As filed with the Securities and Exchange Commission on June 10, 2004

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

The number of outstanding shares of each class of stock of CVRD as of December 31, 2003 was:

245,267,973 common shares, no par value per share
138,571,729 preferred class A shares, no par value per share
1 golden share, no par value per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No o

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o     Item 18 x

TABLE OF CONTENTS

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GLOSSARY

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PRESENTATION OF FINANCIAL INFORMATION

     We have prepared our financial statements appearing in this annual report in accordance with generally accepted accounting principles in the United States (U.S. GAAP), which differ in certain respects from accounting practices adopted in Brazil (defined as Brazilian GAAP). Brazilian GAAP is determined by the requirements of Law No. 6,404, dated December 15, 1976, as amended (the Brazilian Corporate Law), and the rules and regulations of the Comissão de Valores Mobiliários, or CVM, the Brazilian Securities Commission. We also publish Brazilian GAAP financial statements in Brazil, which we refer to as our Brazilian Corporate Law financial statements. We use our Brazilian Corporate Law financial statements for:

     Our financial statements and the other financial information appearing in this annual report have been translated from Brazilian reais into U.S. dollars on the basis explained in Note 3(a) to our financial statements unless we indicate otherwise.

     References to “real,” “reais” or “R$” are to Brazilian reais (plural) and to the Brazilian real (singular), the official currency of Brazil. References to “U.S. dollars,” “dollars” or “US$” are to United States dollars.

     Unless otherwise specified, metric units have been used, e.g., tons refer to metric tons.

     References to “us” or “we” are to CVRD, its consolidated subsidiaries and its joint ventures and other affiliated companies. References to “CVRD” are to Companhia Vale do Rio Doce. References to “Vale Overseas” are to Vale Overseas Limited. References to “affiliated companies” are to companies in which Companhia Vale do Rio Doce has a minority investment, and exclude controlled affiliates that are consolidated for financial reporting purposes.

     References to “ANEEL” are to Agência Nacional de Energia Elétrica, the Brazilian energy regulatory agency.

     References to “ANTT” are to Agência Nacional de Transportes Terrestres, the Brazilian regulatory agency for the transportation sector.

     References to our “ADSs” or “American depositary shares” include both our common American depositary shares (our common ADSs), each of which represents one common share of CVRD, and our preferred American depositary shares (our preferred ADSs), each of which represents one preferred class A share of CVRD. American depositary shares are represented by American depositary receipts (ADRs) issued by JPMorgan Chase Bank, as depositary.

PRESENTATION OF INFORMATION CONCERNING RESERVES

     The estimates of the proven and probable reserves at our mines and the estimates of mine life, as of December 31, 2003, included in this annual report have been calculated according to the technical definitions required by the U.S. Securities and Exchange Commission, or the SEC. We derived estimates of mine life described in this annual report from such reserve estimates. We have adjusted ore reserve estimates for extraction losses and metallurgical recoveries during extraction for manganese ore and bauxite deposits. Our reserve estimates of iron, kaolin, copper and potash are reported as in situ tons with adjustments for dilution and mining losses. See Item 3. Key Information—Risk Factors—Risks Relating to Our Business for a description of risks relating to reserves and reserves estimates. We have retained Golder Associates S.A., or Golder, to audit and verify most of our estimates of proven and probable reserves as of December 31, 2003.

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FORWARD-LOOKING STATEMENTS

     This annual report contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Those statements appear in a number of places in this annual report and include statements regarding our intent, belief or current expectations with respect to:

     We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors, including those identified under Item 3. Key Information—Risk Factors. 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, factors relating to the iron ore business and its dependence on the global steel industry, which is cyclical in nature, and factors relating to the highly competitive industries in which we operate. For additional information on factors that could cause our actual results to differ from expectations reflected in forward-looking statements, please see Item 3. Key Information—Risk Factors, and our reports filed with the SEC. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

     Not applicable.

Item 2. Offer Statistics and Expected Timetable

     Not applicable.

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Item 3. Key Information

SELECTED FINANCIAL DATA

     The table below presents selected consolidated financial information as of and for the periods indicated. You should read this information together with our consolidated financial statements appearing in this annual report.

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EXCHANGE RATES

     There are two principal foreign exchange markets in Brazil:

     Most trade and financial foreign-exchange transactions are carried out on the commercial rate exchange market. These transactions include the purchase or sale of shares or the payment of dividends or interest with respect to shares. Foreign currencies may only be purchased through a Brazilian bank authorized to operate in these markets. In both markets, rates are freely negotiated but may be influenced by the Central Bank of Brazil intervention. In 1999, the Central Bank of Brazil placed the commercial rate exchange market and the floating rate exchange market under identical operational limits, which led to a convergence in the pricing and liquidity of both markets. Since February 1, 1999, the floating market rate has been the same as the commercial market rate. However, there is no guarantee that these rates will continue to be the same in the future. Despite the convergence in the pricing and liquidity of both markets, each market continues to be regulated differently.

     Since 1999, the Central Bank of Brazil has allowed the real/U.S. dollar exchange rate to float freely, and during that period, the real/U.S. dollar exchange rate has fluctuated considerably. In the past, the Central Bank of Brazil has intervened occasionally to control unstable movements in foreign exchange rates. We cannot predict whether the Central Bank of Brazil or the Brazilian government will continue to let the real float freely or will intervene in the exchange rate market through a currency band system or otherwise. The real may depreciate or appreciate substantially in the future. For more information on these risks, see Item 3. Key Information—Risk Factors—Risks Relating to Brazil.

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     The following table sets forth the commercial selling rate, expressed in reais per U.S. dollar (R$/US$) for the periods indicated.

On June 8, 2004, the commercial selling rate was R$3.115 per US$ 1.00.

RISK FACTORS

Risks Relating to Our Business

Due to our dependence on the global steel industry, fluctuations in the demand for steel could adversely affect our business.

     Sales prices and volumes in the seaborne iron ore mining industry depend on the prevailing and expected level of demand for iron ore in the world steel industry. The world steel industry is cyclical. A number of factors, the most significant of these being the prevailing level of worldwide demand for steel products, influence the world steel industry. During periods of sluggish or declining regional or world economic growth, demand for steel products generally decreases, which usually leads to corresponding reductions in demand for iron ore.

     Driven primarily by strong demand from Chinese steelmakers, together with a modest expansion in other markets, the global seaborne iron ore market experienced high demand and rising iron ore and pellet prices in 2003. We cannot guarantee the length of time that demand will remain at current high levels or the direction of future prices. Sustained declines in world contract prices or sales volumes for iron ore could have a material adverse effect on our revenues.

The mining industry is an intensely competitive industry, and we may have difficulty effectively competing with other mining companies in the future.

     Intense competition characterizes the worldwide iron ore industry. We compete with a number of large international mining companies. Some of these competitors possess substantial iron ore mineral deposits at locations closer to our principal Asian and European customers. Competition from foreign or Brazilian iron ore producers may result in our losing market share and revenues. Our aluminum, manganese ore, copper concentrate and other activities are also subject to intense competition and are subject to similar risks.

Demand for iron ore in peak periods may outstrip our production capacity, rendering us unable to satisfy customer demand.

     Our ability to rapidly increase production capacity to satisfy increases in demand for iron ore is limited. In periods where customer demand exceeds our production capacity, we generally satisfy excess customer demand by reselling iron ore and pellets purchased from joint ventures or third parties. If we are unable to satisfy excess customer demand by purchasing from joint ventures or third parties, we may lose customers. Similarly, because it takes time to increase production capacity, we may fail to complete our iron ore expansion projects in time to take

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advantage of the current high levels of worldwide demand for iron ore. In addition, operating at or above full capacity may expose us to higher costs, including demurrage fees due to capacity restraints in our ports.

Aluminum, gold and copper are actively traded on world commodity exchanges, and their prices are subject to fluctuations.

     Aluminum, gold and copper are sold in an active world market and traded on commodity exchanges, such as the London Metals Exchange and the Commodity Exchange, Inc. Prices for these metals are subject to wide fluctuations and are affected by many factors, including international economic and political conditions, levels of supply and demand, the availability and cost of substitutes, inventory levels maintained by producers and others, and actions of participants in the commodity markets. Prices for these metals are more volatile than iron ore and pellet prices because they respond more quickly to actual and expected changes in supply and demand. Sustained declines in world market prices for our aluminum-related products could have a material adverse effect on our revenues.

Commencement of our copper operations will expose us to new risks.

     We recently began producing and marketing copper concentrate from our Sossego mine in Carajás. Copper is a new business for CVRD. Among others, risks involved with our expansion into the copper business include:

Brazilian export products (e.g., grain and steel) could lose their international competitiveness, reducing the internal demand for logistics services.

     Agriculture and steel industries are currently the primary drivers of demand for logistics services. In 2003, almost 60% of our logistics revenues were attributable to these markets. A reduction in world demand for Brazilian steel or agriculture exports could reduce demand for our logistics services and harm the profitability of our logistics business.

We are vulnerable to adverse developments affecting the world economy, especially China.

     The world economy is the primary driver of demand in the global seaborne market for iron ore and pellets. In recent years, China has been the main driver of our sales increases. In 2003, 14% of our iron ore and pellet gross revenues were attributable to customers in China, and customers in China accounted for 10.5% of our total consolidated net operating revenues. During the same period, 7.6% of our consolidated net revenues were attributable to Japanese customers and 32.2% were attributable to sales to European customers. A weakened global economy or a weakened economy in specific markets where we sell our products, such as China, could reduce demand, leading to lower revenues and profitability.

Our reserve estimates may be materially different from mineral quantities that we may actually recover, our estimates of mine life may prove inaccurate and market price fluctuations and changes in operating and capital costs may render certain ore reserves or mineral deposits uneconomical to mine.

     Our reported ore reserves and mineral deposits are estimated quantities of ore and minerals that have the potential to be economically mined and processed under present and anticipated conditions to extract their mineral content. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential future rates of mineral production, including many factors beyond our control. Reserve engineering is a subjective process of estimating underground deposits of minerals that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and judgment. Estimates of different engineers may vary, and results of our mining and production subsequent to the date of an estimate may lead to revision of estimates. Reserve estimates may require revision based on actual production experience and other factors. For example, fluctuations in the market price of metals,

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reduced recovery rates or increased production costs due to inflation or other factors may render proven and probable reserves containing relatively lower grades of mineralization uneconomic to exploit and may ultimately result in a restatement of reserves.

We may not be able to replenish our reserves, which could adversely affect our mining prospects.

     We engage in mineral exploration, which is highly speculative in nature, involves many risks and frequently is nonproductive. Our exploration programs, which involve significant capital expenditures, may fail to result in the expansion or replacement of reserves depleted by current production. If we do not develop new reserves, we will not be able to sustain our current level of production beyond the remaining life of our existing mines.

Even if we discover minerals, we remain subject to drilling and production risks, which could adversely affect the mining process.

     Once we discover minerals, it can take us a number of years from the initial phases of drilling until production is possible, during which the economic feasibility of production may change. It takes substantial time and expenditures to:

     If a project proves not to be economically feasible by the time we are able to exploit it, we may incur substantial write-offs. In addition, potential changes or complications involving metallurgical and other technological processes arising during the life of a project may result in cost overruns that may render the project not economically feasible.

We face rising extraction costs as our deposits decrease.

     Ore reserves gradually decrease in the ordinary course of a given mining operation. As reserves decrease, it becomes necessary to use more expensive processes to extract the remaining ore. As a result, over time, we usually experience rising unit extraction costs with respect to each mine. Several of our mines have operated for long periods, and we will likely experience rising extraction costs per unit in the future at these operations.

An increase in fuel costs may adversely affect our business.

     Our operations rely heavily on fuel sources. Oil and gas represented 11.2% of our cost of goods sold in 2003. Fuel costs are a major component of our total costs in our logistics and pellets businesses, and indirectly affect numerous other areas of our business, including our mining and aluminum-related businesses. An increase in oil and gas prices may lead to lower margins in our logistics, mining and aluminum-related businesses.

We are subject to ongoing antitrust investigations.

     We are currently involved in 14 proceedings before the Conselho Administrativo de Defesa Econômica, or CADE, which is the primary Brazilian antitrust regulator. Most of these proceedings involve post-transaction review of acquisition or joint venture transactions, which is required for nearly all of our acquisitions and joint ventures. The remaining are administrative proceedings alleging that we have engaged in illegal anticompetitive conduct in connection with our logistics and aluminum businesses. We intend to defend these claims vigorously. We cannot predict the outcome of these proceedings. If CADE were to determine that undue concentration exists in any of our industries, it could impose measures to safeguard competition, which could include requirements that we divest operations or respect price restrictions. If CADE were to find that we have engaged in anticompetitive conduct, it could order us to cease the conduct and/or to pay fines, which could be substantial.

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Our principal shareholder could have significant influence over our company.

     Valepar, our principal shareholder, currently owns 53.3% of our outstanding common stock and 34.1% of our total outstanding capital. For a description of the ownership of our shares, see Item 7. Major Shareholders and Related Party Transactions—Principal Shareholder. As a result of its share ownership, Valepar can control the outcome of any action requiring shareholder approval. Further, the Brazilian government owns a golden share in us that gives it limited veto powers over certain actions that we could propose to take. For a detailed description of the veto powers granted to the Brazilian government by virtue of its ownership of this golden share, see Item 10. Additional Information—Common Shares and Preferred Shares—General.

Many of our operations depend on joint ventures; our business could be adversely affected if our joint venture partners do not observe their commitments.

     We currently operate important parts of our pelletizing, energy, aluminum and steel businesses through joint ventures with other companies. Our forecasts and plans for these joint ventures assume that our joint venture partners will observe their obligations to make capital contributions, purchase products and, in some cases, provide managerial talent. If any of our joint venture partners fails to observe its commitments, the affected joint venture may not be able to operate in accordance with its business plans or we may have to increase the level of our investment to give effect to these plans. For more information on our joint ventures, see Item 4. Information on the Company—Lines of Business.

Our risk management strategy may not be effective.

     We are exposed to fluctuations in interest rates, foreign currency exchange rates, and prices relating to our aluminum production, and since the start-up of our copper operations in Carajás, we are be subject to fluctuations in copper prices. In order to partially protect ourselves against unusual market volatility, we periodically enter into hedging transactions to manage these risks. See Item 11. Quantitative and Qualitative Disclosures About Market Risk. Our hedging strategy may not be successful in minimizing our exposure to these fluctuations. In addition, to the extent we hedge our commodity price exposure, we limit the upside benefits that we would otherwise experience if commodities prices were to increase. We do not hedge risks relating to iron ore price fluctuations.

We may not have adequate, if any, insurance coverage for some business risks that could lead to economically harmful consequences to us.

     Our businesses are generally subject to a number of risks and hazards, including:

     These occurrences could result in damage to, or destruction of, mineral properties, production facilities, transportation facilities, equipment or vessels. They could also result in personal injury or death, environmental damage, waste of resources or intermediate products, delays or interruption in mining, production or transportation activities, monetary losses and possible legal liability. The insurance we maintain against risks that are typical in our business may not provide adequate coverage. Insurance against some risks (including liabilities for environmental pollution or certain hazards or interruption of certain business activities) may not be available at a reasonable cost or at all. As a result, accidents or other negative developments involving our mining, production or transportation facilities could have a material adverse effect on our operations.

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Difficulties in implementing enterprise resource planning software may interfere with the normal functioning of our business.

     We are in the process of implementing enterprise resource planning software. If we are unable to replace, upgrade or modify our information technology systems to adapt to this new software in a timely and cost effective manner, our ability to capture and process financial transactions may be impacted. Implementing the software may prove more costly or take longer than expected, result in the loss of data or lead to system malfunctions that interfere with the normal functioning of our business. If we are unable to successfully manage the process of implementing the new software our results of operations may be adversely affected.

Risks Relating to Brazil

The Brazilian government has historically exercised, and continues to exercise, significant influence over the Brazilian economy. Brazilian political and economic conditions have a direct impact on our business and the market price of our securities.

     The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes substantial changes in policy, as often occurs in other emerging economies. The Brazilian government’s actions to control inflation and carry out other policies have in the past involved wage and price controls, currency devaluations, capital controls and limits on imports, among other things. Our business, financial condition and results of operations may be adversely affected by factors in Brazil including:

Inflation and government measures to curb inflation may contribute significantly to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and, consequently, may adversely affect the market value of our securities.

     Brazil has in the past experienced extremely high rates of inflation, with annual rates of inflation reaching as high as 2,708% in 1993 (as measured by the Índice Geral de Preços do Mercado published by Fundação Getúlio Vargas, or IGP-M Index). More recently, Brazil’s rates of inflation were 9.9% in 2000, 10.4% in 2001, 25.3% in 2002, 8.7% in 2003 and 5.3% in the five months ended May 31, 2004 (as measured by the IGP-M Index). Inflation, governmental measures to combat inflation and public speculation about possible future actions have in the past had significant negative effects on the Brazilian economy, and have contributed to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets. If Brazil experiences substantial inflation in the future, our costs may increase, our operating and net margins may decrease and, if investor confidence declines, the price of our securities may fall. Inflationary pressures may also curtail our ability to access foreign financial markets and may lead to further government intervention in the economy, which could involve the introduction of government policies that may adversely affect the overall performance of the Brazilian economy.

Fluctuations in the value of the real against the U.S. dollar may result in uncertainty in the Brazilian economy and the Brazilian securities market and could have a material adverse effect on our net income.

     The Brazilian currency has historically suffered frequent devaluation. In the past, the Brazilian government has implemented various economic plans and exchange rate policies, including sudden devaluations, periodic mini-devaluations during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate

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systems, exchange controls and dual exchange rate markets. Although over long periods depreciation of the Brazilian currency generally is correlated with the differential in the inflation rate in Brazil versus the inflation rate in the U.S., depreciation over shorter periods has resulted in significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies.

     The real appreciated by 22.3% against the U.S. dollar in 2003, and depreciated by 8.3% during the first five months of 2004. The exchange rate between the real and the U.S. dollar may continue to fluctuate and may rise or decline substantially from current levels.

     Depreciation of the real against the U.S. dollar reduces the U.S. dollar value of distributions and the dividends on our American depositary shares and may also reduce the market value of our securities. In addition, exchange rate variations often have a significant effect on our net income. Depreciation of the real relative to the U.S. dollar may require us to record substantial foreign exchange and monetary losses on our U.S. dollar-denominated debt, whereas appreciation of the real against the U.S. dollar generally leads to the opposite effect. These foreign exchange and monetary gains or losses can be substantial, which can make our earnings from one period to the next more volatile. Exchange rate variations also have a substantial impact on our revenues and costs, because most of our revenues are in U.S. dollars and most of our costs are in reais. As a result, appreciation of the real against the U.S. dollar generally results in lower revenues and higher costs, which can hurt our operating profitability. Exchange rate variations also influence the Brazilian economy and inflation rates, which may lead the Brazilian government to adopt policies that may have an adverse impact on our business. For additional information about historical exchange rates, see Item 3. Key Information—Exchange Rates.

Access to and the cost of borrowing in international capital markets for Brazilian companies are influenced by investor perceptions of risk in Brazil and other emerging economies, which may hurt our ability to finance our operations at acceptable cost or reduce the trading price of our securities.

     International investors generally consider Brazil to be an emerging market. As a result, economic and market conditions in other emerging market countries, especially those in Latin America, influence the market for securities issued by Brazilian companies. Economic crises in one or more emerging market countries may reduce overall investor appetite for securities of emerging market issuers. Past economic crises in emerging markets, such as in Southeast Asia, Russia and Argentina, have resulted in significant outflows of U.S. dollars from Brazil and caused Brazilian companies to face higher costs for raising funds, both domestically and abroad, and have effectively impeded the access to international capital markets for extended periods. We cannot assure you that international capital markets will remain open to Brazilian companies or that prevailing interest rates in these markets will be advantageous to us. In addition, future financial crises in emerging market countries may have a negative impact on the Brazilian markets, which could adversely affect the trading price of our securities.

Brazilian government policies in the energy sector may have an adverse impact on the cost or supply of electricity for our aluminum-related and ferroalloy operations.

     We are a significant consumer of Brazil’s electricity production, and accounted for approximately 4.5% of total consumption in Brazil in 2003. Electricity costs are a significant component of the cost of producing aluminum and ferroalloys.

     Brazil faced a shortage of energy during the second half of 2001, which led to an energy-rationing program that required a decrease in energy consumption by at least 20%. As a result of this program, we experienced a temporary reduction in our aluminum and ferroalloy production, both of which use significant amounts of electricity. Although the energy shortages ended in late 2001, and energy-use restrictions were lifted in March 2002, we cannot assure you that Brazil will not experience future energy shortages. Future shortages and government policies to respond to or prevent shortages may have an adverse impact on the cost or supply of electricity for our aluminum and ferroalloy operations.

     The Brazilian power generation business depends on concessions granted by the government and is regulated and supervised by ANEEL. A new law for the electricity sector was recently approved by the Brazilian Congress and the Federal Government is studying other proposals for significant changes in many of the regulations that relate to the new sector law and govern the Brazilian electricity sector. Changes in the laws, regulations or governmental policies regarding the power sector or concession requirements could lower the returns we are expecting from our investments in power generation. For more information on the regulations governing our energy production, see Item 4. Information on the Company—Regulatory Matters.

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Our mining and logistics activities depend on authorizations of regulatory agencies, and changes in regulations could have an adverse effect on our business.

     Our mining and logistics activities in Brazil depend on authorizations and concessions by regulatory agencies of the Brazilian government. Our exploration, mining, mineral processing and logistics activities are also subject to Brazilian laws and regulations, which can change at any time. If these laws and regulations change in the future, modifications to our technologies and operations could be required, and we could be required to make unbudgeted capital expenditures, which could lead to an increase in our borrowing costs. For a more detailed discussion about the authorizations and concessions by regulatory agencies of the Brazilian government upon which our mining and logistics activities depend, see Item 4. Information on the Company—Regulatory Matters.

Brazilian environmental laws may adversely affect our mining and energy businesses.

     Our operations often involve using, handling, disposing and discharging hazardous materials into the environment or the use of natural resources, and are therefore subject to the environmental laws and regulations of Brazil. Environmental regulation in Brazil has become stricter in recent years, and it is possible that more regulation or more aggressive enforcement of existing regulations will adversely affect us by imposing restrictions on our activities, creating new requirements for the issuance or renewal of environmental licenses, raising our costs or requiring us to engage in expensive reclamation efforts.

     Our projects often require us to obtain or renew environmental licenses. Difficulties in obtaining those licenses may lead to construction delays or cost increases and in some cases may lead us to abandon a project.

     We are also subject to recent Brazilian environmental legislation that requires companies undertaking projects with significant environmental impact to pay an “environmental compensation” fee in the amount of at least 0.5% of the total investment in the venture. There are numerous uncertainties about how this law will be applied in practice. If we were required to pay this fee with respect to past investments or if the level of the fees actually charged were increased above 0.5%, it would significantly increase our costs and, depending on the magnitude of the fees involved, could have a material adverse effect on our liquidity. Uncertainties regarding calculation and payment of these fees may strain our relations with the Brazilian environmental authorities or lead to delays in obtaining necessary environmental permits. See Item 8. Financial Information—Legal Proceedings.

     Brazilian laws restricting development in the Amazon river basin and surrounding areas may place limits on our ability to expand certain of our operations and to fully exploit our mineral rights in those regions. See Item 4. Information on the Company—Regulatory Matters—Environmental Matters.

     Several Brazilian states in which we operate are currently considering implementing water usage fees under the National Hydrological Resources Policy. This may require us to pay usage fees in the future for water rights that we currently use for free, which could considerably increase our costs in areas where water resources are scarce.

     In addition, we are currently a defendant in an action brought by the municipality of Itabira, in the state of Minas Gerais, which alleges that our Itabira iron ore mining operations have caused environmental and social damages. If we do not prevail in this lawsuit, we could incur a substantial expense. For more information on environmental laws and the legal challenges we face, see Item 4. Information on the Company—Regulatory Matters—Environmental Matters and Item 8. Financial Information—Legal Proceedings.

Risks Relating to the American Depositary Shares

Restrictions on the movement of capital out of Brazil may hinder your ability to receive dividends and distributions on American depositary shares, and the proceeds from any sale of American depositary shares.

     From time to time, the Brazilian government may impose restrictions on capital outflow that would hinder or prevent the custodian who acts on behalf of the depositary for the American depositary shares from converting proceeds from the shares underlying the American depositary shares into U.S. dollars and remitting those proceeds abroad. Brazilian law permits the government to impose these restrictions whenever there is a serious imbalance in Brazil’s balance of payments or reason to foresee a serious imbalance.

     The Brazilian government imposed remittance restrictions for approximately six months in 1989 and early 1990. If enacted in the future, similar restrictions would hinder or prevent the conversion of dividends, distributions or the proceeds from any sale of shares from reais into U.S. dollars and the remittance of the U.S. dollars abroad. In

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that event, the custodian, acting on behalf of the depositary, will hold the reais it cannot convert for the account of the holders of American depositary receipts who have not been paid. The depositary will not invest the reais and will not be liable for interest on those amounts. Furthermore, any reais so held will be subject to devaluation risk.

If you exchange American depositary shares for the underlying shares, as a result of Brazilian regulations you risk losing the ability to remit foreign currency abroad and Brazilian tax advantages.

     The Brazilian custodian for the shares underlying our American depositary shares will obtain an electronic registration from the Central Bank of Brazil to entitle it to remit U.S. dollars abroad for payments of dividends and other distributions relating to the shares underlying our American depositary shares or upon the disposition of the underlying shares. If you decide to exchange your American depositary shares for the underlying shares, you will be entitled to continue to rely, for five business days from the date of exchange, on the custodian’s electronic registration. Thereafter, you may not be able to obtain and remit U.S. dollars abroad upon the disposition of, or distributions relating to, the underlying shares unless you obtain your own electronic registration by registering your investment in the underlying shares under Resolution No. 2,689 of the National Monetary Council, which entitles foreign investors to buy and sell securities on the São Paulo stock exchange, or BOVESPA. For more information regarding these exchange controls, see Item 10. Additional Information—Exchange Controls and Other Limitations Affecting Security Holders. If you attempt to obtain your own electronic registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or distributions relating to the underlying shares or the return of your capital in a timely manner. We cannot assure you that the custodian’s electronic registration or any certificate of foreign capital registration obtained by you will not be affected by future legislative changes, or that additional restrictions applicable to you, the disposition of the underlying shares or the repatriation of the proceeds from disposition will not be imposed in the future.

Because we are not obligated to file a registration statement with respect to preemptive rights relating to our shares, you may be unable to exercise those preemptive rights.

     Holders of American depositary receipts that are residents of the United States may not be able to exercise preemptive rights, or exercise other types of rights, with respect to the underlying shares. Your ability to exercise preemptive rights is not assured unless a registration statement is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement relating to preemptive rights with respect to the underlying shares or to undertake steps that may be needed to make exemptions from registration available, and we cannot assure you that we will file any registration statement or take such steps. If a registration statement is not filed and an exemption from registration does not exist, JPMorgan Chase Bank, as depositary, will attempt to sell the preemptive rights, and you will be entitled to receive the proceeds of the sale. However, the preemptive rights will expire if the depositary cannot sell them. For a more complete description of preemptive rights with respect to the underlying shares, see Item 10. Additional Information—Common Shares and Preferred Shares—Preemptive Rights.

Holders of our American depositary shares may encounter difficulties in the exercise of voting rights.

     Holders of our common and preferred class A shares are entitled to vote on shareholder matters. You may encounter difficulties in the exercise of some of your rights as a shareholder if you hold our American depositary shares rather than the underlying shares. For example, if we fail to provide the depositary with voting materials on a timely basis, you may not be able to vote by giving instructions to the depositary on how to vote for you.

     Our corporate affairs are governed by our bylaws and the Brazilian Corporate Law, which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States or elsewhere outside Brazil. Under the Brazilian Corporate Law, holders of our common and preferred class A shares may have fewer and less well-defined rights to protect their interests relative to actions taken by our board of directors or the holders of common shares than under the laws of some jurisdictions outside Brazil.

     Although Brazilian law imposes restrictions on insider trading and price manipulation, the Brazilian securities markets are not as highly regulated and supervised as the U.S. securities markets or markets in certain other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of minority shareholder interests may be less well developed and enforced in Brazil than in the United States, which could potentially disadvantage you as a holder of the underlying shares and American depositary shares. For example, when compared to Delaware general corporation law, Brazilian corporate law and practice has less detailed and well-established rules and judicial precedents relating to the review of management decisions against duty of care and duty of loyalty standards in the context of corporate restructurings, transactions with related parties, and sale-of-business

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transactions. In addition, shareholders in Brazilian companies ordinarily do not have standing to bring a class action.

     In addition, as a foreign private issuer, we are not required to follow many of the corporate governance rules that apply to U.S. domestic issuers with securities listed on the New York Stock Exchange. For more information concerning our corporate governance policies, see Item 6. Directors, Senior Management and Employees.

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Item 4. Information on the Company

BUSINESS OVERVIEW

General

     We are the world’s largest producer and exporter of iron ore and pellets, the largest diversified mining company in the Americas by market capitalization and one of the largest companies in Latin America. We hold exploration claims that cover 9.8 million hectares (24.1 million acres) in Brazil, and 395.8 thousand hectares (977.9 thousand acres) outside Brazil in Gabon, Chile and Peru. We operate large logistics systems including railroads and ports that are integrated with our mining operations. Directly and through affiliates and joint ventures, we have major investments in the aluminum-related, energy and steel businesses. We are investing heavily in copper exploration, and our first copper mine began operations in June 2004.

     Our main lines of business are:

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     Through our mineral prospecting and development activities in Brazil, we have acquired extensive experience in exploration techniques and processes specifically designed for use in tropical areas of the world, and maintain an active mineral exploration program in Brazil and overseas. In 2003, our mineral exploration efforts were focused on copper, gold, nickel, manganese ore, kaolin, bauxite and platinum group metals. We spent US$ 82 million on research and development in 2003, including mineral exploration expenses of US$ 69 million (of this amount, US$ 56.6 million, or 82%, consisted of expenditures for mineral exploration in Brazil). International mineral exploration included activities in Chile, Gabon and Peru.

Incorporation of CVRD and Vale Overseas

Vale Overseas

     Vale Overseas is a finance company wholly owned by CVRD. It was registered and incorporated as a Cayman Islands exempted company with limited liability on April 3, 2001 (registration number 113637). Vale Overseas is incorporated for an indefinite period of time. Its registered office is at Walker House, P.O. Box 908 GT, Mary Street, Georgetown, Grand Cayman, Cayman Islands.

     Vale Overseas’ business is to issue debt securities to finance CVRD’s activities. It has no other operations or employees. Vale Overseas has issued three series of debt securities, including its US$ 300 million 8.625% Notes due 2007, which were issued in March 2002, its US$ 300 million 9.0% Notes due 2013, which were issued in August 2003 and its US$ 500 million 8.25% Notes due 2034, which were issued in January 2004. We used the proceeds of these securities for general corporate purposes.

CVRD

     CVRD’s legal and commercial name is Companhia Vale do Rio Doce. CVRD is a stock corporation, or sociedade por ações, duly organized on January 11, 1943, and existing under the laws of the Federative Republic of Brazil.

     CVRD was privatized in three stages between 1997 and 2002, beginning with the sale by the Brazilian government of a controlling stake in CVRD to Valepar in 1997. The last stage of the privatization took place in 2002, when the Brazilian government sold a remaining minority stake through a global equity offering. It is organized for an unlimited period of time. CVRD’s principal executive offices are located at Avenida Graça Aranha, No. 26, 20030-900 Rio de Janeiro, RJ, Brazil, and our telephone number is 55-21-3814-4540.

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Acquisitions, Asset Sales and Significant Changes in 2003 and 2004

Mining

     Caemi. In September 2003, we purchased Mitsui & Co. (Mitsui)’s remaining stake in Caemi Mineração e Metalurgia S.A. (Caemi) for US$ 426.4 million. Together with the 50% stake in Caemi’s voting shares acquired in 2001, this acquisition gives us 60.2% of Caemi’s total capital, with 100% of Caemi’s common shares and 40% its preferred shares. The acquisition of Caemi strengthens our position as a leading producer in the iron ore market by giving us majority control of Minerações Brasileiras Reunidas S.A. (MBR), the second largest producer and exporter of iron ore in Brazil and also gives us a majority stake in Cadam S.A., Brazil’s largest producer and exporter of kaolin. MBR also owns 32.93% of MRS Logística S.A. (MRS Logística), a railway company.

     Rio Doce Manganese Norway. In February 2003, we acquired for US$ 17.6 million 100% of Elkem Rana AS, a Norwegian ferroalloy producer, which we subsequently renamed Rio Doce Manganese Norway AS (RDMN). RDMN has a plant located in an industrial park in Mo I Rana, Norway, where ferrochrome was produced until June 2002. In 2003, we invested US$ 16.7 million to convert the plant to allow the production of ferro manganese alloys, including by revamping one of its electrical furnaces and the plant’s environmental protection and safety procedures. The plant started operations with one furnace in June 2003 and brought its second furnace online in November 2003. The ferroalloy plant, which consumes manganese ore fines from our Azul mine in Carajás, has a production capacity of 110,000 tons per year and produces ferro silicon manganese and high carbon ferro manganese alloys. The acquisition of RDMN expands our ferroalloy business in continental Europe, where our wholly owned subsidiary Rio Doce Manganese Europe has operated a manganese ferroalloy plant since 1992.

     Restructuring of MSG – Minas da Serra Geral S.A. In July 2003, we and JFE Steel Corporation (JFES) signed an agreement to restructure the shareholding composition of Minas da Serra Geral S.A. (MSG), a joint venture created in 1982 to develop the Capanema iron ore mine, which was discontinued in 2003. The restructuring involved the purchase by JFES of a 1% equity stake in MSG previously owned by us and a 24.5% equity stake previously owned by a Japanese group of companies. Following the restructuring, each of CVRD and JFES now owns 50% of MSG’s equity. CVRD and JFES will continue the MSG joint venture, whose purpose will now be to provide equipment for use in the development of our wholly-owned Fábrica Nova iron ore mine, located in the central region of the Iron Ore Quadrangle, in the state of Minas Gerais, 25 km east of Capanema. Fábrica Nova is expected to start operations by 2005, producing 10 million tons of iron ore per year, and is expected to reach full-scale production of 15 million tons by 2007. We currently estimate capital expenditures for the development of Fábrica Nova at US$ 85 million.

     Rio Doce Manganês. On October 15, 2003, our subsidiary SIBRA – Eletrosiderúrgica Brasileira S.A. (SIBRA) was renamed Rio Doce Manganês S.A. (RDM). In February 2004, all of the operational assets of our subsidiaries Sociedade Mineira de Mineração, S.A., Companhia Paulista de Ferro Ligas (CPFL), Minérios Metalúrgicos do Nordeste S.A., and Mineração Urandi S.A., were consolidated into RDM.

     Simplification of corporate structure. In August 2003, our wholly-owned subsidiaries Ferteco Mineração S.A. (Ferteco) and Celmar S.A. — Indústria de Celulose e Papel (Celmar) were merged into CVRD. The merger of Ferteco, which provides us with direct control over Ferteco’s stake in MRS Logística, should allow us to achieve synergies between the two companies via cost reduction and greater operational flexibility in iron ore production and logistics. Celmar’s 30,000 hectares of renewable eucalyptus forest have been contributed to our Ferro Gusa Carajás (Ferro Gusa) pig iron joint venture, as described below.

     In December 2003, the following wholly-owned subsidiaries were merged and consolidated into CVRD: Rio Doce Geologia e Mineração S.A. — Docegeo (Docegeo), Mineração Serra do Sossego S.A. (Sossego), Vale do Rio Doce Alumínio S.A. — Aluvale (Aluvale) and its subsidiary, Mineração Vera Cruz S.A. (MVC). CVRD assumed all of these subsidiaries’ assets and obligations. The consolidations were implemented to simplify our organizational structure.

Logistics

     Coastal shipping. In May 2003, we signed a stock purchase agreement with Mitsui, a major Japanese participant in the global logistics market. Under the agreement, our wholly-owned subsidiary Navegação Vale do Rio Doce S.A.-Docenave, or Docenave, will own 79% of the total shares of a new company, DCNDB Overseas S.A., or DCNDB, established to develop the intermodal coastal shipping business. Mitsui will own the remaining 21% of the shares of DCNDB. All approvals have been obtained, except the license to operate long haul services,

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which is expected during the first half of 2004. We expect the association with Mitsui to allow Docenave to offer service between the ports of Salvador and Itajai, a line which is currently not serviced by any other major carriers, as well as service between other ports in Argentina. We believe this joint venture will help increase Docenave’s share in the coastal shipping market and enable it to attract additional domestic and international customers.

     Restructuring of certain logistics holdings. In April 2003, we, Companhia Siderúrgica Nacional (CSN), and others signed an agreement for the purchase and sale of shares in logistics companies. The agreement involved three principal transactions:

     In the second half of 2003, ANTT authorized these transactions, and we, CSN and the other parties concluded the transactions contemplated in the April agreement. We expect the consummation of these transactions to allow us to focus on and promote new investments in railroad infrastructure and equipment and increase the supply and quality of general cargo transportation services to our clients.

     After receiving authorization from ANTT, a capital increase of FCA was carried out. CVRD fully subscribed to the capital increase, for a total of R$ 1,003 million, of which R$ 789.3 million corresponded to the conversion of advance payments for future capital increases already made, and the remaining R$ 204.9 million were paid in four cash installments. Upon completion of the capital increase, CVRD became the controlling shareholder of FCA.

Aluminum-Related Operations

     Alunorte capacity expansions. In April 2003, Alunorte inaugurated its third production line, which has a capacity of 825,000 tons of alumina per year. With this third line, Alunorte increased its production capacity to 2.4 million tons of alumina per year. Alunorte’s total investment in this project amounted to approximately US$ 300 million.

     In July 2003, Alunorte began work on a new capacity expansion for its alumina refinery in Barcarena, in the state of Pará. This brownfield project involves the construction of stages 4 and 5 of the plant, and is expected to increase its annual capacity from 2.4 million to 4.2 million tons of alumina per year. Alunorte’s total investment in this project is expected to be approximately US$ 583 million.

     ABC Refinery Project. In May 2004, we signed a framework agreement with Chalco that sets forth a general outline of some of the principal terms for a joint investment in an alumina refinery in Brazil (ABC refinery). Under the agreement, we and Chalco have agreed to develop a joint study for the construction of a greenfield refinery in the state of Pará, Brazil near the existing facilities of Alunorte. The alumina refinery is expected to have an initial capacity of 1.8 million tpy, and to reach a final capacity of 7.2 million tpy by gradual expansions. The refinery project would form part of a series of related transactions involving mining, transportation, shipping and port development in Brazil. The framework agreement contemplates that bauxite for the project would be supplied from our Paragominas bauxite mines. The initial phase of the refinery project is preliminarily estimated to have a capital expenditure cost of approximately US$ 1 billion. The first stage of the refinery is expected to be completed and operational in 2007. The project remains subject to further discussion and to the negotiation of final documentation and a number of other conditions, including receipt of board and governmental approvals.

Steel

     Companhia Siderúrgica Tubarão. In April 2003, we completed the acquisition of shares of Companhia Siderúrgica de Tubarão (CST) from Acesita S.A. (Acesita) that are not subject to the CST controlling shareholders’ agreement. We acquired 4.42% of the common shares and 5.64% of the preferred shares of CST, representing 5.17% of CST’s total capital, for US$ 59.7 million. Following this transaction, we now own 24.93% of CST’s common shares and 29.96% of CST’s preferred shares, totaling 28.02% of CST’s capital. Subject to the renewal of the controlling shareholders agreement in 2005, we expect to acquire, jointly with other parties, the remaining shares

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of CST held by Acesita. We expect that the cost of acquiring the stake in CST will be US$ 22.66 per block of thousand shares (equivalent to US$ 33 million as of March 27, 2003) plus 4.25% a year, less distributed dividends. We have also entered into agreements with Arcelor to guarantee the liquidity of our position, under which we have the right to decrease our participation in CST between 2007 and 2009 to 20% of the CST shares owned by the controlling group. Between 2009 and 2015, we have the option to sell our remaining stake in CST to Arcelor. The prices of both divestments will be determined based on a valuation performed by two investment banks.

     A CST expansion project, involving the construction of a third blast furnace, a third continuous casting and a new coke plant, is scheduled to come onstream in 2006. The project will not require capital injections and/or financial guarantees from its shareholders.

     Ferro Gusa pig iron joint venture. In April 2003, we signed an investment agreement with Nucor Corporation, a North American steelmaker, in order to form a joint venture in Brazil, Ferro Gusa, in which approximately 78% and 22% of the voting shares will be held by CVRD and Nucor Corporation (or one of its affiliates), respectively. The main purpose of Ferro Gusa is the production and sale of pig iron. In September 2003, we contributed to Ferro Gusa the forest assets once held by Celmar, a wholly-owned subsidiary of CVRD which was merged into CVRD in August 2003. The cultivated forest assets, now owned by Ferro Gusa, will be used as an energy source for its pig iron production. On May 3, 2004 Nucor Brasil Participações Ltda. (“Nucor”) an affiliate of Nucor Corporation, subscribed to a capital increase of Ferro Gusa for US$ 5 million. As a result, CVRD currently has 88% and Nucor currently has 12% of the voting shares of Ferro Gusa. Nucor is expected to invest an additional US$ 5 million to increase its participation in the capital of Ferro Gusa to approximately 22%, as contemplated in the investment agreement.

     Steel slab plant feasibility study. In February 2004 we agreed with Baosteel, a major Chinese steelmaker, to commence a study to assess the feasibility of implementing a joint venture to build and operate an integrated steel plant in São Luis, in the state of Maranhão, Brazil. An Engineering Service Agreement has been signed authorizing the basic engineering and formal feasibility study for the project. If the project is implemented, it would be the largest investment in the Brazilian steel industry in many years. As currently planned, the plant is expected to produce approximately 3.7 million tons of steel slabs per year, with a possible future capacity expansion to 7.5 million tons per year. If the project is implemented, we expect it to further increase demand for our iron ore products. We and Baosteel are currently negotiating with Arcelor regarding its possible participation in the project. The capital expenditures required for the development of the plant have not yet been determined.

Coal

     Mozambique coal mine pre-feasibility study. In June 2003, we, the Industrial Development Corporation of South Africa, and Iscor, a major South African steel producer, signed a non-binding Memorandum of Understanding to undertake a feasibility study for the development of the Moatize coal deposit in Mozambique. The group expects to spend US$ 3 million in updating the pre-feasibility study which was first undertaken in the 1980s by CVRD and others. It is anticipated that the project will involve the development of the mine to produce coking and steam coal for export and domestic consumption in Mozambique, the rebuilding of the Sena railway line and the development of a port near Beira for coal export. If the pre-feasibility study is positive, the group intends to carry out a formal feasibility study and to implement the project. The project is subject to the Mozambican government’s concession of rights for mining, railroad and port operations and to multi-lateral and government agencies’ support for the related infrastructure investments. The size of the mine and capital expenditures required for its development have not yet been determined.

     Yongcheng Coal Project. In May 2004, we entered into an agreement with Shanghai Baosteel Group Corporation (Baosteel), the largest steelmaker in China, and with Yongcheng Coal & Electricity Group (Yongcheng), one of the largest coal producers in China. The agreement contemplates the establishment of a joint venture for anthracite and coal production in China. The agreement contemplates that we will have guaranteed off-take rights to a portion of the production of the mines, which we intend to consume at our pelletizing plants and to sell to clients in the Brazilian market. The project remains subject to further discussion and to the negotiation of final documentation, as well as to other conditions including receipt of board and governmental approvals.

     Yankuang Coke and Coal Projects. In May 2004, we entered into an agreement with the Yankuang Group (Yankuang), one of the largest coal producers in China, to explore the possibility of participating in a joint venture for the purpose of developing, owning and operating a plant in Jining City, Shandong Province, China that would produce 2,000,000 tons of coke and 200,000 tons of methanol per year. As currently planned, the plant would begin operations in 2006 and approximately 25% of the plant’s production would be exported mainly to Brazil. We are also exploring with Yankuang the possibility of participating in a joint venture to develop new coal mines in the city

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of Zhaolou, Shandong province, China. The planned production capacity of the first mine to be developed would be three million tons per year and, if the project proceeds, the mine is expected to start operations in 2007. Each of the coke plant and coal mine projects remains subject to further discussion, negotiation of final documentation and a number of other conditions, including receipt of board and governmental approvals.

Dispositions and Asset Sales

     In line with our focus on mining and logistics, we have continued to pare down our holdings of non-strategic assets. We summarize below our key dispositions and asset sales since the beginning of 2003.

     Sale of Docenave vessels. In the transportation industry, we continued in 2003 the divestiture of our dry-bulk shipping business begun in 2001, by continuing to sell the fleet of vessels owned by Docenave. In June 2003, we sold two additional ships of Docenave to Magna Marine, Inc. for US$ 36 million. As a result of the sale, Docenave now remains with three ships which we intend to sell in the near future.

     Sale of Fazenda Brasileiro gold mine. In August 2003, we sold our one remaining gold mine, Fazenda Brasileiro, which was near full exhaustion, to Yamana Resources Inc., a Canadian mining company, for US$ 20.9 million. With the sale of Fazenda Brasileiro, our gold production has been discontinued, and we do not expect to begin producing gold again except in connection with the start-up of the copper projects we are currently developing in Carajás, where we expect to produce gold as a by-product of the copper mining process. We continue to invest in mineral exploration aiming at the discovery of new gold reserves.

     Sale of our stake in Fosfértil. In October 2003, we sold our interest in Fertilizantes Fosfatados S.A. (Fosfértil) shares to Bunge Fertilizantes S.A. for US$ 84 million. The sale involved 10.96% of Fosfértil’s voting capital, 11.19% of its preferred capital and 11.12% of its total capital. This transaction is consistent with CVRD’s focus in mining and logistics and with its strategy of selling portfolio investments.

     Santa Isabel hydroelectric power project. Negotiations are currently underway with ANEEL to return the concession for the Santa Isabel hydroelectric project due to difficulties related to environmental issues.

Business Strategy

     Our goal is to strengthen our competitiveness among the world’s leading mining companies by focusing on diversified growth in mining (mainly based on the exploitation of organic growth opportunities) and developing our logistics business. We are pursuing disciplined capital management, looking to maximize return on invested capital and total return to shareholders. Although we are emphasizing organic growth in our core businesses, we will continue to pursue selective acquisitions in order to create value for our shareholders.

     Over the past several years, we have developed a more efficient governance structure and a robust long-term strategic planning process. Now we are building on these changes with ambitious long-range plans in each of our principal business areas. We are planning substantial capital expenditures for organic growth through 2010. The following paragraphs highlight specific major strategies.

Maintaining Our Leadership Position in the Seaborne Iron Ore Market

     In 2003, we consolidated our leadership in the seaborne iron ore trade market, achieving an estimated 32.9% of the total 537 million tons traded in the year. We are committed to maintaining our position in the world iron ore market by strengthening relationships with clients, focusing our product line to capture industry trends, increasing our production capacity in line with demand growth and controlling costs. We believe that our strong relationships with major customers (reinforced through long term contracts), tailored product line and high quality products will enable us to achieve this goal.

Growing Our Logistics Business

     We believe that the quality of our railway assets and our many years of experience as a railroad and port operator, together with the lack of efficient transportation for general cargo that Brazil faces, position us to establish ourselves as a leading Brazilian logistics company serving both domestic and export markets. In 2003, the Brazilian regulatory authorities authorized us to increase our stake in FCA, the largest Brazilian railroad, becoming the owner of 99.99% of its capital. This railroad is a component of our Southern Logistics System, comprising the Estrada de Ferro Vitória a Minas (EFVM) railroad and the complex of Vitória ports (Tubarão, Praia Mole, TPD – Terminal de

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Produtos Diversos and Terminal de Vila Velha). We are focusing on the maximization of asset utilization by means of increasing railroad traffic and port handling, improving levels of service offered and developing new logistics solutions for our clients.

Developing Our Copper Resources

     We believe that our copper projects, which are all situated in the Carajás region, can be among the most competitive in the world in terms of investment cost per ton of ore. Our copper mines will benefit from our transportation facilities serving the Northern System. Sossego, our first copper project, began commercial production in June 2004, and will have an average annual capacity of 140,000 tons of copper in concentrate. We have a Mineral Risk Contract with BNDES providing for the joint development of certain unexplored mineral resources in approximately two million identified hectares of land in the Carajás region, as well as proportional participation in any financial benefits earned from the development of those resources. In April 2004, the Mineral Risk Contract was renewed for an additional period of five years.

Increasing Our Aluminum-Related Activities

     We plan to develop and increase production capacity in our aluminum-related operations, focusing on the upstream of the production chain, developing low cost bauxite and alumina projects. Our bauxite joint venture, MRN and our alumina subsidiary, Alunorte, each increased their production capacity in 2003. We are currently building a new capacity expansion at Alunorte and expect to begin developing a new bauxite mine, Paragominas, which is wholly owned by CVRD. The expansion of Alunorte is expected to be completed by 2006. We are also studying the possibility of a joint venture with Chalco to build a new alumina plant in the state of Pará that would further increase our alumina production. We may pursue acquisitions and/or partnerships in the production of primary aluminum to guarantee demand for our alumina.

Globalization of Multi- Commodity Exploration Efforts

     We are engaged in an active mineral exploration program, with efforts in several countries around the globe, including Brazil, Peru, Chile, Mongolia, Gabon, Angola and China. We are mainly seeking new copper, gold, manganese ore, nickel, kaolin, bauxite and platinum group metals deposits. Mineral exploration is an important part of our organic growth strategy.

Developing Power Generation Projects

     Energy management and efficient supply has become a priority for us, driven both by structural changes in the industry and regulatory uncertainties, which could increase the risk of rising electricity prices and energy shortages, such as Brazil experienced in the second half of 2001. We have invested in nine consortia to develop hydroelectric power generation projects and we plan to use the electricity from these projects for our internal needs. As a large consumer of electricity, we expect that investing in power projects will help protect us against volatility in the price and supply of energy.

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LINES OF BUSINESS

     Our principal lines of business consist of mining and logistics. For internal management purposes, we group our aluminum-related operations together with our other significant equity participations in other companies.

Mining

Ferrous Minerals

     Our ferrous minerals business segment includes iron ore mining, pellet production, manganese ore mining and ferroalloy production.

     The table below sets forth our ferrous minerals gross revenues by geographic market and by category for the periods indicated as reflected in our consolidated financial statements.

   Iron Ore

     We conduct our iron ore business primarily at the parent company level and through our subsidiaries Urucum Mineração S.A., or Urucum and Caemi.

     System Structure

     The table below sets forth information regarding our proven and probable iron ore reserves and projected exhaustion dates as of December 31, 2003. The estimates of mineral reserves have been audited and verified by Golder, experts in geology, mining and ore reserve determination. The projected exhaustion dates are estimated based on our estimates of future production levels.

     Given the recent nature of our acquisition of Caemi, we have not yet completed the process of establishing proven and probable reserves for Caemi under the applicable SEC requirements.

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     Integrated Systems

     The following map shows the location of our current principal operations.

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     Our iron ore mining and related operations are concentrated in three systems in Brazil, the Southern System, the Northern System and the Caemi System. The Southern System is located in the states of Minas Gerais and Espírito Santo, and the Northern System is located in the states of Pará and Maranhão. Caemi’s iron ore mining area is concentrated in the Iron Ore Quadrangle region in the state of Minas Gerais. Each our Northern and Southern Systems includes iron ore reserves and other mineral deposits, mines, ore processing facilities and integrated railroad and terminal transportation facilities. Our railroads connect the Northern System mines to the Ponta da Madeira Maritime Terminal Complex and the Southern System mines to the Tubarão Maritime Terminal Complex. The operation of these separate systems, each with transportation capability, enhances reliability and consistency of service to our customers. The Caemi System does not include a wholly owned railroad. Instead, we contract freight services from MRS Logística, a railway company in which we have a minority interest, to transport products from mines in the Caemi System to the Guaiba Maritime Terminal Complex, in the state of Rio de Janeiro.

     Southern System

     The Southern System is an integrated system consisting of iron ore mines, the Vitória a Minas railroad, and the Tubarão Maritime Terminal Complex (located in Vitória, in the state of Espírito Santo). The iron ore mines of the Southern System are located in a region called the Iron Ore Quadrangle in the state of Minas Gerais, in the southeast of Brazil. The Southern System is accessible by road or by spur tracks of the Vitória a Minas railroad. The iron ore from our Southern System mines is also transported through MRS Logística’s railroad to our Port of Sepetiba, in the state of Rio de Janeiro. Transportation of the iron ore concentrate, lump and natural pellet ore produced in the Southern System is discussed below in Item 4. Information on the Company—Line of Business—Logistics.

     Iron ore in the Southern System is mined by open pit methods. These ore reserves have high ratios of itabirite ore relative to hematite ore. Itabirite is a quartz-hematite rock with an average iron content ranging from 35% to 65%, requiring concentration to achieve shipping grade, which is above a 64% average iron content. Hematite is a high grade ore with an average iron content around 66%. Mines in the Southern System generally process their run-of-mine by means of standard crushing, classification and concentration steps, producing sinter feed, lump ore and pellet feed.

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     Northern System

     The Northern System is an integrated mine, railroad and port system, including open pit mines and an ore processing complex. The Northern System is located in the Carajás region, in the states of Pará and Maranhão in the north of Brazil (in the Amazon River basin), on public lands for which we hold mining concessions. The Northern System’s reserves are among the largest iron ore deposits in the world. These reserves are divided into two main ranges (north and south), situated approximately 35 kilometers apart. Iron ore mining activities in the Northern System are currently being conducted in the northern range, which is divided into six main mining bodies (N4E, N4WC, N4WN, N5W, N5E and N5EN).

     The N4E deposit is the largest operational pit in the Northern Region. Industrial scale mining operations began at this mine in 1985. We selected the N4E mine as the first iron body to be developed in the Northern System because development of the N4E would facilitate access to the N4W and N5 deposits, which could share the N4E beneficiation complex and train-loading terminal. We began mining operations at N4W in 1994, opening two pits (N4WC and N4WN). We completed the construction of two in-pit crushing systems located at N4E and N4WN mines in late December 1998. The N4E and N4W mines use conventional open pit benching, with drilling and blasting to open a free face followed by shovel loading. During 1998, we also started operations in the N5 mines (N5W and N5E). Operations in the N5EN mine commenced in 2003.

     Because of the high iron content (66.6% on average) in the Northern System, we do not have to operate a concentration plant at Carajás. The beneficiation process consists simply of sizing operations, including screening, hydrocycloning, crushing and filtration. This allows us to produce marketable iron ore in the Northern System at a lower cost than in the Southern System. Output from the beneficiation process consists of sinter feed, pellet feed, special fines for direct reduction processes and lump ore, which is sampled regularly before storage at the Carajás stockyard by automatic sampling systems that conform to ISO 9002 standards. After the beneficiation process, our Carajás railroad transports Northern System iron ore to the Ponta da Madeira Maritime Terminal Complex located at São Luís in the state of Maranhão.

     Our complex in Carajás is accessible by road, air and rail. It obtains electrical power at market rates from regional utilities. To support our Carajás operations and to reduce turnover of mining personnel, we have housing and other facilities in a nearby township.

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Caemi System

     Caemi operates its iron ore activities through its subsidiary MBR. MBR operates in the Iron Ore Quadrangle in the state of Minas Gerais and exports through its own maritime terminal on Guaiba Island, in Sepetiba Bay, state of Rio de Janeiro.

     MBR presently operates three mines: Tamanduá, Pico and Jangada. Iron ore is mined by the open pit method in each of the mines. Lump ore, sinter feed fines and pellet feed fines are produced from iron ore extracted from each mine after beneficiation.

     The Pico Complex (which includes the mine and the surrounding area which supports the mine) has a beneficiation plant that contains concentration columns. Concentration columns are used to isolate pellet feed fines from silica, resulting in an improved product grade. The Tamanduá Complex has a beneficiation plant at Vargem Grande. MBR transports its iron ore to the Guaiba Island Maritime Terminal at market rates via the MRS Logística railway, in which we currently have a minority interest. The Jangada Complex has a beneficiation plant near the mine and its ore is transported through MRS Logística railway to the Guaiba Island Maritime Terminal.

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Pellets

     The table below sets forth information regarding our share ownership and joint venture partners as of April 30, 2004 and total pellet production by us and our joint ventures for the periods indicated.

     Our pellet activities increase our market for fine and ultrafine iron ore products. We sell pellet feed to our pellet joint ventures at market-based prices. Historically, we have supplied all of the iron ore requirements of our joint ventures located in the Southern System. Besides BF pellets, some of the pellets we and our joint ventures produce are DR pellets, which are used in steel mills that use electric arc furnace rather than blast furnace technology.

     The table below sets forth information regarding iron ore shipments to our pellet joint ventures for the periods indicated.

   Customers, Sales and Marketing (Iron Ore and Pellets)

     We use all of our iron ore and pellets (including our share of joint venture pellet production) to supply the steelmaking industry. Prevailing and expected levels of demand for steel products affect demand for our iron ore and pellets. Demand for steel products is influenced by many factors, such as expected rates of economic growth.

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     Historically, we have exported more than two-thirds of our iron ore shipments. We export iron ore and pellets primarily to Asia and Europe, with customers in China, Japan, South Korea, France and Germany accounting for approximately 44.8% of our total iron ore and pellets export shipments in 2003. Our 10 largest customers collectively purchased 70.6 million tons of iron ore and pellets from us, representing 38% of our 2003 iron ore and pellet shipments and 41% of our total iron ore and pellets revenues. No individual customer accounted for more than 11% of our sales of iron ore and pellets for any of the three years ended December 31, 2003.

     We strongly emphasize customer service in order to improve our competitiveness. We work with our customers to understand their principal objectives and then tailor our iron ore to meet specific customer needs. To provide a tailored product, we take advantage of our large number of iron ore mines in order to produce multiple iron ore products possessing different grades of iron, silica and alumina, and varying physical properties, including grain size. We believe that we offer our customers more variety than our competitors. This variety helps us offset disadvantages in relation to competitors who may be more conveniently located geographically. In addition to offering technical assistance to our customers, CVRD operates sales support offices in Tokyo, Brussels, New York and Shanghai. These offices allow us to stay in close contact with our customers, monitor their requirements and our contract performance, and ensure that our customers receive deliveries on schedule. Our central sales office in Rio de Janeiro coordinates the activities of these offices. Caemi’s sales support offices are located in Connecticut (USA), Den Haag (The Netherlands), Hong Kong and Shanghai.

   Distribution (Iron Ore and Pellets)

     Our ownership and operation of transportation systems designed for the efficient transportation of iron ore products complement our iron ore mining business in the Northern and Southern Systems. We operate an integrated railroad and terminal network in each of our Northern and Southern Systems. These networks transport our iron ore products from interior mining locations to the maritime terminal and domestic customers. A more detailed description of the networks is provided in the section below entitled Logistics.

     We do not own or operate an integrated transportation system for our Caemi System. Instead we enter into freight contracts with MRS Logística, a railway company in which we own a minority interest, to transport our iron ore products at market rates from MBR’s mines to its maritime terminal on Guaiba Island and to its domestic customers.

   Competition (Iron Ore and Pellets)

     In general, the international iron ore market is highly competitive. Several large producers operate in this market. The principal factors affecting competition are price, quality, range of products offered, reliability and transportation costs. In 2003, the European market and the Asian market (primarily China, Japan and South Korea) were the primary markets for our iron ore.

     Our biggest competitors in the Asian market are located in Australia and include subsidiaries and affiliates of BHP Billiton PLC and Rio Tinto Ltd. Although the transportation costs of delivering iron ore from Australia to Asian customers are generally lower than ours as a result of Australia’s geographical proximity, we believe we are able to remain competitive in the Asian market for two principal reasons. First, steel producers generally seek to obtain the types (or blends) of iron ore which can produce the intended final product in the most economic and efficient manner. Our iron ore has low impurity levels, which generally lead to lower processing costs. For example, the alumina content of our iron ore is very low compared to Australian ore. Our ore also has high iron grade, which improves productivity in blast furnaces, which is important during periods of high demand. Second, steel mills often develop sales relationships based on a reliable supply of a specific mix of iron ore. We have a customer-oriented marketing policy of meeting our clients’ needs to the extent possible, including placing specialized personnel in direct contact with our clients to determine the blend that best suits each particular client. We sell most of our products FOB from our ports, which means that the invoice price includes delivery at our expense to our ports and no further. In general, in the Northern and Southern Systems our ownership of the process of producing and transporting iron ore to our ports makes it easier for us to ensure that our products get to our ports on schedule and at competitive costs.

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     We are competitive in the European market for the reasons we described above, as well as the proximity of the Ponta da Madeira port facilities to European customers. Our principal competitors in Europe are:

     The Brazilian iron ore market is highly competitive with a wide range of smaller producers. Although pricing is relevant, quality and reliability are important competitive factors as well. We believe that our integrated transportation systems, high-quality ore and technical services make us a strong competitor in domestic sales. Prevailing export market prices, with adjustments negotiated to compensate for lower transport costs to domestic customers, influence iron ore sales in the domestic market.

   Manganese Ore and Ferroalloys

     We conduct our manganese ore and ferroalloy business primarily through the following subsidiaries and joint ventures, as of April 30, 2004:

     In 2003, we were the largest manganese ore producer in the Americas and one of the largest players in the global seaborne market, with total shipments of approximately 885 thousand tons of manganese ore and 502 thousand tons of ferroalloys. We had US$ 349 million in revenues in 2003 from manganese ore and ferroalloy sales.

     We produce manganese ore products from the Azul mine in the Carajás region in the state of Pará and from the Urucum mine in the Pantanal region in the state of Mato Grosso do Sul. We operate on-site beneficiation plants at both the Azul and Urucum mines. Both mines are accessible by road and obtain electrical power at market rates from regional electric utilities. We also operate five minor mines, Morro da Mina, Coribe, Barnabé, Cobra and São Desidério, in the states of Minas Gerais and Bahia.

     Our manganese ore mines produce three types of manganese ore products:

     The production of ferroalloys consumes significant amounts of electricity. For information on the risks associated with potential energy shortages, see Item 3. Key Information—Risk Factors.

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     The table below sets forth information regarding our manganese ore mines and recent manganese ore production for the periods indicated. The estimates of mineral reserves of Urucum and Azul have been audited and verified by Golder. We own 100% of all mines. For our small mines in Minas Gerais and Bahia, geological surveys are under way in order to assess reserves and resources.