Edgar Filing: Companhia Vale do Rio Doce

FORM 6-K

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 November 2006

Companhia Vale do Rio Doce

Avenida Graça Aranha, No. 26
20030-900 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 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- .)

Table of Contents


	Page
Condensed Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005		F-1

Condensed Consolidated Statements of Income for the three-month periods ended September 30, 2006 and 2005 and June 30, 2006 and for the nine-month periods ended September 30, 2006 and 2005		F-3

Condensed Consolidated Statements of Cash Flows for the three-month periods ended September 30, 2006 and 2005 and June 30, 2006 and for the nine-month periods ended September 30, 2006 and 2005		F-4

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended September 30, 2006 and 2005 and June 30, 2006 and for the nine-month periods ended September 30, 2006 and 2005		F-5

Notes to the Condensed Consolidated Financial Information		F-6

Signature Page

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars


	September		December 31,
	30,2006		2005
	(unaudited)
Assets
Current assets
Cash and cash equivalents		2,891		1,041
Accounts receivable
Related parties		213		159
Unrelated parties		2,045		1,490
Loans and advances to related parties		59		22
Inventories		1,336		1,142
Deferred income tax		358		186
Recoverable taxes		303		362
Others		374		373

		7,579		4,775


Property, plant and equipment, net		19,427		14,166
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments		1,690		1,672
Other assets
Goodwill on acquisition of subsidiaries		594		548
Loans and advances
Related parties		5		4
Unrelated parties		67		61
Prepaid pension cost		455		308
Judicial deposits		828		568
Advances to suppliers — energy		429		311
Recoverable taxes		208		110
Others		266		121

		2,852		2,031

TOTAL		31,548		22,644

F-1

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

(Continued)


	September 30,			December 31,
	2006			2005
	(unaudited)
Liabilities and stockholders’ equity

Current liabilities

Suppliers		908			1,110
Payroll and related charges		235			229
Dividends and interest attributed to stockholders		628			—
Current portion of long-term debt — unrelated parties		978			1,218
Short-term debt		233			15
Loans from related parties		46			62
Provision for income taxes		340			244
Taxes payable		92			53
Employees post-retirement benefits		36			30
Others		358			364

		3,854			3,325

Long-term liabilities
Employees post-retirement benefits		252			241
Long-term debt — unrelated parties		4,612			3,714
Loans from related parties		1			1
Provisions for contingencies (Note 11 (b))		1,425			1,286
Unrealized loss on derivative instruments		247			260
Deferred income tax		360			2
Provisions for asset retirement obligations		250			225
Others		478			395

		7,625			6,124

Minority interests		1,189			1,218


Stockholders’ equity
Preferred class A stock — 1,800,000,000 no-par-value shares authorized and 959,758,200 issued		4,702			2,150
Common stock — 900,000,000 no-par-value shares authorized and 1,499,898,858 issued		3,806			3,806
Treasury stock — 15,172,516 preferred and 28,291,020 common shares		(389	)		(88	)
Additional paid-in capital		498			498
Other cumulative comprehensive deficit		(1,792	)		(2,729	)
Appropriated retained earnings		4,706			4,357
Unappropriated retained earnings		7,349			3,983

		18,880			11,977

TOTAL		31,548			22,644

See notes to condensed consolidated financial statements.

F-2

Condensed Consolidated Statements of Income

Expressed in millions of United States dollars (Unaudited)
(except number of shares and per-share amounts)


										Nine-month periods ended
	Three-month periods ended									September 30,
	September 30,			June 30,			September 30,
	2006			2006			2005			2006			2005
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		4,014			3,286			2,887			10,060			7,712
Revenues from logistic services		383			362			359			1,034			907
Aluminum products		638			640			358			1,707			1,031
Other products and services		31			25			6			68			9

		5,066			4,313			3,610			12,869			9,659
Taxes on revenues		(214	)		(167	)		(165	)		(531	)		(465	)

Net operating revenues		4,852			4,146			3,445			12,338			9,194

Operating costs and expenses
Cost of ores and metals sold		(1,580	)		(1,350	)		(1,202	)		(4,186	)		(3,248	)
Cost of logistic services		(203	)		(196	)		(188	)		(573	)		(500	)
Cost of aluminum products		(382	)		(324	)		(249	)		(963	)		(643	)
Others		(16	)		(14	)		(6	)		(38	)		(9	)

		(2,181	)		(1,884	)		(1,645	)		(5,760	)		(4,400	)
Selling, general and administrative expenses		(167	)		(212	)		(160	)		(547	)		(408	)
Research and development		(134	)		(101	)		(104	)		(306	)		(192	)
Employee profit sharing plan		(34	)		(35	)		(24	)		(97	)		(65	)
Others		(88	)		(41	)		(107	)		(171	)		(158	)

		(2,604	)		(2,273	)		(2,040	)		(6,881	)		(5,223	)

Operating income		2,248			1,873			1,405			5,457			3,971

Non-operating income (expenses)
Financial income		59			45			36			146			92
Financial expenses		(172	)		(245	)		(216	)		(630	)		(359	)
Foreign exchange and monetary gains (losses), net		38			28			163			325			465
Gain on sale of investments		16			338			126			363			126

		(59	)		166			109			204			324

Income before income taxes, equity results and minority interests		2,189			2,039			1,514			5,661			4,295

Income taxes
Current		(419	)		(158	)		(172	)		(819	)		(662	)
Deferred		71			(80	)		(102	)		(62	)		(162	)

		(348	)		(238	)		(274	)		(881	)		(824	)

Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		187			184			194			527			547
Minority interests		(124	)		(105	)		(117	)		(352	)		(373	)

Net income		1,904			1,880			1,317			4,955			3,645

Basic and diluted earnings per Preferred Class A Share		0.79			0.77			0.57			2.04			1.58
Basic and diluted earnings per Common Share		0.79			0.77			0.57			2.04			1.58
Weighted average number of shares outstanding (thousands of shares) Common shares		1,471,608			1,471,608			1,471,608			1,471,608			1,471,608
Preferred Class A shares		952,346			959,717			831,432			955,873			831,432

See notes to condensed consolidated financial statements.

F-3

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


										Nine-month periods ended
	Three-month periods ended									September 30,
	September 30,			June 30,			September 30,
	2006			2006			2005			2006			2005
Cash flows from operating activities:
Net income		1,904			1,880			1,317			4,955			3,645

Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		232			205			171			618			436
Dividends received		242			98			158			452			353
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(187	)		(184	)		(194	)		(527	)		(547	)
Deferred income taxes		(71	)		80			102			62			162
Provisions for contingencies		23			19			10			55			(1	)
Gain on sale of investments		(16	)		(338	)		(126	)		(363	)		(126	)
Foreign exchange and monetary losses (gains)		25			(75	)		(201	)		(341	)		(472	)
Unrealized derivative losses (gains), net		(75	)		51			66			20			(24	)
Minority interests		124			105			117			352			373
Interest payable (receivable), net		(55	)		40			12			(43	)		48
Others		1			(21	)		3			24			(61	)
Decrease (increase) in assets:														.
Accounts receivable		(291	)		(346	)		281			(475	)		(283	)
Inventories		34			(23	)		(44	)		(6	)		(114	)
Others		10			(38	)		(441	)		(136	)		(702	)
Increase (decrease) in liabilities:														.
Suppliers		28			103			(21	)		(236	)		166
Payroll and related charges		47			47			22			(14	)		—
Income taxes		112			175			396			109			642
Others		88			(34	)		160			(117	)		150

Net cash provided by operating activities		2,175			1,744			1,788			4,389			3,645

Cash flows from investing activities:														.
Loans and advances receivable														.
Related parties														.
Additions		(2	)		1			(1	)		(8	)		(28	)
Repayments		8			—			28			11			53
Others		20			(35	)		(1	)		33			—
Guarantees and deposits		(26	)		(12	)		(32	)		(61	)		(52	)
Additions to investments		(57	)		(2	)		—			(61	)		(91	)
Additions to property, plant and equipment		(834	)		(961	)		(1,302	)		(2,650	)		(2,740	)
Proceeds from disposal of investments		—			418			126			432			126
Proceeds from disposals of property, plant and equipment		11			29			1			49			4
Cash used to acquire subsidiaries, net cash of acquired		(6	)		—			—			(6	)		—

Net cash used in investing activities		(886	)		(562	)		(1,181	)		(2,261	)		(2,728	)

Cash flows from financing activities:														.
Short-term debt, net issuances (repayments)		213			(65	)		(194	)		198			43
Loans														.
Related parties														.
Additions		(1	)		1			—			10			7
Repayments		(17	)		29			(17	)		(28	)		(43	)
Issuances of long-term debt														.
Related parties		—			—			—			—			15
Others		12			4			22			1,363			371
Stock treasury		(276	)		(25	)		—			(301	)		—
Repayments of long-term debt		(206	)		(200	)		(156	)		(727	)		(744	)
Dividends and interest attributed to stockholders		—			(650	)		—			(650	)		(500	)
Dividends to minority interest		(37	)		(19	)		—			(56	)		—

Net cash used in financing activities		(312	)		(925	)		(345	)		(191	)		(851	)

Increase in cash and cash equivalents		977			257			262			1,937			66
Effect of exchange rate changes on cash and cash equivalents		20			(7	)		17			(87	)		(80	)
Cash and cash equivalents, beginning of period		1,894			1,644			956			1,041			1,249

Cash and cash equivalents, end of period		2,891			1,894			1,235			2,891			1,235

Cash paid during the period for:														.
Interest on short-term debt		(2	)		(5	)		(1	)		(8	)		(1	)
Interest on long-term debt		(146	)		(73	)		(71	)		(313	)		(188	)
Income tax		(247	)		(31	)		(202	)		(465	)		(452	)
Non-cash transactions														.
Income tax paid with credits		(56	)		(40	)		(16	)		(126	)		(74	)
Interest capitalized		(34	)		(31	)		(10	)		(96	)		(34	)
Fair market value adjustment in relation to acquisition of minority interest in Caemi (Note 5)		—			—			—			(2,182	)		—

See notes to condensed consolidated financial statements.

F-4

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									Nine-month periods ended September 30,
	September 30,			June 30,			September 30,
	2006			2006			2005			2006			2005
Preferred class A stock (including three special shares)
Beginning of the period		4,702			4,702			2,150			2,150			1,176
Capital increase (Note 5)		—			—			—			2,552			—
Transfer from appropriated retained earnings		—			—			—			—			974

End of the period		4,702			4,702			2,150			4,702			2,150

Common stock
Beginning of the period		3,806			3,806			3,806			3,806			2,121
Merger of shares		—			—			—			—			1,685

End of the period		3,806			3,806			3,806			3,806			3,806

Treasury stock
Beginning of the period		(113	)		(88	)		(88	)		(88	)		(88	)
Acquisitions		(276	)		(25	)		—			(301	)		—

End of the period		(389	)		(113	)		(88	)		(389	)		(88	)

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

Other cumulative comprehensive deficit
Cumulative translation adjustments
Beginning of the period		(1,888	)		(2,006	)		(2,859	)		(2,856	)		(3,869	)
Change in the period		(34	)		118			590			934			1,600

End of the period		(1,922	)		(1,888	)		(2,269	)		(1,922	)		(2,269	)

Unrealized gain on available-for-sale securities
Beginning of the period		112			132			115			127			95
Change in the period		18			(20	)		49			3			69

End of the period		130			112			164			130			164

Total other cumulative comprehensive deficit		(1,792	)		(1,776	)		(2,105	)		(1,792	)		(2,105	)

Appropriated retained earnings
Beginning of the period		4,705			4,687			1,829			4,357			4,143
Transfer from unappropriated retained earnings		1			18			107			349			452
Transfer to capital stock		—			—			—			—			(2,659	)

End of the period		4,706			4,705			1,936			4,706			1,936

Unappropriated retained earnings
Beginning of the period		5,386			4,824			4,798			3,983			3,315
Net income		1,904			1,880			1,317			4,955			3,645
Dividends and interest attributed to stockholders
Preferred class A stock		—			(513	)		—			(513	)		(180	)
Common stock		—			(787	)		—			(787	)		(320	)
Appropriation to reserves		59			(18	)		(107	)		(289	)		(452	)

End of the period		7,349			5,386			6,008			7,349			6,008

Total stockholders’ equity		18,880			17,208			12,205			18,880			12,205

Comprehensive income is comprised as follows:
Net income		1,904			1,880			1,317			4,955			3,645
Cumulative translation adjustments		(34	)		118			590			934			1,600
Unrealized gain (loss) on available-for-sale securities		18			(20	)		49			3			69

Total comprehensive income		1,888			1,978			1,956			5,892			5,314


Shares
Preferred class A stock (including six special shares)(1)		959,758,200			959,758,200			831,455,478			959,758,200			831,455,478
Common stock		1,499,898,858			1,499,898,858			1,499,898,858			1,499,898,858			1,499,898,858
Treasury stock (2)
Beginning of the period		(29,595,036	)		(28,313,936	)		(28,314,626	)		(28,313,936	)		(28,314,922	)
Acquisitions		(13,868,500	)		(1,281,100	)		—			(15,149,600	)		—
Sales		—			—			—			—			296

End of the period		(43,463,536	)		(29,595,036	)		(28,314,626	)		(43,463,536	)		(28,314,626	)

		2,416,193,522			2,430,062,022			2,303,039,710			2,416,193,522			2,303,039,710

Dividends and interest attributed to stockholders (per share)
Preferred class A stock (including six special shares)		—			0.54			—			0.54			0.22
Common stock		—			0.54			—			0.54			0.22

(1)		Increase of 128,302,722 (after split of shares) preferred shares due to merger of shares from Caemi.

(2)		As of September, 2006, 28,291,020 common shares and 15,172,516 preferred shares were held in treasury in the amount of US$389. The 28,291,020 common shares are provided as collateral to secure a loan of our subsidiary Alunorte. On September 30, 2006 the market value of 4,924,760 of these shares would be sufficient to offset the balance of the debt.

See notes to condensed consolidated financial statements.

F-5

Notes to the Condensed Consolidated Financial Statements

Expressed in millions of United States dollars, unless otherwise stated

1		The Company and its operation

		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 joint ventures and affiliates are described in Note 8.

		The main operating subsidiaries we consolidate are as follows:

% voting

Head office

Subsidiary

% ownership

capital

location

Principal activity

Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)

Brazil

Alumina

Alumínio Brasileiro S.A. — Albras (“Albras”)

Brazil

Aluminum

CADAM S.A (CADAM)

100

Brazil

Kaolin

CVRD Overseas Ltd.

100

Cayman Islands

Trading

Ferrovia Centro-Atlântica S. A.

100

Brazil

Logistics

CVRD International S.A. (1)

100

Swiss

Trading

Minerações Brasileiras Reunidas S.A. — MBR

Brazil

Iron ore

Mineração Onça Puma Ltda

100

Brazil

Nickel

Navegação Vale do Rio Doce S.A. — DOCENAVE

100

Brazil

Shipping

Pará Pigmentos S.A.

Brazil

Kaolin

Rio Doce Manganês S.A.

100

Brazil

Manganese and Ferroalloys

Rio Doce Manganèse Europe — RDME

100

France

Ferroalloys

Rio Doce Manganese Norway — RDMN

100

Norway

Ferroalloys
Iron ore, Ferroalloys and

Urucum Mineração S.A.

100

Brazil

Manganese

Valesul Aumínio S.A. (2)

100

Brazil

Aluminum


(1)		Previously known as Itabira Rio Doce Company Ltd. — ITACO

(2)		Subsidiary consolidated as from July, 2006 (Note 5 and 8)

2		Basis of consolidation

		All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. As from January 1, 2004, our variable interest entities in which we are the primary beneficiary are consolidated. 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.

		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 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 hydroelectric power projects, are proportionately consolidated.

F-6

3		Summary of significant accounting policies

		Our condensed consolidated interim financial information for the three-month periods ended September 30, 2006, June 30, 2006 and September 30, 2005 and for the nine-month periods ended June 30, 2006 and 2005 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 and nine-month periods ended September 30, 2006 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2006.

		In preparing the condensed consolidated financial statements, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our condensed 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.

		We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$2.1623 and R$2.3370 at September 30, 2006 and December 31, 2005, respectively to US$1.00 or the first available exchange rate if exchange on the last day of the period, was not available), and all accounts in the statements of income (including amounts relative to local currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remeasurement process is included in the cumulative translation adjustments account in stockholders’ equity.

4		Recently-issued accounting pronouncements

		In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. Accordingly to the Board, a single definition of fair value, together with a framework for measuring fair value, should result in increased consistency and comparability in fair value measurements. This standard is effective for fiscal years ending on or after November 15, 2007. We are currently studying the impact of this standard.

		In September 2006, the Financial Accounting Standards Board issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. SFAS No. 158 requires employers to recognize the over funded or under funded status of defined benefit postretirement plans as an asset or a liability and to recognize the changes in the funded status through comprehensive income. Statement No. 158 also requires that defined benefit plan assets and obligations be measured as of the fiscal year-end. This standard is effective for fiscal years ending on or after December 15, 2006. We are currently studying the impact of this standard. At December 31, 2005 the Company had a funded status (excess of benefit obligation over plan assets) in the amount of US$811, from which US$131 was recorded as prepaid pension cost.

		In July 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes.” FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). Under the Interpretation, the financial statements will reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. This standard is effective for fiscal years starting on or after December, 15 2006. We are currently studying the impact of this standard.

F-7

5		Major acquisitions and disposals during the years presented

		On November, 2006 the Board of Directors approved the restructuring of its stake in USIMINAS, involving its entry into the control group and the partial sale of common shares. We will sell to Nippon Steel, Votorantim Participações S/A, and Camargo Correa S/A, 5,362,928 common shares amounting to R$379 million (approximately US$176). The remaining 13,829,192 Usiminas common shares will be sold through a public offer.

		During the third quarter of 2006, we sold 1,361,100 shares of GERDAU S.A. by approximately US$19. In the subsequent period after the closing of third quarter of 2006, we sold 3,379,825 shares of Gerdau S.A. by approximately US$48.

		On July 3, 2006 we acquired the remaining 45.5% of Valesul Alumínio S. A., which was a jointly controlled company with equal voting rights, for US$28, becoming our aluminum subsidiary and therefore we have been consolidating it since them.

		During the second quarter of 2006, we sold our total interest in Gulf Industrial Investment Company for US$418, resulting in a net gain of US$338.

		At an Extraordinary Shareholders’ Meeting on March 31, 2006, the Capital Stock increased by US$2,552, corresponding to 128,302,722 preferred shares (64,151,361 before split), due to the issuance of shares in relation to the acquisition of the outstanding minority interest in Caemi.

		Pro forma information considers that our acquisition of the 39.77% preferred shares of Caemi, totaling 100% of total interest as if it was completed at the beginning of each period.


	Three-month periods ended
	September 30, 2005
				Caemi - Merger
	Consolidated			(39.77%)		Pro Forma (unaudited)
Income before minority interests		1,434			—		1,434
Minority interests		(117	)		104		(13	)

Net income		1,317			104		1,421


Outstanding shares (thousands)		2,303,040			—		2,431,343
Basic and diluted earnings per share		0.57			—		0.58


	Nine-month periods ended September 30,
	2006								2005
				Caemi -								Caemi -
				Merger		Pro Forma						Merger		Pro Forma
	Consolidated			(39.77%)		(unaudited)			Consolidated			(39.77%)		(unaudited)
Income before minority interests		5,307			—		5,307			4,018			—		4,018
Minority interests		(352	)		54		(298	)		(373	)		196		(177	)

Net income		4,955			54		5,009			3,645			196		3,841


Outstanding shares (thousands)		2,416,194			—		2,416,194			2,303,040			—		2,341,343
Basic and diluted earnings per share		2.05			—		2.05			1.58			—		1.58

		In November 2005, we acquired 93.0% of the voting capital of Canico Resource Corp. (Canico) a Canadian-based junior resource company focused on the development of the Onça-Puma nickel laterite, for US$750. In December 2005, we acquired an additional 6.20% of the voting capital of Canico for US$50. Canico ´s only significant asset other than US$63 of cash and cash equivalents was US$794 of mining rights. On February 10, 2006, we concluded the acquisition of the outstanding common shares of Canico, acquiring the remaining voting capital of Canico, 0.8% of its total capital for US$6, which is now a wholly owned subsidiary.

		During the first quarter of 2006, we sold our total interest in Nova Era Silicon (49%) to JFE Steel Corporation for US$14, resulting in a net gain of US$9.

F-8

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:


										Nine-month periods ended
	Three-month periods ended									September 30,
	September			June 30,			September
	30,2006			2006			30,2005			2006			2005
Income before income taxes, equity results and minority interests		2,189			2,039			1,514			5,661			4,295

Federal income tax and social contribution expense at statutory enacted rates		(744	)		(693	)		(515	)		(1,925	)		(1,460	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		80			85			50			256			235
Exempt foreign income		301			348			143			763			271
Difference on tax basis of equity investees		(23	)		(18	)		(9	)		(107	)		(30	)
Tax incentives		71			44			54			147			135
Other non-taxable gains (losses)		(33	)		(4	)		3			(15	)		25

Federal income tax and social contribution expense in consolidated statements of income		(348	)		(238	)		(274	)		(881	)		(824	)

		We have certain tax incentives relative to our manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relative to manganese comprise partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels, which expires in 2009 and 2013, respectively, while the partial exemption incentives relative to aluminum and kaolin expire in 2013. 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. Tax loss carry forward has no expiration date.

7		Inventories


	September 30,		December 31,
	2006		2005
Finished products
Iron ore and pellets		318		271
Manganese and ferroalloys		118		151
Alumina		41		22
Aluminum		77		52
Kaolin		36		18
Others		36		28
Spare parts and maintenance supplies		710		600

		1,336		1,142

F-9

Investments in affiliated companies and joint ventures


	September 30, 2006								Investments				Equity Adjustments													Dividends received
																					Nine-month periods ended											Nine-month periods ended
													Three-month periods ended								September 30,					Three-month periods ended						September 30,
							Net income
	Participation in				Net		(loss) for the		September		December		September			June 30,		September								September		June 30,		September
	capital (%)				equity		period		30, 2006		31, 2005		30, 2006			2006		30, 2005			2006		2005			30, 2006		2006		30, 2005		2006		2005
	voting		total
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)		51.11		51.00		71		32		36		60		(1	)		7		13			16		26			—		—		—		22		—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		73		21		37		37		4			2		8			11		24			—		—		16		13		20
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		78		33		39		41		2			5		3			16		20			—		11		—		11		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)		51.00		50.90		66		19		34		33		3			2		5			10		19			—		—		10		12		10
SAMARCO Mineração S.A. — SAMARCO (2)		50.00		50.00		550		326		325		335		57			67		82			163		172			175		—		75		200		130
Minas da Serra Geral S.A. — MSG		50.00		50.00		46		2		23		21		1			1		2			1		(2	)		—		1		—		1		—
Gulf Industrial Investment Company — GIIC (5)		—		—		—		—		—		62		—			4		14			18		49			—		—		20		—		31
Others		—		—		—		—		21		25		1			—		—			—		(1	)		—		1		—		1		—

										515		614		67			88		127			235		307			175		13		121		260		191
Logistics
MRS Logística S.A		37.23		40.45		472		180		198		109		32			24		17			69		39			—		20		—		20		5

										198		109		32			24		17			69		39			—		20		—		20		5
Holdings

Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (4)		22.99		11.46		3.090		843		352		281		43			28		36			96		135			12		28		29		40		63
California Steel Industries Inc. — CSI		50.00		50.00		343		101		172		161		17			18		(1	)		50		15			37		—		8		40		28
SIDERAR (cost $15) — available for sale investments (4)		4.85		4.85		—		—		111		142		—			—		—			—		—			—		—		—		—		—

										635		584		60			46		35			146		150			49		28		37		80		91
Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		359		109		143		178		18			14		17			44		49			18		22		—		77		58
Valesul Alumínio S.A. — VALESUL (6)		100.00		100.00		—		—		—		58		—			8		(2	)		12		2			—		—		—		—		8

										143		236		18			22		15			56		51			18		22		—		77		66
Coal
Henan Longyu Resources Co. Ltd		25.00		25.00		412		85		103		96		10			4		—			21		—			—		15		—		15		—
Shandong Yankuang International Company Ltd(3)		25.00		25.00		102		—		27		22		—			—		—			—		—			—		—		—		—		—

										130		118		10			4		—			21		—			—		15		—		15		—
Other affiliates and joint ventures
Others		—		—		—		—		69		11		—			—		—			—		—			—		—		—		—		—

										69		11		—			—		—			—		—			—		—		—		—		—

										977		949		88			72		50			223		201			67		65		37		172		157

Total		—		—		—		—		1.690		1.672		187			184		194			527		547			242		98		158		452		353


(1)		CVRD held a majority of the voting interest of several entities that were accounted for under the equity method, in accordance with EITF 96-16, due to veto rights held by minority shareholders under shareholders agreements;

(2)		Investment includes goodwill of US$50 and US$46 in 2006 and 2005, respectively;

(3)		Pre operating investment;

(4)		The quoted market value of Usiminas is equal to US$879 and Siderar is equal to US$111;

(5)		Sold for US$418 in May, 2006.

(6)		Subsidiary consolidated as from July, 2006 (see note 5)

F-10

9		Stockholders’ equity

		On May 22, 2006 a stock split was effected which had been approved by the Extraordinary General Shareholders’ Meeting on April 27, 2006. Each existing, common and preferred, share was split into two shares.

		After the split our capital comprises 2,459,657,058 shares, of which 959,758,200 common shares 1,499,898,858 class “A” preferred shares, including six special class shares without par value (“Golden Share”). The share/ADR proportion will be maintained at 1/1; therefore, each common and preferred share, will continue to be represented by one ADR supported by one common share (NYSE: RIO) or by one ADR supported by one class “A” preferred share (NYSE: RIOPR) respectively.

		For comparative purposes we considered the effects of the split as it had occurred consistently in all periods presented.

		On June 21, 2006 the Board of Directors approved a buy-back program of our preferred shares. The program involves the acquisition of up to 47,986,763 preferred shares, corresponding to 5% of our preferred shares, to be executed during 180 days. We had acquired 1,281,100 and 13,868,500 preferred shares as of June 30, 2006 and September 30, 2006, respectively, totalizing at September 30, 2006 an acquisition of 15,149,600.

		On April 2006 we paid the first installment of the minimum mandatory dividend for 2006 of US$650. The distribution was made in the form of interest on stockholders’ equity and dividends and on October 2006 we paid the second installment of the minimum mandatory dividend for 2006 of US$650. The distribution was made in the form of interest on stockholders’ equity and dividends.

10		Pension costs


										Nine-month periods
	Three-month periods ended									ended September 30,
	September			June 30,			September
	30, 2006			2006			30, 2005			2006			2005
Service cost — benefits earned during the period		2			1			1			4			2
Interest cost on projected benefit obligation		70			70			63			186			179
Expected return on assets		(100	)		(100	)		(80	)		(266	)		(224	)
Amortization of initial transitory obligation		3			3			3			8			8
Net deferral		(7	)		(8	)		(3	)		(19	)		(11	)

Net periodic pension cost		(32	)		(34	)		(16	)		(87	)		(46	)

		In addition to benefits provided under the Pension Plan, accruals have been made relative to supplementary health care benefits extended in previous periods as part of early-retirement programs. Such accruals included in long-term liabilities totaled US$77, US$76 and US$71, at September 30, 2006, June 30, 2006 and September 30, 2005, respectively, plus US$7, US$6 and US$5, respectively, in current liabilities.

		The cost recognized for the three-month periods ended September 30, 2006, June 30, 2006, and September 30, 2005 and for the nine-month periods ended September 30, 2006 and September 30, 2005, relative to the defined contribution element of the New Plan was US$3, US$3, US$2, US$9 and US$6, respectively.

		We previously disclosed in our consolidated financial statements for the year ended December 31, 2005, that we expected to contribute US$59 to our defined benefit pension plan in 2006. As of September 30, 2006, US$44 of our contributions has been made. We do not expect any significant change in our previous estimate.

F - 11

11		Commitments and contingencies

(a)		At September 30, 2006, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of US$3, as follows:

Amount of

Denominated

Counter

Affiliate or Joint Venture

guarantee

currency

Purpose

Final maturity

guarantees

SAMARCO

US$

Debt guarantee

2008

None

		We expect no losses to arise as a result of the above guarantees. We charge commission for extending these guarantees.

		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 for contingent losses is sufficient to cover probable losses in connection with such actions.

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


	September 30, 2006				December 31, 2005
	Provision for		Judicial		Provision for		Judicial
	contingencies		deposits		contingencies		deposits
Labor and social security claims		355		218		229		138
Civil claims		249		141		210		98
Tax — related actions		794		468		816		329
Others		27		1		31		3

		1,425		828		1,286		568

		Labor and social security — related actions principally comprise claims for (i) payment of time spent traveling from their residences to the work-place, (ii) additional health and safety related payments and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal and the one-third extra holiday pay.

		Civil — actions principally related 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 and accidents.

		Tax — related actions principally comprise our challenges of certain revenue taxes, value added tax and income tax.

		We continue to vigorously pursue our interests in all the above actions but recognize that we probably 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.

		Contingencies settled in the three-month periods ended September 30, 2006 and 2005 and June, 2006 aggregated US$56, US$86 and US$178 , respectively, and additional provisions aggregated US$64 , US$96 and US$184 , respectively, classified in other operating expenses.

		In addition to the contingencies for which we have made provisions we are defending claims

F - 12

		which in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible losses, which total US$1,194 at September 30, 2006, for which no provision has been made.

(c)		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.

		At October 2, 2006 and March 27, 2006 we paid as remuneration of these “debentures” the amounts of $4 and $2, respectively.

(d)		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. On September 30, 2006, US$8 of environmental liabilities and asset retirement obligations was classified in current liabilities (Others).

		The changes are demonstrated as follows:


										Nine-month periods
	Three-month periods ended									ended September 30,
	September			June 30,			September
	30, 2006			2006			30, 2005			2006			2005
Provisions for asset retirement obligations beginning of period		252			248			159			225			134
Accretion expense		7			6			—			19			14
Liabilities settled in the current period		(1	)		(3	)		(2	)		(4	)		(6	)
Cumulative translation adjustment		—			1			9			18			24


Provisions for asset retirement obligations end of period		258			252			166			258			166

F - 13

12		Segment and geographical information

		We adopt 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. We analyze our segment information on aggregated and disaggregated basis 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, including potash, kaolin and copper.

		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 and aluminum metal smelting and investments in joint ventures and affiliates engaged in bauxite mining.

	•		Others — comprises our investments in joint ventures and affiliates engaged in other businesses.

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

F - 14

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations


	As of and for the three-month periods ended
	September 30, 2006																					June 30, 2006																					September 30, 2005
										Holdings																					Holdings																					Holdings
				Non																					Non																					Non
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Export		4,540			459			13			817			20			(1,984	)		3,865			3,649			378			15			877			19			(1,643	)		3,295			3,387			166			17			432			—			(1,398	)		2,604
Gross revenues — Domestic		769			95			379			167			—			(209	)		1,201			697			27			364			82			—			(152	)		1,018			586			70			353			87			—			(90	)		1,006
Cost and expenses		(3,317	)		(319	)		(250	)		(735	)		(24	)		2,193			(2,452	)		(2,770	)		(230	)		(264	)		(643	)		(22	)		1,795			(2,134	)		(2,554	)		(200	)		(256	)		(408	)		—			1,488			(1,930	)
Research and development		(34	)		(38	)		(2	)		—			(60	)		—			(134	)		(31	)		(18	)		(2	)		—			(50	)		—			(101	)		(18	)		(19	)		—			—			(67	)		—			(104	)
Depreciation, depletion and amortization		(165	)		(28	)		(22	)		(17	)		—			—			(232	)		(151	)		(23	)		(15	)		(14	)		(2	)		—			(205	)		(130	)		(14	)		(9	)		(18	)		—			—			(171	)

Operating income		1,793			169			118			232			(64	)		—			2,248			1,394			134			98			302			(55	)		—			1,873			1,271			3			105			93			(67	)		—			1,405
Financial income		190			—			8			5			5			(149	)		59			173			2			4			6			(7	)		(133	)		45			159			—			7			2			7			(139	)		36
Financial expenses		(317	)		(2	)		(2	)		9			(9	)		149			(172	)		(302	)		(2	)		(1	)		(72	)		(1	)		133			(245	)		(268	)		1			(14	)		(75	)		1			139			(216	)
Foreign exchange and monetary gains (losses), net		42			—			—			(2	)		(2	)		—			38			64			(53	)		4			12			1			—			28			126			1			(9	)		46			(1	)		—			163
Gain on sale of investments		16			—			—			—			—			—			16			338			—			—			—			—			—			338			—			—			—			—			126			—			126
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		69			—			31			18			69			—			187			88			—			24			22			50			—			184			127			—			17			15			35			—			194
Income taxes		(298	)		1			(2	)		(49	)		—			—			(348	)		(197	)		—			(4	)		(36	)		(1	)		—			(238	)		(248	)		2			(5	)		(22	)		(1	)		—			(274	)
Minority interests		(41	)		—			—			(83	)		—			—			(124	)		(30	)		—			—			(75	)		—			—			(105	)		(104	)		—			(1	)		(12	)		—			—			(117	)

Net income		1,454			168			153			130			(1	)		—			1,904			1,528			81			125			159			(13	)		—			1,880			1,063			7			100			47			100			—			1,317


Sales classified by geographic destination:
Export market
America, except United States		376			—			8			232			—			(249	)		367			276			—			7			157			—			(153	)		287			413			—			10			66			—			(286	)		203
United States		160			5			—			23			20			(66	)		142			156			2			—			3			19			(81	)		99			56			3			—			43			—			(17	)		85
Europe		1,483			259			5			362			—			(762	)		1,347			1,257			169			2			380			—			(625	)		1,183			1,303			82			7			205			—			(582	)		1,015
Middle East/Africa/Oceania		193			42			—			52			—			(44	)		243			193			112			—			106			—			(69	)		342			155			20			—			9			—			24			208
Japan		515			13			—			137			—			(170	)		495			366			8			—			142			—			(128	)		388			345			20			—			97			—			(120	)		342
China		1,413			37			—			11			—			(497	)		964			1,131			6			5			89			—			(417	)		814			858			17			—			12			—			(319	)		568
Asia, other than Japan and China		400			103			—			—			—			(196	)		307			270			81			1			—			—			(170	)		182			257			24			—			—			—			(98	)		183

		4,540			459			13			817			20			(1,984	)		3,865			3,649			378			15			877			19			(1,643	)		3,295			3,387			166			17			432			—			(1,398	)		2,604
Domestic market		769			95			379			167			—			(209	)		1,201			697			27			364			82			—			(152	)		1,018			586			70			353			87			—			(90	)		1,006

		5,309			554			392			984			20			(2,193	)		5,066			4,346			405			379			959			19			(1,795	)		4,313			3,973			236			370			519			—			(1,488	)		3,610

F - 15

Operating segment — after eliminations


	As of and for the three-month periods ended
	September 30, 2006
	Revenues																	Depreciation,						Property,		Addition to
							Value			Net		Cost and						depletion and			Operating			Plant and		Property,
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Equipment,		Plant and		Investiments
Ferrous
Iron ore		2,385		524		2,909		(82	)		2,827		(1,058	)		1,769			(141	)		1,628			12,383		530		44
Pellets		470		100		570		(22	)		548		(334	)		214			(14	)		200			533		12		471
Manganese		12		5		17		(1	)		16		(17	)		(1	)		(1	)		(2	)		60		1		—
Ferroalloys		85		45		130		(12	)		118		(122	)		(4	)		(6	)		(10	)		196		8		—

		2,952		674		3,626		(117	)		3,509		(1,531	)		1,978			(162	)		1,816			13,172		551		515

Non ferrous
Potash		—		55		55		(3	)		52		(33	)		19			(7	)		12			174		2		—
Kaolin		45		8		53		(2	)		51		(44	)		7			(8	)		(1	)		233		—		—
Copper		247		33		280		(7	)		273		(71	)		202			(13	)		189			1,352		56		—

		292		96		388		(12	)		376		(148	)		228			(28	)		200			1,759		58		—

Aluminum
Alumina		271		—		271		(8	)		263		(187	)		76			(10	)		66			1,624		114		—
Aluminum		304		59		363		(12	)		351		(192	)		159			(7	)		152			390		10		—
Bauxite		4		—		4		—			4		(5	)		(1	)		—			(1	)		499		74		143

		579		59		638		(20	)		618		(384	)		234			(17	)		217			2,513		198		143

Logistics
Railroads		—		278		278		(47	)		231		(131	)		100			(20	)		80			700		17		198
Ports		11		63		74		(12	)		62		(37	)		25			(4	)		21			222		4		—
Ships		11		20		31		(4	)		27		(28	)		(1	)		—			(1	)		3		—		—

		22		361		383		(63	)		320		(196	)		124			(24	)		100			925		21		198
Others		20		11		31		(2	)		29		(113	)		(84	)		(1	)		(85	)		1,058		6		834

		3,865		1,201		5,066		(214	)		4,852		(2,372	)		2,480			(232	)		2,248			19,427		834		1,690

F - 16

Operating segment — after eliminations (continued)


	As of and for the three-month periods ended
	June 30, 2006
																		Depreciation,						Property,		Addition to
	Revenues						Value			Net		Cost and						depletion and			Operating			Plant and		Property,
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Equipment,		Plant and		Investiments
Ferrous
Iron ore		1,986		485		2,471		(73	)		2,398		(959	)		1,439			(122	)		1,317			11,991		675		42
Pellets		313		90		403		(21	)		382		(270	)		112			(10	)		102			523		30		580
Manganese		8		4		12		(1	)		11		(17	)		(6	)		(1	)		(7	)		60		3		—
Ferroalloys		87		38		125		(10	)		115		(117	)		(2	)		(4	)		(6	)		208		15		—

		2,394		617		3,011		(105	)		2,906		(1,363	)		1,543			(137	)		1,406			12,782		723		622

Non ferrous
Potash		—		23		23		(2	)		21		(11	)		10			(7	)		3			177		1		—
Kaolin		40		7		47		—			47		(34	)		13			(7	)		6			239		—		—
Copper		201		4		205		—			205		(55	)		150			(12	)		138			1,297		18		—

		241		34		275		(2	)		273		(100	)		173			(26	)		147			1,713		19		—

Aluminum
Alumina		339		—		339		—			339		(204	)		135			(8	)		127			1,519		88		—
Aluminum		279		14		293		(1	)		292		(111	)		181			(6	)		175			384		6		72
Bauxite		8		—		8		—			8		(7	)		1			—			1			420		56		126

		626		14		640		(1	)		639		(322	)		317			(14	)		303			2,323		150		198

Logistics
Railroads		—		272		272		(46	)		226		(133	)		93			(19	)		74			693		26		167
Ports		—		64		64		(11	)		53		(30	)		23			(5	)		18			226		1		—
Ships		15		11		26		(2	)		24		(28	)		(4	)		(1	)		(5	)		3		—		—

		15		347		362		(59	)		303		(191	)		112			(25	)		87			922		27		167

Others		19		6		25		—			25		(92	)		(67	)		(3	)		(70	)		1,046		42		777

		3,295		1,018		4,313		(167	)		4,146		(2,068	)		2,078			(205	)		1,873			18,786		961		1,764

F - 17

Operating segment — after eliminations (continued)


	As of and for the three-month periods ended
	September 30, 2005
																		Depreciation,						Property,		Addition to
	Revenues						Value			Net		Cost and						depletion and			Operating			Plant and		Property,
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Equipment,		Plant and		Investiments
Ferrous
Iron ore		1,649		416		2,065		(66	)		1,999		(693	)		1,306			(120	)		1,186			8,171		934		50
Pellets		438		91		529		(22	)		507		(347	)		160			(7	)		153			453		3		579
Manganese		14		6		20		(2	)		18		(25	)		(7	)		(1	)		(8	)		35		2		—
Ferroalloys		61		31		92		(9	)		83		(87	)		(4	)		(5	)		(9	)		198		14		—

		2,162		544		2,706		(99	)		2,607		(1,152	)		1,455			(133	)		1,322			8,857		953		629

Non ferrous
Potash		—		47		47		(4	)		43		(32	)		11			(1	)		10			159		4		—
Kaolin		36		6		42		(2	)		40		(56	)		(16	)		(3	)		(19	)		244		5		—
Copper		75		17		92		(1	)		91		(59	)		32			(9	)		23			1,192		26		—

		111		70		181		(7	)		174		(147	)		27			(13	)		14			1,595		35		—

Aluminum
Alumina		116		30		146		(4	)		142		(130	)		12			(7	)		5			1,284		141		—
Aluminum		191		11		202		(2	)		200		(105	)		95			(11	)		84			378		5		64
Bauxite		10		—		10		—			10		(10	)		—			—			—			200		56		162

		317		41		358		(6	)		352		(245	)		107			(18	)		89			1,862		202		226

Logistics
Railroads		—		267		267		(38	)		229		(161	)		68			(5	)		63			688		79		97
Ports		—		67		67		(6	)		61		(32	)		29			(2	)		27			255		—		—
Ships		14		11		25		(3	)		22		(26	)		(4	)		—			(4	)		4		—		—

		14		345		359		(47	)		312		(219	)		93			(7	)		86			947		79		97

Others		—		6		6		(6	)		—		(106	)		(106	)		—			(106	)		114		33		692

		2,604		1,006		3,610		(165	)		3,445		(1,869	)		1,576			(171	)		1,405			13,375		1,302		1,644

F - 18

Results by segment — before eliminations (Unaudited)


	Nine-month periods ended September 30,
	2006																					2005
				Non									Holdings												Non									Holdings
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated

RESULTS
Gross revenues — Export		11,492			1,017			44			2,284			39			(5,076	)		9,800			8,985			525			54			1,299			—			(3,875	)		6,988
Gross revenues — Domestic		2,002			177			1,037			338			7			(492	)		3,069			1,651			161			899			261			—			(301	)		2,671
Cost and expenses		(8,664	)		(710	)		(744	)		(1,888	)		(50	)		5,568			(6,488	)		(6,906	)		(515	)		(624	)		(1,191	)		—			4,176			(5,060	)
Research and development		(87	)		(81	)		(5	)		—			(133	)		—			(306	)		(38	)		(69	)		—			(6	)		(79	)		—			(192	)
Depreciation, depletion and amortization		(450	)		(70	)		(51	)		(45	)		(2	)		—			(618	)		(324	)		(44	)		(28	)		(40	)		—			—			(436	)

Operating income		4,293			333			281			689			(139	)		—			5,457			3,368			58			301			323			(79	)		—			3,971
Financial income		524			2			20			13			2			(415	)		146			306			1			26			7			8			(256	)		92
Financial expenses		(895	)		(6	)		(5	)		(125	)		(14	)		415			(630	)		(556	)		(4	)		(21	)		(35	)		1			256			(359	)
Foreign exchange and monetary gains (losses), net		232			5			(7	)		96			(1	)		—			325			322			7			(16	)		153			(1	)		—			465
Gain on sale of investments		363			—			—			—			—			—			363			—			—			—			—			126			—			126
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		235			—			69			56			167			—			527			307			—			39			51			150			—			547
Income taxes		(741	)		1			(9	)		(131	)		(1	)		—			(881	)		(705	)		(1	)		(15	)		(101	)		(2	)		—			(824	)
Minority interests		(138	)		—			—			(214	)		—			—			(352	)		(233	)		—			(1	)		(139	)		—			—			(373	)

Net income		3,873			335			349			384			14			—			4,955			2,809			61			313			259			203			—			3,645


Sales classified by geographic destination:
Export market
America, except United States		923			1			21			520			—			(574	)		891			963			—			32			253			—			(575	)		673
United States		420			10			—			29			39			(188	)		310			348			3			3			163			—			(215	)		302
Europe		3,890			523			13			1,030			—			(1,967	)		3,489			3,645			257			19			522			—			(1,626	)		2,817
Middle East/Africa/Oceania		569			158			—			190			—			(181	)		736			556			92			—			15			—			(102	)		561
Japan		1,243			50			—			405			—			(442	)		1,256			890			32			—			292			—			(332	)		882
China		3,500			53			8			100			—			(1,230	)		2,431			1,898			55			—			38			—			(713	)		1,278
Asia, other than Japan and China		947			222			2			10			—			(494	)		687			685			86			—			16			—			(312	)		475

		11,492			1,017			44			2,284			39			(5,076	)		9,800			8,985			525			54			1,299			—			(3,875	)		6,988
Domestic market		2,002			177			1,037			338			7			(492	)		3,069			1,651			161			899			261			—			(301	)		2,671

		13,494			1,194			1,081			2,622			46			(5,568	)		12,869			10,636			686			953			1,560			—			(4,176	)		9,659

F - 19

Operating segment – after eliminations (Unaudited)


	Nine-month periods ended September 30,
	2006
																		Depreciation,						Property,		Addition to
	Revenues						Value			Net		Cost and						depletion and			Operating			Plant and		Property,
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Equipment,		Plant and		Investiments

Ferrous
Iron ore		6,004		1,376		7,380		(212	)		7,168		(2,877	)		4,291			(376	)		3,915			12,383		1,796		44
Pellets		1,158		277		1,435		(62	)		1,373		(899	)		474			(36	)		438			533		49		471
Manganese		28		12		40		(3	)		37		(41	)		(4	)		(3	)		(7	)		60		12		—
Ferroalloys		243		118		361		(31	)		330		(323	)		7			(14	)		(7	)		196		23		—

		7,433		1,783		9,216		(308	)		8,908		(4,140	)		4,768			(429	)		4,339			13,172		1,880		515

Non ferrous
Potash		—		100		100		(6	)		94		(58	)		36			(16	)		20			174		9		—
Kaolin		126		22		148		(5	)		143		(119	)		24			(21	)		3			233		—		—
Copper		538		58		596		(12	)		584		(179	)		405			(33	)		372			1,352		109		—

		664		180		844		(23	)		821		(356	)		465			(70	)		395			1,759		118		—

Aluminum
Alumina		760		10		770		(10	)		760		(529	)		231			(26	)		205			1,624		263		—
Aluminum		830		86		916		(15	)		901		(415	)		486			(19	)		467			390		17		—
Bauxite		21		—		21		—			21		(21	)		—			—			—			499		178		143

		1,611		96		1,707		(25	)		1,682		(965	)		717			(45	)		672			2,513		458		143

Logistics
Railroads		—		764		764		(132	)		632		(378	)		254			(55	)		199			700		69		198
Ports		11		181		192		(32	)		160		(98	)		62			(12	)		50			222		6		—
Ships		40		38		78		(7	)		71		(81	)		(10	)		(2	)		(12	)		3		—		—

		51		983		1,034		(171	)		863		(557	)		306			(69	)		237			925		75		198
Others		41		27		68		(4	)		64		(245	)		(181	)		(5	)		(186	)		1,058		119		834

		9,800		3,069		12,869		(531	)		12,338		(6,263	)		6,075			(618	)		5,457			19,427		2,650		1,690

F - 20

Operating segment – after eliminations (Unaudited) — (continued)


	Nine-month periods ended September 30,
	2005
	Revenues																	Depreciation,						Property,		Addition to
							Value			Net		Cost and						depletion and			Operating			Plant and		Property,
	Export		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Equipment,		Plant and		Investiments
Ferrous
Iron ore		4,208		1,113		5,321		(177	)		5,144		(1,890	)		3,254			(291	)		2,963			8,171		1,865		50
Pellets		1,167		272		1,439		(60	)		1,379		(917	)		462			(14	)		448			453		36		579
Manganese		44		15		59		(5	)		54		(48	)		6			(1	)		5			35		3		—
Ferroalloys		261		138		399		(37	)		362		(265	)		97			(13	)		84			198		55		—

		5,680		1,538		7,218		(279	)		6,939		(3,120	)		3,819			(319	)		3,500			8,857		1,959		629

Non ferrous
Potash		—		108		108		(9	)		99		(61	)		38			(5	)		33			159		11		—
Kaolin		108		18		126		(5	)		121		(114	)		7			(19	)		(12	)		244		5		—
Copper		225		35		260		(5	)		255		(143	)		112			(26	)		86			1,192		94		—

		333		161		494		(19	)		475		(318	)		157			(50	)		107			1,595		110		—

Aluminum
Alumina		324		68		392		(23	)		369		(323	)		46			(19	)		27			1,284		331		—
Aluminum		576		30		606		(4	)		602		(288	)		314			(21	)		293			378		16		64
Bauxite		33		—		33		—			33		(31	)		2			—			2			200		117		162

		933		98		1,031		(27	)		1,004		(642	)		362			(40	)		322			1,862		464		226

Logistics
Railroads		—		658		658		(102	)		556		(376	)		180			(22	)		158			688		165		97
Ports		—		173		173		(25	)		148		(91	)		57			(3	)		54			255		7		—
Ships		41		35		76		(7	)		69		(70	)		(1	)		(2	)		(3	)		4		1		—

		41		866		907		(134	)		773		(537	)		236			(27	)		209			947		173		97

Others		1		8		9		(6	)		3		(170	)		(167	)		—			(167	)		114		34		692

		6,988		2,671		9,659		(465	)		9,194		(4,787	)		4,407			(436	)		3,971			13,375		2,740		1,644

F - 21

13		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 contract derivatives for speculative 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 change in fair value of derivative financial instruments are as follows (the quarterly information is unaudited):


	Interest
	rates			Currencies												Copper
	(LIBOR)			*()**			Gold			Alumina			Aluminum			*()**		Total
Unrealized gains (losses) at July 1, 2006		(1	)		2			(61	)		(74	)		(178	)		—		(312	)
Financial settlement		—			—			5			11			12			—		28
Unrealized gains (losses) in the period		—			33			5			2			32			3		75
Effect of exchange rate changes		—			—			—			—			—			—		—


Unrealized gains (losses) at September 30, 2006		(1	)		35			(51	)		(61	)		(134	)		3		(209	)


Unrealized gains (losses) at April 1, 2006		(3	)		1			(58	)		(73	)		(163	)		—		(296	)
Financial settlement		1			—			4			13			15			—		33
Unrealized gains (losses) in the period		1			1			(7	)		(15	)		(31	)		—		(51	)
Effect of exchange rate changes		—			—			—			1			1			—		2

Unrealized gains (losses) at June 30, 2006		(1	)		2			(61	)		(74	)		(178	)		—		(312	)


Unrealized gains (losses) at July 1, 2005		(9	)		2			(30	)		(22	)		(54	)		—		(113	)
Financial settlement		—			(1	)		3			7			7			—		16
Unrealized gains (losses) in the period		2			—			(8	)		(13	)		(47	)		—		(66	)
Effect of exchange rate changes		—			—			(2	)		(2	)		(5	)		—		(9	)

Unrealized gains (losses) at September 30, 2005		(7	)		1			(37	)		(30	)		(99	)		—		(172	)


Unrealized gains (losses) at January 1, 2006		(4	)		1			(46	)		(53	)		(157	)		—		(259	)
Financial settlement		1			—			13			38			41			—		93
Unrealized gains (losses) in the period		2			34			(14	)		(42	)		(3	)		3		(20	)
Effect of exchange rate changes		—			—			(4	)		(4	)		(15	)		—		(23	)

Unrealized gains (losses) at September 30, 2006		(1	)		35			(51	)		(61	)		(134	)		3		(209	)


Unrealized gains (losses) at January 1, 2005		(17	)		4			(37	)		(55	)		(127	)		—		(232	)
Financial settlement		8			(1	)		7			23			26			—		63
Unrealized gains (losses) in the period		4			(2	)		(2	)		8			16			—		24
Effect of exchange rate changes		(2	)		—			(5	)		(6	)		(14	)		—		(27	)

Unrealized gains (losses) at September 30, 2005		(7	)		1			(37	)		(30	)		(99	)		—		(172	)


(*)		Included as “others” in Other assets.

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Unrealized gains (losses) in the period are included in our income statement under the caption of financial expenses and foreign exchange and monetary gains (losses), net.

Final maturity dates for the above instruments are as follows:


Gold		December 2008
Interest rates(LIBOR)		October 2007
Currencies		December 2011
Alumina		December 2008
Aluminum		December 2008
Copper		December 2008

14		Acquisition of INCO (Subsequent events)

		On October 23, 2006 we acquired Inco Limited (Inco) for US$13 billion, corresponding to 174,623,019 common shares for Cdn$ 86.00 each share, representing 75.66% of its outstanding shares.

		Our acquisition is consistent with our long-term corporate strategy and with our non-ferrous metals busines strategy. It is a new step in our strategy of developing, operating and maximizing the performance of large-scale, long-life and low-cost assets.

		Our acquisition will bring a better diversification to our activities by products, markets and geographic asset base contributing to reducing our business and financial risks.

		Inco is a leading Canadian-based nickel company, and one of the largest nickel producer possessing the world’s largest nickel reserve base.

		In accordance with our stated purpose of acquiring 100% of the outstanding shares of Inco, we are taking the steps to acquire the remaining shares. Until November 3, 2006 we have already acquired 196,078,276 shares by aproximatelly US$15 billion, representing 86.57% of Inco’s capital.

		Our financial disbursement with the acquisition of 100% of Inco shares is estimated to reach aproximatelly US$17 billion. Most part of money is coming from a bridge loan supplied by a syndicate of banks. The bridge loan has a two-year tenor, with an interest rate of Libor plus 40 basis points during the first year and Libor plus 60 basis points during the second year.

		We expect to conclude several transactions to take out the bridge loan aiming to extended our debt maturity close to the pre-acquisition level, longer than seven years.

		The allocations on the purchase price to acquired assets and liabilities in the following unaudited information are based on management’s preliminary internal valuation estimates. Accordingly, the purchase price allocation ajustments set forth bellow are preliminary and are subject to revision , which may be material.

		Fair value used herein were calculated using current pension and post retirement benefits obligation funded status, current interest rates and sales prices for finished goods, estimated future production, investment, costs, commodity prices and cash flows.

F - 23

The preparation of this information assumes that upon completation of the acquisition we will own 100% of Inco.


Cash consideration using the US$/Cdn.$ exchange rate as of September 30, 2006	16,869
Estimated transaction costs	32

Purchase price	16,901
Book value of assets acquired and liabilities assumed, net	(4,672	)
Adjustment to fair value of inventory	(2,097	)
Adjustment to fair value of property, plant and equipment	(12,310	)
Change of control adjustments	1,145
Adjustment to fair value of other liabilities assumed	372
Adjustment to deferred taxes	3,360

Goodwill	2,699

* * *

F - 24

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: November 13, 2006	By:	/s/ Fabio de Oliveira Barbosa
		Fabio de Oliveira Barbosa
		Chief Financial Officer