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1 the 2006 capex budget January 27, 2006 Companhia Vale do Rio Doce Leveraging the competitive advantages:

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Presentation on theme: "1 the 2006 capex budget January 27, 2006 Companhia Vale do Rio Doce Leveraging the competitive advantages:"— Presentation transcript:

1 1 the 2006 capex budget January 27, 2006 Companhia Vale do Rio Doce Leveraging the competitive advantages:

2 2 Disclaimer This presentation may contain statements that express managements expectations about future events or results rather than historical facts. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected in forward- looking statements, and CVRD cannot give assurance that such statements will prove correct. These risks and uncertainties include factors: relating to the Brazilian economy and securities markets, which exhibit volatility and can be adversely affected by developments in other countries; relating to the iron ore business and its dependence on the global steel industry, which is cyclical in nature; and relating to the highly competitive industries in which CVRD operates. For additional information on factors that could cause CVRDs actual results to differ from expectations reflected in forward-looking statements, please see CVRDs reports filed with the Brazilian Comissão de Valores Mobiliários and the U.S. Securities and Exchange Commission.

3 3 Capex of US$ 4.6 billion in line with strategic plan nOrganic growth is the main driver of shareholder value creation nWorld-class assets and synergies with an efficient logistics infrastructure provide opportunities for high rates of return on projects

4 4 CVRD has an excellent track record of delivering: 14 major projects over the last four years Funil Alunorte 3 Carajás 70 Mtpa Sossego Candonga Aimorés Alunorte 4 São Luís Trombetas Capão Xavier Pier III PDM Mo I Rana Fábrica Nova Taquari-Vassouras Average ROIC 2002-2005: 33.7%

5 5 CVRD, a global leader of shareholder value creation Source: The Boston Consulting Group Large Cap 1 Top Ten, 2000-2004 1 n=119 global companies with a market valuation greater than US$ 25 billion

6 6 The highest TSR among large mining companies TSR 2001-2005 Annual average

7 7 Capex continues to be growth-focused: 77% of budget dedicated to growth US$ 4.6 billion

8 8 Capex will increase US$ 1.3 billion relatively to the US$ 3.3 billion spent in 2005 4,626 US$ million Capex 2005 New projects 3,361 201 227 504 Cost increase 891 R&D¹ (558) 1 US$ 100 million is due to Onça Puma Capex 2006 SIB Old projects

9 9 We are developing six very attractive iron ore projects TotalCapacityStart-up investmentincrease US$ millionMtpy Carajás 85 Mtpy296152006 Carajás 100 Mtpy366152007 Brucutu85624¹2006/07 Itabira7532007 Fazendão10014²2007 Fábrica14452007 1 Can be expanded to 30 Mtpy ² ROM

10 10 CVRD iron ore production grew at 15% per annum from 2001 to 2005. It is expected to reach almost 300 Mtpy in 2007 Iron ore production Mtpy

11 11 Exploring the long-term upward trend of pellets consumption TotalCapacityStart-up investmentincrease US$ millionMtpy Itabiritos7597.02008 Tubarão VIII5167.02008 Samarco¹1,1837.62008 1 Samarco is a JV. Its project is not included in CVRD capex program. 3 new highly competitive plants

12 12 Exploring our strong competitive advantages in the aluminum business nParagominas, a new big bauxite mine –CapexUS$ 548 million –Capacity2007: 5.4 Mtpy 2008: 9.9 Mtpy nAlunorte, the worlds lowest expansion cost –CapexUS$ 1.4 billion –Capacity2006: 4.5 Mtpy 2008: 6.4 Mtpy

13 13 CVRD alumina production grew at 13% per year from 2001 to 2005 and it is expected to reach 6.4 Mtpy in 2009 Alumina production Mtpy

14 14 CVRD will emerge as a fairly large global player in nickel TotalCapacityStart-up investmentincrease US$ billionKtpy Vermelho¹1.2462008 Onça Puma²1.1572008 1 Final product: nickel cathodes and cobalt (2.8 Mtpy). ² To be approved. Final product: ferronickel.

15 15 CVRD is investing in the logistics infrastructure to support the mining business nPorts –PDM - capacity to load 100 Mtpy of iron oreUS$ 196 million –Tubarão – higher speed of ship loadingUS$ 65 million –Guaíba Island – capacity to 49 mtpy from 43 Mtpy US$ 41 million –Sepetiba – capacity to 21 Mtpy from 16 Mtpy US$ 28 million nRailroads –1,426 railcars & 22 locos US$ 200 million –EFC expansion US$ 153 million Capex

16 16 Fostering iron ore consumption in Brazil - attracting steelmaking projects - taking advantage of the trend towards geographical reallocation of global steel capacity nCeará Steel –Capacity:1.5 Mtpy –CVRD Capex:US$ 25 million –DR pellets consumption:2.5 Mtpy –Estimated start-up:2009 nCSA –Capacity:4.1 Mtpy –CVRD Capex:US$ 200 million –Iron ore & pellets consumption: 7.1 Mtpy –Estimated start-up:2008

17 17 e-mail: e-mail: CVRD – A global leader

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