18			14				47				32			95			27		23			3			50		8			—
Ferrous
Caemi Mineração e Metalurgia S.A. (3)		—		—		—		—			—		—		—			—				7				—			12			—		—			—			—		—			—
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		51.11		51.00		41		14			21		18		5			2				(1	)			7			—			—		—			—			—		—			—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		51.00		50.89		37		8			19		17		3			1				2				4			3			—		—			—			—		2			—
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		4		4			2		1		1			1				—				2			—			—		—			—			—		—			—
Companhia Coreano-Brasileira de Pelotização — KOBRASCO - change in provision for losses											—		—		—			—				6				—			9			—		—			—			—		—			—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		51.00		50.90		26		6			13		11		3			1				1				4			1			—		—			1			—		1			—
Gulf Industrial Investment Company — GIIC		50.00		50.00		77		11			39		40		2			4				4				6			6			1		6			—			7		5			—
SAMARCO Mineração S.A. — SAMARCO (4)		50.00		50.00		331		90			200		221		20			25				23				45			42			30		19			25			49		39			—
Minas da Serra Geral S.A. — MSG		50.00		50.00		33		(3	)		16		15		(2	)		—				1				(2	)		2			—		—			1			—		1			—
Others		—		—		—		—			20		21		—			(1	)			(1	)			(1	)		2			—		—			1			—		1			—

											330		344		32			33				42				65			77			31		25			28			56		49			—
Logistics
Ferroban — Ferrovias Bandeirantes S.A. — change in provision for losses		—		—		—		—			1		1		—			—				—				—			—			—		—			—			—		—			—
Ferrovia Centro-Atlântica S.A. — FCA — change in provision for losses (3)		—		—		—		—			—		—		—			—				(73	)			—			(84	)		—		—			—			—		—			—
MRS Logística S.A		—		—		—		—			49		39		8			6				—				14			—			—		—			—			—		—			—
MRS Logística S.A. — change in provision for losses		—		—		—		—			—		—		—			—				3				—			4			—		—			—			—		—			—
Others, mainly investments sold in 2003		—		—		—		—			6		4		—			—				(2	)			—			(3	)		—		—			—			—		—			—

											56		44		8			6				(72	)			14			(83	)		—		—			—			—		—			—
Other affiliates and joint ventures
Fertilizantes Fosfatados S.A. — FOSFERTIL (2)		—		—		—		—			—		—		—			—				2				—			5			—		—			2			—		7			—
Others		—		—		—		—			6		8		—			(1	)			—				(1	)		—			—		—			—			—		—			—

											6		8		—			(1	)			2				(1	)		5			—		—			2			—		7			—

Total											966		1,034		150			86				35				236			129			60		61			36			121		72			694

(1)		During the quarter ended June 30, 2003 CVRD acquired an additional 4.42% of the voting shares and 5.64% of the preferred shares, representing 5.17% of CST’s total capital for $ 60;

(2)		Investment sold in 2003;

(3)		Consolidated as from September, 2003, after acquisition of control;

(4)		Investment includes goodwill of $35 in 2004 and $ 37 in 2003;

(5)		Albras was consolidated as from January 1, 2004.

F-12

Pension plans


										Six months
							Quarter			ended June 30
	June 30,			March 31,			June 30,
	2004			2004			2003			2004			2003
Service cost — benefits earned during the period		—			1			1			1			1
Interest cost on projected benefit obligation		36			38			36			74			67
Actual return on assets		(32	)		(44	)		(87	)		(76	)		(118	)
Amortization of initial transitory obligation		2			2			2			4			4
Net deferral		(3	)		6			50			3			51

Net periodic pension cost		3			3			2			6			5

		Employer contributions

		We previously disclosed in our consolidated financial statements for the year ended December 31, 2003, that we expected to contribute $14 to our pension plan in 2004. As of June 30, 2004, $7 of contributions have been made. We do not expect any change in our previous estimate.

10		Commitments and contingencies

(a)		At June 30, 2004, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of $8, of which $7 is denominated in United States dollars and the remaining $1 in local currency, 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 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)		CVRD and its 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-13

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


	June 30, 2004				December 31, 2003
	Provision for		Judicial		Provision for		Judicial
	contingencies		deposits		contingencies		deposits
Labor claims		184		76		177		66
Civil claims		135		56		167		54
Tax — related actions		334		283		285		279
Others		5		4		6		8

		658		419		635		407

		Labor — related actions principally comprise employee claims for (i) payment of time spent traveling 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 revenue taxes, VAT and of the tax on financial movements — CPMF.

		We continue to vigorously pursue our interests in all the above actions but recognize that probably we 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 delivered to the prevailing party. An increase of $4 for tax deposits during 2004 refers mainly to an action in which we challenged the annual limitation on use to our tax loss carry forwards.

		Contingencies settled in the three-month period ended June 30, 2004, and 2003 and March 31, 2004 aggregated $14, $32 and $23, respectively, and additional provisions aggregated $39, $18 and $13, respectively.

		In addition to the contingencies for which we have made provisions we have possible losses in connection with tax contingencies totaling $293 and $335 at June 30, 2004 and 2003, respectively, for which no provision is maintained.

(c)		We are defendants in two actions seeking substantial compensatory damages brought by the Municipality of Itabira, State of Minas Gerais, which we believe are without merit. Due to the remote likelihood that any loss will arise there from no provision has been made in the financial statements with respect to these two actions.

(d)		We are committed under a take-or-pay agreement to purchase approximately 43,970 thousand metric tons of bauxite from Mineração Rio do Norte S.A. - MRN at a formula price, calculated based on the current London Metal Exchange (LME) quotation for aluminum. Based on a market price of US$ 19.43 per metric ton as of June 30, 2004, it represents the following total commitment:

F-14


2004 as from July			27,550
2005			55,100
2006			55,100
2007			55,100
2008			55,100
2009 and thereafter			606,350

			854,300

(e)		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 $ 205 million, which represents half of the $ 410 million in expenditures estimated as necessary to complete geological exploration and mineral resource development projects in the region over a period of five years, which had already been extended for an additional period of two years and on April 28, 2004 was extended again for another 5 years. 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, 2004, the remaining contributions towards exploration and development activities totaled $ 68 million. In the event that either of us wishes to conduct further exploration and development after having spent such $ 205 million, 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 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.

(f)		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 26, 2004 as a result of exploiting our mineral resources we declared a distribution on these “debentures” in the amount of $ 2, payable as from April 1, 2004.

(g)		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:

F-15


Balance as of January 01, 2004	81
Accretion expense	2
Cumulative translation adjustment	(1	)

Balance as of March 31, 2004	82

Accretion expense	4
Cumulative translation adjustment	(4	)

Balance as of June 30, 2004	82

Balance as of January 01, 2004	81
Accretion expense	6
Cumulative translation adjustment	(5	)

Balance as of June 30, 2004	82

11		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.

		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, 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 businesses.

Information presented to top management with respect to the performance of each segment is generally derived directly from the accounting records maintained in accordance with accounting practices generally accepted in Brazil together with certain minor inter-segment allocations.

F-16

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, 2004
										Holdings
				Non						(1)
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
Gross revenues — Export		1,875			81			22			398			—			(923	)		1,453
Gross revenues — Domestic		364			35			219			47			—			(85	)		580
Cost and expenses		(1,588	)		(89	)		(142	)		(308	)		—			1,008			(1,119	)
Depreciation, depletion and amortization		(57	)		(6	)		(8	)		(8	)		—			—			(79	)
Pension plan		(3	)		—			—			—			—			—			(3	)

Operating income (loss)		591			21			91			129			—			—			832
Financial income		63			—			2			20			1			(67	)		19
Financial expenses		(139	)		(2	)		(5	)		(26	)		(1	)		67			(106	)
Foreign exchange and monetary gains (losses), net		(202	)		(2	)		(1	)		(42	)		2			—			(245	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		32			—			8			18			92			—			150
Income taxes		(87	)		(4	)		(1	)		31			(3	)		—			(64	)
Minority interests		(31	)		1			—			(52	)		—			—			(82	)

Net income		227			14			94			78			91			—			504

Sales classified by geographic destination:
Export market
America, except United States		172			—			18			41			—			(98	)		133
United States		121			—			—			7			—			(70	)		58
Europe		857			68			4			212			—			(435	)		706
Middle East/Africa/Oceania		87			1			—			—			—			(19	)		69
Japan		187			4			—			105			—			(99	)		197
China		300			5			—			33			—			(135	)		203
Asia, other than Japan and China		151			3			—			—			—			(67	)		87

		1,875			81			22			398			—			(923	)		1,453
Domestic market		364			35			219			47			—			(85	)		580

		2,239			116			241			445			—			(1,008	)		2,033

Assets:
Property, plant and equipment, net		4,542			1,020			483			826			1			—			6,872
Additions to Property, plant and equipment		165			62			153			35			1			—			416
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		330			—			56			195			385			—			966

Capital employed		4,307			679			449			816			26			—			6,277

[Additional columns below]

[Continued from above table, first column(s) repeated]


	As of and for the three-month periods ended
	March 31, 2004
										Holdings
				Non						(1)
	Ferrous			ferrous			Logistics			Aluminum			Others		Eliminations			Consolidated
Gross revenues — Export		1,562			34			19			363			—		(735	)		1,243
Gross revenues — Domestic		287			28			184			59			—		(70	)		488
Cost and expenses		(1,366	)		(53	)		(128	)		(304	)		—		805			(1,046	)
Depreciation, depletion and amortization		(78	)		(6	)		(7	)		(8	)		—		—			(99	)
Pension plan		(3	)		—			—			—			—		—			(3	)

Operating income (loss)		402			3			68			110			—		—			583
Financial income		44			—			4			(17	)		1		(20	)		12
Financial expenses		(116	)		(1	)		(4	)		(41	)		—		20			(142	)
Foreign exchange and monetary gains (losses), net		(32	)		—			(5	)		(6	)		1		—			(42	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		33			—			6			14			33		—			86
Income taxes		(54	)		—			(2	)		(9	)		—		—			(65	)
Minority interests		(14	)		(1	)		—			(12	)		—		—			(27	)

Net income		263			1			67			39			35		—			405

Sales classified by geographic destination:
Export market
America, except United States		158			—			15			70			—		(103	)		140
United States		107			—			—			38			—		(66	)		79
Europe		659			22			4			149			—		(312	)		522
Middle East/Africa/Oceania		89			—			—			—			—		(26	)		63
Japan		150			8			—			80			—		(67	)		171
China		238			4			—			26			—		(97	)		171
Asia, other than Japan and China		161			—			—			—			—		(64	)		97

		1,562			34			19			363			—		(735	)		1,243
Domestic market		287			28			184			59			—		(70	)		488

		1,849			62			203			422			—		(805	)		1,731

Assets:
Property, plant and equipment, net		4,646			1,060			455			854			1		—			7,016
Additions to Property, plant and equipment		156			71			132			22			—		—			381
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		353			—			51			207			343		—			954

Capital employed		4,298			245			404			819			28		—			5,794

[Additional columns below]

[Continued from above table, first column(s) repeated]


	As of and for the three-month periods ended
	June 30, 2003
										Holdings
				Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
Gross revenues — Export		1,115			18			18			158			—			(495	)		814
Gross revenues — Domestic		279			22			108			41			—			(45	)		405
Cost and expenses		(1,039	)		(40	)		(68	)		(175	)		7			540			(775	)
Depreciation, depletion and amortization		(45	)		(2	)		(3	)		(4	)		—			—			(54	)
Pension plan		(2	)		—			—			—			—			—			(2	)

Operating income (loss)		308			(2	)		55			20			7			—			388
Financial income		51			(1	)		5			3			2			(31	)		29
Financial expenses		(85	)		—			(2	)		(7	)		(1	)		31			(64	)
Foreign exchange and monetary gains (losses), net		185			14			(12	)		72			(2	)		—			257
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		42			—			(72	)		47			18			—			35
Income taxes		(139	)		1			1			(24	)		1			—			(160	)
Minority interests		(1	)		(3	)		—			(25	)		—			—			(29	)

Net income		361			9			(25	)		86			25			—			456

Sales classified by geographic destination:
Export market
America, except United States		121			—			4			36			—			(84	)		77
United States		70			2			—			17			—			(47	)		42
Europe		491			14			10			45			—			(185	)		375
Middle East/Africa/Oceania		68			—			1			—			—			(14	)		55
Japan		131			2			2			47			—			(60	)		122
China		148			—			—			13			—			(68	)		93
Asia, other than Japan and China		86			—			1			—			—			(37	)		50

		1,115			18			18			158			—			(495	)		814
Domestic market		279			22			108			41			—			(45	)		405

		1,394			40			126			199			—			(540	)		1,219

Assets:
Property, plant and equipment, net		3,103			634			212			522			31			—			4,502
Additions to Property, plant and equipment		177			94			17			20			—			—			308
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		459			—			2			305			306			—			1,072

Capital employed		2,875			158			245			486			29			—			3,793

(1)

Albras was consolidated as from January 1, 2004. Generating contribution to net revenues and operating income of $61 and $74, $46 and $54 in the three-month periods ended June 30, 2004 and March 31, 2004, respectively.

F-17

Operating income by product — after eliminations (Unaudited)


	For the three-month periods ended
	June 30, 2004


	Revenues						Value											Impairment/ Gain on sale of property,		Depreciation,
							added			Net		Cost and						plant and		depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			equipment		amortization			income
Ferrous
Iron ore		732		211		943		(38	)		905		(394	)		511			—		(55	)		456
Pellets		251		68		319		(11	)		308		(207	)		101			—		—			101
Manganese		8		3		11		(2	)		9		(7	)		2			—		—			2
Ferroalloys		103		50		153		(13	)		140		(72	)		68			—		(3	)		65

		1,094		332		1,426		(64	)		1,362		(680	)		682			—		(58	)		624
Non ferrous
Gold		—		—		—		—			—		—			—			—		—			—
Potash		—		31		31		(6	)		25		(13	)		12			—		(1	)		11
Kaolin		34		5		39		(1	)		38		(21	)		17			—		(4	)		13
Copper		24		—		24		—			24		(4	)		20			—		(2	)		18

		58		36		94		(7	)		87		(38	)		49			—		(7	)		42
Aluminum
Alumina		83		—		83		(4	)		79		(66	)		13			—		(5	)		8
Aluminum		197		1		198		(1	)		197		(67	)		130			—		(3	)		127
Bauxite		8		—		8		—			8		(8	)		—			—		—			—

		288		1		289		(5	)		284		(141	)		143			—		(8	)		135
Logistics
Railroads		—		153		153		(25	)		128		(81	)		47			—		(4	)		43
Ports		—		45		45		(3	)		42		(21	)		21			—		(1	)		20
Ships		10		12		22		(7	)		15		(25	)		(10	)		—		(1	)		(11	)

		10		210		220		(35	)		185		(127	)		58			—		(6	)		52
Others		3		1		4		(2	)		2		(23	)		(21	)		—		—			(21	)

		1,453		580		2,033		(113	)		1,920		(1,009	)		911			—		(79	)		832

[Additional columns below]

[Continued from above table, first column(s) repeated]


	For the three-months ended
	March 31, 2004


	Revenues						Value											Impairment/ Gain on sale of property,		Depreciation,
							added			Net		Cost and						plant and		depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			equipment		amortization			income
Ferrous
Iron ore		652		174		826		(23	)		803		(385	)		418			—		(70	)		348
Pellets		183		52		235		(8	)		227		(172	)		55			—		(3	)		52
Manganese		6		3		9		(1	)		8		(7	)		1			—		—			1
Ferroalloys		91		31		122		(8	)		114		(86	)		28			—		(4	)		24

		932		260		1,192		(40	)		1,152		(650	)		502			—		(77	)		425
Non ferrous
Gold		—		—		—		—			—		—			—			—		—			—
Potash		—		23		23		(3	)		20		(9	)		11			—		(2	)		9
Kaolin		34		5		39		(2	)		37		(22	)		15			—		(3	)		12
Copper		—		—		—		—			—		—			—			—		—			—

		34		28		62		(5	)		57		(31	)		26			—		(5	)		21
Aluminum
Alumina		98		6		104		(5	)		99		(90	)		9			—		(4	)		5
Aluminum		150		11		161		—			161		(54	)		107			—		(4	)		103
Bauxite		15		—		15		—			15		(13	)		2			—		—			2

		263		17		280		(5	)		275		(157	)		118			—		(8	)		110
Logistics
Railroads		—		133		133		(19	)		114		(66	)		48			—		(8	)		40
Ports		—		38		38		(3	)		35		(23	)		12			—		(1	)		11
Ships		11		9		20		(3	)		17		(27	)		(10	)		—		—			(10	)

		11		180		191		(25	)		166		(116	)		50			—		(9	)		41
Others		3		3		6		—			6		(20	)		(14	)		—		—			(14	)

		1,243		488		1,731		(75	)		1,656		(974	)		682			—		(99	)		583

[Additional columns below]

[Continued from above table, first column(s) repeated]


	For the three-months ended
	June 30, 2003


	Revenues						Value										Impairment/ Gain on sale of property,			Depreciation,
							added			Net		Cost and					plant and			depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net		equipment			amortization			income
Ferrous
Iron ore		458		135		593		(18	)		575		(283	)		292		—			(20	)		272
Pellets		118		50		168		(7	)		161		(134	)		27		(12	)		(4	)		11
Manganese		14		2		16		(1	)		15		(2	)		13		—			(1	)		12
Ferroalloys		46		27		73		(5	)		68		(46	)		22		—			(2	)		20

		636		214		850		(31	)		819		(465	)		354		(12	)		(27	)		315
Non ferrous
Gold		7		—		7		—			7		(7	)		—		—			(2	)		(2	)
Potash		—		21		21		(2	)		19		(10	)		9		—			(1	)		8
Kaolin		13		1		14		(1	)		13		(9	)		4		—			—			4
Copper		—		—		—		—			—		—			—		—			—			—

		20		22		42		(3	)		39		(26	)		13		—			(3	)		10
Aluminum
Alumina		65		39		104		(2	)		102		(86	)		16		—			(4	)		12
Aluminum		74		4		78		—			78		(68	)		10		—			—			10
Bauxite		6		—		6		—			6		(6	)		—		—			—			—

		145		43		188		(2	)		186		(160	)		26		—			(4	)		22
Logistics
Railroads		—		79		79		(8	)		71		(19	)		52		—			(16	)		36
Ports		—		38		38		(5	)		33		(27	)		6		—			(2	)		4
Ships		13		8		21		—			21		(21	)		—		—			—			—

		13		125		138		(13	)		125		(67	)		58		—			(18	)		40
Others		—		1		1		—			1		2			3		—			(2	)		1

		814		405		1,219		(49	)		1,170		(716	)		454		(12	)		(54	)		388

F-18

Results by segment — before eliminations (Unaudited)


	Six-month periods ended June 30
	2004
										Holdings
				Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
Gross revenues — Export		3,437			115			41			761			—			(1,658	)		2,696
Gross revenues — Domestic		651			63			403			106			—			(155	)		1,068
Cost and expenses		(2,954	)		(142	)		(270	)		(612	)		—			1,813			(2,165	)
Depreciation, depletion and amortization		(135	)		(12	)		(15	)		(16	)		—			—			(178	)
Pension plan		(6	)		—			—			—			—			—			(6	)

Operating (loss) income		993			24			159			239			—			—			1,415
Financial income		107			—			6			3			2			(87	)		31
Financial expenses		(255	)		(3	)		(9	)		(67	)		(1	)		87			(248	)
Foreign exchange and monetary gains (losses), net		(234	)		(2	)		(6	)		(48	)		3			—			(287	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		65			—			14			32			125			—			236
Income taxes		(141	)		(4	)		(3	)		22			(3	)		—			(129	)
Minority interests		(45	)		—			—			(64	)		—			—			(109	)

Income from continuing operations		490			15			161			117			126			—			909
Change in accounting pratice for asset retirement obligations (note 4)		—			—			—			—			—			—			—

Net income		490			15			161			117			126			—			909

Sales classified by geographic destination:
Export market
America, except United States		330			—			33			111			—			(201	)		273
United States		228			—			—			45			—			(136	)		137
Europe		1,516			90			8			361			—			(747	)		1,228
Middle East/Africa/Oceania		176			1			—			—			—			(45	)		132
Japan		337			12			—			185			—			(166	)		368
China		538			9			—			59			—			(232	)		374
Asia, other than Japan and China		312			3			—			—			—			(131	)		184

		3,437			115			41			761			—			(1,658	)		2,696
Domestic market		651			63			403			106			—			(155	)		1,068

		4,088			178			444			867			—			(1,813	)		3,764

Assets:
Property, plant and equipment, net		4,542			1,020			483			826			1			—			6,872
Additions to Property, plant and equipment		322			133			285			57			—			—			797
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		330			—			56			195			385			—			966

Capital employed		4,307			679			449			816			26			—			6,277

[Additional columns below]

[Continued from above table, first column(s) repeated]


	Six-month periods ended June 30
	2003
										Holdings
				Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
Gross revenues — Export		2,195			41			39			307			—			(971	)		1,611
Gross revenues — Domestic		537			46			186			78			—			(86	)		761
Cost and expenses		(2,040	)		(78	)		(129	)		(334	)		5			1,057			(1,519	)
Depreciation, depletion and amortization		(81	)		(5	)		(5	)		(6	)		—			—			(97	)
Pension plan		(5	)		—			—			—			—			—			(5	)

Operating (loss) income		606			4			91			45			5			—			751
Financial income		96			—			8			6			3			(56	)		57
Financial expenses		(181	)		(2	)		(3	)		(12	)		(4	)		56			(146	)
Foreign exchange and monetary gains (losses), net		210			19			(15	)		95			(2	)		—			307
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		77			—			(83	)		95			40			—			129
Income taxes		(205	)		—			—			(26	)		—			—			(231	)
Minority interests		(1	)		(5	)		—			(41	)		—			—			(47	)

Income from continuing operations		602			16			(2	)		162			42			—			820
Change in accounting pratice for asset retirement obligations (note 4)		(10	)		—			—			—			—			—			(10	)

Net income		592			16			(2	)		162			42			—			810

Sales classified by geographic destination:
Export market
America, except United States		237			—			18			67			—			(156	)		166
United States		171			6			—			19			—			(97	)		99
Europe		931			31			16			132			—			(355	)		755
Middle East/Africa/Oceania		119			—			4			—			—			(30	)		93
Japan		242			3			—			70			—			(109	)		206
China		332			1			—			19			—			(152	)		200
Asia, other than Japan and China		163			—			1			—			—			(72	)		92

		2,195			41			39			307			—			(971	)		1,611
Domestic market		537			46			186			78			—			(86	)		761

		2,732			87			225			385			—			(1,057	)		2,372

Assets:
Property, plant and equipment, net		3,103			634			212			522			31			—			4,502
Additions to Property, plant and equipment		268			145			49			43			1			—			506
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		459			—			2			305			306			—			1,072

Capital employed		2,875			158			245			486			29			—			3,793

F-19

Operating income by product — after eliminations (Unaudited)


	Six-month periods ended June 30
	2004


	Revenues						Value											Impairment/ Gain on sale of property,		Depreciation,
							added			Net		Cost and						plant and		depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			equipment		amortization			income
Ferrous
Iron ore		1,384		385		1,769		(61	)		1,708		(779	)		929			—		(125	)		804
Pellets		434		120		554		(19	)		535		(379	)		156			—		(3	)		153
Manganese		14		6		20		(3	)		17		(14	)		3			—		—			3
Ferroalloys		194		81		275		(21	)		254		(158	)		96			—		(7	)		89

		2,026		592		2,618		(104	)		2,514		(1,330	)		1,184			—		(135	)		1,049
Non ferrous
Gold		—		—		—		—			—		—			—			—		—			—
Potash		—		54		54		(9	)		45		(22	)		23			—		(3	)		20
Kaolin		68		10		78		(3	)		75		(43	)		32			—		(7	)		25
Copper		24		—		24		—			24		(4	)		20			—		(2	)		18

		92		64		156		(12	)		144		(69	)		75			—		(12	)		63
Aluminum
Alumina		181		6		187		(9	)		178		(156	)		22			—		(9	)		13
Aluminum		347		12		359		(1	)		358		(121	)		237			—		(7	)		230
Bauxite		23		—		23		—			23		(21	)		2			—		—			2

		551		18		569		(10	)		559		(298	)		261			—		(16	)		245
Logistics
Railroads		—		286		286		(44	)		242		(147	)		95			—		(12	)		83
Ports		—		83		83		(6	)		77		(44	)		33			—		(2	)		31
Ships		21		21		42		(10	)		32		(52	)		(20	)		—		(1	)		(21	)

		21		390		411		(60	)		351		(243	)		108			—		(15	)		93
Others		6		4		10		(2	)		8		(43	)		(35	)		—		—			(35	)

		2,696		1,068		3,764		(188	)		3,576		(1,983	)		1,593			—		(178	)		1,415

[Additional columns below]

[Continued from above table, first column(s) repeated]


	Six-month periods ended June 30
	2003


	Revenues						Value											Impairment/ Gain on sale of property,			Depreciation,
							added			Net		Cost and						plant and			depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			equipment			amortization			income
Ferrous
Iron ore		879		261		1,140		(36	)		1,104		(532	)		572			—			(38	)		534
Pellets		270		97		367		(12	)		355		(297	)		58			(12	)		(7	)		39
Manganese		23		4		27		(2	)		25		(6	)		19			—			(1	)		18
Ferroalloys		93		44		137		(9	)		128		(96	)		32			—			(4	)		28

		1,265		406		1,671		(59	)		1,612		(931	)		681			(12	)		(50	)		619
Non ferrous
Gold		16		—		16		—			16		(15	)		1			—			(2	)		(1	)
Potash		—		42		42		(5	)		37		(19	)		18			—			(2	)		16
Kaolin		26		4		30		(1	)		29		(19	)		10			—			(1	)		9
Copper		—		—		—		—			—		—			—			—			—			—

		42		46		88		(6	)		82		(53	)		29			—			(5	)		24
Aluminum
Alumina		124		73		197		(4	)		193		(157	)		36			—			(6	)		30
Aluminum		144		4		148		—			148		(134	)		14			—			—			14
Bauxite		10		—		10		—			10		(10	)		—			—			—			—

		278		77		355		(4	)		351		(301	)		50			—			(6	)		44
Logistics
Railroads		—		145		145		(15	)		130		(34	)		96			—			(30	)		66
Ports		—		66		66		(6	)		60		(35	)		25			—			(4	)		21
Ships		26		16		42		(2	)		40		(58	)		(18	)		—			—			(18	)

		26		227		253		(23	)		230		(127	)		103			—			(34	)		69
Others		—		5		5		—			5		(8	)		(3	)		—			(2	)		(5	)

		1,611		761		2,372		(92	)		2,280		(1,420	)		860			(12	)		(97	)		751

F-20

12		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 operations. 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 movement in fair value of derivative financial instruments is as follows (the quarterly information is unaudited):


				Interest
				rates
	Gold			(LIBOR)			Currencies			Alumina			Aluminum			Total
Unrealized gains (losses) at January 1, 2004		(32	)		(46	)		5			(18	)		—			(91	)
Initial consolidation of Albras		—			—			—			—			(20	)		(20	)
Financial settlement		—			3			(2	)		—			—			1
Unrealized gains (losses) in the period		(5	)		(6	)		(2	)		(18	)		(23	)		(54	)
Effect of exchange rate changes		—			1			—			—			—			1

Unrealized gains (losses) at March 31, 2004		(37	)		(48	)		1			(36	)		(43	)		(163	)

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

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

Unrealized gains (losses) at April 1, 2003		(10	)		(68	)		(1	)		3			—			(76	)
Financial settlement		—			10			—			—			—			10
Unrealized gains (losses) in the period		—			4			—			(3	)		—			1
Effect of exchange rate changes		(1	)		(11	)		—			1			—			(11	)

Unrealized gains (losses) at June 30, 2003		(11	)		(65	)		(1	)		1			—			(76	)

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

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

Unrealized gains (losses) at January 1, 2003		(15	)		(60	)		(1	)		3			—			(73	)
Financial settlement		—			14			—			—			—			14
Unrealized gains (losses) in the period		5			(4	)		—			(3	)		—			(2	)
Effect of exchange rate changes		(1	)		(15	)		—			1			—			(15	)

Unrealized gains (losses) at June 30, 2003		(11	)		(65	)		(1	)		1			—			(76	)

Unrealized gains (losses) in the period are included in our income statement under the caption of financial expenses.

F-21

Final maturity dates for the above instruments are as follows:


Gold		Dec 2008
Interest rates (LIBOR)		Oct 2007
Currencies		Dec 2011
Alumina		Dec 2008
Aluminum		Dec 2006

13		Subsequent Event

		CVRD Divests its Stake in CST

		On June 28, 2004 CVRD signed a conditional sales contract with Arcelor, the world´s largest steelmaker, with the intent to sell its stake in Companhia Siderurgica de Tubarão (CST).

		CVRD agreed to sell to Arcelor 869,045,672 common shares and 9,381,163,397 preferred shares of CST, representing, respectively, 4.42% of the voting capital and 29.96% of the non-voting capital of this company. On July 28, 2004, the contract was consumated and CVRD was paid US$ 415.1 million for the sale of these shares.

		Additionally, on June 28, 2004, CVRD signed an agreement to sell to Arcelor 4,034,524,170 common shares of CST, linked to the current CST shareholders agreement. This last transaction will be concluded when one of the three following events occur, the first to occur will trigger the transaction: (i) termination of the current CST shareholders agreement on May 25, 2005; (ii) waiver given by the other participants of the shareholders agreement; (iii) purchase by Arcelor of the CST shares owned by the other participants of the CST shareholders agreement.

		CVRD will be paid US$ 163.4 million for the CST shares. This price will be adjusted by an interest rate equal to Libor plus 1.5% per annum, minus dividends distributed by CST to CVRD from now to the conclusion of the transaction.

		The sale of shares to Arcelor implies in the total divestment of the 28.02% share of the CST capital currently owned by CVRD.

* * *

F-22

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 13, 2004		By: /s/ Fabio de Oliveira Barbosa Fabio de Oliveira Barbosa Chief Financial Officer