Edgar Filing: Companhia Vale do Rio Doce

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

March 2008

Companhia Vale do Rio Doce

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 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- .)

COMPANHIA VALE DO RIO DOCE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page

Report of Independent Registered Public Accounting Firm		F-2

Management’s Report on Internal Control Over Financial Reporting		F-4

Consolidated Balance Sheets as of December 31, 2007 and 2006		F-5

Consolidated Statements of Income for the three-month periods ended December 31, 2007, September 30, 2007 and December 31, 2006 and for the years ended December 31, 2007, 2006 and 2005		F-7

Consolidated Statements of Cash Flows for the three-month periods ended December 31, 2007, September 30, 2007 and December 31, 2006 and for the years ended December 31, 2007, 2006 and 2005		F-8

Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended December 31, 2007, September 30, 2007 and December 31, 2006 and for the years ended December 31, 2007, 2006 and 2005		F-9

Notes to the Consolidated Financial Statements		F-10

Supplemental Financial Information		S-1

F - 1

PricewaterhouseCoopers
Rua da Candelária, 65 11° - 15°
20091-020 Rio de Janeiro, RJ - Brasil
Caixa Postal 949
Telefone (21) 3232-6112
Fax (21) 2516-6319
www.pwc.com/br

Report of Independent Registered
Public Accounting Firm

To the Board of Directors and Stockholders
Companhia Vale do Rio Doce

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in stockholders’ equity present fairly, in all material respects, the financial position of Companhia Vale do Rio Doce and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on internal control over financial reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits (which were integrated audits in 2007 and 2006). We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an

F - 2

understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As discussed in Note 18 to the consolidated financial statement, the Company changed the manner in which its accounts for defined benefit pension and other retirement plans in 2006.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
February 28, 2008

F - 3

Management’s Report on Internal Control over Financial Reporting

The management of Companhia Vale do Rio Doce – VALE is responsible for establishing and maintaining adequate internal control over financial reporting.

The company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate.

Vale’s management has assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2007 based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission — COSO. Based on such assessment and criteria, Vale’s management has concluded that the company’s internal control over financial reporting was effective as of December 31, 2007.

The effectiveness of the company’s internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein.

By:
Name: Roger Agnelli
Title: Chief Executive Officer

By:

Name: Fabio de Oliveira Barbosa
Title: Chief Financial Officer

Date: February 28, 2008

F -4

Consolidated Balance Sheets
Expressed in millions of United States Dollars


	As of December 31,
	2007		2006
Assets
Current assets
Cash and cash equivalents		1,046		4,448
Accounts receivable
Related parties		281		675
Unrelated parties		3,671		2,929
Loans and advances to related parties		64		40
Inventories		3,859		3,493
Deferred income tax		603		410
Recoverable taxes		1,159		414
Others		697		531

		11,380		12,940


Property, plant and equipment, net, and intangible assets		54,625		38,007
Investments in affiliated companies, joint ventures and other investments		2,922		2,353
Other assets
Goodwill on acquisition of subsidiaries		3,791		4,484
Loans and advances
Related parties		3		5
Unrelated parties		127		109
Prepaid pension cost		1,009		977
Prepaid expenses		200		360
Judicial deposits		1,124		852
Advances to suppliers — energy		574		443
Recoverable taxes		199		305
Unrealized gains on derivative instruments		673		22
Others		90		69

		7,790		7,626

TOTAL		76,717		60,926

The accompanying notes are an integral part of these consolidated financial statements.

F - 5

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


	(Continued)
	As of December 31,
	2007			2006
Liabilities and stockholders’ equity
Current liabilities
Suppliers		2,430			2,382
Payroll and related charges		734			451
Minimum annual dividends attributed to stockholders		2,683			1,494
Current portion of long-term debt — unrelated parties		1,249			711
Short-term debt		167			723
Loans from related parties		6			25
Provision for income taxes		1,198			817
Taxes payable and royalties		322			149
Employees post retirement benefits		131			107
Sub-concession North South Railroad		210			—
Unrealized losses on derivative instruments		346			—
Provisions for asset retirement obligations		64			—
Others		543			453

		10,083			7,312

Long-term liabilities
Employees post retirement benefits		2,204			1,841
Long-term debt — unrelated parties		17,608			21,122
Provisions for contingencies (Note 19 (c))		2,453			1,641
Unrealized losses on derivative instruments		5			705
Deferred income tax		5,725			4,527
Provisions for asset retirement obligations		911			676
Sub-concession North South Railroad		210			—
Others		1,687			618

		30,803			31,130

Minority interests		2,555			2,811


Commitments and contingencies (Note 19)

Stockholders’ equity (Note 16)
Preferred class A stock — 7,200,000,000 no-par-value shares authorized and 1,919,516,400 issued		4,953			4,702
Common stock — 3,600,000,000 no-par-value shares authorized and 2,999,797,716 issued		7,742			3,806
Treasury stock — 30,341,144 preferred and 56,582,040 common shares		(389	)		(389	)
Additional paid-in capital		498			498
Mandatory convertible notes in common shares		1,288			—
Mandatory convertible notes in preferred shares		581			—
Other cumulative comprehensive income (deficit)		1,655			(1,004	)
Undistributed retained earnings		15,317			9,555
Unappropriated retained earnings		1,631			2,505

		33,276			19,673

TOTAL		76,717			60,926

The accompanying notes are an integral part of these consolidated financial statements.

F - 6

Consolidated Statements of Income
Expressed in millions of United States Dollars
(Except per share amounts)


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended December 31,
	2007			2007			2006			2007			2006			2005
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		7,213			6,927			6,451			28,441			16,511			10,767
Revenues from logistic services		389			391			342			1,525			1,376			1,216
Aluminum products		672			677			674			2,722			2,381			1,408
Other products and services		138			129			27			427			95			14

		8,412			8,124			7,494			33,115			20,363			13,405
Taxes on revenues		(249	)		(226	)		(181	)		(873	)		(712	)		(613	)

Net operating revenues		8,163			7,898			7,313			32,242			19,651			12,792

Operating costs and expenses
Cost of ores and metals sold		(3,687	)		(3,053	)		(3,760	)		(13,628	)		(7,946	)		(4,620	)
Cost of logistic services		(231	)		(207	)		(204	)		(853	)		(777	)		(705	)
Cost of aluminum products		(486	)		(419	)		(392	)		(1,705	)		(1,355	)		(893	)
Others		(100	)		(106	)		(31	)		(277	)		(69	)		(11	)

		(4,504	)		(3,785	)		(4,387	)		(16,463	)		(10,147	)		(6,229	)
Selling, general and administrative expenses		(424	)		(287	)		(269	)		(1,245	)		(816	)		(583	)
Research and development		(262	)		(206	)		(175	)		(733	)		(481	)		(277	)
Others		(290	)		(190	)		(302	)		(607	)		(570	)		(271	)

		(5,480	)		(4,468	)		(5,133	)		(19,048	)		(12,014	)		(7,360	)

Operating income		2,683			3,430			2,180			13,194			7,637			5,432

Non-operating income (expenses)
Financial income		58			39			181			295			327			123
Financial expenses		(227	)		(198	)		(708	)		(1,592	)		(1,338	)		(560	)
Foreign exchange and monetary gains, net		304			553			204			2,559			529			299
Gain on sale of investments		—			103			311			777			674			126

		135			497			(12	)		2,039			192			(12	)

Income before income taxes, equity results and minority interests		2,818			3,927			2,168			15,233			7,829			5,420

Income taxes
Current		(610	)		(975	)		(314	)		(3,901	)		(1,134	)		(754	)
Deferred		394			28			(237	)		700			(298	)		(126	)

		(216	)		(947	)		(551	)		(3,201	)		(1,432	)		(880	)

Equity in results of affiliates and joint ventures and other investments		136			165			183			595			710			760
Minority interests		(165	)		(205	)		(227	)		(802	)		(579	)		(459	)

Net income		2,573			2,940			1,573			11,825			6,528			4,841


Basic and diluted earnings per share
Earnings per preferred share		0.52			0.59			0.33			2.41			1.35			1.05
Earnings per common share		0.52			0.59			0.33			2.41			1.35			1.05
Earnings per convertible notes linked to prefered share (*)		0.79			0.86			—			3.30			—			—
Earnings per convertible notes linked to common share (*)		0.85			0.94			—			3.51			—			—


(*)		Basic earnings per share only as dulition assumes conversion.

The accompanying notes are an integral part of these consolidated financial statements.

F - 7

Consolidated Statements of Cash Flows
Expressed in millions of United States Dollars


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended December 31,
	2007			2007			2006			2007			2006			2005
Cash flows from operating activities:
Net income		2,573			2,940			1,573			11,825			6,528			4,841

Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		737			532			379			2,186			997			619
Dividends received		112			39			64			394			516			489
Equity in results of affiliates and joint ventures		(136	)		(165	)		(183	)		(595	)		(710	)		(760	)
Deferred income taxes		(394	)		(28	)		237			(700	)		298			126
Loss on sale of property, plant and equipment		104			3			57			168			106			26
Gain on sale of investments		—			(103	)		(311	)		(777	)		(674	)		(126	)
Foreign exchange and monetary losses (gains), net		(266	)		(565	)		(576	)		(2,827	)		(917	)		(237	)
Unrealized derivative losses (gains), net		(326	)		(338	)		94			(917	)		116			101
Minority interests		165			205			227			802			579			459
Interest payable (receivable), net		(23	)		9			79			102			36			62
Others		46			68			(123	)		115			(93	)		(132	)
Decrease (increase) in assets:
Accounts receivable		135			489			37			235			(438	)		(416	)
Inventories		(558	)		(194	)		865			(343	)		859			(138	)
Others		80			(467	)		124			(292	)		(12	)		(639	)
Increase (decrease) in liabilities:
Suppliers		429			95			189			998			(47	)		279
Payroll and related charges		106			121			(72	)		170			(86	)		40
Income taxes		(582	)		526			(25	)		393			84			413
Others		260			(327	)		208			75			90			154

Net cash provided by operating activities		2,462			2,840			2,843			11,012			7,232			5,161

Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions		(32	)		—			(10	)		(33	)		(18	)		(27	)
Repayments		—			—			—			10			11			115
Others		(1	)		3			(49	)		1			(16	)		—
Judicial deposits		(50	)		(12	)		(17	)		(125	)		(78	)		(59	)
Additions to investments		(230	)		—			(46	)		(324	)		(107	)		(103	)
Additions to property, plant and equipment		(2,747	)		(1,367	)		(1,781	)		(6,651	)		(4,431	)		(3,977	)
Proceeds from disposal of investments		—			134			405			1,042			837			126
Proceeds from disposals of property, plant and equipment		—			—			—			—			49			16
Cash used to acquire subsidiaries, net of cash acquired		—			—			(13,195	)		(2,926	)		(13,201	)		(737	)

Net cash used in investing activities		(3,060	)		(1,242	)		(14,693	)		(9,006	)		(16,954	)		(4,646	)

Cash flows from financing activities:
Short-term debt, additions		2,021			472			1,151			4,483			4,912			763
Short-term debt, repayments		(1,877	)		(472	)		(670	)		(5,040	)		(4,233	)		(849	)
Loans
Related parties
Additions		1			5			—			259			10			10
Repayments		(39	)		—			(22	)		(273	)		(50	)		(43	)
Issuances of long-term debt
Related parties		—			—			14			—			14			15
Others		646			54			20,630			7,212			21,993			1,757
Treasury stock		—			—			—			—			(301	)		—
Repayments of long-term debt
Others		(114	)		(871	)		(6,908	)		(11,130	)		(7,635	)		(884	)
Proceeds from mandatory convertible notes		—			—			—			1,869			—			—
Interest attributed to stockholders		(1,050	)		—			(650	)		(1,875	)		(1,300	)		(1,300	)
Dividends to minority interest		(429	)		—			(9	)		(714	)		(65	)		—

Net cash provided by (used in) financing activities		(841	)		(812	)		13,536			(5,209	)		13,345			(531	)

Increase (decrease) in cash and cash equivalents		(1,439	)		786			1,686			(3,203	)		3,623			(16	)
Effect of exchange rate changes on cash and cash equivalents		(23	)		(52	)		(129	)		(199	)		(216	)		(192	)
Cash and cash equivalents, beginning of period		2,508			1,774			2,891			4,448			1,041			1,249

Cash and cash equivalents, end of period		1,046			2,508			4,448			1,046			4,448			1,041

Cash paid during the period for:
Interest on short-term debt		(8	)		(1	)		(1	)		(49	)		(9	)		(9	)
Interest on long-term debt		(361	)		(324	)		(252	)		(1,289	)		(565	)		(243	)
Income tax		(732	)		(691	)		(121	)		(3,284	)		(586	)		(481	)

Non-cash transactions
Interest capitalized		(15	)		(20	)		(30	)		(78	)		(126	)		(86	)
Issuance of preferred stock for the acquisition of Caemi, net of cash acquired		—			—			—			—			(2,552	)		—

The accompanying notes are an integral part of these consolidated financial statements.

F - 8

Consolidated Statements of Changes in Stockholders’ Equity
Expressed in millions of United States Dollars
(except number of shares and per-share amounts)


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,			Year ended December 31,
	2007			2007			2006			2007			2006			2005
Preferred class A stock (including twelve special shares)
Beginning of the period		4,953			4,953			4,702			4,702			2,150			1,176
Capital increase		—			—			—			—			2,552			—
Transfer from undistributed retained earnings		—			—			—			251			—			974

End of the period		4,953			4,953			4,702			4,953			4,702			2,150

Common stock
Beginning of the period		7,742			7,742			3,806			3,806			3,806			2,121
Transfer from undistributed retained earnings		—			—			—			3,936			—			1,685

End of the period		7,742			7,742			3,806			7,742			3,806			3,806

Treasury stock
Beginning of the period		(389	)		(389	)		(389	)		(389	)		(88	)		(88	)
Acquisitions		—			—			—			—			(301	)		—

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

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

Mandatory convertible notes in common shares
Beginning and end of the period		1,288			1,288			—			—			—			—
Change in the period		—			—			—			1,288			—			—

		1,288			1,288			—			1,288			—			—

Mandatory convertible notes in preferred shares
Beginning and end of the period		581			581			—			—			—			—
Change in the period		—			—			—			581			—			—

		581			581			—			581			—			—
Other cumulative comprehensive income (deficit)
Cumulative translation adjustments
Beginning of the period		1,003			(464	)		(1,862	)		(1,628	)		(2,856	)		(3,869	)
Change in the period		337			1,467			234			2,968			1,228			1,013

End of the period		1,340			1,003			(1,628	)		1,340			(1,628	)		(2,856	)

Unrealized gain on available-for-sale securities
Beginning of the period		229			205			130			271			127			95
Change in the period		(18	)		24			141			(60	)		144			32

End of the period		211			229			271			211			271			127
Superavit (deficit) accrued pension plan
Beginning of the period		540			472			460			353			460			—
Change in the period		(465	)		68			(107	)		(278	)		(107	)		—

End of the period		75			540			353			75			353			—

Cash flow hedge
Beginning of the period		23			14			—			—			—			—
Change in the period		6			9			—			29			—			—

End of the period		29			23			—			29			—			—

Total other cumulative comprehensive income (deficit)		1,655			1,795			(1,004	)		1,655			(1,004	)		(2,729	)

Undistributed retained earnings
Beginning of the period		6,560			6,233			4,646			9,555			4,357			4,143
Transfer from unappropriated retained earnings		8,757			327			4,909			9,949			5,198			2,873
Transfer to capital stock		—			—			—			(4,187	)		—			(2,659	)

End of the period		15,317			6,560			9,555			15,317			9,555			4,357

Unappropriated retained earnings
Beginning of the period		10,524			7,952			7,349			2,505			3,983			3,315
Net income		2,573			2,940			1,573			11,825			6,528			4,841
Interest attributed to mandatory covertible debt
Preferred class A stock		(8	)		(14	)		—			(22	)		—			—
Common stock		(18	)		(27	)		—			(45	)		—			—
Dividends and interest attributed to stockholders
Preferred class A stock		(1,049	)		—			(585	)		(1,049	)		(1,098	)		(469	)
Common stock		(1,634	)		—			(923	)		(1,634	)		(1,710	)		(831	)
Appropriation to reserves		(8,757	)		(327	)		(4,909	)		(9,949	)		(5,198	)		(2,873	)

End of the period		1,631			10,524			2,505			1,631			2,505			3,983

Total stockholders’ equity		33,276			33,552			19,673			33,276			19,673			11,977


Preferred class A stock (including twelve special shares)		1,919,516,400			1,919,516,400			1,919,516,400			1,919,516,400			1,919,516,400			1,662,910,956
Common stock		2,999,797,716			2,999,797,716			2,999,797,716			2,999,797,716			2,999,797,716			2,999,797,716
Treasury stock
Beginning of the period		(86,923,184	)		(86,923,328	)		(86,927,072	)		(86,927,072	)		(56,627,872	)		(56,629,844	)
Acquisitions		—			—			—			—			(30,299,200	)		—
Sales		—			144			—			3,888			—			1,972

End of the period		(86,923,184	)		(86,923,184	)		(86,927,072	)		(86,923,184	)		(86,927,072	)		(56,627,872	)

		4,832,390,932			4,832,390,932			4,832,387,044			4,832,390,932			4,832,387,044			4,606,080,800

Dividends and interest attributed to stockholders (per share):
Preferred class A stock (including twelve special shares)		0.56			—			0.31			0.56			0.58			0.29
Common stock		0.56			—			0.31			0.56			0.58			0.29

The accompanying notes are an integral part of these consolidated financial statements.

F - 9

Notes to the Consolidated Financial Statements

Expressed in millions of United States Dollars, unless otherwise stated

1		The Company and its operation

		Companhia Vale do Rio Doce (Vale) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. The operations are carried out through Vale and our 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.

		On December 31, 2007 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”)

57.03

61.74

Brazil

Alumina

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

51.00

Brazil

Aluminum

CADAM S.A (CADAM)

61.48

100.00

Brazil

Kaolin

CVRD International S.A.

100.00

Swiss

Trading

CVRD Overseas Ltd.

100.00

Cayman Islands

Trading

Vale Inco Limited (1)

100.00

Canada

Nickel

Ferrovia Centro-Atlântica S. A.

100.00

Brazil

Logistics

Minerações Brasileiras Reunidas S.A. — MBR (5)

92.99

Brazil

Iron ore

Mineração Onça Puma Ltda

100.00

Brazil

Nickel

Pará Pigmentos S.A. (“PPSA”)

86.17

85.57

Brazil

Kaolin

PT International Nickel Indonesia Tbk (“PT Inco”) (2)

61.16

Indonesia

Nickel

Rio Doce Manganês S.A.

100.00

Brazil

Manganese and Ferroalloys

Rio Doce Manganèse Europe — RDME

100.00

France

Ferroalloys

Rio Doce Manganese Norway — RDMN

100.00

Norway

Ferroalloys

Valesul Aumínio S.A. (3)

100.00

Brazil

Aluminum

Vale Australia Pty Ltd. (4)

100.00

Australia

Coal


(1)		Subsidiary consolidated as from October 2006 (Note 13);

(2)		Through Vale Inco Limited;

(3)		Subsidiary consolidated as from July 2006 (Note 13);

(4)		Subsidiary consolidated as from april de 2007 (Note 6); and

(5)		See Note 6.

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. Our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are accounted for by the equity method (Note 13).

		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.

		Our condensed consolidated interim financial information for the three-month periods ended December 31, 2007, September 30, 2007, and December 31, 2006 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.

		Our investments in hydroelectric projects are made via consortium contracts under which we have an undivided interest in assets and are liable for our proportionate share of liabilities and expenses, which are based on our proportionate share of power output. We do not have joint liability for any obligations, and all our recorded costs, income, assets and liabilities relate to the entities within our group. Since there is no separate legal entity for the project, there are no separate financial statements, income tax return, net income or shareholders’ equity. As confirned by our external legal counsel, Brazilian corporate law explicitly states that no separate legal entity arises from consortium contract. Accordingly, we recognize

F - 10

		our proportionate share of costs and our undivided interest in assets relating to hydroelectric projects (Note 12 (c)).

3		Summary of significant accounting policies

		The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, 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 could differ from those estimates.

(a)		Basis of presentation

		We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which differ in certain respects from the accounting practices adopted in Brazil that we use in preparing our statutory financial statements.

		As from July 1, 1997, when we concluded that the Brazilian economy had ceased to be highly inflationary, we changed our functional currency from the reporting currency (U.S. Dollars) to the Brazil currency (Brazilian Reais), for Brazilian operations and extensions thereof. Accordingly, we translated the U.S. Dollar amounts of non-monetary assets and liabilities into Reais at the current exchange rate, and those amounts became the new accounting bases for such assets and liabilities.

		For the Brazilian operations, the U.S. Dollar amounts for the periods and years presented have been remeasured (translated) from the Brazilian currency amounts in accordance with the criteria set forth in Statement of Financial Accounting Standards (SFAS) 52 – “Foreign Currency Translation” (SFAS 52).

		We have remeasured all assets and liabilities into U.S. Dollars at the exchange rate at each balance sheet date (2007- R$1.7713 and 2006- R$2.1342 to US$1.00 or the first available exchange rate if exchange on December 31, was not available), and all accounts in the statements of income (including amounts exchange gains and losses 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.

		The net exchange transaction gain (loss) included in our statement of income was US$1,639, US$452 and US$227 in 2007, 2006 and 2005, respectively, included within the line “Foreign exchange and monetary gains (losses), net”.

(b)		Business combinations

		We adopt the procedures determined by SFAS 141 – “Business Combinations” to recognize acquisitions of interests in other companies. The method of accounting used in our business combination transactions is the “purchase method”, which requires that acquirers reasonably determine the fair value of the identifiable assets and liabilities of acquired companies, individually, in order to determine the goodwill paid on the purchase to be recognized as an intangible asset. On the acquisition of assets, which include the rights to mine reserves of natural resources, the establishment of values for these assets includes the determination of fair values on purchased reserves, which are classified in the balance sheet as “Property, plant and equipment”.

		Through December 31, 2001, goodwill was amortized in a systematic manner over the periods estimated to be benefited. As required by SFAS 142 — “Goodwill and Other Intangible Assets” from January 1, 2002 goodwill resulting from the acquisitions is no longer amortized, but is tested for impairment at least annually and reduced to fair value to the extent any such impairment is identified.

F - 11

(c)		Inventories

		Inventories are stated at the average cost of purchase or production, lower than replacement or realizable values. We record allowances for slow moving or obsolete inventories when considered appropriate, reflecting our periodic assessment of recoverability.

		We classify proven and probable reserve quantities attributable to stockpiled inventory as inventory and account for them as processed when they are removed from the mine. These reserve quantities are not included in the total proven and probable reserve quantities used in the units of production, depreciation, depletion and amortization calculations.

(d)		Property, plant and equipment

		Property, plant and equipment are recorded at cost, including interest cost incurred during the construction of major new facilities. We compute depreciation on the straight-line basis at annual average rates which take into consideration the useful lives of the assets, as follows: 3.03% for railroads, 3.65% for buildings, 3.78% for installations and 3.25% for mining development costs and 7.30% for other equipment. Expenditures for maintenance and repairs are charged to operating costs and expenses as incurred.

		We capitalize the costs of developing major new ore bodies or expanding the capacity of operating mines and amortize these to operations on the unit-of-production method based on the total probable and proven quantity of ore to be recovered. Exploration costs are expensed. After economic viability of mining activities is established, subsequent development costs are capitalized. We capitalize mine development costs as from the time the development phase commences.

(e)		Available-for-sale equity securities

		Equity securities classified as “available-for-sale” are recorded in accordance with SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities”. Accordingly, we exclude unrealized holding gains and losses, net of taxes, if applicable, from income and recognize them, net of tax effects, as a separate component of stockholders’ equity until realized.

(f)		Revenues and expenses

		Revenues are recognized when title has transferred to the customer or services are rendered. Revenue from exported products is recognized when such products are loaded on board the ship. Revenue from products sold in the domestic market is recognized when delivery is made to the customer. Revenue from transportation services is recognized when the service order has been fulfilled. Expenses and costs are recognized on the accrual basis.

(g)		Asset retirement obligations

		Retirement of long-lived assets is accounted for in accordance with SFAS 143 – “Accounting for Asset Retirement Obligations”. Our retirement obligations consist primarily of estimated closure costs, the initial measurement of which is recognized as a liability discounted to present values and subsequently accreted through earnings. An asset retirement cost equal to the initial liability is capitalized as part of the related asset’s carrying value and depreciated over the asset’s useful life.

(h)		Compensated absences

		We fully accrue the employees’ compensation liability for vacations vested during the year.

(i)		Income taxes

		The deferred tax effects of tax loss carryforwards and temporary differences have been recognized in the consolidated financial statements pursuant to SFAS 109 — “Accounting for Income Taxes”. A valuation allowance is made when we believe that it is more likely than not that tax assets will not be fully recoverable in the future.

F - 12

(j)		Statement of cash flows

		Cash flows relating to overnight financing and investment are reported net. Short-term investments that have a ready market and original maturities to us, when purchased, of 90 days or less are classified as “Cash equivalents”.

(k)		Earnings per share

		Earnings per share are computed by dividing net income by the weighted average number of common and preferred shares outstanding during the period.

(l)		Interest attributable to stockholders

		Brazilian corporations are permitted to distribute interest attributable to stockholders’ equity. The calculation is based on the stockholders’ equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the long-term interest rate (TJLP) determined by the Brazilian Central Bank. Also, such interest may not exceed 50% of net income for the year nor 50% of retained earnings plus revenue reserves.

		The amount of interest attributed to stockholders is deductible for purposes of taxes on income. Accordingly, the benefit to us, as opposed to making a dividend payment, is a reduction in our income tax charge. Income tax of 15% is withheld on behalf of the stockholders relative to the interest distribution. Under Brazilian law, interest attributable to stockholders is considered as part of the annual minimum dividend (Note 16). This notional interest distribution is treated for accounting purposes as a deduction from stockholders’ equity in a manner similar to a dividend.

(m)		Derivatives and hedging activities

		We apply SFAS 133 — “Accounting for Derivative Financial Instruments and Hedging Activities”, as amended by SFAS 137, SFAS 138 and SFAS 149. Those standards require that we recognize all derivative financial instruments as either assets or liabilities on our balance sheet and measure such instruments at fair value. Changes in the fair value of derivatives are recorded in each period in current earnings or in other comprehensive income, in the latter case depending on whether a transaction is designated as an effective hedge and has been effective during the period.

(n)		Comprehensive income

		We present comprehensive income as part of the Statement of Changes in Stockholders’ Equity, in compliance with SFAS 130 – “Reporting Comprehensive Income”, net of taxes.

(o)		Pension and other post retirement benefits

		We sponsor private pension and other post retirement benefits for our employees which are actuarially determined and recognized as an asset or liability or both depending on the funded or unfunded status of each plan in accordance with SFAS 158 – “Employees’ Accounting for Defined Benefit Pension and Other Post retirement Plans”. This Statement, issued in 2006, amended previously issued statements. The cost of our defined benefit and prior service costs or credits that arise during the period and are not components of net periodic benefit costs are recorded in other cumulative comprehensive income (deficit).

(p)		Removal of waste materials to access mineral deposits

		Stripping costs (the costs associated with the removal of overburden and other waste materials) incurred during the development of a mine, before production commences, are capitalized as part of the depreciable cost of developing the property. Such costs are subsequently amortized over the useful life of the mine based on proven and probable reserves.

		Post-production stripping costs are recorded as cost of production when incurred.

F - 13

4		Recently-issued accounting pronouncements

		In December 2007, the Financial Accounting Standard (FASB) issued SFAS 160, which clarifies that a no controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, in the case of Vale, January 1, 2009). Earlier adoption is prohibited. SFAS 160 shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. The Company is currently evaluating the impact of such new pronouncement in its consolidated financial statements but believes that it will not generate a material impact on the Company’s consolidated results of operations or financial position.

		In December 2007, the FASB issued SFAS 141(R), “Statement of Financial Accounting Standards No. 141 (revised 2007)”. SFAS 141(R) retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141 did not define the acquirer, although it included guidance on identifying the acquirer. SFAS 141(R)’s scope is broader than that of SFAS 141, which applied only to business combinations in which control was obtained by transferring consideration. The result of applying SFAS 141’s guidance on recognizing and measuring assets and liabilities in a step acquisition was to measure them at a blend of historical costs and fair values. In addition, SFAS 141(R) requires to measure the noncontrolling interest in the acquiree at fair value which results in recognizing the goodwill attributable to the noncontrolling interest in addition to that attributable to the acquirer. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 (that is, in the case of Vale, January 1, 2009). An entity may not apply it before that date. The effective date of this Statement is the same as that of the related SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (described below). We are currently studying the possible effects which may arise upon adoption of this standard.

		In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. This standard is effective for fiscal years that begin after November 15, 2007. We are currently studying the possible effects which may arise upon adoption of this standard.

		In September 2006, the FASB issued SFAS 157 — “Fair value measurements”, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years (that is, in the case of Vale, January 1, 2008). We are currently studying the possible effects which may arise upon adoption of this standard.

F - 14

5		Our privatization

		In May 1997, we were privatized by the Brazilian Government, which transferred voting control to Valepar S.A. (“Valepar”). The Brazilian Government has retained certain rights with respect to our future decisions and those of Valepar and has also caused us to enter into agreements which may affect our activities and results of operations in the future. These rights and agreements are:

	•		Preferred Special Share. The Brazilian Government holds twelve preferred special shares of Vale which confers upon it permanent veto rights over changes in our (i) name, (ii) location of our headquarters, (iii) corporate purpose with respect to mineral exploration, (iv) continued operation of our integrated iron ore mining systems and (v) certain other matters.

	•		Shareholder revenue interests. On April 18, 1997, we issued to shareholders of record (including the Brazilian Government) revenue interests providing holders thereof with the right to receive semi-annual payments based on a percentage of our net revenues above threshold production volumes from identified mining resources. These instruments are not secured by the corresponding mineral reserves and deposits (Note 19 (e)).

Major acquisitions and disposals

		In October, 2007 we were awarded, in an auction, a 30-year sub-concession for commercial exploitation of the North-South railroad (FNS – Ferrovia Norte Sul) for US$837, payable in three installments. The first installment, equal to US$412 and corresponding to 50% was paid in December 2007. The second installment, equal to 25%, is to be paid in December 2008, and the last installment falls due upon the completion of the railroad. The remaining installments are indexed to the general price index (IGP-DI) and accrue interest of 12% p.a. from the settlement date of the first installment.

		In July 2007, we sold our total interest in Lion Ore Mining International Ltd. (held by our subsidiary Vale Inco), corresponding to 1.8% of total common shares for US$105 generating a gain of US$80.

		In June 2007, we sold through a primary and secondary public offering, 25,213,664 common shares, representing 57.84% of the total capital of our subsidiary Log-In Logística Intermodal S.A. for US$179, recording a gain of US$155.

		In July 2007, we sold an additional 5.1% stake for US$24 recording a gain of US$21. Since December 31, 2007, we hold 31.27% of the voting and total capital of this entity, which is accounted for as an equity investee.

		In May 2007, we sold in a public offering, part of our shareholding in Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS, an available-for-sale investee, for US$728, recording a gain of US$456. We have retained the minimum number of shares required to participate in the current shareholders agreement of the investee.

		In May 2007, we acquired a further 6.25% of the total share capital of Empreendimentos Brasileiros de Mineração S.A. (EBM), which main asset is its interest in MBR, for US$231 and as a result, our direct and indirect stake in MBR increased to, 92.99% of total and voting capital. We simultaneously entered into an usufruct agreement with minority shareholders whereby they transferred to us all rights and obligations with respect to their EBM shares, including rights to dividends for the next 30 years, for which we will make an initial payment of US$61 plus an annual fee of US$48 foreach of the next 29 years. The present value of the future obligation is recorded as a liability and the corresponding charge recorded to minority interests in the balance sheet.

		In April 2007, we concluded the acquisition of 100% of Vale Australia (former AMCI Holdings Australia Pty – AMCI HA), a private company domiciled in Australia which owns and operates coal mines in that country, for US$656.

		The purchase price allocations based on the fair values of acquired assets and liabilities was based on management’s internal valuation estimates.

F - 15

Such allocations were finalized based on valuation and other studies, performed by us with the assistance of outside valuation specialists. Accordingly, the purchase price allocation adjustments for acquisitions are as follows:


Purchase price	656
Book value of assets acquired and liabilities assumed, net	(184	)
Adjustment to fair value of property, plant and equipment	(441	)
Adjustment to fair value of inventories	(6	)
Deferred taxes on the above adjustments	43

Goodwill	68

		In March 2007, we acquired the remaining 18% minority interest in Ferro-Gusa Carajás held by Nucor do Brasil S.A. for US$20, which then became a wholly-owned subsidiary.

		In October, 2006 we acquired Inco Limited (Note 7).

7		Acquisition of Inco

		In October, 2006 we initially acquired 174,623,019 common shares, representing 75.66% the outstanding shares of Inco Limited (Inco), a Canadian-domiciled nickel company, for US$13 billion. By November 3, 2006 we had already acquired a total of 196,078,276 shares for approximately US$15 billion, representing 86.57% of Inco’s capital. On December 31, 2006 we held 87.73% of the outstanding shares.

		On January 3, 2007, we paid an additional US$2 billion and now own 100% of share capital of Vale Inco. At the date the shareholders of Inco approved the amalgamation of Inco with Itabira Canada Inc. (Itabira Canada), our wholly-owned indirect subsidiary. Pursuant to the amalgamation, Inco changed its name to “Vale Inco Limited” (Vale Inco).

		In December 2006 we concluded several transactions to settle the bridge loan aiming to extend our average debt maturity close to the pre-acquisition level (Note 15).

		The purchase price allocation based on the fair values of acquired assets and liabilities was initially based on management’s preliminary internal valuation estimates. During the second quarter of 2007, we finalized the allocations based on further studies performed by us with the assistance of external valuation specialists. Accordingly, the purchase price allocation adjustments in relation to the fair value of assets and liabilities acquired set forth below are finalized and the main difference in relation to our preliminary allocation refers to rights identified after the studies. The revision of the allocation had no material effects on the results for the three-month period ended March 31, 2007, as previously reported. Fair values 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 and investments, costs, commodity prices and cash flows.

		This information relates to our ownership of 100% of Vale Inco´s shares.


Total disbursements	17,023
Transaction costs	38

Purchase price	17,061
Book value of assets acquired and liabilities assumed, net	(4,657	)
Adjustment to fair value of inventory	(2,008	)
Adjustment to fair value of property, plant and equipment and intangible assets	(12,723	)
Change of control obligations	949
Adjustment to fair value of other liabilities assumed	795
Deferred taxes on the above adjustments	3,188

Goodwill	2,605

F -16

		The main effects between the preliminary valuation reported in 2006 and final allocations, of US$1,271, reflect the increase in fair value of the nickel mines and the related deferred taxes, which was reclassified to reduce goodwill.

		Pro forma unaudited information considers our acquisition of 100% of Inco as though the transaction had occurred on January 1, 2006.


	Three-month period ended (unaudited)									December 31, 2006 (unaudited)
	December 31, 2006									2006									2005
	CVRD									CVRD									CVRD
	Consolidated			Inco			Pro forma			Consolidated			Inco			Pro forma			Consolidated			Inco			Pro forma
Net operating revenues		7,313			—			7,313			19,651			5,351			25,002			12,792			4,518			17,310
Operating costs and expenses		(5,133	)		(93	)		(5,226	)		(12,014	)		(3,627	)		(15,641	)		(7,360	)		(3,645	)		(11,005	)

Operating income		2,180			(93	)		2,087			7,637			1,724			9,361			5,432			873			6,305
Non-operating income (expenses)		(12	)		(26	)		(38	)		192			(598	)		(406	)		(12	)		(1,065	)		(1,077	)

Income before income taxes, equity results and minority interests		2,168			(119	)		2,049			7,829			1,126			8,955			5,420			(192	)		5,228
Income taxes		(551	)		44			(507	)		(1,432	)		(429	)		(1,861	)		(880	)		23			(857	)
Equity in results of affiliates and joint ventures		183			—			183			710			—			710			760			—			760
Minority interests		(227	)		117			(110	)		(579	)		35			(544	)		(459	)		(141	)		(600	)

Net income		1,573			42			1,615			6,528			732			7,260			4,841			(310	)		4,531

		In our opinion, the unaudited pro forma combined results of operations may not be indicative of the actual results that would have occurred had the acquisitions been consummated on January 1, 2006.

8		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.

		In other countries where we have operations the applicable tax rate varied from 3.29% to 43.15%.

		The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:


	Three-month period ended (unaudited)
	December 31, 2007									September 30, 2007									December
	Brazil			Foreign			Total			Brazil			Foreign			Total			31,2006
Income before income taxes, equity results and minority interests		1,299			1,519			2,818			2,062			1,865			3,927			2,168

Federal income tax and social contribution expense at statutory enacted rates		(442	)		(516	)		(958	)		(701	)		(634	)		(1,335	)		(737	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		129			—			129			124			—			124			87
Difference on tax rates of foreign income		—			676			676			—			215			215			425
Difference on tax basis of equity investees		—			(59	)		(59	)		—			(6	)		(6	)		(93	)
Tax incentives		7			—			7			50			—			50			(147	)
Other non-taxable gains (losses)		(12	)		1			(11	)		—			5			5			(86	)

Federal income tax and social contribution expense in consolidated statements of income		(318	)		102			(216	)		(527	)		(420	)		(947	)		(551	)

F - 17


	Year ended December 31,
	2007
	Brazil			Foreign			Total			2006			2005
Income before income taxes, equity results and minority interests		7,769			7,464			15,233			7,829			5,420

Federal income tax and social contribution expense at statutory enacted rates		(2,641	)		(2,538	)		(5,179	)		(2,662	)		(1,843	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		474			—			474			343			307
Difference on tax rates of foreign income		—			1,439			1,439			1,004			617
Difference on tax basis of equity investees		7			(176	)		(169	)		(200	)		(58	)
Tax incentives		173			—			173			194			109
Valuation allowance reversal (provision)		16			—			16			(21	)		3
Other non-taxable gains (losses)		57			(12	)		45			(90	)		(15	)

Federal income tax and social contribution expense in consolidated statements of income		(1,914	)		(1,287	)		(3,201	)		(1,432	)		(880	)

We have certain income 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.

We also have income tax incentives related to Goro Project in New Caledonia. These incentives include an income tax holiday during the construction phase of the project and throughout a 15-year period commencing in the first year in which commercial production, as defined by the applicable legislation, is achieved followed by a five-year, 50 per cent income tax holiday. In addition, Goro qualifies for certain exemptions from indirect taxes such as import duties during the construction phase and throughout the commercial life of the project. Certain of these tax benefits, including the income tax holiday, are subject to an earlier phase out should the project achieve a specified cumulative rate of return. We are subject to a branch profit tax commencing in the first year in which commercial production is achieved, as defined by the applicable legislation. To date, we have not recorded any taxable income for New Caledonia tax purposes. The benefits of this legislation are expected to apply with respect to any taxes otherwise payable once the Goro project is in operation.

Effective January 1, 2007 for U.S. GAAP purposes, we adopted FASB Interpretation 48 “Accounting for Uncertainty in Income Taxes”. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

We are subject to examination by the tax authorities for up to five years regarding our operations in Brazil, ten years for Indonesia, and five and six years for Canada, except for Newfoundland which has no limit. Brazilian tax loss carry forwards have no expiration date.

Brazilian tax loss carryforwards have no expiration date though offset is restricted to 30% of annual income before tax.

The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(See note 19 (c) Tax – related actions)


Balance at January 1, 2007	663

Increase resulting from tax positions taken	264
Decrease resulting from tax positions taken	(47	)
Changes in tax legislation	29
Effects of translation from Brazilian R$ into Dollar	137

Balance at December 31, 2007	1,046

F - 18

The major components of the deferred tax accounts in the balance sheet are as follows:


	As of December 31,
	2007			2006
Current deferred tax assets
Accrued expenses deductible only when disbursed		603			410

		603			410

Long-term deferred tax assets and liabilities
Assets

Related to provision for losses and write-downs of investments		—			19
Employees post retirement benefits provision		461			803
Tax loss carryforwards		348			265
Asset retirement obligation		195			163

		1,004			1,250

Liabilities
Fair value in financial instruments		(173	)		(22	)
Unrealized inflation reestatement effects		(138	)		(97	)
Property, plant & equipment		(150	)		(108	)
Prepaid retirement benefit		(203	)		(228	)
Fair value adjustments in business combinations		(5,770	)		(5,122	)
Other temporary differences		(191	)		(87	)

		(6,625	)		(5,664	)

Valuation allowance
Beginning balance		(113	)		(84	)
Translation adjustments		(20	)		(8	)
Change in allowance		29			(21	)

Ending balance		(104	)		(113	)

Net long-term deferred tax assets		(5,725	)		(4,527	)

Cash and cash equivalents


	As of December 31,
	2007		2006
Cash		424		1,542
Deposits denominated in Brazilian Reais		123		237
Deposits denominated in other currencies mainly United States dollars		499		2,669

		1,046		4,448

Accounts receivable


	As of December 31,
	2007			2006
Customers
Denominated in Brazilian Reais		750			517
Denominated in other curriencies, mainly United States Dollars		3,311			3,164

		4,061			3,681

Allowance for doubtful accounts		(100	)		(61	)
Allowance for ore weight credits		(9	)		(16	)

Total		3,952			3,604

F - 19

		Accounts receivable from customers in the steel industry represent 51.1% of receivables at December 31, 2007.

		No single customer accounted for more than 10% of total revenues.

		Additional allowances for doubtful accounts recognized in the income statement as expenses in 2007 and 2006 were US$31 and US$15, respectively. We wrote-off US$6 in 2007 and in 2006 the was no wrote-off.

11		Inventories


	As of December 31,
	2007		2006
Finished products
Nickel (co-products and by-products)		1,812		2,046
Iron ore and pellets		588		325
Manganese and ferroalloys		106		94
Alumina		44		33
Aluminum		132		110
Kaolin		42		23
Copper concentrate		15		5
Coal		38		—
Others		36		40
Spare parts and maintenance supplies		1,046		817

		3,859		3,493

		There was US$0 and US$47 million recorded as write down in 2007 and 2006, respectively.

12		Property, plant and equipment and intangible assets

		By type of assets:


	As of December 31, 2007						As of December 31, 2006
			Accumulated						Accumulated
	Cost		depreciation		Net		Cost		depreciation		Net
Lands		110		—		110		92		—		92
Buildings		4,086		842		3,244		2,438		560		1,878
Installations		10,974		2,889		8,085		7,751		2,034		5,717
Equipment		5,703		1,709		3,994		3,301		1,016		2,285
Railroads		5,819		1,614		4,205		3,964		1,268		2,696
Mine development costs		19,270		1,632		17,638		12,703		584		12,119
Others		7,146		1,813		5,333		2,753		1,095		1,658

		53,108		10,499		42,609		33,002		6,557		26,445
Construction in progress		12,016		—		12,016		11,562		—		11,562

Total		65,124		10,499		54,625		44,564		6,557		38,007

		Losses on sales of property, plant and equipment totaled US$ 168, US$106 and US$26 in 2007, 2006 and 2005, respectively. Mainly relate to losses on sales of ships and trucks, locomotives and other equipment, which were replaced in the normal course of business.

		Assets given in guarantee to judicial processes totaled US$192.

F - 20

Hydroelectric assets

We participate in several jointly-owned hydroelectric plants, already in operation or under construction. We have an undivided interest in these plants and are responsible for our proportionate share of the costs of construction and operation and entitled to our proportionate share of the energy produced. We record our undivided interest in these assets as Property, plant and equipment.

At December 31, 2007 the cost of hydroelectric plants in service totals US$803 and the related depreciation is US$68. The cost of hydroelectric plant under construction at December 31, 2007 totals US$ 735.

Income and expenses to operate such plants are not material.

F - 21

Investments in affiliated companies and joint ventures


	2007													Equity in earnings (losses) of investee adjustments																	Dividends received
	Participation in						Net income							Three-month period ended (unaudited)																	Three-month period ended (unaudited)
	capital (%)				Net		(loss) for the			Investments				December			September		December			Year ended December 31,									December		September		December		Year ended December 31,
	voting		total		equity		period			2007		2006		31, 2007			30, 2007		31, 2006			2007			2006			2005			31, 2007		30, 2007		31, 2006		2007		2006		2005
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)		51.11		51.00		119		24			61		40		2			5		2			12			18			39			—		—		—		—		22		16
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		84		18			43		42		(3	)		3		4			9			15			28			—		—		—		16		13		20
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		90		38			45		40		4			5		—			19			17			26			21		—		10		21		21		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (1)		51.00		50.90		90		19			46		37		—			2		3			10			12			21			—		—		—		8		12		10
SAMARCO Mineração S.A. — SAMARCO (2)		50.00		50.00		970		483			546		370		56			67		66			242			229			257			25		25		25		150		225		225
Minas da Serra Geral S.A. — MSG		50.00		50.00		60		6			30		25		1			1		2			3			2			(2	)		—		—		—		—		1		—
Gulf Industrial Investment Company — GIIC (4)		—		—		—		—			—		—		—			—		—			—			18			67			—		—		—		—		—		51
Others		—		—		—		—			30		23		3			2		1			6			1			(1	)		—		—		—		—		1		—

											801		577		63			85		78			301			312			435			46		25		35		195		295		322

Logistics
MRS Logística S.A		37.86		41.50		825		285			342		222		34			31		27			117			95			54			24		—		22		51		41		11
LOG-IN Logística Inter modal S.A. (6)		31.27		31.27		342		26			107		91		6			4		—			8			—			—			—		—		—		—		—		—

											449		313		40			35		27			125			95			54			24		—		22		51		41		11

Holdings
Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (cost $180) (3)		—		—		—		—			465		744		—			7		50			31			147			176			—		7		7		31		48		62
California Steel Industries Inc. — CSI		50.00		50.00		326		(2	)		163		175		(7	)		1		4			(1	)		54			21			—		—		—		11		40		28
THYSSENKRUPP CSA Companhia Siderúrgica (7)		11.43		11.43		—		—			388		—		—			—		—			—			—			—			—		—		—		—		—		—

											1,016		919		(7	)		8		54			30			201			197			—		7		7		42		88		90

Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		459		210			184		164		21			21		20			84			64			64			—		7		—		64		77		58
Valesul Alumínio S.A. — VALESUL (5)		100.00		100.00		—		—			—		—		—			—		—			—			12			1			—		—		—		—		—		8

											184		164		21			21		20			84			76			65			—		7		—		64		77		66

Coal
Henan Longyu Resources Co. Ltd		25.00		25.00		461		183			115		112		12			12		9			46			31			9			42		—		—		42		15		—
Shandong Yankuang International Company Ltd		25.00		25.00		93		1			23		23		2			—		(5	)		—			(5	)		—			—		—		—		—		—		—

											138		135		14			12		4			46			26			9			42		—		—		42		15		—

Nickel
Jubilee Mines N.L (cost $9) — available-for-sale investments		—		—		—		—			126		79		—			—		—			—			—			—			—		—		—		—		—		—
Lion Ore Mining International Ltd (cost $21) — available-for-sale investments(8)		—		—		—		—			—		45		—			—		—			—			—			—			—		—		—		—		—		—
Mirabela Nickel Ltd (cost $24) — available-for-sale investments		—		—		—		—			72		21		—			—		—			—			—			—			—		—		—		—		—		—
Skye Resources Inc (cost $36) — available-for-sale investments		—		—		—		—			44		36		—			—		—			—			—			—			—		—		—		—		—		—
Heron Resources Inc (cost $25) — available-for-sale investments		—		—		—		—			34		12		—			—		—			—			—			—			—		—		—		—		—		—
Others		—		—		—		—			23		29		5			4		—			9			—			—			—		—		—		—		—		—

											299		222		5			4		—			9			—			—			—		—		—		—		—		—

Other affiliates and joint ventures
Others		—		—		—		—			35		23		—			—		—			—			—			—			—		—		—		—		—		—

											35		23		—			—		—			—			—			—			—		—		—		—		—		—

											1,672		1,463		33			45		78			169			303			271			42		14		7		148		180		156

Total		—		—		—		—			2,922		2,353		136			165		183			595			710			760			112		39		64		394		516		489


(1)		Although Vale held a majority of the voting interest of investees accounted for under the equity method, existing veto rights held by minority shareholders under shareholder agreements preclude consolidation;

(2)		Investment includes goodwill of US$61 and US$ 50 in 2007 and 2006, respectively;

(3)		Equity method used through November 2006 and available-for-sale subsequently. Dividends received included in equity adjustment from June 30, 2007;

(4)		Sold for US$ 418 in May, 2006;

(5)		Subsidiary consolidated as from July, 2006;

(6)		Investment held through Vale Inco;

(7)		Consolidated throgh May, 2007;

(8)		Preoperating company; and

(9)		Sold in July, 2007 (Note 6).

F - 22

14		Short-term debt

		Our short-term borrowings are mainly from commercial banks and relate to export financing denominated in United States Dollars.

		Average annual interest rates on short-term borrowings were 5.5%, 5.5% and 4.2% at December 31, 2007 and 2006 and 2005, respectively.

15		Long-term debt


	As of December 31,
	Current liabilities				Long-term liabilities
	2007		2006		2007		2006
Foreign debt
Loans and financing denominated in the following currencies:
United States dollars		212		192		5,927		10,483
Others		64		4		214		152
Fixed Rate Notes — US$ denominated		—		112		6,680		6,785
Debt securities — export sales (*) — US$ denominated		53		86		205		259
Perpetual notes		—		—		87		86
Accrued charges		282		139		—		—

		611		533		13,113		17,765

Local debt

Denominated in Long-Term Interest Rate — TJLP/CDI		586		16		1,148		511
Denominated in General Price Index-Market (IGPM)		1		20		1		1
Basket of currencies		2		2		6		7
Non-convertible debentures		—		—		3,340		2,774
Indexed by U.S. dollars		—		107		—		64
Accrued charges		49		33		—		—

		638		178		4,495		3,357

Total		1,249		711		17,608		21,122


(*)		Debt securities secured by future receivables arising from export sales.

The long-term portion at December 31, 2007 falls due as follows:


2009			321
2010			2,384
2011			2,780
2012			1,083
2013 and thereafter			10,718
No due date (Perpetual notes and non-convertible debentures)			322

			17,608

At December 31, 2007 annual interest rates on long-term debt were as follows:


3.1% to 5%			618
5.1% to 7%			11,316
7.1% to 9%			2,436
9.1% to 11%			119
Over 11% (*)			4,281
Variable (Perpetual notes)			87

			18,857


(*)		Includes non-convertible debentures and other Brazilian-reais denominated debt that bears interest at CDI (Brazilian interbank certificate of deposit) rate plus spread. For these operations we have entered into derivative transactions to hedge the exposure we hold on our floating rate debt denominated in reais. The outstanding amount for these transactions is US$4,234 and the average cost of such debt after the hedge transactions is 5.7%.

F - 23

The indices applied to debt and respective percentage variations in each year were as follows (unaudited):


	%
	2007			2006			2005
TJLP — Long-Term Interest Rate (effective rate)		6.4			7.9			9.8
IGP-M — General Price Index — Market		7.8			3.8			1.2
Devaluation of United States Dollar against Real		(17.2	)		(8.7	)		(11.8	)

Pursuant to the acquisition of Vale Inco we executed various financial operations to repay the initial US$ 14.6 billion bridge loan, used to finance the acquisition, as follows:

	•		On November 16, 2006, we issued US$3.75 billion 10-year and 30-year notes. The US$1.25 billion notes due in January 2017 bear a coupon rate of 6.25% per year, payable semi-annually, and were priced with a yield to maturity of 6.346% per year. The US$ 2.50 billion notes due in November 2036 bear a coupon rate of 6.875% per year, payable semi-annually, and were priced with a yield to maturity of 6.997% per year.

	•		We issued on December 20, 2006 in the Brazilian market of non-convertible debentures (debentures) in Reais in an amount equivalent to US$2.6 billion, in two series, with four and seven-year maturities. The first series, due on November 20, 2010, US$700 million, will be remunerated at 101.75% of the accumulated variation of the Brazilian CDI (interbank certificate of deposit) interest rate, payable semi-annually. The second series, due on November 20, 2013, US$ 1.9 billion, will be remunerated at the Brazilian CDI interest rate plus 0.25% per year, also payable semi-annually. These debentures can be traded in the secondary market, through the Sistema Nacional de Debêntures (SND).

	•		On January 23, 2007, we entered into a pre-export finance transaction of US$6.0 billion, with a syndicate composed by 30 banks from different countries. The transaction includes a US$5.0 billion tranche, five-year maturity, at Libor plus 0.625% per year, and a US$1.0 billion tranche, seven-year maturity, at Libor plus 0.75% per year. Due to our cash availability, US$2.1 billion of this deal was prepaid during 2007.

	•		During 2007 we settled the balance of the bridge loan with cash, totaling US$2.25 billion.

	•		In addition to the prepayment of both the bridge and the pre-export financing transaction, we prepaid US$ 380 million of our debt during 2007. The total debt so prepaid, as part of our liability management initiatives, was US$ 4.73 billion.

		On December 31, 2007 the US Dollar denominated Fixed Rate Notes of US$6,680 (2006 – US$6,897) and other debt of US$11,511 (2006 – US$14,017) are unsecured. The export securitzation of US$258 (2006 – US$345) is debt securities secured by future receivables arising from certain export sales of our subsidiary CVRD Overseas Ltd. Loans from International lenders of US$82 (2006 – US$106) are guarateed by Brazilian Federal Government, to which we have given counter guarantees in the same amount. The remaining long-term debt of US$326 (2006 – US$458) is secured mainly by receivables of our subsidiaries.

		Some of our long-term debt instruments contain financial covenants. Our principal covenants require us to maintain certain ratios, such as debt to EBITDA and interest coverage. We were in full compliance with our financial covenants as of December 31, 2007.

		We have revolving credit lines of US$1.9 billion.

F - 24

16		Stockholders’ equity

		Each holder of common and preferred class A stock is entitled to one vote for each share on all matters that come before a stockholders’ meeting, except for the election of the Board of Directors, which is restricted to the holders of common stock. The Brazilian Government holds twelve preferred special shares which confer to it permanent veto rights over certain matters.

		In September 2007, a stock split was effected and each existing, common and preferred, share was split into two shares. After the split our capital comprises 4,919,314,116 shares, of which 1,919,516,400 are class “A” preferred shares and 2,999,797,716 are common shares, including twelve special class shares without par value (“Golden Shares”). The share/ADR proportion was maintained at 1/1; therefore, each common and preferred share, continued 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. All numbers of share and per share amounts included herein reflect retroactive application of the stock split. The Notes due 2010, series RIO and RIO P, mandatorily convertible into Vale ADRs will have their conversion rates adjusted to reflect the share split.

		In June 2007, we issued US$1,880 Mandatorily Convertible Notes due June 15, 2010 for total proceeds of US$1,869 net of commissions. The Notes bear interest at 5.50% per year payable quarterly and additional interest which will be payable based on the net amount of cash distribution paid to ADS holders. The US$1,296 Notes are mandatorily convertible into an aggregate maximum of 56,582,040 common shares and the US$584 Notes are mandatorily convertible into an aggregate maximum of 30,295,456 preferred class A shares. On the maturity date (whether at stated maturity or upon acceleration following an event of default), the Series RIO Notes will automatically convert into ADSs, each ADS representing one common share of Vale, and the Series RIO P Notes will automatically convert into ADSs, each ADS representing one preferred class A share of Vale. We currently hold the shares to be issued on conversion in treasury stock. The Notes are not repayable in cash. Holders of notes will have no voting rights. We will pay to the holders of our Series RIO Notes or RIO P Notes additional interest in the event that Vale makes cash distributions to all holders of RIO ADSs or RIO P ADSs, respectively. On 2007, the amount of additional interest totaled US$ 15. We determined, using a statistical model, that the potential variability in the number of shares to be converted is not a predominant feature of this hybrid financial instrument and thus classified it as an equity instrument within our stockholders’ equity. Other than during the cash acquisition conversion period, holders of the notes have the right to convert their notes, in whole or in part, at any time prior to maturity in the case of the Series RIO Notes, into RIO ADSs at the minimum conversion rate of 0.8664 RIO ADSs per Series RIO Note, and in the case of Series RIO P Notes, into RIO P ADSs at the minimum conversion rate of 1.0283 RIO P ADSs per Series RIO P Note.


Note	Twenty Day Market Value	Conversion Rate
Rio P	Less than or equal to US$38.59	1.2957
	Between US$38.59 and US$48.62	US$50.00 divided by the twenty day market value
	Equal to or greater than US$48.62	1.0283

Rio	Less than or equal to US$45.80	1.0917
	Between US$45.80 and US$57.71	US$50.00 divided by the twenty day market value
	Equal to or greater than US$57.71	0.8664

On June 21, 2006 the Board of Directors approved a buy-back program of our preferred shares, in effect during 180 days. Under this program, we had acquired 30,299,200 shares held in treasury at an average weighted unit cost of US$9.94 (minimum cost of US$9.45 and maximum of US$ 10.37).

In October 2007, we paid US$1,050 to stockholders. The distribution was made in the form of interest on stockholders’ equity and dividends. In April 2007, we paid US$825 to stockholders. The distribution was made in the form of interest attributable to stockholders’ equity and dividends.

F - 25

In April 2007, at an Extraordinary Shareholders’ Meeting the paid-up capital was increased by US$4,187 through transfer of reserves, without issuance of shares, to US$12,695.

Both common and preferred stockholders are entitled to receive a mandatory minimum dividend of 25% of annual adjusted net income based on the statutory accounting records, upon approval at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the statutory book equity value per share. For the year ended December 31, 2007, this annual minimum dividend corresponded to US$ 2,691 of which US$ 8 was paid on October 2007 and therefore we accrued the remaining value of US$ 2,683 with a direct charge to stockholders’ equity. For each of the years 2006 and 2005 we distributed dividends to preferred stockholders in excess of this limit. Interest attributed to stockholders equity as from January 1, 1996 is considered part of the minimum dividend.

Brazilian law permits the payment of cash dividends only from retained earnings as stated in the statutory accounting records and such payments are made in Reais. In addition, per the statutory books record, undistributed retained earnings at December 31, 2007 includes US$13,954, related to the unrealized income and expansion reserves, which could be freely transferred to retained earnings and paid as dividends, if approved by the stockholders.

No withholding tax is payable on distribution of profits earned except for distributions in the form of interest attributed to stockholders (Note 3 (l)).

In December 2007, significant changes were made to Brazilian Corporate law to permit Brazil to converge with International Financial Reporting Standards (IFRS) . Such changes will be effective for the fiscal year ended December 31, 2008. Future impacts in the local income statement could include alteration in the form of calculating and amortizing goodwill on business combinations, the recognition of exchange variations in foreign subsidiaries, joint ventures and affiliates and related tax effects, among others. Detailed regulation of the impact changes and transition requirements is not yet available and will be evaluated once available.

Brazilian laws and our By-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis, all determined in accordance with amounts stated in the statutory accounting records, as detailed below:

F - 26


	Three-month period ended (unaudited)
	December 31,			September		December 31,			Year ended December 31,
	2007			30, 2007		2006			2007			2006			2005
Undistributed retained earnings
Unrealized income reserve
Beginning of the period		105			99		109			57			101			130
Transfer (to) from retained earnings		(32	)		6		(52	)		16			(44	)		(29	)

End of the period		73			105		57			73			57			101
Expansion reserve
Beginning of the period		5,726			5,441		3,853			8,485			3,621			3,091
Transfer to capital stock		—			—		—			(3,776	)		—			(2,036	)
Transfer from retained earnings		8,155			285		4,632			9,172			4,864			2,566

End of the period		13,881			5,726		8,485			13,881			8,485			3,621
Legal reserve
Beginning of the period		724			688		646			970			599			529
Transfer to capital stock		—			—		—			(370	)		—			(209	)
Transfer from retained earnings		586			36		324			710			371			279

End of the period		1,310			724		970			1,310			970			599
Fiscal incentive depletion reserve
Beginning of the period		—			—		—			—			—			378
Transfer to capital stock		—			—		—			—			—			(398	)
Transfer from retained earnings		—			—		—			—			—			20

End of the period		—			—		—			—			—			—
Fiscal incentive investment reserve
Beginning of the period		5			5		38			43			36			15
Transfer to capital stock		—			—		—			(41	)		—			(16	)
Transfer from retained earnings		48			—		5			51			7			37

End of the period		53			5		43			53			43			36

Total undistributed retained earnings		15,317			6,560		9,555			15,317			9,555			4,357

The purpose and basis of appropriation to such reserves is described below:

	•		Unrealized income reserve — this represents principally our share of the earnings of affiliates and joint ventures, not yet received in the form of cash dividends.

	•		Expansion reserve — this is a general reserve for expansion of our activities.

	•		Legal reserve — this reserve is a requirement for all Brazilian corporations and represents the appropriation of 5% of annual net income up to a limit of 20% of capital stock all determined under Brazilian GAAP.

	•		Fiscal incentive depletion reserve — this represents an additional amount relative to mineral reserve depletion equivalent to 20% of the sales price of mining production, which is deductible for tax purposes providing an equivalent amount is transferred from retained earnings to the reserve account. This fiscal incentive expired in 1996.

	•		Fiscal incentive investment reserve — this reserve results from an option to designate a portion of income tax otherwise payable for investment in government approved projects and is recorded in the year following that in which the taxable income was earned. As from 2000, this reserve basically contemplates income tax incentives (Note 8).

		Basic and diluted earnings per share

		Basic and diluted earnings per share amounts have been calculated as follows:

F - 27


	Three-month period ended (unaudited)
	December 31,			September 30,			December 31,		Year ended December 31,
	2007			2007			2006		2007			2006		2005
Net income for the period		2,573			2,940			1,573		11,825			6,528		4,841


Interest attributed to preferred convertible notes		(8	)		(8	)		—		(16	)		—		—
Interest attributed to common convertible notes		(18	)		(19	)		—		(37	)		—		—

Net income for the period adjusted		2,547			2,913			1,573		11,772			6,528		4,841

Basic and diluted earnings per share

Income available to preferred stockholders		978			1,119			615		4,552			2,568		1,748
Income available to common stockholders		1,524			1,742			958		7,092			3,960		3,093
Income available to convertible notes linked to preferred shares		16			18			—		45			—
Income available to convertible notes linked to common shares		30			34			—		84			—
Weighted average number of shares outstanding (thousands of shares) — preferred shares		1,889,175			1,889,175			1,889,172		1,889,171			1,908,852		1,662,864
Weighted average number of shares outstanding (thousands of shares) — common shares		2,943,216			2,943,216			2,943,216		2,943,216			2,943,216		2,943,216
Treasury preferred shares linked to mandatorily convertible notes		30,295			30,295			—		18,478			—
Treasury common shares linked to mandatorily convertible notes		56,582			56,582			—		34,510			—

Total		4,919,268			4,919,268			4,832,388		4,885,375			4,852,068		4,606,080


Earnings per preferred share		0.52			0.59			0.33		2.41			1.35		1.05
Earnings per common share		0.52			0.59			0.33		2.41			1.35		1.05
Earnings per convertible notes linked to preferred share (*)		0.79			0.86			—		3.30			—		—
Earnings per convertible notes linked to common share (*)		0.85			0.94			—		3.51			—		—


(*)		Basic earnings per share only as dilution assumes conversion.

Were the conversion of the convertible notes to be considered in the calculation of diluted earnings per share they would generate a minor antidilutive effect in the year as shown below:


	Three-month period ended (unaudited)
	December 31,		September 30,		December 31,		Year ended December 31,
	2007		2007		2006		2007		2006		2005
Income available to preferred stockholders		1,002		1,145		—		4,613		—		—
Income available to common stockholders		1,571		1,795		—		7,212		—		—
Weighted average number of shares outstanding (thousands of shares) — preferred shares		1,919,470		1,919,470		—		1,907,649		—		—
Weighted average number of shares outstanding (thousands of shares) — common shares		2,999,798		2,999,798		—		2,977,726		—		—
Earnings per preferred share		0.52		0.60		—		2.42		—		—
Earnings per common share		0.52		0.60		—		2.42		—		—

F - 28

Other Cumulative Comprehensive Income (Deficit)


	Three-month period ended
	December 31,			September 30,			December 31,			Year ended December 31,
	2007			2007			2006			2007			2006			2005
Comprehensive income is comprised as follows:
Net income		2,573			2,940			1,573			11,825			6,528			4,841
Cumulative translation adjustments		337			1,467			234			2,968			1,228			1,013
Unrealized gain (loss) on available-for-sale securities		(18	)		24			141			(60	)		144			32
Surplus (deficit) accrued pension plan		(465	)		68			(107	)		(278	)		(107	)		—
Cash flow hedge		6			9			—			29			—			—

Total comprehensive income		2,433			4,508			1,841			14,484			7,793			5,886


Tax effect on other comprehensive income (expense) allocated to each component
Unrealized gain on available-for-sale securities
Gross balance as of the period end		271			326			395			271			395			127
Tax (expense) benefit		(60	)		(97	)		(124	)		(60	)		(124	)		—
Net balance as of the period end		211			229			271			211			271			127
Surplus (deficit) accrued pension plan
Gross balance as of the period end		134			817			540			134			540			—
Tax (expense) benefit		(59	)		(277	)		(187	)		(59	)		(187	)		—
Net balance as of the period end		75			540			353			75			353			—

18		Pension plans

		Since 1973 we have sponsored a supplementary social security plan with characteristics of defined benefit plan (the “Old Plan”) covering substantially all Brazilian employees, with benefits calculated based on years of service, age, contribution salary and supplementary social security benefits. This plan is administered by Fundação Vale do Rio Doce de Seguridade Social – VALIA and was funded by monthly contributions made by us and our employees, calculated based on periodic actuarial appraisals.

		In May 2000, we implemented a new supplementary social security plan with characteristics of variable contribution, which complements the earnings of programmed retirements and benefits from risks (death, physical invalidity, and sickness benefit). At that time we provided our Brazilian active employees the option to migrate to the “New Plan” (a Benefit Mix Plan – Vale Mais) which was taken up by over 98% of our active employees. The Old Plan will continue in existence, covering almost exclusively retired participants and their beneficiaries.

		Additionally we provide supplementary payments to a specific group of former Brazilian employees, in addition to the regular benefits from Valia, through the “Abono Complementação”, which represents a postretirement health care, odontological and pharmaceutical benefit to this group of participants.

		Upon the acquisition of Inco, we assumed benefits through defined benefit pension plans that cover essentially all its employees and post retirement benefits other than pensions that also provide certain health care and life insurance benefits for retired employees.

		The following information details the status of the defined benefit elements of all plans in accordance with SFAS 132 — “Employers’ Disclosure about Pensions and Other Post retirement Benefits” and SFAS 158 – “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, as amended.

(a)		Change in benefit obligation


	As of December 31,
	2007									2006
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Benefit obligation at beginning of year		2,531			3,743			1,287			1,783			250			78

Liability recognized upon consolidation of Inco		—			100			213			—			3,619			1,225

Service cost		9			61			20			5			14			4

Interest cost		306			229			78			246			79			25

Plan amendment		—			4			—			—			(76	)		—

Assumptions changes		—			—			—			465			52			13

Benefits paid		(301	)		(279	)		(63	)		(173	)		(85	)		(22	)

Effect of exchange rate changes		526			607			215			175			(108	)		(41	)

Actuarial loss (gain)		107			(29	)		(79	)		30			(2	)		5


Benefit obligation at end of year		3,178			4,436			1,671			2,531			3,743			1,287

We use a measurement date of December 31 for our pension and post retirement benefit plans.

F - 29

(b)

Change in plan assets


	As of December 31,
	2007									2006
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Fair value of plan assets at beginning of year		3,508			3,078			4			2,781			63			—

Asset recognized upon consolidation of Inco		—			—			—			—			2,924			4

Actual return on plan assets		250			85			1			607			202			—

Employer contributions		33			372			67			25			84			22

Benefits paid		(301	)		(279	)		(63	)		(173	)		(85	)		(22	)

Effect of exchange rate changes		697			506			1			268			(110	)		—


Fair value of plan assets at end of year		4,187			3,762			10			3,508			3,078			4

		Plan assets at December 31, 2007 include US$693 and US$73 of portfolio investments in our own shares (US$312 and US$46 at December 31, 2006) and debentures, respectively, and US$48 and US$0 of shares of related parties (US$36 and US$7 at December 31, 2006) and debentures, as well. They also include US$1,116 of Federal Government Securities (US$607 at December 31, 2006).

(c)		Funded Status and Financial Position


	As of December 31,
	2007						2006
	Overfunded		Underfunded		Underfunded		Overfunded		Underfunded		Underfunded
	pension plans		pension plans		other benefits		pension plans		pension plans		other benefits
Other assets		1,009		—		—		977		—		—

Current liabilities		—		54		77		—		42		65

Long-term liabilities		—		620		1,584		—		623		1,218


Funded status		1,009		674		1,661		977		665		1,283

(d)

Assumptions used in each year (expressed in nominal terms)

Brazil

2007

2006

Overfunded

Underfunded

Overfunded

Underfunded

pension plans

other benefits

pension plans

other benefits

Discount rate

10.24% p.a.

11.30% p.a.

Expected return on plan assets

12.78% p.a.

11.70% p.a.

—

14.98% p.a.

—

Rate of compensation increase — up to 47 years

7.12% p.a.

—

8.15% p.a.

—

Rate of compensation increase — over 47 years

4.00% p.a.

—

5.00% p.a.

—

Inflation

4.00% p.a.

5.00% p.a.

Health care cost trend rate

—

7.64% p.a.

—

8.67% p.a.

Foreign

2007

2006

Overfunded

Underfunded

Overfunded

Underfunded

pension plans

other benefits

pension plans

other benefits

Discount rate

—

5.21% p.a.

5.55% p.a.

5.00% p.a.

—

5.00% p.a.

Expected return on plan assets

—

7.18% p.a.

7.50% p.a.

—

7.50% p.a.

Rate of compensation increase — up to 47 years

—

4.01% p.a.

3.58% p.a.

3.00% p.a.

—

3.00% p.a.

Rate of compensation increase — over 47 years

—

4.01% p.a.

3.58% p.a.

3.00% p.a.

—

3.00% p.a.

Inflation

—

2.00% p.a.

1.80% p.a.

—

1.80% p.a.

Health care cost trend rate

—

6.35% p.a.

—

5.05% p.a.

F - 30

(e)

Investment targets and composition of plan assets

•

Overfunded pension plans

The fair value of the Brazil overfunded pension plan assets is US$4,187 and US$3,508 at the end of 2007 and 2006, respectively. There are no foreign overfunded pension plans assets at the period end. The asset allocation for these plans at the end of 2007 and 2006, and the target allocation for 2008, by asset category, follows:


	Brazil
	Target
	allocation for		Percentage of plan assets at
	2008		December 31,
	(Unaudited)		2007		2006
Equity securities		27%		29%		30%
Real estate		6%		4%		5%
Loans		6%		4%		4%
Fixed Income		61%		63%		61%

Total		100%		100%		100%

F - 31

•

Underfunded pension plans

The fair value of the underfunded pension plan assets is US$146 and US$91 at the end of 2007 and 2006, respectively, for Brazilian plans and US$3,616 and US$2,987 at the end of 2007 and 2006, respectively, for foreign plans. The asset allocation for these plans at the end of 2007 (Brazil and foreign) and 2006 (Brazil and foreign), and the target allocation for 2008, by asset category, follows:


	Brazil
	Target
	allocation for		Percentage of plan assets at
	2008		December 31,
	(Unaudited)		2007		2006
Equity securities		25%		—		8%
Real estate		—		—		1%
Loans		9%		5%		1%
Fixed Income		66%		95%		90%

Total		100%		100%		100%

Foreign

Percentage of plan assets at

Target allocation

December 31,

for 2008

2007

2006

Equity securities

61%

Fixed Income

39%

Total

100%

The fixed income asset allocation target for the Brazilian plans was established in order to surpass the benefit obligation and to be used for the payment of short-term plans. The proposal for 2008 is to increase the investments in inflation-indexed funds.

The target for equity securities of these plans reflects the expected appreciation of the Brazilian stock markets as well as the volatility of the market and the decrease of the Brazilian interest rates.

The asset allocation policy for the foreign plans of 39% fixed income and 61% equity securities, is maintained fairly close to the policy mix at most times by the use of a rebalancing policy.

•

Underfunded other benefits

The fair value of the foreign underfunded other benefit assets is US$10 and US$4 at the end of 2007 and 2006, respectively. There are no Brazilian underfunded other benefit assets in our postretirement benefit other than pensions at the period end.

The asset allocation for these benefits at the end of 2007 and target allocation for 2008, by asset category, follows:

Foreign

Target allocation

Percentage of plan assets at

for 2008

December 31,

(unaudited)

2007

2006

Equity securities

Fixed Income

61%

Total

39%

100%

The asset allocation policy is the same for the foreing underfunded pension plan.

F - 32

(f)

Pension costs


	Three-month period ended
	December 31, 2007									September 30, 2007								December 31, 2006
	Overfunded									Overfunded								Overfunded
	pension			Underfunded			Underfunded			pension			Underfunded			Underfunded		pension			Underfunded			Underfunded
	plans			pension plans			other benefits			plans			pension plans			other benefits		plans			pension plans			other benefits
Service cost — benefits earned during the period		3			18			6			2			14			5		2			14			4
Interest cost on projected benefit obligation		110			76			26			77			53			18		82			56			18
Expected return on assets		(205	)		(73	)		(4	)		(144	)		(59	)		—		(131	)		(56	)		—
Amortization of initial transitory obligation		5			—			—			4			—			—		4			—			—
Net deferral		(6	)		—			—			(4	)		—			—		(10	)		—			—

Net periodic pension cost		(93	)		21			28			(65	)		8			23		(53	)		14			22


	As of December 31,
	2007									2006
				Underfunded									Underfunded
	Overfunded			pension			Underfunded			Overfunded			pension			Underfunded
	pension plans			plans			other benefits			pension plans			plans			other benefits
Service cost — benefits earned during the period		9			61			20			5			14			4
Interest cost on projected benefit obligation		306			229			78			246			79			25
Expected return on assets		(570	)		(247	)		(4	)		(391	)		(63	)		—
Amortization of initial transitory obligation		14			—			—			12			—			—
Net deferral		(17	)		—			—			(28	)		—			—

Net periodic pension cost		(258	)		43			94			(156	)		30			29

(g)		Expected contributions and benefits

		Employer contributions expected for 2008 are US$324.

		The benefit payments, which reflect future service, as appropriate, are expected to be made as follows (unaudited):


	2007
	Overfunded		Underfunded
	pension		pension		Underfunded
	plans		plans		other benefits		Total
2008		230		319		79		628
2009		233		323		84		640
2010		235		320		88		643
2011		237		316		93		646
2012		238		312		98		648
2013 and thereafter		1,201		1,482		503		3,186

(h)

Accumulated benefit obligation


	2007									2006
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Accumulated benefit obligation		3,166			4,293			1,671			2,524			3,680			1,287
Projected benefit obligation		3,178			4,436			1,671			2,531			3,743			1,287
Fair value of plan assets		(4,187	)		(3,762	)		(10	)		(3,508	)		(3,078	)		(4	)

F - 33

(i)

Impact of 1% variation in assumed health care cost trend rate


	1% increase				1% decrease
	2007		2006		2007			2006
Accumulated postretirement benefit obligation (APBO)		261		178		(201	)		(145	)
Interest and service costs		15		15		(12	)		(12	)

(j)

Other Cumulative Comprehensive Income (Deficit)


	As of December 31,
	2007									2006
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Net transition obligation / (asset)		(24	)		—			—			(34	)		—			—
Net actuarial loss / (gain)		(6	)		(34	)		97			422			(34	)		119
Effect of exchange rate changes		94			(7	)		(2	)		66			1			—
Deferred income tax		(22	)		14			(35	)		(154	)		11			(44	)

Amounts recognized in other cumulative comprehensive income (deficit)		42			(27	)		60			300			(22	)		75

(l)

Change in Other Cumulative Comprehensive Income (Deficit)


	As of December 31,
	2007									2006
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Net transition obligation / (asset) not yet recognized in NPPC at beginning of period		(38	)		—			—			(46	)		—			—
Net actuarial loss / (gain) not yet recognized in NPPC at beginning of period		491			(33	)		(11	)		736			10			(5	)
Deferred income tax at beginning of period		(154	)		11			4			(234	)		(3	)		2

Effect of initial recognition of cumulative comprehensive Income (deficit)		299			(22	)		(7	)		456			7			(3	)
Change in the period
Amortization of net transition obligation / (asset)		14			—			—			12			—			—
Amortization of net actuarial loss / (gain)		(17	)		—			—			(28	)		—			—
Total net actuarial loss / (gain) arising during period		(480	)		(1	)		108			(286	)		(44	)		124
Effect of exchange rate changes		94			(7	)		(2	)		66			1			—
Deferred income tax		132			3			(39	)		80			14			(46	)

Total recognized in other cumulative comprehensive income (deficit)		42			(27	)		60			300			(22	)		75

(m)

Net periodic pension cost for the next year


	As of December 31,
	2008
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost		12			64			24
Interest cost		314			260			97
Expected return on plan assets		(523	)		(268	)		(4	)
Net transition obligation / (asset) amortization		15			—			—
Net actuarial loss / (gain) amortization		(6	)		2			—

		(188	)		58			117

Commitments and contingencies

	(a)		At December 31, 2007, we had extended guarantees for borrowings obtained by our affiliate SAMARCO in the amount of less than US$1, the denominated currency U.S.Dollar final maturity at 2008 has no counter guarantees.

			We do not expect losses to arise as a result of the above guarantees. We charge commissions for extending these guarantees.

F - 34

	(b)		In connection with the Girardin Financing, we provided certain guarantees on behalf of Goro pursuant to which we guaranteed payments due from Goro of up to a maximum amount of $100 million (“Maximum Amount”) in connection with an indemnity. We also provided an additional guarantee covering the payments due from Goro of (a) amounts exceeding the Maximum Amount in connection with the indemnity and (b) certain other amounts payable by Goro under a lease agreement covering certain assets.

			Sumic Nickel Netherlands B.V. ( Sumic), a 21% shareholder of Goro, has a put option to sell to Vale Inco 25%, 50%, or 100% of the shares they own of Goro. The put option can be exercised if the defined cost of the initial Goro project exceeds $4.2 billion at project rates and an agreement cannot be reached on how to proceed with the project.

			We provided a guarantee covering certain termination payments due from Goro to the supplier under an electricity supply agreement (“ESA”) entered into in October 2004 for the Goro nickel-cobalt project. The amount of the termination payments guaranteed depends upon a number of factors, including whether any termination of the ESA is as a result of a default by Goro and the date on which an early termination of the ESA were to occur. If Goro defaults under the ESA prior to the anticipated start date for supply of electricity to the project, the termination payment, which currently is at its maximum, would be 145 million euros. Once the supply of electricity under the ESA to the project begins, the guaranteed amounts will decrease over the life of the ESA.

	(c)		We and our 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:


	As of December 31,
	2007				2006
	Provision for				Provision for
	contingencies		Judicial deposits		contingencies		Judicial deposits
Labor and social security claims		519		372		378		234

Civil claims		311		135		260		117

Tax — related actions		1,605		613		972		500

Others		18		4		31		1

		2,453		1,124		1,641		852

			Labor and social security — related actions principally comprise claims by Brazilian employees and former employees 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 Brazil in connection with losses alleged to have been incurred by them as a result of various past government economic stabilization plans during which full indexation of contracts for inflation was not permitted as well as for accidents and land appropriations.

			Tax – tax-related actions principally comprise our challenges of certain revenue taxes and value added taxes positions and uncertain tax positions.

			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.

F - 35

			Contingencies settled in 2007, 2006 and 2005 aggregated US$ 331, US$424 and US$114, respectively, and additional provisions aggregated US$ 364, US$ 439 and US$ 141, respectively, classified in other operating expenses.

			In addition to the contingencies for which we have made provisions we are defending claims where in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible but not probable, in the total of US$2,381 at December 31, 2007 and for which no provision has been made.

	(d)		We are committed under a take-or-pay agreement to purchase approximately 16,450 thousand metric tons of bauxite from Mineração Rio do Norte S.A. — MRN at a formula price, calculated based on the current London Metal Exchange (LME) quotation for aluminum. Based on a market price of US$31.60 per metric ton as of December 31, 2007, this arrangement represents the following total commitment per metric ton as of December 31, 2007, this arrangement represents the following total commitment:


2008			269
2009			251

			520

	(e)		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.

			In preparation for the issuance of the debentures, we issued series B preferred shares on a one-for-one basis to all holders of our common shares and series A preferred shares. We then exchanged all of the series B shares for the debentures at par value. The debentures are not redeemable or convertible, and do not trade on a stapled basis or otherwise with our common or preferred shares. During 2002 we registered the debentures with the Brazilian Securities Commissions (CVM) in order to permit trading.

			Under the terms of the debentures, holders will have the right to receive semi-annual payments equal to an agreed percentage of our net revenues (revenues less value added tax) from certain identified mineral resources that we owned as of May 1997, to the extent that we exceed defined threshold production volumes of these resources, and from the sale of mineral rights that we owned as of May 1997. Our obligation to make payments to the holders will cease when the relevant mineral resources are exhausted at which time we are required to repay the original par value plus accrued interest. Based on current production levels, and estimates for new projects, we began payments relating to copper resources in 2004 and expect to start payments relating to iron ore resources from approximately 2020 for our Northern System and 2030 for our Southern System in Brazil, and payments related to other mineral resources at the end of the current decade.

F - 36

The table below summarizes the amounts we will be required to pay under the debentures based on the net revenues we earn from the identified mineral resources and the sale of mineral rights.


Area	Mineral	Required Payments by CVRD
Southern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.7 billion tons.

Northern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.2 billion tons.

Pojuca, Andorinhas, Liberdade and Sossego	Gold and copper	2.5% of net revenue from the beginning of commercialization.

Igarapé Bahia and Alemão	Gold and copper	2.5% of net revenue, after total sales from May 1997 exceeds 70 tons of gold.

Other areas, excluding Carajás / Serra Leste	Gold	2.5% of net revenue.

Other areas owned as of May 1997	Other minerals	1% of net revenue, 4 years after the beginning of the commercialization.

All areas	Sale of mineral rights owned as of May 1997	1% of the sales price.

At October 1, 2007 and March 30, 2007 we paid remuneration on these “debentures” of US$5 and US$6, respectively. During 2007 we paid US$11 and during 2006 we paid US$6.

(f)

We use various judgments and assumptions when measuring our asset retirement obligations. Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain.

The changes in the provisions for asset retirement obligations are as follows:


	Three-month period ended (unaudited)
	December			September			December			Year ended December 31,
	31, 2007			30, 2007			31, 2006			2007			2006			2005
Provisions for asset retirement obligations beginning of period		859			760			258			676			225			134
Liability recognized upon consolidation of Inco		—			—			178			—			178			—
Accretion expense		23			42			186			84			205			14
Liabilities settled in the current period		(8	)		(2	)		(4	)		(15	)		(9	)		(9	)
Revisions in estimated cash flows		83			—			59			83			59			67
Cumulative translation adjustment		18			59			(1	)		147			18			19

Provisions for asset retirement obligations end of period		975			859			676			975			676			225

F - 37

	(g)		Description of Leasing Arrangements

			We conduct part of our railroad operation from leased facilities. The 30-year lease, renewable for a further 30 years, expires in August, 2026 and is classified as an operating lease. At the end of the lease term, we are required to return the concession and the lease assets. In most cases, management expects that in the normal course of business, leases will be renewed.

			Operating Leases

			The following is a schedule by year of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2007:


Year ending December 31:
2008			62
2009			62
2010			62
2012			62
2012 thereafter			888

Total minimum payments required			1,136

The total expenses of operating leases in 2007, 2006 and 2005 was US$62, US$48 and US$42, respectively.

20			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 our Brazilian 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 – comprises the production of non-ferrous minerals, including nickel (co-products and by-products), 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 - 38

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations (Aggregated)


	Three-month period ended (unaudited)
	December 31, 2007																					September 30, 2007																					December 31, 2006
				Non						Holdings															Non						Holdings															Non						Holdings
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Foreign		5,904			2,978			22			841			87			(2,863	)		6,969			5,649			2,902			11			877			85			(2,748	)		6,776			4,237			3,182			23			841			15			(1,953	)		6,345
Gross revenues — Domestic		1,116			113			388			217			1			(392	)		1,443			1,120			106			395			211			—			(484	)		1,348			736			100			336			136			—			(159	)		1,149
Cost and expenses		(4,895	)		(1,795	)		(275	)		(907	)		(113	)		3,255			(4,730	)		(4,570	)		(1,435	)		(235	)		(837	)		(111	)		3,232			(3,956	)		(3,340	)		(2,591	)		(226	)		(709	)		(6	)		2,112			(4,760	)
Research and development		(84	)		(92	)		(26	)		—			(60	)		—			(262	)		(44	)		(98	)		(8	)		—			(56	)		—			(206	)		(36	)		(85	)		(5	)		—			(49	)		—			(175	)
Depreciation, depletion and amortization		(262	)		(404	)		(29	)		(36	)		(6	)		—			(737	)		(236	)		(238	)		(25	)		(26	)		(7	)		—			(532	)		(182	)		(149	)		(25	)		(21	)		(2	)		—			(379	)

Operating income		1,779			800			80			115			(91	)		—			2,683			1,919			1,237			138			225			(89	)		—			3,430			1,415			457			103			247			(42	)		—			2,180
Financial income		653			227			1			5			1			(829	)		58			665			59			3			4			(1	)		(691	)		39			265			95			8			7			—			(194	)		181
Financial expenses		(757	)		(352	)		(10	)		30			33			829			(227	)		(537	)		(364	)		(4	)		60			(44	)		691			(198	)		(646	)		(80	)		(3	)		(169	)		(4	)		194			(708	)
Foreign exchange and monetary gains (losses), net		246			70			(5	)		38			(45	)		—			304			433			44			(2	)		37			41			—			553			(26	)		209			(4	)		23			2			—			204
Gain on sale of investments		—			—			—			—			—			—			—			—			81			20			—			2			—			103			80			—			—			—			231			—			311
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		63			5			40			21			7			—			136			86			4			36			21			18			—			165			77			—			27			20			59			—			183
Income taxes		(298	)		104			(2	)		(30	)		10			—			(216	)		(612	)		(248	)		(4	)		(83	)		—			—			(947	)		(235	)		(251	)		(9	)		(56	)		—			—			(551	)
Minority interests		4			(86	)		—			(72	)		(11	)		—			(165	)		—			(120	)		—			(96	)		11			—			(205	)		(19	)		(190	)		—			(18	)		—			—			(227	)

Net income		1,690			768			104			107			(96	)		—			2,573			1,954			693			187			168			(62	)		—			2,940			911			240			122			54			246			—			1,573


Sales classified by geographic destination:
Foreign market
America, except United States		417			468			—			139			—			(240	)		784			369			369			3			227			—			(272	)		696			326			437			9			206			—			(249	)		729
United States		102			517			—			145			24			(116	)		672			115			564			—			52			17			(57	)		691			86			440			—			66			15			(49	)		558
Europe		1,949			636			22			378			—			(1,044	)		1,941			1,834			715			8			398			—			(980	)		1,975			1,575			497			6			316			—			(700	)		1,694
Middle East/Africa/Oceania		204			134			—			45			63			(138	)		308			194			85			—			38			68			(82	)		303			198			60			1			73			—			(58	)		274
Japan		551			392			—			134			—			(226	)		851			638			472			—			146			—			(277	)		979			536			473			—			143			—			(220	)		932
China		1,958			400			—			—			—			(817	)		1,541			2,061			286			—			—			—			(860	)		1,487			1,281			446			8			26			—			(486	)		1,275
Asia, other than Japan and China		723			431			—			—			—			(282	)		872			438			411			—			16			—			(220	)		645			235			828			(1	)		11			—			(190	)		883

		5,904			2,978			22			841			87			(2,863	)		6,969			5,649			2,902			11			877			85			(2,748	)		6,776			4,237			3,181			23			841			15			(1,952	)		6,345
Domestic market		1,116			113			388			217			1			(392	)		1,443			1,120			106			395			211			—			(484	)		1,348			736			100			336			136			—			(159	)		1,149

		7,020			3,091			410			1,058			88			(3,255	)		8,412			6,769			3,008			406			1,088			85			(3,232	)		8,124			4,973			3,281			359			977			15			(2,111	)		^7,494

F - 39

Operating segment – after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	December 31, 2007
	Revenues
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		2,818		531		3,349		(74	)		3,275		(1,522	)		1,753			(222	)		1,531			17,031		958		60
Pellets		524		202		726		(46	)		680		(490	)		190			(26	)		164			754		31		741
Manganese		21		8		29		(1	)		28		(21	)		7			(2	)		5			79		1		—
Ferroalloys		181		102		283		(26	)		257		(137	)		120			(8	)		112			168		12		—

		3,544		843		4,387		(147	)		4,240		(2,170	)		2,070			(258	)		1,812			18,032		1,002		801

Non ferrous
Nickel and other products (*)		2,480		11		2,491		—			2,491		(1,398	)		1,093			(370	)		723			23,668		705		299
Potash		—		58		58		(3	)		55		(35	)		20			(7	)		13			218		6		—
Kaolin		62		12		74		(2	)		72		(40	)		32			(10	)		22			295		2		—
Copper concentrate		175		28		203		(6	)		197		(146	)		51			(21	)		30			1,841		86		—

		2,717		109		2,826		(11	)		2,815		(1,619	)		1,196			(408	)		788			26,022		799		299

Aluminum
Alumina and bauxite		312		10		322		(8	)		314		(282	)		32			(26	)		6			3,687		236		184
Aluminum		274		76		350		(16	)		334		(210	)		124			(11	)		113			761		45		—

		586		86		672		(24	)		648		(492	)		156			(37	)		119			4,448		281		184

Logistics
Railroads		—		322		322		(52	)		270		(194	)		76			(23	)		53			1,735		462		342
Ports		11		56		67		(9	)		58		(52	)		6			(6	)		—			1,371		58		—
Ships		—		—		—		—			—		—			—			—			—			36		—		107

		11		378		389		(61	)		328		(246	)		82			(29	)		53			3,142		520		449
Others		111		27		138		(6	)		132		(216	)		(84	)		(5	)		(89	)		2,981		145		1,189

		6,969		1,443		8,412		(249	)		8,163		(4,743	)		3,420			(737	)		2,683			54,625		2,747		2,922


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

F - 40

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	September 30, 2007
	Revenues
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment			Investments
Ferrous
Iron ore		2,696		514		3,210		(76	)		3,134		(1,146	)		1,988			(196	)		1,792			15,071		559			53
Pellets		556		161		717		(37	)		680		(511	)		169			(23	)		146			1,529		7			681
Manganese		8		5		13		(2	)		11		(19	)		(8	)		(2	)		(10	)		72		—			—
Ferroalloys		90		76		166		(20	)		146		(96	)		50			(6	)		44			178		3			—

		3,350		756		4,106		(135	)		3,971		(1,772	)		2,199			(227	)		1,972			16,850		569			734

Non ferrous
Nickel and other products (*)		2,514		13		2,527		—			2,527		(1,143	)		1,384			(211	)		1,173			23,170		510			269
Potash		—		49		49		(2	)		47		(28	)		19			(5	)		14			188		4			—
Kaolin		51		8		59		(3	)		56		(76	)		(20	)		(9	)		(29	)		298		(1	)		—
Copper concentrate		150		36		186		(8	)		178		(117	)		61			(13	)		48			1,747		30			—

		2,715		106		2,821		(13	)		2,808		(1,364	)		1,444			(238	)		1,206			25,403		543			269

Aluminum
Alumina and bauxite		296		—		296		10			306		(233	)		73			(16	)		57			3,369		197			163
Aluminum		307		74		381		(16	)		365		(190	)		175			(12	)		163			717		10			—

		603		74		677		(6	)		671		(423	)		248			(28	)		220			4,086		207			163

Logistics
Railroads		—		323		323		(54	)		269		(166	)		103			(23	)		80			840		16			397
Ports		—		58		58		(13	)		45		(42	)		3			(6	)		(3	)		1,148		24			—
Ships		—		10		10		—			10		(6	)		4			(1	)		3			39		—			—

		—		391		391		(67	)		324		(214	)		110			(30	)		80			2,027		40			397
Others		108		21		129		(5	)		124		(163	)		(39	)		(9	)		(48	)		2,440		8			1,032

		6,776		1,348		8,124		(226	)		7,898		(3,936	)		3,962			(532	)		3,430			50,806		1,367			2,595


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

F - 41

Operating segment — after eliminations (Disaggregated)


	As of and for the three-month period ended (unaudited)
	December 31, 2006
	Revenues
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		2,163		484		2,647		(59	)		2,588		(1,183	)		1,405			(152	)		1,253			13,235		820		48
Pellets		432		112		544		(24	)		520		(311	)		209			(17	)		192			593		61		529
Manganese		11		4		15		—			15		(56	)		(41	)		(1	)		(42	)		65		7		—
Ferroalloys		99		48		147		(12	)		135		(120	)		15			(5	)		10			186		11		—

		2,705		648		3,353		(95	)		3,258		(1,670	)		1,588			(175	)		1,413			14,079		899		577

Non ferrous
Nickel and other products		2,786		16		2,802		—			2,802		(2,267	)		535			(124	)		411			17,193		483		222
Potash		—		43		43		(2	)		41		(26	)		15			(7	)		8			178		7		—
Kaolin		62		8		70		(4	)		66		(63	)		3			(6	)		(3	)		249		19		—
Copper concentrate		152		31		183		(8	)		175		(67	)		108			(16	)		92			1,386		41		—

		3,000		98		3,098		(14	)		3,084		(2,423	)		661			(153	)		508			19,006		550		222

Aluminum
Alumina and bauxite		346		—		346		2			348		(246	)		102			(13	)		89			2,414		265		164
Aluminum		263		65		328		(14	)		314		(143	)		171			(7	)		164			415		26		—

		609		65		674		(12	)		662		(389	)		273			(20	)		253			2,829		291		164

Logistics
Railroads		—		247		247		(45	)		202		(110	)		92			(17	)		75			720		26		222
Ports		4		65		69		(12	)		57		(39	)		18			(4	)		14			222		6		—
Ships		12		14		26		(1	)		25		(16	)		9			(3	)		6			45		2		—

		16		326		342		(58	)		284		(165	)		119			(24	)		95			987		34		222
Others		15		12		27		(2	)		25		(107	)		(82	)		(7	)		(89	)		1,106		7		1,168

		6,345		1,149		7,494		(181	)		7,313		(4,754	)		2,559			(379	)		2,180			38,007		1,781		2,353

F - 42

Results by segment — before eliminations (Aggregated)


	As of and for the year ended December 31,
	2007																					2006																					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 — Foreign		21,126			13,338			61			3,506			242			(10,437	)		27,836			15,729			4,199			67			3,125			54			(7,029	)		16,145			12,655			787			75			1,784			—			(5,461	)		9,840
Gross revenues — Domestic		3,865			487			1,519			751			1			(1,344	)		5,279			2,738			277			1,373			474			7			(651	)		4,218			2,197			213			1,215			345			—			(405	)		3,565
Cost and expenses		(16,882	)		(7,301	)		(983	)		(3,307	)		(310	)		11,781			(17,002	)		(12,004	)		(3,301	)		(970	)		(2,597	)		(56	)		7,680			(11,248	)		(9,646	)		(762	)		(886	)		(1,639	)		(10	)		5,866			(7,077	)
Research and development		(175	)		(329	)		(39	)		—			(190	)		—			(733	)		(123	)		(166	)		(10	)		—			(182	)		—			(481	)		(87	)		(73	)		(4	)		(5	)		(108	)		—			(277	)
Depreciation, depletion and amortization		(917	)		(1,039	)		(103	)		(110	)		(17	)		—			(2,186	)		(632	)		(219	)		(76	)		(66	)		(4	)		—			(997	)		(458	)		(65	)		(45	)		(51	)		—			—			(619	)

Operating income		7,017			5,156			455			840			(274	)		—			13,194			5,708			790			384			936			(181	)		—			7,637			4,661			100			355			434			(118	)		—			5,432
Financial income		2,514			578			9			17			25			(2,848	)		295			789			97			28			20			2			(609	)		327			439			1			34			9			2			(362	)		123
Financial expenses		(3,154	)		(1,242	)		(17	)		(13	)		(14	)		2,848			(1,592	)		(1,541	)		(86	)		(8	)		(294	)		(18	)		609			(1,338	)		(751	)		(6	)		(19	)		(154	)		8			362			(560	)
Foreign exchange and monetary gains (losses), net		2,302			93			(15	)		181			(2	)		—			2,559			206			214			(11	)		119			1			—			529			259			(44	)		(13	)		98			(1	)		—			299
Gain on sale of investments		—			81			237			—			459			—			777			443			—			—			—			231			—			674			—			—			—			—			126			—			126
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		301			9			125			84			76			—			595			312			—			96			76			226			—			710			435			—			54			65			206			—			760
Income taxes		(1,959	)		(1,005	)		(16	)		(231	)		10			—			(3,201	)		(976	)		(250	)		(18	)		(187	)		(1	)		—			(1,432	)		(808	)		(1	)		(17	)		(55	)		1			—			(880	)
Minority interests		(31	)		(444	)		(1	)		(326	)		—			—			(802	)		(157	)		(190	)		—			(232	)		—			—			(579	)		(337	)		—			(1	)		(121	)		—			—			(459	)

Net income		6,990			3,226			777			552			280			—			11,825			4,784			575			471			438			260			—			6,528			3,898			50			393			276			224			—			4,841


Sales classified by geographic destination:
Foreign market
America, except United States		1,449			1,555			23			850			—			(1,026	)		2,851			1,249			438			30			726			—			(823	)		1,620			1,313			—			45			320			—			(762	)		916
United States		432			2,462			—			308			81			(318	)		2,965			506			450			—			95			54			(237	)		868			464			7			3			211			—			(268	)		417
Europe		6,823			2,589			33			1,606			—			(3,716	)		7,335			5,465			1,020			19			1,346			—			(2,667	)		5,183			4,847			449			23			750			—			(2,256	)		3,813
Middle East/Africa/Oceania		827			396			—			142			161			(412	)		1,114			767			218			1			263			—			(239	)		1,010			775			108			—			42			—			(148	)		777
Japan		2,131			2,041			—			584			—			(929	)		3,827			1,779			523			—			548			—			(662	)		2,188			1,261			44			—			395			—			(469	)		1,231
China		7,570			1,457			4			—			—			(3,168	)		5,863			4,781			499			16			126			—			(1,716	)		3,706			3,018			79			4			50			—			(1,135	)		2,016
Asia, other than Japan and China		1,894			2,838			1			16			—			(868	)		3,881			1,182			1,050			1			21			—			(684	)		1,570			977			100			—			16			—			(423	)		670

		21,126			13,338			61			3,506			242			(10,437	)		27,836			15,729			4,198			67			3,125			54			(7,028	)		16,145			12,655			787			75			1,784			—			(5,461	)		9,840
Domestic market		3,865			487			1,519			751			1			(1,344	)		5,279			2,738			277			1,373			474			7			(651	)		4,218			2,197			213			1,215			345			—			(405	)		3,565

		24,991			13,825			1,580			4,257			243			(11,781	)		33,115			18,467			4,475			1,440			3,599			61			(7,679	)		20,363			14,852			1,000			1,290			2,129			—			(5,866	)		13,405

F - 43

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2007
	Revenues
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		9,873		2,035		11,908		(286	)		11,622		(4,520	)		7,102			(777	)		6,325			17,031		2,496		60
Pellets		2,151		587		2,738		(132	)		2,606		(1,860	)		746			(87	)		659			754		92		741
Manganese		48		21		69		(5	)		64		(66	)		(2	)		(7	)		(9	)		79		2		—
Ferroalloys		445		274		719		(70	)		649		(442	)		207			(25	)		182			168		22		—

		12,517		2,917		15,434		(493	)		14,941		(6,888	)		8,053			(896	)		7,157			18,032		2,612		801
Non ferrous
Nickel and other products (*)		11,664		125		11,789		—			11,789		(6,077	)		5,712			(927	)		4,785			23,668		2,088		299
Potash		—		178		178		(10	)		168		(108	)		60			(23	)		37			218		19		—
Kaolin		202		36		238		(9	)		229		(228	)		1			(33	)		(32	)		295		33		—
Copper concentrate		663		139		802		(30	)		772		(456	)		316			(64	)		252			1,841		197		—

		12,529		478		13,007		(49	)		12,958		(6,869	)		6,089			(1,047	)		5,042			26,022		2,337		299

Aluminum
Alumina and bauxite		1,142		10		1,152		(5	)		1,147		(917	)		230			(70	)		160			3,687		757		184
Aluminum		1,276		294		1,570		(61	)		1,509		(800	)		709			(41	)		668			761		99		—

		2,418		304		2,722		(66	)		2,656		(1,717	)		939			(111	)		828			4,448		856		184

Logistics
Railroads		—		1,220		1,220		(199	)		1,021		(636	)		385			(88	)		297			1,735		491		342
Ports		13		254		267		(46	)		221		(177	)		44			(22	)		22			1,371		102		—
Ships		17		21		38		(3	)		35		(44	)		(9	)		(3	)		(12	)		36		12		107

		30		1,495		1,525		(248	)		1,277		(857	)		420			(113	)		307			3,142		605		449
Others		342		85		427		(17	)		410		(531	)		(121	)		(19	)		(140	)		2,981		241		1,189

		27,836		5,279		33,115		(873	)		32,242		(16,862	)		15,380			(2,186	)		13,194			54,625		6,651		2,922


(*)		Includes nickel co-products and by-products (copper, precious metals, cobalt and others).

F - 44

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2006
	Revenues
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		8,167		1,860		10,027		(271	)		9,756		(4,060	)		5,696			(528	)		5,168			13,235		2,616		48
Pellets		1,590		389		1,979		(86	)		1,893		(1,210	)		683			(53	)		630			593		110		529
Manganese		39		16		55		(3	)		52		(97	)		(45	)		(4	)		(49	)		65		19		—
Ferroalloys		342		166		508		(43	)		465		(443	)		22			(19	)		3			186		34		—

		10,138		2,431		12,569		(403	)		12,166		(5,810	)		6,356			(604	)		5,752			14,079		2,779		577

Non ferrous
Nickel and other products (*)		2,786		16		2,802		—			2,802		(2,267	)		535			(124	)		411			17,193		483		222
Potash		—		143		143		(8	)		135		(84	)		51			(23	)		28			178		16		—
Kaolin		188		30		218		(9	)		209		(182	)		27			(27	)		—			249		19		—
Copper concentrate		690		89		779		(20	)		759		(246	)		513			(49	)		464			1,386		150		—

		3,664		278		3,942		(37	)		3,905		(2,779	)		1,126			(223	)		903			19,006		668		222

Aluminum
Alumina and bauxite		1,127		10		1,137		(8	)		1,129		(796	)		333			(39	)		294			2,414		706		164
Aluminum		1,093		151		1,244		(29	)		1,215		(558	)		657			(26	)		631			415		43		—

		2,220		161		2,381		(37	)		2,344		(1,354	)		990			(65	)		925			2,829		749		164

Logistics
Railroads		—		1,011		1,011		(177	)		834		(488	)		346			(72	)		274			720		95		222
Ports		15		246		261		(44	)		217		(137	)		80			(16	)		64			222		12		—
Ships		52		52		104		(8	)		96		(97	)		(1	)		(5	)		(6	)		45		2		—

		67		1,309		1,376		(229	)		1,147		(722	)		425			(93	)		332			987		109		222
Others		56		39		95		(6	)		89		(352	)		(263	)		(12	)		(275	)		1,106		126		1,168

		16,145		4,218		20,363		(712	)		19,651		(11,017	)		8,634			(997	)		7,637			38,007		4,431		2,353

F - 45

Operating segment — after eliminations (Disaggregated)


	As of and for the year ended December 31,
	2005
	Revenues
																								Property,		Addition to
																		Depreciation,						Plant and		Property,
							Value			Net		Cost and						depletion and			Operating			Equipment,		Plant and
	Foreign		Domestic		Total		added tax			revenues		expenses			Net			amortization			income			Net		Equipment		Investments
Ferrous
Iron ore		5,890		1,506		7,396		(234	)		7,162		(2,658	)		4,504			(419	)		4,085			8,157		2,695		46
Pellets		1,722		361		2,083		(78	)		2,005		(1,321	)		684			(23	)		661			461		75		568
Manganese		56		21		77		(6	)		71		(81	)		(10	)		(1	)		(11	)		52		20		—
Ferroalloys		318		176		494		(47	)		447		(344	)		103			(20	)		83			208		82		—

		7,986		2,064		10,050		(365	)		9,685		(4,404	)		5,281			(463	)		4,818			8,878		2,872		614

Non ferrous
Potash		—		149		149		(11	)		138		(86	)		52			(8	)		44			166		18		—
Kaolin		150		27		177		(7	)		170		(176	)		(6	)		(20	)		(26	)		231		5		—
Copper concentrate		354		37		391		(8	)		383		(203	)		180			(34	)		146			1,180		152		—

		504		213		717		(26	)		691		(465	)		226			(62	)		164			1,577		175		—

Aluminum
Alumina and bauxite		509		76		585		(24	)		561		(494	)		67			(25	)		42			1,569		600		178
Aluminum		784		39		823		(5	)		818		(397	)		421			(26	)		395			361		25		58

		1,293		115		1,408		(29	)		1,379		(891	)		488			(51	)		437			1,930		625		236

Logistics
Railroads		—		881		881		(145	)		736		(528	)		208			(35	)		173			612		247		109
Ports		—		230		230		(34	)		196		(126	)		70			(5	)		65			244		22		—
Ships		56		49		105		(8	)		97		(101	)		(4	)		(3	)		(7	)		3		2		—

		56		1,160		1,216		(187	)		1,029		(755	)		274			(43	)		231			859		271		109
Others		1		13		14		(6	)		8		(226	)		(218	)		—			(218	)		922		34		713

		9,840		3,565		13,405		(613	)		12,792		(6,741	)		6,051			(619	)		5,432			14,166		3,977		1,672

F - 46

21		Related party transactions

		Balances from transactions with major related parties are as follows:


	As of December 31,
	2007				2006
	Assets		Liabilities		Assets		Liabilities
AFFILIATED COMPANIES AND JOINT VENTURES

Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		59		46		58		49
Companhia ítalo-Brasileira de Pelotização — ITABRASCO		53		49		51		19
Companhia Nipo-Brasileira de Pelotização — NIBRASCO		108		30		101		39
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		24		13		39		11
Baovale Mineração S.A.		16		41		1		24
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		34		—		37		—
Minas da Serra Geral S.A. — MSG		—		14		—		14
MRS Logística S.A.		11		35		—		19
Mineração Rio Norte S.A.		—		29		—		21
Samarco Mineração S.A.		10		—		4		—
TAIWAN NICKEL REFINING CORPORATION		—		—		362		—
KOREA NICKEL CORPORATION		9		—		56		—
MITSUI & CO, LTD		—		21		—		18
Others		24		10		11		8

		348		288		720		222

Current		345		287		715		222

Long-term		3		1		5		—

These balances are included in the following balance sheet classifications:


	As of December 31,
	2007				2006
	Assets		Liabilities		Assets		Liabilities
Current assets
Accounts receivable		281		—		675		—
Loans and advances to related parties		64		—		40		—
Other assets
Loans and advances to related parties		3		—		5		—
Current liabilities
Suppliers		—		281		—		197
Loans from related parties		—		6		—		25
Long-term liabilities
Long-term debt		—		1		—		—

		348		288		720		222

F - 47

Income and expenses from the principal transactions and financial operations carried out with major related parties are as follows:


	As of December 31,
	2007				2006				2005
	Income		Expense		Income		Expense		Income		Expense
AFFILIATED COMPANIES AND JOINT VENTURES

Companhia Nipo-Brasileira de Pelotização — NIBRASCO		386		328		363		292		280		310
Samarco Mineração S.A		117		—		79		—		25		1
SIDERAR S.A.I.C		—		—		—		—		11		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO		233		163		204		58		158		65
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS		247		195		224		159		170		185
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		220		270		226		191		170		113
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		442		—		410		—		24		—
Valesul Alumínio S.A		—		—		11		—		66		—
Mineração Rio Norte S.A		—		232		—		234		—		136
Gulf Industrial Investment Company — GIIC		—		—		56		2		157		—
MRS Logística S.A		17		593		14		516		4		385
Others		30		29		3		39		19		60

		1,692		1,810		1,590		1,491		1,084		1,255

These amounts are included in the following statement of income line items:


	As of December 31,
	2007				2006				2005
	Income		Expense		Income		Expense		Income		Expense
Sales / Cost of iron ore and pellets		1,649		960		1,553		712		964		694
Revenues / expense from logistic services		17		593		13		516		4		387
Sales / Cost of aluminum products		—		232		11		234		66		136
Financial income/expenses		26		24		13		16		26		36
Others		—		1		—		13		24		2

		1,692		1,810		1,590		1,491		1,084		1,255

		Additionally the Company has with Mitsui & Co, Ltd, Bradesco, Banco Nacional de Desenvolvimento Social and BNDES Participações S.A in the amounts of US$13, US$3,142, US$236 and US$376, related to loans instrument with interests at market condition, whose major maturity is November of 2013. These values are recorded in loans and financings disclosed in Note 15.

		The Company still has operations cash equivalents with Bradesco in the amount of US$18 in 2007.

22		Fair value of financial instruments

		The carrying amount of our current financial instruments generally approximates fair market value because of the short-term maturity or frequent repricing of these instruments.

		The market value of our listed long-term investments, where available, is disclosed in Note 13.

		Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, the fair market value of long-term debt (current portion not included) at December 31, 2007 and 2006 is estimated as follows:


	As of December 31,
	2007		2006
Fair market value		17,942		21,746
Carrying value		17,608		21,122

F - 48

		Fair market value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. Changes in assumptions could significantly affect the estimates.

23		Derivative financial instruments

		The main market risks we face are interest rate risk, exchange rate risk and commodity price risk. We manage some of these risks through the use of derivative instruments. Our risk management activities follow the risk management policy, which requires diversification of transactions and counter-parties. We monitor and evaluate our overall position regularly in order to evaluate financial results and impact on our cash flow. We also periodically review the credit limits and creditworthiness of our hedging counter-parties.

		Risk Management Policy

		We consider the effective management of risk a key objective to support our growth strategy and financial flexibility. In furtherance of this objective, the Board of Directors has established an enterprise risk management policy and a risk management committee. Under the policy, we measure, monitor, and manage risk at the portfolio level, using a single framework, and consider the natural diversification of our portfolio. We hedge our market risk only when considered necessary to support our corporate strategy or to maintain our target level of financial flexibility.

		The risk management committee assists our Executive Directors in overseeing and reviewing information regarding our enterprise risk management and framework, including the significant policies, procedures and practices employed to manage risk. Our enterprise risk management policy is designed to promote an effective risk management system and to ensure that enterprise-level risks are reported at least quarterly to the risk management committee.

		We address some of the risks through the use of derivative instruments. Our risk management activities follow the risk management policy, which generally prohibits speculative trading and short selling and requires diversification of transactions and counter-parties.

		We monitor and evaluate our overall position regularly in order to evaluate financial results and impact on our cash flow. We also periodically review the credit limits and creditworthiness of our hedging counter-parties.

		Under SFAS 133 “Accounting for Derivative Financial Instruments and Hedging Activities,” as amended by SFAS 137 and SFAS 138, we recognize all derivatives on our balance sheet at fair value, and the gain or loss in fair value is included in current earnings, unless designated as a cash flow hedge.

		Interest rate risk

		We are exposed to interest rate risk on our outstanding borrowings. Our floating rate debt consists principally of U.S. Dollar borrowings related to trade finance and loans from commercial banks and multilateral organizations and Real-denominated borrowings related to the debentures and the property and services acquisition financing issued in the Brazilian market. In general, our foreign currency floating rate debt is principally subject to changes in the London Interbank Offered Rate (USD LIBOR). Consequently, fluctuations in the USD LIBOR may adversely impact our cash flows. To mitigate the effects of interest rate volatility we make use of natural hedges derived from the correlation between U.S. Dollar floating interest rates and metals prices. When natural hedges are not present, we may opt to realize the same effect with the aid of financial instruments. Our floating rate debt denominated in Reais is mainly subject to changes in the CDI and TJLP.

		We have entered into interest rate derivative transactions primarily to hedge the exposure we have on our Brazilian Reais floating rate debt. Our interest rate derivatives portfolio consists of interest rate swaps to convert Reais floating rate exposures to U.S. Dollar fixed rate exposures.

F - 49

		Currency risk

		We are exposed to exchange rate risk associated with the denomination of our debt in currencies other than the Brazilian Real. On the other hand, a substantial proportion of our revenues are denominated in, or automatically indexed to, the U.S. Dollar. This provides a natural hedge against any changes in the Brazilian Real against the U.S. Dollar. For instance, when a devaluation of the Brazilian Real occurs, the immediate negative impact on our non-Brazilian Real-denominated debt is offset over time by the positive effect of devaluation on future cash flows. In light of this framework, we generally do not use derivative instruments to manage the currency exposure on our long-term Dollar-denominated debt. However, we may occasionally use derivatives to minimize the effects of the volatility of the exchange rates between Reais and U.S. Dollars in the cash flow.

		Our cash flows are also exposed to the volatility of other currencies against the U.S. Dollar. While prices for most of our products are primarily in U.S. Dollars, a substantial portion of our costs, expenses and investments are in currencies other than the U.S. Dollar, in particular the Brazilian Real and the Canadian Dollar. In projects developed outside Brazil and Canada, we are also exposed to other currencies, such as the Euro, Australian Dollar and the Yuan.

		We have other exposures associated with our outstanding debt portfolio. We have a Euro exposure associated with a credit line extended by KFW (Kreditanstalt Für Wiederaufbau). To mitigate the foreign currency risk, we have entered into currency forwards.

		Product Price Risk

		We are also exposed to various market risks relating to the volatility in world market prices for the following products:

	•		iron ore and pellets, which represented 44.2% of our 2007 gross consolidated revenues;

	•		nickel, which represented 30.3% of our 2007 gross consolidated revenues;

	•		manganese ore and ferroalloys, which represented 2.4% of our 2007 gross consolidated revenues;

	•		aluminum products, which represented 8.2% of our 2007 gross consolidated revenues; and

	•		copper concentrate, which represented 2.4% of our 2007 gross consolidated revenues.

		Other products, such as platinum-group metals (PGMs) kaolin and potash, represented a minor percentage of our consolidated revenues.

		We do not enter into derivative transactions to hedge our iron ore, pellets, and manganese ore or ferroalloys exposure. Our risk management policy permits us to hedge market risk only when necessary to support our corporate strategy or maintain financial flexibility. Currently, our derivatives transactions include nickel forward purchase and sale contracts, aluminum forward contracts and options, copper options, as well as positions in gold, platinum and fuel oil derivative instruments.

		Our Executive Board approved the hedging of a portion of our aluminum and copper production for 2007 and 2008 to reduce cash flow risk in connection with the change in our capital structure and the significant increase in our debt position after the acquisition of Inco.

		Nickel — We do not generally use derivative instruments to hedge our exposure to fluctuations in nickel prices. However, we do enter into LME forward purchase contracts, which are substantially offset by fixed-price customer contracts, in order to maintain exposure to nickel price risk. We also enter into LME forward sales contracts to minimize nickel price risk associated with purchased nickel inventories of intermediates and finished nickel products.

		Aluminum — In order to manage the risk associated with fluctuations in aluminum prices, we engaged in hedging transactions involving put and call options, as well as forward contracts. These derivative instruments allowed us to establish minimum average profits for our future aluminum production in excess of our expected production costs and therefore ensure stable cash generation. However, they also have the effect of reducing potential gains from price

F - 50

		increases in the spot market for aluminum. Our policy has been to settle all commodity derivatives contracts in cash without physical delivery of product.

		Copper — We have outstanding put option contracts, giving us the right but not the obligation to sell copper, and sell call option contracts, giving the buyer the right but not the obligation to purchase copper for time periods extending to 2008. A major part of the copper derivative position is added to our books as a result of the acquisition of Inco.

		PGMs and other precious metals — We currently hold a small position in gold derivative instruments, structured to manage the risks related to gold price fluctuations, inherent from the content of gold associated with copper concentrate production. We enter into platinum hedging contracts in order to manage the risk associated with the volatility of platinum prices. These contracts are generally swap contracts or options and are intended to provide certain minimum price realizations for a portion of our future production of such metals. Under these swap contracts, we receive fixed prices for platinum and pay a floating price based on monthly average spot prices.

		Fuel oil — We use fuel oil swap contracts to minimize the impact of fluctuations in the prices of our energy requirements. Under these contracts, we pay fixed prices for energy and receive amounts based on monthly average spot prices.

		There is an embedded derivative related to energy in our subsidiary Albras on which we have an unrealized gain of US$17 million as of December 31, 2007 and US$76 million as of December 31, 2006.

F - 51

The asset (liability) balances and the change in fair value of derivative financial instruments are as follows (the quarterly information is unaudited):


	Interest									Products of
	rates									aluminum
	(LIBOR)			Currencies			Gold			area			Copper			Nickel			Platinum			Total
Unrealized gains (losses) at October 1, 2007		(2	)		651			(39	)		(176	)		(356	)		3			(25	)		56
Financial settlement		(2	)		(198	)		10			16			63			26			5			(80	)
Unrealized gains (losses) in the year		(2	)		151			(5	)		67			106			13			(4	)		326
Effect of exchange rate changes		1			27			(2	)		(5	)		(1	)		—			—			20


Unrealized gains (losses) at December 31, 2007		(5	)		631			(36	)		(98	)		(188	)		42			(24	)		322


Unrealized gains (losses) at July 1, 2007		8			355			(37	)		(292	)		(355	)		28			(24	)		(317	)
Financial settlement		(4	)		(6	)		7			28			70			(76	)		4			23
Unrealized gains (losses) in the year		(6	)		279			(7	)		96			(69	)		50			(5	)		338
Effect of exchange rate changes		—			23			(2	)		(8	)		(2	)		1			—			12


Unrealized gains (losses) at September 30, 2007		(2	)		651			(39	)		(176	)		(356	)		3			(25	)		56


Unrealized gains (losses) at October 1, 2006		(1	)		35			(51	)		(195	)		3			—			—			(209	)
Gain (Loss) recognized upon consolidation of Inco		4			9			—			—			(364	)		62			(22	)		(311	)
Financial settlement		—			(6	)		7			22			—			(88	)		—			(65	)
Unrealized gains (losses) in the year		3			(54	)		(8	)		(142	)		63			42			2			(94	)
Effect of exchange rate changes		—			—			(1	)		(3	)		—			—			—			(4	)


Unrealized gains (losses) at December 31, 2006		6			(16	)		(53	)		(318	)		(298	)		16			(20	)		(683	)


Unrealized gains (losses) at January 1, 2007		6			(16	)		(53	)		(318	)		(298	)		16			(20	)		(683	)
Financial settlement		(6	)		(284	)		33			112			240			(38	)		13			70
Unrealized gains (losses) in the year		(6	)		860			(7	)		153			(129	)		63			(17	)		917
Effect of exchange rate changes		1			71			(9	)		(45	)		(1	)		1			—			18


Unrealized gains (losses) at December 31, 2007		(5	)		631			(36	)		(98	)		(188	)		42			(24	)		322


Unrealized gains (losses) at January 1, 2006		(4	)		1			(46	)		(210	)		—			—			—			(259	)
Gain (Loss) recognized upon consolidation of Inco		4			9			—			—			(364	)		62			(22	)		(311	)
Financial settlement		2			(6	)		19			102			—			(87	)		—			30
Unrealized gains (losses) in the year		4			(19	)		(23	)		(187	)		65			42			2			(116	)
Effect of exchange rate changes		—			—			(4	)		(23	)		—			—			—			(27	)


Unrealized gains (losses) at December 31, 2006		6			(15	)		(54	)		(318	)		(299	)		17			(20	)		(683	)


Unrealized gains (losses) at January 1, 2005		(17	)		4			(37	)		(182	)		—			—			—			(232	)
Financial settlement		9			(1	)		11			70			—			—			—			89
Unrealized gains (losses) in the year		6			(2	)		(17	)		(88	)											(101	)
Effect of exchange rate changes		(2	)		—			(3	)		(10	)		—			—			—			(15	)


Unrealized gains (losses) at December 31, 2005		(4	)		1			(46	)		(210	)		—			—			—			(259	)

Changes for the three month periods ended December 31, 2007, September 30, 2007 and December 31, 2006 are unaudited.

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)		December 2011
Currencies		December 2011
Products of the aluminum area		December 2008
Copper concentrate		December 2008
Nickel		December 2009
Platinum		December 2008

F - 52

Under U.S. GAAP, all derivatives, whether designated in hedging relationships or not, are required to be recorded in the balance sheet at fair value. A derivative must be designated in a hedging relationship in order to qualify for hedge accounting. These standards include a determination of what portions of hedges are deemed to be effective versus ineffective. In general, a hedging relationship is effective when a change in the fair value of the derivative is offset by an equal and opposite change in the fair value of the underlying hedged item. In accordance with these standards, effectiveness tests are performed in order to assess effectiveness and quantify ineffectiveness for all designated hedges. At December 31, 2007, we had outstanding cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in expected future cash flows that is attributable to a particular risk such as a forecasted purchase or sale. If a derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in earnings when the hedged item affects earnings. Ineffective portions of changes in the fair value of the derivatives designated as hedges are recognized in earnings. Under U.S. GAAP, if a portion of a derivative contract is excluded for purposes of effectiveness testing, such as time value, the value of such excluded portion is included in earnings. At December 31, 2007, unrealized net gains in respect of derivative instruments which were not qualified for hedge accounting under United States GAAP amounted to US$869.

Over-the-counter (OTC) forward and zero-cost collar aluminum contracts are used to smooth the effect of fluctuations in the price of aluminum with respect to forecasted sales of aluminum and alumina. These contracts have been designated as a hedge to our exposure to variability in future cash flows associated with our aluminum and alumina sales. There was no hedge ineffectiveness regarding these contracts since the inception of our cash flow hedge accounting program. At December 31, 2007, US$29 of deferred net gains on derivative instruments were recorded in other comprehensive income. The maximum term over which cash flows are hedged is 24 months.

F - 53

Supplemental Financial Information (Unaudited)

The following unaudited information provides additional details in relation to certain financial ratios.

EBITDA — Earnings Before Financial Expenses, Minority Interests, Gain on Sale of Investments, Foreign Exchange and Monetary Gains (Losses), Equity in Results of Affiliates and Joint Ventures and Change in Provision for Losses on Equity Investments, Income Taxes, Depreciation and Amortization

(a)		EBITDA represents operating income plus depreciation, amortization and depletion plus impairment/gain on sale of property, plant and equipment plus dividends received from equity investees.

(b)		EBITDA is not a U.S. GAAP measure and does not represent cash flow for the periods presented and should not be considered as an alternative to net income (loss), as an indicator of our operating performance or as an alternative to cash flow as a source of liquidity.

(c)		Our definition of EBITDA may not be comparable with EBITDA as defined by other companies.

(d)		Although EBITDA, as defined above, does not provide a U.S. GAAP measure of operating cash flows, our management uses it to measure our operating performance and financial analysts in evaluating our business commonly use it.

Selected financial indicators for the main affiliates and joint ventures are available on the Company’s website, www.vale.com, under “investor relations”.

S - 1

Indexes on CVRD’s Consolidated Debt (Supplemental information — unaudited)


	Three-month period ended (unaudited)									Year ended December 31,
	December 31,			September 30,			December 31,			December 31,			December 31,
	2007			2007			2006			2007			2006
Current debt
Current portion of long-term debt — unrelated parties		1,249			702			711			1,249			711
Short-term debt		167			2			723			167			723
Loans from related parties		6			42			25			6			25

		1,422			746			1,459			1,422			1,459

Long-term debt
Long-term debt — unrelated parties		17,608			17,522			21,122			17,608			21,122
Loans from related parties		—			—			—			—			—

		17,608			17,522			21,122			17,608			21,122

Gross debt (current plus long-term debt)		19,030			18,268			22,581			19,030			22,581


Interest paid over:
Short-term debt		(8	)		(1	)		(1	)		(49	)		(9	)
Long-term debt		(361	)		(324	)		(252	)		(1,289	)		(565	)

Interest paid		(369	)		(325	)		(253	)		(1,338	)		(574	)
EBITDA		3,532			4,001			2,623			15,774			9,150
Stockholders’ equity		33,276			33,552			19,673			33,276			19,673
LTM (2) EBITDA / LTM (2) Interest paid		11.79			12.17			15.94			11.79			15.94
Gross Debt / LTM (2) EBITDA		1.21			1.23			2.47			1.21			2.47
Gross debt / Equity Capitalization (%)		36			35			53			36			53

Financial expenses
Third party — local debt		(132	)		(118	)		(29	)		(513	)		(67	)
Third party — foreign debt		(180	)		(189	)		(264	)		(831	)		(428	)
Related party debt		(1	)		—			(1	)		(4	)		(6	)

Gross interest		(313	)		(307	)		(294	)		(1,348	)		(501	)
Labor and civil claims and tax-related actions		(39	)		(19	)		(28	)		(98	)		(109	)
Tax on financial transactions — CPMF		(27	)		(20	)		(84	)		(132	)		(141	)
Derivatives (Interest rate / Currencies)		169			297			(49	)		906			(15	)
Derivatives (Gold / Alumina / Aluminum / Copper / Energy )		158			98			(48	)		19			(127	)
Call option premium		—			—			—			—			(86	)
Others		(175	)		(247	)		(205	)		(939	)		(359	)

		(227	)		(198	)		(708	)		(1,592	)		(1,338	)


Financial income
Cash and cash equivalents		32			16			84			105			188
Others		26			23			97			190			139

		58			39			181			295			327

Financial expenses, net		(169	)		(159	)		(527	)		(1,297	)		(1,011	)

Foreign exchange and monetary gain (losses), net (1)		304			553			204			2,559			529

Financial result, net		135			394			(323	)		1,262			(482	)


(1)		Includes foreign exchange gain(loss) on derivatives in the amount of US$ (11), US$7, US$4, US$5, US$27 for the three-month period ended December 31, 2007, September 30, 2007 and December 31, 2006 and for years ended December 31, 2007 and December 31, 2006, respectively.

(2)		Last twelve months

S - 2

Calculation of EBITDA (Supplemental information — Unaudited)

Three-month period ended (unaudited)

As of and for the year ended

December 31,

September

December 31,

2007

30, 2007

2006

2007

2006

Operating income

2,683

3,430

2,180

13,194

7,637

Depreciation

737

532

379

2,186

997

3,420

3,962

2,559

15,380

8,634

Dividends received

112

394

516

EBITDA

3,532

4,001

2,623

15,774

9,150

Net operating revenues

8,163

7,898

7,313

32,242

19,651

Margin EBITDA

43.3%

50.7%

35.9%

48.9%

46.6%

Adjusted EBITDA x Operating Cash Flows (Supplemental information — Unaudited)


	As of and for the three-month period ended (unaudited)
	December 31, 2007						September 30, 2007						December 31, 2006
				Operating						Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows
Net income		2,573			2,573			2,940			2,940			1,573			1,573
Income tax — deferred		(394	)		(394	)		(28	)		(28	)		237			237
Income tax — current		610			—			975			—			314			—
Equity in results of affiliates and joint ventures and other investments		(136	)		(136	)		(165	)		(165	)		(183	)		(183	)
Foreign exchange and monetary gains, net		(304	)		(266	)		(553	)		(565	)		(204	)		(576	)
Financial expenses, net		169			(23	)		159			9			527			79
Minority interests		165			165			205			205			227			227
Gain on sale of investments		—			—			(103	)		(103	)		(311	)		(311	)
Net working capital		—			(130	)		—			243			—			1,298
Others		—			(176	)		—			(267	)		—			56

Operating income		2,683			1,613			3,430			2,269			2,180			2,400
Depreciation, depletion and amortization		737			737			532			532			379			379
Dividends received		112			112			39			39			64			64

		3,532			2,462			4,001			2,840			2,623			2,843


Operating cash flows					2,462						2,840						2,843
Income tax					610						975						314
Foreign exchange and monetary gains					(38	)					12						372
Financial expenses					192						150						448
Net working capital					130						(243	)					(1,298	)
Others					176						267						(56	)
EBITDA					3,532						4,001						2,623

S - 3


	As of and for the year ended December 31,
				2007						2006
				Operating cash						Operating cash
	EBITDA			flows			EBITDA			flows
Net income		11,825			11,825			6,528			6,528
Income tax — deferred		(700	)		(700	)		298			298
Income tax — current		3,901			—			1,134			—
Equity in results of affiliates and joint ventures and other investments		(595	)		(595	)		(710	)		(710	)
Foreign exchange and monetary gains, net		(2,559	)		(2,827	)		(529	)		(917	)
Financial expenses, net		1,297			102			1,011			36
Minority interests		802			802			579			579
Gain on sale of investments		(777	)		(777	)		(674	)		(674	)
Net working capital		—			1,236			—			423
Others		—			(634	)		—			156

Operating income		13,194			8,432			7,637			5,719
Depreciation, depletion and amortization		2,186			2,186			997			997
Dividends received		394			394			516			516

		15,774			11,012			9,150			7,232


Operating cash flows					11,012						7,232
Income tax					3,901						1,134
Foreign exchange and monetary gains					268						388
Financial expenses					1,195						975
Net working capital					(1,236	)					(423	)
Others					634						(156	)

EBITDA					15,774						9,150

S - 4

Board of Directors, Fiscal Council, Advisory committees and Executive Officers


Board of Directors		Fiscal Council

Sérgio Ricardo Silva Rosa		Marcelo Amaral Moraes
Chairman		Chairman

Mário da Silveira Teixeira Júnior		Aníbal Moreira dos Santos
Vice-President		Bernard Appy
		José Bernardo de Medeiros Neto

Luciano Galvão Coutinho
Francisco Augusto da Costa e Silva		Alternate
Hiroshi Tada		Oswaldo Mário Pêgo de Amorim Azevedo
João Batista Cavaglieri		Tarcísio José Massote de Godoy
Jorge Luiz Pacheco		Marcos Coimbra
José Ricardo Sasseron
Oscar Augusto de Camargo Filho
Renato da Cruz Gomes
Sandro Kohler Marcondes		Executive Officers

Advisory Committees of the Board of Directors		Roger Agnelli
		Chief Executive Officer

Controlling Committee
Antonio José Figueiredo Ferreira		Carla Grasso
Luiz Carlos de Freitas		Executive Officer for Human Resources and Corporate
Paulo Roberto Ferreira de Medeiros		Services

Executive Development Committee		Eduardo de Salles Bartolomeo
João Moisés de Oliveira		Executive Officer for Logistics
José Ricardo Sasseron
Oscar Augusto de Camargo Filho		Fabio de Oliveira Barbosa
		Chief Financial Officer and Investor Relations

Strategic Committee
Roger Agnelli		Gabriel Stoliar
Gabriel Stoliar		Executive Officer for Planning and Business Development
Luciano Siani Pires
Mário da Silveira Teixeira Júnior		José Carlos Martins
Oscar Augusto de Camargo Filho		Executive Officer for Ferrous Minerals
Sérgio Ricardo Silva Rosa
		José Lancaster
Finance Committee		Executive Officer for Copper, Coal and Aluminum
Fabio de Oliveira Barbosa
Ivan Luiz Modesto Schara		Murilo de Oliveira Ferreira
Luiz Maurício Leuzinger		Executive Officer for Nickel and Basic Metals
Wanderlei Viçoso Fagundes		Commercialization

Governance and Sustainability Committee		Tito Botelho Martins
Jorge Luiz Pacheco		Executive Officer for Corporate Affairs and Energy
Ricardo Simonsen
Renato da Cruz Gomes		Demian Fiocca
		Executive Officer for Technology and Management

		Marcus Vinícius Dias Severini
		Chief Officer of Accounting and Control Department

		Vera Lúcia de Almeida Pereira Elias
		Chief Accountant
		CRC-RJ - 043059/O-8

S - 5

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: March 5, 2008	By:	/s/ Fabio de Oliveira Barbosa

		Fabio de Oliveira Barbosa
		Chief Financial Officer