1

the 2006 capex budgetJanuary 27, 2006

Companhia Vale do Rio Doce

Leveraging the competitive advantages:

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DisclaimerDisclaimer

”This presentation may contain statements that express management’s

expectations about future events or results rather than historical facts.

These forward-looking statements involve risks and uncertainties that could

cause actual results to differ materially from those projected in forward-

looking statements, and CVRD cannot give assurance that such statements

will prove correct. These risks and uncertainties include factors: relating to

the Brazilian economy and securities markets, which exhibit volatility and

can be adversely affected by developments in other countries; relating to

the iron ore business and its dependence on the global steel industry, which

is cyclical in nature; and relating to the highly competitive industries in

which CVRD operates. For additional information on factors that could cause

CVRD’s actual results to differ from expectations reflected in forward-looking

statements, please see CVRD’s reports filed with the Brazilian Comissão de

Valores Mobiliários and the U.S. Securities and Exchange Commission.”

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Capex of US$ 4.6 billion in line with strategic planCapex of US$ 4.6 billion in line with strategic plan

Organic growth is the main driver of shareholder value

creation

World-class assets and synergies with an efficient

logistics infrastructure provide opportunities for high

rates of return on projects

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CVRD has an excellent track record of delivering: 14 major projects over the last four yearsCVRD has an excellent track record of delivering: 14 major projects over the last four years

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q061Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06

Funil

Alunorte 3

Carajás

70 Mtpa

Sossego

Candonga

Aimorés

Alunorte 4

São Luís

Trombetas

Capão

Xavier

Pier III

PDM

Mo I Rana

Fábrica

Nova

Taquari-Vassouras

Average ROIC 2002-2005: 33.7%

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CVRD, a global leader of shareholder value creationCVRD, a global leader of shareholder value creation

Source: The Boston Consulting Group

14.3%

14.4%

19.0%

24.3%

24.3%

26.6%

28.7%

29.0%

30.0%

48.5%

Lowe's

Tesco

Caterpillar

Nissan Motor

Exelon

Boston Scientific

Altria Group

Brit American Tobacco

Ebay

CVRD

Large Cap1 Top Ten, 2000-2004

1 n=119 global companies with a market valuation greater than US$ 25 billion

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23.7%24.2%26.3%30.6%

41.7%

-0.6%

CVRD BHP Billiton Newmont Anglo Rio Tinto Alcoa

The highest TSR among large mining companiesThe highest TSR among large mining companies

TSR 2001-2005Annual average

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Capex continues to be growth-focused: 77% of budget dedicated to growth Capex continues to be growth-focused: 77% of budget dedicated to growth

Projects US$ 3.07

billion

Stay-in-business US$ 1.07

billion

R&D US$ 491

million

US$ 4.6 billion

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Capex will increase US$ 1.3 billion relatively to the US$ 3.3 billion spent in 2005Capex will increase US$ 1.3 billion relatively to the US$ 3.3 billion spent in 2005

4,626

US$ million

Capex2005

Newprojects

3,361

201227

504

Cost increase

891 R&D¹

(558)

1 US$ 100 million is due to Onça Puma

Capex2006

SIB

Old projects

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We are developing six very attractive iron ore projectsWe are developing six very attractive iron ore projects

Total Capacity Start-up

investment increaseUS$ million Mtpy

Carajás 85 Mtpy 296 15 2006

Carajás 100 Mtpy 366 15 2007

Brucutu 856 24¹ 2006/07

Itabira 75 3 2007

Fazendão 100 14² 2007

Fábrica 144 5 2007

1 Can be expanded to 30 Mtpy² ROM

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

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

300.0

264.4

233.8

211.3

188.3

167.8

133.8 2001

2002

2003

2004

2005

2006E

2007E

Iron ore productionMtpy

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Exploring the long-term upward trend of pellets consumptionExploring the long-term upward trend of pellets consumption

Total Capacity Start-up

investment increaseUS$ million Mtpy

Itabiritos 759 7.0 2008

Tubarão VIII 516 7.0 2008

Samarco¹ 1,183 7.6 2008

1 Samarco is a JV. Its project is not included in CVRD capex program.

3 new highly competitive plants

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Exploring our strong competitive advantages in the aluminum businessExploring our strong competitive advantages in the aluminum business

Paragominas, a new big bauxite mine

– Capex US$ 548 million

– Capacity 2007: 5.4 Mtpy

2008: 9.9 Mtpy

Alunorte, the world’s lowest expansion cost

– Capex US$ 1.4 billion

– Capacity 2006: 4.5 Mtpy

2008: 6.4 Mtpy

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

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

6.4

5.7

4.5

3.8

2.6

2.5

2.3

1.7

1.6 2001

2002

2003

2004

2005

2006E

2007E

2008E

2009E

Alumina productionMtpy

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CVRD will emerge as a fairly large global player in nickelCVRD will emerge as a fairly large global player in nickel

Total Capacity Start-up

investment increaseUS$ billion Ktpy

Vermelho¹ 1.2 46 2008

Onça Puma² 1.1 57 2008

1 Final product: nickel cathodes and cobalt (2.8 Mtpy).² To be approved. Final product: ferronickel.

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CVRD is investing in the logistics infrastructure to support the mining business CVRD is investing in the logistics infrastructure to support the mining business

Ports

– PDM - capacity to load 100 Mtpy of iron ore

US$ 196 million

– Tubarão – higher speed of ship loading

US$ 65 million

– Guaíba Island – capacity to 49 mtpy from 43 Mtpy

US$ 41 million

– Sepetiba – capacity to 21 Mtpy from 16 Mtpy

US$ 28 million

Railroads

– 1,426 railcars & 22 locos

US$ 200 million

– EFC expansion

US$ 153 million

Capex

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Fostering iron ore consumption in Brazil - attracting steelmaking projects - taking advantage of the trend towards geographical reallocation of global steel capacity

Fostering iron ore consumption in Brazil - attracting steelmaking projects - taking advantage of the trend towards geographical reallocation of global steel capacity

Ceará Steel

– Capacity: 1.5 Mtpy

– CVRD Capex: US$ 25 million

– DR pellets consumption: 2.5 Mtpy

– Estimated start-up: 2009

CSA

– Capacity: 4.1 Mtpy

– CVRD Capex: US$ 200 million

– Iron ore & pellets consumption: 7.1 Mtpy

– Estimated start-up: 2008

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www.cvrd.com.bre-mail: rio@cvrd.com.br

www.cvrd.com.bre-mail: rio@cvrd.com.br

CVRD – A global leader