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

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-                    .)

 

 

BR GAAP

REAPING THE FRUITS OF THE LONG CYCLE
CVRD’s performance in the second quarter 2005

BOVESPA: VALE3, VALE5
NYSE: RIO, RIOPR
LATIBEX: XVALO, XVALP

www.cvrd.com.br
rio@cvrd.com.br

Investor Relations Department

Roberto Castello Branco
Alessandra Gadelha
Barbara Geluda
Daniela Tinoco
Eduardo Mello Franco
Rafael Azevedo
Tel: (5521) 3814-4540

Rio de Janeiro, August 10, 2005 — Excellent strategy execution, linked mainly to discipline in capital allocation, has allowed Companhia Vale do Rio Doce (CVRD) to benefit from the opportunities offered by the long cycle in the metals and mining sector.

The results in the second quarter of 2005 (2Q05) reflected this process, with various new records being set in the following areas: shipments of iron ore and pellets, gross revenues, operational performance, cash generation and net earnings. Of particular note were the records for production - 115.841 million tons of iron ore in 1H05, investments¹ of US$ 2.5 billion and exports of US$ 6.1 billion in the last twelve months, and the Company’s achievement of the investment grade rating.

•		Sales of iron ore and pellets in 2Q05 of 61.717 million tons, 10.9% higher than in 2Q04.
•		Gross revenues in 2Q05 of R$10.052 billion, up 36.3% year-over-year (yoy).
•		Consolidated exports in 1H05 of US$3.287 billion, exceeding the exports obtained in 1H04, by 22.4%. Once again, CVRD’s sales performance in international markets reinforced the Company’s position as Brazil’s largest exporter.
•		Net exports in 1H05 (exports less imports) of US$2.912 billion were 29.6% higher than that reported in 1H04. CVRD’s contribution to Brazil’s trade balance continues to be extremely significant, being responsible for 14.8% of the trade surplus of US$19.666 billion in the first half of this year.
•		Operational performance, as measured by EBIT (earnings before interest and taxation) of R$4.756 billion in 2Q05, 60.2% higher than in 2Q04, when this figure amounted to R$2.968 billion.

The financial and operational information contained in this press release, except where otherwise indicated, was consolidated in accordance with Brazilian generally accepted accounting principles (Brazilian GAAP). According to the criteria of Brazilian GAAP, those companies in which CVRD has effective control, or shared control as defined by shareholders agreement, are included in the consolidated figures. In the instances where CVRD has effective control, the consolidation is carried out on a 100% basis and the difference between this amount and the percentage of CVRD’s equity stake in the subsidiary is discounted at the minority shareholding line. CVRD’s main subsidiaries are Caemi, Alunorte, Albras, RDM, RDME, RDMN, Urucum Mineração, Docenave, Ferrovia Centro-Atlântica (FCA), Rio Doce Europa, Itaco, CVRD Overseas and Rio Doce International Finance. For companies in which control is shared, the consolidated figures are proportional to the equity stake held by CVRD in each company. The main companies in which CVRD has shared control are MRN, Valesul, Kobrasco, Nibrasco, Hispanobras, Itabrasco, GIIC, Samarco and CSI.

2T05

BR GAAP

•

Cash generation, as measured by EBITDA (earnings before interest, taxation, depreciation and amortization), in 2Q05 of R$5.334 billion, which represents an increase of 57.6% yoy.

•

Net earnings of R$3.479 billion in 2Q05, which corresponds to earnings per share of R$3.02, which is more than double than the figure reported in 2Q04, of R$1.683 billion.

•

Return on equity (ROE) of 38.3% in 2Q05, compared to 36.0% in 1Q05.

•

Investments of US$821.3 million in 2Q05, as measured according to the US GAAP principles.

SELECTED FINANCIAL INDICATORS

																		R$ million
		2Q04				1Q05				2Q05				1S04				1S05
Gross operating revenues			7,374				7,052				10,052				13,304				17,104
Exports (US$ million)			1,598				1,336				1,951				2,686				3,287
EBIT			2,968				2,375				4,755				4,747				7,132
EBIT margin (%)			42.6	%			35.3	%			49.8	%			37.6	%			43.8	%
EBITDA			3,384				2,849				5,334				5,819				8,183
Net earnings			1,683				1,614				3,479				2,637				5,094
Net earnings per share (R$)			1.46				1.40				3.02				2.29				4.42
Capex (US$ million)			488.3				570.3				821.3				846.3				1,391.6

BUSINESS OUTLOOK

The global economy appears to be close to completion of a transition toward a more sustainable long-term rate of expansion. In spite of the adverse effect of the shock in oil prices — whose persistence at high levels, indeed, reflects the strength of demand — there are good indications that the world economic growth is robust and should continue over the coming quarters.

In 2Q05 the US economy completed its ninth consecutive quarter with an annual expansion rate above 3%. At the same time, China’s annualized GDP growth rate has been above 9% since 3Q03 and was 9.5% in 2Q05.

Leading indicators of manufacturing industry activity are showing signals that suggest a strong recovery, as new wholesale orders, production, purchasing orders/inventories have been growing significantly since June.

There was substantial accumulation of inventories in the US in 4Q04 and 1Q05, leading companies to reduce them in 2Q05. Therefore, the ISM (Institute of Supply Management) indicator for the industry reached in May 2005 its lowest point of a downtrend which begun in 2Q04. Since then, its behavior reversed markedly, indicating acceleration of industrial growth in the next two quarters.

The adjustment in the US economy coincided with a similar industrial movement in other important economies, in terms of consumption of inventories of commodities and processed raw materials, which had reached excessive levels in response to the increase in prices and supply-side uncertainties in 2004.

With this phase completed, there is a recovery in the Purchasing Manager Indices (PMIs) in practically all the world’s regions, suggesting the start of a globally synchronized recovery in economic activity. This synchronization had been broken down since the middle of 2004, with the slow growth of Japan and the Eurozone.

2T05

BR GAAP

The dynamics of the cycle now translate into new purchase orders, increased international trade flows, industrial growth, and recovery in commodity prices. Symptomatically, copper prices reached 20-year record highs in June and July, and primary aluminum prices interrupted their downtrend initiated since last March, accumulating a fall of 15.5% until the first week of July.

In the steel industry, the International Iron and Steel Institute (IISI) figure of 7.6% for global expansion of production in the first half of the year hides the disparity between the very strong Chinese growth of 28.3% and a soft patch in the rest of the world, where production increased by only 0.6%, as a result of the marginal cuts since February. Indeed, building of inventories in the hands of consumers of steel products forced the industry to slow down production, primarily in the EU and North America — where crude steel output decreased, respectively, by 1.7% and 2.6%.

In the developing economies, which are less subject to cyclical variations, being China and India typical examples, steel production continued to grow vigorously, with increases of 28.3% and 12%, respectively, in the first half of 2005.

In the coming months we expect to see the differences between steel production growth in the various regions of the world diminishing — with more moderate expansion in China, where there appears to be a short term excess supply in long steels, and a recovery in the European Union and the US, reflecting the reduction of inventories over recent months. It is important to point out that the urbanization process in large scale in China is expected to continue for at least the next 10 years. Thus, strong demand for long steel, used in civil construction, should prevail.

In China, fixed assets investments, a good leading indicator for steel consumption, has been growing at annual rates above 25% since March, and was 27.1% in June. Thus, the strong outlook for consumption combined with the probably more moderate increase in production indicates lower availability for exports, setting the stage for a recovery in steel production in other regions of the world.

A scenario in which there is persistent economic growth in China, strengthening of the US, European and Japanese economies, and a slow response from supply given the restraints on supply of equipment, makes it possible to foresee lengthening of the present mining and metals cycle.

The continuity of the global economic growth — with strong liquidity in the financial markets and solid demand for commodities — tends to benefit Brazil and sustain the appreciation of the Real against the US dollar.

As a result of the performance of steel production, Chinese imports of iron ore reached 131.2 million tons in the first half of 2005 (1H05), 34.1% higher yoy. China’s volume of imports in 1H05 was equal to the annual imports of the whole of the European Union, for example.

In spite of record imports, inventories of iron ore in the Chinese ports in July continued to be low. Spot market prices started rising again, remaining above benchmark prices. Thus, all the signs indicate that excess global demand for iron ore will continue.

In July, the China National Development & Reform Commission issued its Steel Industry Development Policy, aiming to restructure the steel industry turning it more efficient and competitive in the global market. The steel industry in China is still very fragmented: according to the China Iron & Steel Association (CISA) in 2004 there were 871 steel mills in operation, but only 15 with capacity of 5 million tons per year or more, and the top 10 companies were producing 35% of the total

2T05

BR GAAP

output. The Chinese government’s target is to increase this percentage to 50% in 2005 and 70% in 2010, through mergers and expansion of the more competitive operations.

Since the directives of the new policy do not apply to projects that have already been approved, we believe their effects will not be felt in the short term. It is possible, however, to predict that the focus on consolidation, productivity gains and product quality improvements will tend to benefit an iron ore supplier such as CVRD, which has large scale, high quality products, capacity to develop specific solutions, and whose clients are among the players with the largest scale, financial capacity and advanced technological development.

The market for alumina continues to show signs of disequilibrium between supply and demand. Chinese imports in 1H05 were 3.7 million tons, 30% more than in 1H04, and prices have passed the US$ 400/ton mark. Our expectation is that this scenario will not change significantly over the next 18 months.

The situation in the ferro alloys market is different from that of the other mineral products. After a strong rise which began in 4Q03, prices entered a downtrend starting around the middle of 2004, with the exception of medium carbon ferro-manganese alloy, whose price fall is more recent, becoming pronounced in 1Q05.

The imbalance in the alloys market was caused by the strong expansion of capacity — which, according to data from the International Manganese Institute, was 12.3% in 2003 and 15.4% in 2004 - and in global production, which grew 20% in 2004, put in place mainly by the higher-cost, non-integrated producers. The expansion of Chinese production — from 20% of global alloys production in 2000 to 35% in 2004, supported by a considerable increase in imports of manganese ore since 2001 — was a key factor in this context of excess supply.

Due to the context of accumulation of inventories and falling prices, CVRD is shutting down temporarily the two furnaces of its Mo I Rana plants, in Norway, and running the Dunkerque unit, in France, at half-capacity — these two actions should reduce the company’s output of alloys by an estimated 200,000 tons in an annualized basis. At the same time, other players are also reducing production, some recently re-activated plants are being closed, and the Chinese government is eliminating export incentives.

As a consequence, we expect alloy prices to stabilize in the near future. Manganese ore and ferro alloys provided 4.4% of CVRD’s total sales revenue in 2Q05.

IMPORTANT RECENT EVENTS

• CVRD rated investment grade
On July 8, Moody’s Investors Service upgraded CVRD foreign currency rating from Ba1 to Baa3. According to Moody’s rating scale, Baa3 qualifies the Company as a moderate credit risk issuer, without speculative elements, corresponding to investment grade.

The upgrade of CVRD’s rating is a landmark in its growth path, characterized by the Company’s strong commitment to shareholder value creation. CVRD is the first Brazilian company to obtain the investment grade rating.

2T05

BR GAAP

•

Dividend payment

On April 29, CVRD distributed to its shareholders a total of R$ 1,280 billion, equivalent to US$ 0.435 per share, as the first installment of the minimum dividend for the year of 2005, set at US$ 1.0 billion.

Payment of the second tranche of the minimum dividend is scheduled for October 31.

•

Development of the Vermelho nickel project approved

In July, CVRD’s Board of Directors gave the go-ahead for development of the Vermelho nickel project, located in the Carajás mineral province, in the Brazilian state of Pará. This project will mark the Company’s entry into the global nickel market. The Vermelho project will have production capacity for approximately 46,000 tons per year (tpy) of metallic nickel and 2,800 tpy of cobalt. The useful life of the project is estimated to be 40 years.

The estimated investment is up to US$ 1.2 billion, with startup scheduled for the fourth quarter of 2008.

•

CVRD begins mineral exploration in Australia

In July CVRD signed agreement with the Australian mining companies Aquila Resources Limited and AMCI Holdings for an exploration study of the Belvedere Coal Underground Project (Belvedere). Belvedere is an estimated 2.7 billion ton hard coking coal resource located in the state of Queensland, Australia.

At the conclusion of the pre-feasibility study, CVRD has the option to acquire a 51% interest in Belvedere at a price of US$ 90 million. CVRD has further options to increase its stake in the project up to 100% by acquiring its partners ´ interests at a fair market value determined at the time of the exercising of each option.

With this project, CVRD now has mineral exploration investments in four continents: South America, Africa, Asia and Australasia.

•

First iron ore shipment to Ukraine

In August, CVRD concluded its first iron ore shipment to Ukraine. Ukraine is the world seventh largest steel producer. This shipment represents the conquest of a new frontier of the iron ore seaborne market.

•

Divestment of QCM

CVRD’s subsidiary Caemi sold its shareholding in Quebec Cartier Mining Company (QCM), an iron ore and pellets producer with operations in Quebec, Canada, for US$ 125 million, to Dofasco Inc, on July 22.

This transaction completed CVRD’s compliance with its undertakings to the antitrust authorities of the European Union.

SALES AND REVENUES

CVRD’s gross revenues in 2Q05 amounted to R$ 10.052 billion, 36.3% higher yoy. The growth of R$ 2.678 billion is essentially a function of the higher pricing level, responsible for an increase of R$ 4.131 billion in gross revenues, principally due to the positive impact of the annual price increase of iron ore and pellets.

Increased sales volume, including shipments of copper concentrates, improved the Company’s gross revenues by R$ 285 million.

2T05

BR GAAP

On the other hand, the appreciation of the Brazilian real against the US dollar seen between 2Q05 and 2Q04, of 18.6%, again had a negative impact on CVRD’s revenues, reducing them by around R$ 1.347 billion.

The ferrous minerals area was responsible for 74.3% of the Company’s total gross revenue in 2Q05, the aluminum chain accounted for 9.2%, logistics services 8.5%, non-ferrous minerals 4.1% and steel products 3.8%.

Brazil was once again the main destination of the Company’s sales, accounting for 23.0% of gross revenues in 2Q05. Sales to Europe, accounted for 30.2% of total sales, Germany being the main destination (8.7% of the total). Sales to Asia accounted for 25.1% of gross revenues, where China alone accounted for 11.3% of the total.

•

Ferrous minerals

Sales of iron ore totaled 52.969 million tons in 2Q05, up 17.1% yoy. Between 2Q04 and 2Q05, two new mines began operations: Capão Xavier, in June 2004, and Fábrica Nova, in April of this year.

In 2Q05, CVRD purchased 4.140 million tons of iron ore from small mining companies located in the Iron Quadrangle, in the state of Minas Gerais, Brazil to complement its own production in the quarter — a new record, of 62,583 million tons — and enable the Company to meet commitments to clients. Total purchases from third party suppliers in 1H05 were 8.496 million tons, 10.5% more than the 7.687 million tons acquired in 1H04.

Pellet sales, of 8.748 million tons, were down 1.678 million tons compared to 2Q04 due to the programmed maintenance stoppage of the São Luís pelletizing plant, which production decresed 472,000 tons in the 2Q05 quarter-over-quarter (qoq), and because of shipment reprogramming between quarters.

Of the volume sold in 2Q05, 12.3 million tons of iron ore and pellets were shipped to China, representing 19.9% of the total, 6.6 million tons to Japan (10.7%) and 20.6 million tons to Europe (33.4%). Sales within Brazil accounted for 18.5% of the total — 11.4 million tons — of which 2.6 million tons were sent to the pelletizing joint ventures and 8.8 million tons to Brazilian steel and pig iron producers.

Gross revenues from the sale of iron ore and pellets in 2Q05 amounted to R$ 7.015 billion. About 90% of the difference of the iron ore and pellet price increase, retroactive to 1Q05, was accounted for in this quarter.

Revenues from the operation services of the pelletizing plants located in Tubarão, amounted to R$ 13 million.

Sales of manganese ore amounted to 194,000 tons, 5.4% lower than the figure in 2Q04, mainly because of the drop in Chinese demand for this product, generating total gross revenues of R$ 62 million.

Sales of ferro alloys were 151,000 tons and revenues generated from these sales, R$ 381 million, were substantially impacted by the drop in the ferro alloys price seen in 2Q05.

The global market for alloys is in a typical oversupply phase, after production growth of 20% in 2004. With the accumulation of inventories and falling prices, CVRD has decided to suspend production at the two Mo I Rana furnaces in Norway, and reduce capacity utilization at Dunkerque plant, in France, to 50% -

2T05

BR GAAP

together these actions reduce output of alloys by an estimated 200,000 tons per year.

Various swing producers — plants with high costs, which produce at the top of the cycle and shut down in the low part of the cycle — have suspended operations due to the price fall, and as a result the rate of growth of production fell in 1Q05, from 20% to 15% per year. Supply — and as a result, prices — are expected to stabilize in the coming quarters.

•

Aluminum chain

Sales of bauxite, alumina and primary aluminum in the quarter, due to the fact that short-term production capacity remained unaltered, did not see any significant changes. Some variations seen between quarters, in terms of volume shipped, were because of shipment reprogramming.

In 2Q05, sales of bauxite amounted to 1.401 million tons, 13.4% more than in 2Q04, and 13.6% higher than sales in 1Q05.

Sales of alumina, of 367,000 tons, saw an increase of 8.9%, compared to the sales recorded in the same quarter in 2004, of 337,000 tons.

Primary aluminum sales, of 123,000 tons, were down 7.5% on 2Q04.

Sales of products in the aluminum chain generated gross revenues of R$ 928 million, 9.2% of CVRD’s total sales in this quarter.

•

Copper

In 2Q05, CVRD sold 105,000 tons of copper concentrate, 20,000 tons more than 1Q05, 85,000 tons, and 71,000 tons more than in 2Q04, when shipments began. Gross revenues generated from the shipments of copper concentrate amounted to R$ 229 million.

Production at the Sossego copper mine continues to be lower than programmed, since drilling equipment acquired by the Company this year has not yet been delivered. Delivery of these equipments is now expected during the second half of the year. Therefore, production of copper concentrate for 2005 is likely to be approximately 130,000 tons.

•

Industrial minerals

Potash sales amounted to 129,000 tons, down 22.3% yoy. In the first half of the year, as well as the unfavorable seasonal effect, the severe drought seen in the South of Brazil resulted in losses in the harvest and contributed to reducing potash consumption in Brazil for the first time since 1998.

In the second half of 2005, with the effects of the drought overcome, and the start of planting for the new crop, especially coffee — which uses potash intensively as a soil nutrient — we expect a strong expansion in sales. Such increase will be enabled by the capacity increase of the Taquari-Vasouras mine. With the ramp-up of the new installations, CVRD should produce 710,000 tons in 2005 against 638,000 tons in 2004. In 2006, operating at full capacity, estimated production is 850,000 tons of potash.

Gross revenues generated by potash sales amounted to R$ 76 million.

2T05

BR GAAP

Sales of kaolin totaled 303,000 tons, 3.8% higher than that reported in 2Q04, and generated revenues of R$ 111 million. The increased sales volume was due to new contracts signed, as already anticipated.

•

Logistics services

Logistics services contributed with gross revenues of R$ 848 million, 8.5% of the Company’s total revenues in 2Q05. Of this amount, railroad transportation generated R$ 631 million and port services, R$ 123 million. Coastal shipping and port support services together were responsible for revenues of R$ 94 million.

CVRD’s railroads transported 7.755 billion net ton kilometers (ntk) of general cargo, 4.9% above 2Q04. Agricultural products accounted for 39.9% of the total, inputs and steel industry products 36.3% and construction materials and forestry-based products, 6.7%.

CVRD’s ports and maritime terminals handled 8.280 million tons in this quarter, compared to 8.120 million tons in 2Q04.

SALES VOLUME — IRON ORE AND PELLETS

																						thousand tons
		2Q04				%				1Q05				%				2Q05				%
Iron ore			45,231				81	%			49,159				83	%			52,969				86	%
Pellets			10,426				19	%			9,725				17	%			8,748				14	%
Total			55,657				100	%			58,884				100	%			61,717				100	%

SALES VOLUME - ORES AND METALS

										thousand tons
		2Q04				1Q05				2Q05
Manganese			205				198				194
Ferro alloys			94				136				151
Copper concentrate			34				85				105
Potash			166				138				129
Kaolin			292				280				303
Bauxite			1,235				1,233				1,401
Alumina			337				464				367
Aluminum			133				122				123

LOGISTICS SERVICES

		2Q04				1Q05				2Q05
Railroads — general cargo (million ntk)			7,395				6,009				7,755
Ports (thousand tons)			8,120				6,313				8,280

2T05

BR GAAP

VOLUME SOLD BY DESTINATION — IRON ORE AND PELLETS

																						million tons
		2Q04				%				1Q05				%				2Q05				%
Asia			19.7				35.4	%			22.7				38.5	%			22.5				36.5	%
China			8.9				16.0	%			11.5				19.5	%			12.3				19.9	%
Japan			6.3				11.3	%			5.8				9.8	%			6.6				10.7	%
South Korea			2.1				3.8	%			2.5				4.2	%			1.3				2.1	%
Emerging Asia (ex-China)			2.4				4.3	%			2.9				4.9	%			2.3				3.7	%
Europe			18.5				33.2	%			18.0				30.6	%			20.6				33.4	%
Germany			6.4				11.5	%			5.9				10.0	%			6.5				10.5	%
France			3.1				5.6	%			2.6				4.4	%			3.0				4.9	%
Italy			2.3				4.1	%			2.2				3.7	%			3.4				5.5	%
Others			6.7				12.0	%			7.3				12.4	%			7.7				12.5	%
Brazil			10.9				19.6	%			11.2				19.0	%			11.4				18.5	%
USA			1.5				2.7	%			1.3				2.2	%			1.1				1.8	%
Rest of the World			5.1				9.2	%			5.7				9.7	%			6.1				9.9	%
Total			55.7				100.0	%			58.9				100.0	%			61.7				100.0	%

GROSS REVENUES — BY PRODUCT

																						R$ million
		2Q04				%				1Q05				%				2Q05				%
Iron ore and pellets			3,912				53.1	%			3,920				55.6	%			7,014				69.8	%
Iron ore			2,680				36.3	%			2,753				39.0	%			5,072				50.5	%
Pellets			1,232				16.7	%			1,167				16.5	%			1,942				19.3	%
Pelletizing plants operation services			27				0.4	%			21				0.3	%			13				0.1	%
Manganese and ferro alloys			527				7.1	%			498				7.1	%			443				4.4	%
Copper concentrate			72				1.0	%			200				2.8	%			229				2.3	%
Potash			96				1.3	%			80				1.1	%			76				0.8	%
Kaolin			116				1.6	%			105				1.5	%			111				1.1	%
Aluminum			982				13.3	%			1,040				14.7	%			928				9.2	%
Logistics			792				10.7	%			725				10.3	%			848				8.4	%
Railroads			553				7.5	%			506				7.2	%			631				6.3	%
Ports			119				1.6	%			114				1.6	%			123				1.2	%
Shipping			120				1.6	%			105				1.5	%			94				0.9	%
Steel products			828				11.2	%			452				6.4	%			379				3.8	%
Others			22				0.3	%			11				0.2	%			11				0.1	%
Total			7,374				100.0	%			7,052				100.0	%			10,052				100.0	%

GROSS REVENUES — BY DESTINATION

																						R$ million
		2Q04				%				1Q05				%				2Q05				%
Brazil			1,840				24.9	%			1,765				25.0	%			2,323				23.1	%
USA			793				10.8	%			743				10.5	%			715				7.1	%
Europe			2,234				30.3	%			1,828				25.9	%			3,027				30.1	%
Japan			690				9.4	%			597				8.5	%			841				8.3	%
China			699				9.5	%			836				11.9	%			1,128				11.3	%
Emerging Asia (ex-China)			361				4.9	%			428				6.1	%			547				5.5	%
Rest of the World			757				10.3	%			854				12.1	%			1,470				14.6	%
Total			7,374				100.0	%			7,052				100.0	%			10,052				100.0	%

2T05

BR GAAP

THE EXCELLENCE OF CVRD OPERATIONAL PERFORMANCE

In 2Q05, the Company’s operating profit (EBIT) amounted to R$ 4.756 billion, 60.2% higher yoy. EBIT margin amounted to 49.8%, compared to 42.6% in 2Q04.

Among the determining factors behind the increase of R$ 1.788 billion in EBIT between 2Q04 and 2Q05, the increase in net revenues, of R$ 2.581 billion, was the main one. This was partly offset by a raise of R$ 613 million in the cost of goods sold (COGS).

This increase in COGS is explained by the rise in the price of energy, raw materials, parts and equipments, technical services, as well as expanded production. The specific figures that make up the increased COGS in 2Q05, compared to the same quarter in 2004, are: (a) materials, which were up by R$ 251 million, (b) outsourced services, R$ 225 million, (c) energy, R$ 80 million, and (d) depreciation and exhaustion, R$ 74 million.

In this quarter, demurrage expenses amounted to R$ 40 million, below the R$ 56 million spent in 1Q05, and the R$ 48 million disbursed in 2Q04, which reflects CVRD’s efforts in reducing ship waiting and loading time in the Company’s ports.

EBIT was also negatively affected by an increase of R$ 181 million in operational expenses. Administrative expenses were up by R$ 33 million, principally due to increased expenditure on advertising and publicity (R$ 14 million), travel expenses (R$ 8 million), technical consultancy (external auditing, legal and IT services, R$ 7 million) and rents and taxes (R$ 8 million). In 2Q05, CVRD practically doubled its expenditure on research and development, which enlarged from R$ 81 million to R$ 161 million.

Other operational expenses saw an increase of R$ 82 million, mainly because of investments in social projects.

COGS BREAKDOWN

																						R$ million
		2Q04				%				1Q05				%				2Q05				%
Personnel			352				10.4	%			314				8.3	%			340				8.5	%
Material			541				15.9	%			715				18.9	%			792				19.7	%
Fuel oil and gases			399				11.7	%			407				10.7	%			447				11.1	%
Outsourced services			570				16.8	%			758				20.0	%			795				19.8	%
Electric energy			291				8.6	%			318				8.4	%			371				9.2	%
Acquisition of products			608				17.9	%			593				15.7	%			570				14.2	%
Depreciation and exhaustion			288				8.5	%			347				9.2	%			362				9.0	%
Goodwill amortization			96				2.8	%			96				2.5	%			96				2.4	%
Others			252				7.4	%			238				6.3	%			238				5.9	%
Total			3,397				100.0	%			3,785				100.0	%			4,011				100.0	%

EBITDA: CASH GENERATION IN THE QUARTER EXCEEDS R$ 5 BILLION

Cash generation, as measured by EBITDA, amounted to R$ 5.334 billion in 2Q05, 57.6% higher than the EBITDA reported in 2Q04, of R$ 3.384 billion. In the twelve months ended in June 2005, EBITDA amounted to R$ 14.613 billion.

2T05

BR GAAP

The increase of R$ 1.949 billion in EBITDA between 2Q04 and 2Q05 is explained by the increase of R$ 1.788 billion seen in EBIT and the rise of R$ 72 million in depreciation expenses. In addition, in 2Q05, CVRD received R$ 88 million in dividends from affiliated companies.

Earnings from ferrous mineral operations (iron ore, pellets, manganese ore and ferro alloys) increased as a proportion of total EBITDA, from 68.0% in 1Q05, to 79.8% in 2Q05. Logistics services accounted for 10.4% of EBITDA in the quarter, aluminum chain products, 6.5%, non-ferrous minerals (copper, kaolin and potash), 1.5%, while steel products and others contributed 1.7%.

QUARTERLY EBITDA

										R$ million
		2Q04				1Q05				2Q05
Net operating revenues			6,970				6,720				9,551
COGS			(3,398	)			(3,785	)			(4,011	)
SG&A			(387	)			(358	)			(403	)
Research and development			(81	)			(81	)			(162	)
Other operational expenses			(137	)			(121	)			(220	)
EBIT			2,968				2,375				4,756
Depreciation, amortization & exhaustion			416				473				488
Dividends received			—				—				89
EBITDA			3,384				2,849				5,334

EBITDA BY BUSINESS AREA

										R$ million
		2Q04				1Q05				2Q05
Ferrous minerals			2,184				1,936				4,258
Non- ferrous minerals			151				104				82
Logistics			358				292				552
Aluminum			434				454				348
Steel			256				64				120
Others			—				—				(27	)
Total			3,384				2,849				5,334

RECORD NET EARNINGS

CVRD’s net earnings in 2Q05 amounted to R$ 3.479 billion, a new quarterly record, and more than double that reported in 2Q04, of R$ 1.683 billion. Of the increase of R$ 1.796 billion observed between these two quarterly periods, R$ 1.788 billion was as a result of the Company’s increased operating profit.

The net financial result also had a positive impact on net earnings in 2Q05, being R$ 978 million higher yoy. The increase of R$ 859 million in monetary variation is the result of the 11.8% appreciation in the Brazilian real / US dollar exchange rate as at June 30, 2005, compared to the end of 1Q05, against a depreciation of 6.8% in the BRL/USD exchange rate in 2Q04, in relation to 1Q04.

Financial expenses saw an improvement of R$ 106 million, in large part explained by the reduction in lending and financing. Financial revenues increased by R$ 12 million.

The result from shareholdings, of R$ 77 million, was R$ 100 million higher than that seen in 2Q04, at which time the Company saw a loss of R$ 23 million from its

2T05

BR GAAP

shareholdings. The positive equity income result of R$ 134 million in 2Q05 was partly offset by the goodwill on consolidated companies, of R$ 57 million.

Provisions for the payment of income tax and social contribution amounted to R$ 1.061 billion in the quarter, R$ 834 million more than in 2Q04, reflecting the expansion in the Company’s taxable earnings base.

PARADIGM SHIFT: THE INVESTMENT GRADE CONQUEST

On July 8, 2005 Moody’s Investors Service upgraded CVRD’s foreign currency credit rating from Ba1 to Baa3 — which on Moody’s scale means credit of moderate risk, without speculative elements, identified as investment grade.

This upgrade is the result of continuous effort to implement a long-term strategy focused on the value creation, which has been responsible for CVRD’s strong cash flow, supported by excellence in financial management, oriented toward minimization of risks and the strengthening of the Company’s capacity to assume financial commitments.

The improvement of CVRD’s credit risk classification is a historic benchmark in the Company’s growth trajectory, characterized as it has been by firm commitment to value creation for its shareholders.

CVRD is now one of the rare cases in which a company that has the vast majority of its assets in a non-investment grade country is itself promoted to investment grade — thus breaking a previous paradigm, and becoming the only company in Brazil with this position.

CVRD’s total debt on June 30, 2005 was US$ 4.168 billion, compared to US$ 4.182 billion on March 2005 and to US$ 4.088 billion in the end of 2004. Net debt at the end of June 2005 was US$ 3.212 billion, slightly higher than the US$ 3.060 billion verified at the end of March 2005.

The average maturity of CVRD’s debt on June 30, 2005 was 6.57 years, with 50% of the total debt at fixed rates and 50% at floating rates.

The rapid growth in adjusted EBITDA has been reflected in the improving trend of the Company’s leverage and interest coverage indicators. Cash generation growth enables the financing of investments and distribution of dividends with only marginal increases in debt levels, leading to a decline in leverage and an increase in interest coverage. This trend is expected to be even higher in 2H05 given the expectation of decrease in total debt due to its amortization.

Total debt/LTM EBITDA fell from 2.05x on December 31, 2001 to 0.83x on June 30, 2005. Interest coverage, expressed as LTM EBITDA/interest paid increased significantly to 17.73x on June 30, 2005 from 7.58x.

In June, CVRD used part of its free cash flow and the prepayment of some bank loans contracted at floating rates, in a transaction with total value of US$ 240.6 million. This aimed to reduce risks - refinancing risk and interest rate risk — and also the Company’s average cost of debt.

In isolation, these transactions reduced the proportion of floating-rate debt from 53% to 50% of CVRD’s total, and also produced a marginal positive impact on the debt’s cost and average maturity.

2T05

BR GAAP

The effect of the debt amortization was not fully reflected in the Company’s total debt because CVRD contracted in April export finance credit lines to deal with short-term cash management. Such credit lines will be liquidated during 2H05, US$ 129 million in 3Q05 and US$ 186 million in 4Q05, reducing debt levels.

FINANCIAL EXPENSES

										US$ million
		2Q04				1Q05				2Q05
Financial expenses on:
Debt with third parties			(79	)			(48	)			(57	)
Debt with related parties			(5	)			(2	)			(4	)
Total debt-related financial expenses			(84	)			(50	)			(61	)

		2Q04				1Q05				2Q05
Gross interest on:
Tax and labour contingencies			(9	)			(11	)			(13	)
Tax on financial transactions — CPMF			(14	)			(9	)			(16	)
Derivatives			23				5				56
Others			(22	)			(27	)			(17	)
Total gross interest			(22	)			(42	)			10
Total			(106	)			(92	)			(51	)

DEBT INDICATORS

										US$ million
		2Q04				1Q05				2Q05
Gross debt			4,514				4,182				4,168
Net debt			3,455				3,060				3,212
Gross debt / LTM EBITDA (x)			1.55				1.05				0.83
LTM EBITDA / LTM interest expenses (x)			12.94				13.24				17.73
Gross debt / EV (x)			0.22				0.11				0.11

GREEN LIGHT FOR VERMELHO

CVRD’s priority for the use of its strong cash flow is to finance investments that constitute platforms for shareholder value creation. At this point of the economic cycle, which is characterized, among other factors, by a significant increase in the price of equipments, raw materials and services, the choice of the right investment opportunities, that are truly capable of adding value, became an even greater challenge for the managers of a mining company.

Based on rigorous criteria, CVRD continues to invest a considerable volume of funds in the quest for profitable growth.

Total capital expenditure in 2Q05 was US$ 821.3 million, 44.0% more than in 1Q05. US$ 658.4 million of this total was spent on organic growth — projects and R&D, and US$ 162.9 million on “stay-in-business capex” — maintaining existing operations².

CVRD’s total capex in the first half of 2005 was US$ 1.392 billion, 41.8% of the total of US$ 3.332 billion budgeted for the year.

The amount spent on research and development in 2Q05 was US$ 42.7 million, more than 50% higher than the US$ 28.2 million spent in the previous quarter.

2T05

BR GAAP

Mineral exploration efforts were focused on identifying new deposits of copper, coal, nickel, gold and manganese.

CVRD has various studies in progress. Highlights are: the Cristalino copper project in Carajás, in the Brazilian state of Pará; the São João do Piauí nickel project in the Brazilian state of Piauí; the coal project at Moatize in Mozambique; the manganese project at Franceville in Gabon; the phosphates project in Bayóvar, Peru; and the potash project at Rio Colorado in Argentina. The Company will start studies for the Belvedere coal project in Queensland, Australia.

The acquisition of 25% of the Chinese anthracite producer Henan Long Energy Resources Ltd. was concluded in this quarter, on payment of US$ 86.3 million. Henan is expected to produce 1.7 million tons in 2005.

At the beginning of July, CVRD’s Board of Directors approved investment in development of the Vermelho nickel project with estimated production capacity of 46,000 tpy of metallic nickel and 2,800 tpy of cobalt. The estimated total investment is up to US$ 1.2 billion, for startup scheduled for the last quarter of 2008.

•

Main CVRD projects currently in progress

				Budgeted
				2005
Area		Project		US$ million				Status
Ferrous minerals		Expansion of the Carajás iron ore mines by 85 Mtpa – Northern System			140			For completion in 2006, this will add 15 million tons to CVRD’s annual production capacity. The second ship loading system of Pier III is in test phase.
		Brucutu iron ore mine – Southern System			205			Phase I should be completed in 2006, increasing nominal production capacity to 15 million tpy. Phase II is scheduled for completion in 2007, to bring production capacity to 24 million tpy. A further expansion, to 30 million tpy is currently under study.
		Itabira iron ore mines – Southern System			16			Modernization of operations and expansion of production capacity to 46 million tpy, for conclusion and startup in 2006.
		Fazendão iron ore mine – Southern System			52			Project to produce 14 million tons run-of-mine (ROM) iron ore/year. Works to begin in second half 2005, for completion and operational startup in 2007.
		Fábrica iron ore mine – Southern System			38			Project for expansion of production capacity by 5 million tons, from 12 to 17 million tpy. Startup scheduled for 2007.
		Timbopeba iron ore mine – Southern System			25			Extension of the mine’s working life to 2008, with estimated annual production capacity of 2.7 million tons. US$7.8 million will be invested in development, purchase of small scale equipment and new access for the crushing facilities; a further US$17.6 million will be spent on rolling stock for the EFVM railroad.
		Tubarão Port expansion – Southern System			22			Expansion of the conveyor belt and dockside machinery, and construction of new dockside storage patios.
		Expansion of the São Luis pelletizingplant			18			Expansion of capacity from 6 to 7 million tpy. The expansion will be completed by January 2006. Production this year is estimated at 6.25 million tons.

2T05

BR GAAP

				Budgeted
				2005
Area		Project		US$ million				Status
Coal		Anthracite			86			Acquisition of 25% of the Chinese anthracite producer Henan Longyu Energy Resources Ltd., in partnership with Yoncheng and Baosteel, has been completed. The mine will produce 1.7 million tons of high quality anthracite in 2005.
		Metallurgical coke			16			Acquisition of 25% stake in the Chinese coal producer Shandong Yankuang International Coking Ltd. – for production of metallurgical coke – in association with Yankuang. The project has estimated production capacity of 2 million tpy of coke, and 200,000 tpy of methanol. Startup is planned for 2006.
Non-ferrous minerals		Expansion of the Taquari-Vassouras potash mine			9			Project to expand nominal potash production capacity from 600,000 to 850,000 tpy. The ramp-up period has begun and production of 710,000 tons is expected this year.
		118 copper mine			32			Project for production of 36,000 tons of copper cathode/year.
		Vermelho nickel mine			34			Project for production of 46,000 tons of metallic nickel and 2,800 tons of cobalt, per year. Approved in July 2005; conclusion planned for 4Q08.
Aluminum		Alumina: Alunorte Modules 4 and 5			306			Modules 4 and 5 will increase the refinery’s production capacity to 4.2 million tons of alumina/year. Completion is planned for 1Q06.
		Paragominas I bauxite mine			154			Will produce 4.5 million tpy of bauxite starting early in 2007. Tubes are currently being delivered for construction of the 244-km ore delivery pipeline to transport bauxite from Paragominas to the alumina refinery in Barcarena, in the Brazilian state of Pará. Earthmoving work has been completed for start of construction.
Logistics		Acquisition of locomotives and railcars for EFVM, EFC and FCA railroads			559			2,288 railcars and 63 locomotives were bought in the first half of 2005.
Electric energy		Aimorés hydroelectric power plant			12			This power plant on the Doce river in the Brazilian state of Minas Gerais will have generation capacity of 330MW. The first turbine started up in July 2005; the other two are programmed to startup by October. CVRD owns 51.0% stake in the project.
		Capim Branco I and II hydroelectric power plants			73			Both plants are on the Araguari river in the Brazilian state of Minas Gerais. Scheduled to start operating in 2006, they have generating capacity of 240MW and 210MW, respectively. Works are 68% completed on Capim Branco I, and 41% on Capim Branco II. CVRD has a 48.4% stake in both projects.

CAPEX BY BUSINESS AREA

		US$ million
Business area		2Q05								Realized 2005
Ferrous minerals			340.2				41.4	%			540.1				38.8	%
Non ferrous minerals			53.1				6.5	%			88.8				6.4	%
Logistcs			128.6				15.6	%			282.5				20.3	%
Aluminum			151.0				18.4	%			277.7				19.9	%
Coal			91.5				11.1	%			94.0				6.8	%
Electric energy			35.7				4.4	%			59.5				4.3	%
Others			21.1				2.6	%			49.1				3.5	%
Total			821.3				100.0	%			1,391.6				100.0	%

THE SARBANES-OXLEY LAW: ADAPTING THE BYLAWS

CVRD’s Extraordinary General Shareholders Meeting held on June 19, 2005 made changes to the Bylaws to introduce and provide for compliance with the principles and concepts of the Sarbanes-Oxley Act of 2002, Rule 10A-3 of the Securities and Exchange Act of 1934, and Rule 303A.06 of the New York Stock Exchange Listed Company Manual, with necessary adaptations to Brazilian legislation. Also in accordance with the rules of the Sarbanes-Oxley Act, CVRD created an internal complaints channel.

2T05

BR GAAP

TELECONFERENCE AND WEBCAST

CVRD will hold a conference call and webcast on Friday, August 12, 2005, at 12:00 p.m. Rio de Janeiro time, 11:00 a.m. US Eastern Standard time, and 4:00 p.m. UK time. To participate, see the instructions on CVRD’s website www.cvrd.com.br, in the Investor Relations subsection. A playback of the call and webcast will be available on the site for 90 days following August 12.

SELECTED FINANCIAL INDICATORS OF THE MAIN NON-CONSOLIDATED COMPANIES

Selected financial indicators of the principal non-consolidated companies can be found in CVRD’s quarterly accounts, which are available on its website, www.cvrd.com.br, in the Investor Relations subsection.

2T05

BR GAAP

FINANCIAL STATEMENTS

		R$ million
		2Q04				1Q05				2Q05
Gross operating revenues			7,374				7,052				10,052
Taxes			(404	)			(332	)			(500	)
Net operating revenues			6,970				6,720				9,551
Cost of goods sold			(3,398	)			(3,785	)			(4,011	)
Gross profit			3,572				2,935				5,540
Gross margin (%)			51.3	%			43.7	%			58.0	%
Operational expenses			(605	)			(560	)			(785	)
Sales			(111	)			(100	)			(96	)
Administrative			(276	)			(258	)			(308	)
Research and development			(81	)			(81	)			(161	)
Other operational expenses			(137	)			(121	)			(220	)
Result from shareholdings			(23	)			73				77
Equity income			53				130				147
Goodwill amortization			(80	)			(57	)			(57	)
Others			5				—				(13	)
Financial result			(895	)			(274	)			82
Financial expenses			(353	)			(295	)			(247	)
Financial revenues			46				113				58
Monetary variation			(588	)			(92	)			271
Operating profit			2,050				2,174				4,914
Income tax and social contribution			(227	)			(391	)			(1,061	)
Minority interest			(140	)			(169	)			(375	)
Net earnings			1,683				1,614				3,479

BALANCE SHEET

		R$ million
		03/31/05				06/30/05
Asset
Current			11,937				12,386
Long term			3,787				4,106
Fixed			29,159				30,462
Total			44,884				46,954
Liabilities
Current			8,712				8,195
Long term			14,225				12,918
Others			2,162				2,579
Shareholders’ equity			19,785				23,262
Paid-up capital			7,300				14,000
Reserves			12,485				9,262
Total			44,884				46,954

2T05

BR GAAP

CASH FLOW

		R$ million
		2Q04				1Q05				2Q05
Cash flows from operating activities:
Net income			1,683				1,614				3,479
Adjustments to reconcile net income with cash provided by operating activities:
Result from shareholdings			23				(74	)			(77	)
Depreciation, depletion and amortization			560				385				384
Deferred income tax and social contribution			65				(113	)			53
Financial expenses and foreign exchange and monetary net variation			886				46				(982	)
Minority interest			140				169				375
Impairment of property, plant and equipment			116				15				60
Goodwill amortization in the COGS			96				96				96
Net unrealized derivative losses			(77	)			5				(10	)
Dividends/interest attributed to stockholders received			—				—				89
Others			130				(81	)			58
Decrease (increase) in assets:
Accounts receivable			(426	)			(338	)			(1,026	)
Inventories			(296	)			(70	)			(67	)
Others			(253	)			(122	)			(593	)
Increase (decrease) in liabilities:
Suppliers and contractors			(160	)			49				278
Payroll and related charges			(1	)			(94	)			30
Taxes and Contributions			249				(579	)			885
Others			52				(257	)			288
Net cash provided by operating activities			2,785				651				3,322
Cash Flow from investing activities:
Loans and advances receivable			0				12				(43	)
Guarantees and deposits			(77	)			(52	)			(37	)
Additions to investments			—				(10	)			(208	)
Additions to property, plant and equipment			(1,527	)			(1,755	)			(1,926	)
Proceeds from disposals of investments/property, plant and equipment			3				6				4
Net cash used I investing activities			(1,601	)			(1,798	)			(2,212	)
Cash flows from financing activities:
Short-term debt, net issuances (repayments)			(184	)			221				470
Long-term debt			780				726				342
Repayments:
Financial institutions			(700	)			(477	)			(1,138	)
Shares in treasury			(791	)			0				(1,280	)
Net cash used in financing activities			(895	)			470				(1,606	)
Increase (decrease) in cash and cash equivalents			289				(677	)			(496	)
Cash and equivalents, beginning of period			3,503				3,917				3,240
Cash and equivalents, end of period			3,792				3,240				2,744
Cash paid during the period for:
Interest on short-term debt			(7	)			(2	)			(20	)
Interest on long-term debt			(148	)			(226	)			(128	)
Paid income tax and social contribution			(126	)			(211	)			(379	)
Non-cash transactions:
Additions to property, plant and equipment — interest capitalization			(204	)			(27	)			402
Income tax and social contribution paid with credits			(196	)			(49	)			(56	)

2T05

BR GAAP

“This communication may include declarations which represent the expectations of the Company’s Management about future results or events. All such declarations, when based on future expectations and not on historical facts, involve various risks and uncertainties. The Company cannot guarantee that such declarations turn out to be correct. Such risks and uncertainties include factors relative to the Brazilian economy and capital markets, which are volatile and may be affected by developments in other countries; factors relative to the iron ore business and its dependence on the steel industry, which is cyclical in nature; and factors relative to the high degree of competitiveness in industries in which CVRD operates. To obtain additional information on factors which could cause results to be different from those estimated by the Company, please consult the reports filed with the Comissão de Valores Mobiliários (CVM — Brazilian stock exchange regulatory authority) and the U.S. Securities and Exchange Commission — SEC, including the most recent Annual Report — CVRD Form 20F.”

2T05

Contents

Part I			2
1- Management’s Discussion and Analysis of the Operating Results for the semesters ended June 30, 2005 Compared With June 30, 2004			2
1.1- General Aspects			2
1.2- Comments on the Consolidated Results			4
1.2.1- Gross Revenue			4
1.2.2- Cost of Products and Services			6
1.2.3- Operating Expenses			6
1.2.4- Net Financial Results			6
1.2.5- Income Tax and Social Contribution			6
1.2.6- Cash Generation Consolidated			7
1.3- Comments on the Parent Company Results			8
1.3.1- Net Income			8
1.3.2- Gross Revenue			8
1.3.3- Cost of Products and Services			8
1.3.4- Gross Margin			8
1.3.5- Results of Shareholdings by Business Area			8
1.3.6- Operating Expenses			9
1.3.7- Net Financial Results			9
1.3.8- Income Tax and Social Contribution			9
Part II			10
Quarterly Information and Notes to the Quarterly Information			10
2- Balance Sheet			10
3- Statement of Income			11
4- Statement of Changes in Stockholders’ Equity (Additional Information)			12
5- Statement of Cash Flows (Additional Information)			13
6- Notes to the Quarterly Information at June 30, 2005 and 2004			14
6.1- Operations			14
6.2- Presentation of Quarterly Information			14
6.3- Significant and Practices Accounting Policies			14
6.4- Principles and Practices of Consolidation			14
6.5- Cash and Cash Equivalents			15
6.6- Accounts Receivable from Customers			15
6.7- Inventories			15
6.8- Related Parties			16
6.9- Taxes to Recover or Offset			16
6.10- Deferred Income Tax and Social Contribution			16
6.11- Consolidated investments			17
6.12- Property, Plant and Equipment			18
6.13- Loans and Financing			19
6.14- Contingent Liabilities			20
6.15- Environmental and Site Reclamation and Restoration Costs			21
6.16- Paid-up Capital			21
6.17- Treasury Stock			22
6.18- Remuneration of Shareholders			22
6.19- Financial Results			22
6.20- Financial Instruments – Derivatives			23
6.21- Administrative and Other Operating Expenses			25
6.22- Subsequent Event			25
Part III			26
7- Attachment I — Statement of Investments in Subsidiaries			26
8- Other Information the Company Deems Relevant			27
8.1- Consolidated Iron Ore and Pellet Sales (Main Markets — Not Reviewed)			27
9- Report of the Independent Accountants			28
10- Board of Directors, Advisory Committees, Fiscal Council, Executive Officers and Technical Responsibles			29

Part I

Expressed In thousands of reais

1-		Management’s Discussion and Analysis of the Operating Results for the semesters ended June 30, 2005 Compared With June 30, 2004

1.1- General Aspects

(a)

Companhia Vale do Rio Doce group’s segments of business are as follows:

	•		Ferrous minerals: iron ore and pellets as well as manganese and ferroalloys;
	•		Non-ferrous minerals: potash, kaolin and copper;
	•		Logistics: railroads, ports and maritime terminals and shipping; and
	•		Holdings: equity holdings in producers of aluminum, steel and electric power generation.

Ferrous Minerals

Iron Ore and Pellets

Operating through two world-class integrated systems for ore production and distribution. The Northern System, based in the states of Pará and Maranhão and the Southern System, based in the states of Minas Gerais and Espírito Santo, each consisting of mines, railroads and maritime terminals. Besides those, there is a third system that consists of mines and port facilities from Caemi.

Currently CVRD operates nine pelletizing plants in Brazil, five of them in joint ventures with international partners. The Company also has an interest in Samarco, which owns and operates two pelletizing plants in Espírito Santo, and an interest in GIIC, a pelletizing plant in Bahrein.

Iron ore and pellets sales are generally made pursuant to long-term supply contracts which provide for annual price negotiations. Cyclical changes in the world demand for steel products affect sales prices and volumes in the world iron ore market. Different factors, such as the iron content of specific ore deposits, the various beneficiation processes required to produce the final product, granulometric, moisture content, and the type and concentration of contaminants (such as phosphorus, alumina and manganese) in the ore, influence contract prices for iron ore. Contract prices also depend on transportation costs.

Annual price negotiations generally occur from November to February, with separate prices established for the Asian and European iron ore markets. In the Asian market, the renegotiated prices are effective as of April of each period up to March of the next period. In the European market, the renegotiated prices are effective from January to December.

Manganese and Ferroalloys

This activity is carried out through the subsidiaries RDM located in the state of Bahia, Pará and Minas Gerais, Urucum located in the state of Mato Grosso do Sul, Rio Doce Manganèse Europe in France and Rio Doce Manganese Norway in Norway.

Non-Ferrous Minerals

Potash

The Company through a leasing contract with Petróleo Brasileiro S.A. – PETROBRAS, has a potash leased mine since 1995 from Operational Unit Taquari-Vassouras (UOTV), located in state of Sergipe. It is the only producer of potash chloride in activity in Brazil. The potash explored by the Company is raw material to fertilizers producers.

Copper

CVRD’s copper activities have been operating since June, 2004 the operation of the Sossego mine in Pará. Sossego is the first copper mine of CVRD.

Kaolin

Kaolin is a fine white aluminum silicate clay, used in the paper, ceramic and pharmaceutical industries as a coating and filler. Kaolin commercial activities are conducted through Caemi, controller of Pará Pigmentos S.A. and Cadam.

Logistics

The logistics system includes the Vitória to Minas Railroad and the Tubarão port complex in the Southern System, and the Carajás Railroad and Ponta da Madeira Marine Terminal in the Northern System. In addition, CVRD controls the railroad Ferrovia Centro-Atlântica S.A. – FCA, Terminal de Vila Velha S.A. (TVV) and Cia Portuária Baia de Sepetiba (CPBS), the Maritime terminal Guaiba Island and has a holding in MRS Logística.

The principal cargo of CVRD’s railroad is the Company’s own iron ore, along with steel, coal, pig iron, limestone, agricultural products and fuel. The Company charges market rates for third-party cargo, which vary based upon the distance traveled and the density of the freight in question.

Energy

The Company participates in nine hydroelectric plants, four of which are in operation. CVRD’s investments in the sector seek to optimize the Group’s supply of electric power.

Holdings

Aluminum Operations

The Company sells aluminum, alumina and bauxite to an active world market in which prices are determined based on prices for the primary aluminum quoted on the London Metals Exchange.

Bauxite extraction operation works through our jointly-controlled company Mineração Rio do Norte S.A. – MRN.

Alumina refine works through ALUNORTE – Alumina do Norte do Brasil S.A. and the smelts of aluminum through ALBRAS – Aluminio Brasileiro S.A. and the jointly-controlled company Valesul Alumínio S.A..

Steel

Commercial activities in the steel industry are conducted through the jointly-controlled company California Steel Industries Inc., located in United States and through the affiliated company Usinas Siderúrgicas de Minas Gerais S.A.

(b)

The variations of the main currencies and indices in relation to the real, which impacted the results of the Company and its subsidiaries, jointly-controlled companies and affiliates, were as follows:

		D%																Parity - end of period
Currencies / Indices		U.S.
Period		DOLLAR				YEN				IGP-M				TJLP				US$ x R$				US$ x Yen
From 01/01/05 to 06/30/05			(11.5	)			(18.3	)			1.8				4.8				2.3504				110.91
From 04/01/05 to 06/30/05			(11.8	)			(14.8	)			0.2				2.4				2.3504				110.91
From 01/01/05 to 03/31/05			0.4				(4.1	)			1.6				2.4				2.6662				107.39
From 01/01/04 to 06/30/04			7.6				5.9				6.8				4.8				3.1075				108.89
From 04/01/04 to 06/30/04			6.8				2.5				4.0				2.4				3.1075				108.89

About 87% of the consolidated gross revenue on 06/30/05 is linked to the U.S. dollar. About 32% of total consolidated costs are linked to the U.S. dollar. Consequently, fluctuations in the exchange rate between the two currencies have a significant impact on the operating cash flows.

Approximately 92% of the short-term and long-term loans of the consolidated on 06/30/05 are denominated in U.S. dollars. As a result, exchange rate fluctuations have a significant impact on the financial expenses (Notes 6.13 and 6.19).

(c) On 06/30/05, the consolidated trade balance of US$ 2,912 million was generated as follows:

		Consolidated (in US$ million)
		Quarter												Accumulated
		2Q/05				1Q/05				2Q/04				06/30/05				06/30/04
Exports			1,951				1,336				1,598				3,287				2,686
Imports			(134	)			(241	)			(283	)			(375	)			(439	)
			1,817				1,095				1,315				2,912				2,247

(d) CVRD receives the investment grade rating:

Moody’s Investors Service (Moody ´s), upgraded CVRD foreign currency rating from Ba1 to Baa3. According to Moody ´s rating scale, Baa3 qualifies the Company as a moderate credit risk issuer, without speculative elements, corresponding to investment grade.

The upgrade of CVRD ´s rating is a landmark in its growth path.

(e) Changes in the Fiscal Council

On 07/19/05 the Extraordinary General Shareholders Meeting decided to attribute CVRD ´s Fiscal Council the function of the Audit Committee’s role under the Sarbanes-Oxley Act. In this connection, Mr. Aníbal Moreira dos Santos (financial expert) was appointed as a member of the Fiscal Council.

1.2- Comments on the Consolidated Results

The net income of the Company on 06/30/05 was R$ 5,094,475 compared with net income of R$ 2,636,855 on 06/30/04 (the earnings per share corresponds to R$ 4.42 on 06/30/05 versus R$ 2.29 on 06/30/04).

1.2.1- Gross Revenue

Sales volume and revenues by products and services:

		In thousands of metric tons
		(except railroad transportation)																								In thousands of reais
		Quarter												Accumulated												Quarter												Accumulated
		2Q/05				1Q/05				2Q/04				06/30/05				03/31/04				D%				2Q/05				1Q/05				2Q/04				06/30/05				06/30/04				D%
Iron ore			52,969				49,159				45,231				102,128				88,614				15				5,072,201				2,753,407				2,680,170				7,825,608				4,943,805				58
Pellets (*)			8,748				9,725				10,426				18,473				19,853				(7	)			1,955,682				1,188,131				1,259,132				3,143,813				2,203,174				43
			61,717				58,884				55,657				120,601				108,467				11				7,027,883				3,941,538				3,939,302				10,969,421				7,146,979				53
Manganese			194				198				205				392				366				7				62,013				63,355				41,251				125,368				63,918				96
Ferroalloys			151				136				94				287				297				(3	)			380,969				434,884				485,982				815,853				831,451				(2	)
																											442,982				498,239				527,233				941,221				895,369				5
Copper			105				85				34				190				34				459				228,570				199,980				72,350				428,550				72,350				492
Potash			129				138				166				267				304				(12	)			75,506				80,373				96,176				155,879				161,448				(3	)
Kaolin			303				280				292				583				578				1				110,955				104,576				115,960				215,531				228,554				(6	)
																											415,031				384,929				284,486				799,960				462,352				73
Railroad transportation (millions of TKU) (**)			10,019				8,333				9,933				18,352				18,340				—				630,946				505,512				552,456				1,136,458				1,009,414				13
Port services			8,280				6,313				8,120				14,593				14,333				2				122,875				114,375				119,175				237,250				215,261				10
Maritime transportation			—				—				—				—				—				—				94,146				104,576				119,919				198,722				212,409				(6	)
																											847,967				724,463				791,550				1,572,430				1,437,084				9
Aluminum			123				122				133				245				243				1				582,268				611,222				700,641				1,193,490				1,225,732				(3	)
Alumina			367				464				337				831				804				3				237,726				358,703				214,777				596,429				521,529				14
Bauxite			1,401				1,233				1,235				2,634				2,370				11				108,176				70,043				65,940				178,219				136,775				30
																											928,170				1,039,968				981,358				1,968,138				1,884,036				4
Steel			—				—				—				—				—				—				378,697				452,153				828,725				830,850				1,438,376				(42	)
Other products and services			—				—				—				—				—				—				10,718				11,073				21,245				21,791				39,258				(44	)
																											10,051,448				7,052,363				7,373,899				17,103,811				13,303,454				29