United States
Securities and Exchange Commission

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

For the month of

August 2004

Valley of the Rio Doce Company

(Translation of Registrant’s name into English)

Avenida Graça Aranha, No. 26
20005-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

(Check One) Yes o No þ

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

(Check One) Yes o No þ

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(Check One) Yes o No þ

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82- .)

COMPANHIA VALE DO RIO DOCE
Report on Form 6-K

Table of Contents

BOVESPA: VALE3, VALE5
NYSE: RIO, RIOPR
LATIBEX: XVALO, XVALP

PERFORMANCE OF COMPANHIA VALE DO

RIO DOCE IN THE SECOND QUARTER OF 2004

Except where otherwise indicated, the operational and financial information contained in this press release is presented based on the consolidated figures in accordance with generally accepted accounting principles in the United States of America (US GAAP). Except for the information on investments and market behavior, this information is based on quarterly financial statements reviewed by independent auditors. The main subsidiaries of CVRD that are consolidated are: Caemi, Alunorte, Albras, RDM, RDME, RDMN, Urucum Mineração, Pará Pigmentos (PPSA), Docenave, Ferrovia Centro-Atlântica (FCA), Itaco, CVRD Overseas and Rio Doce International Finance.

www.cvrd.com.br
rio@cvrd.com.br

Investor Relations
Department

Roberto Castello Branco
Rafael Campos
Barbara Geluda
Daniela Tinoco
Eduardo Mello Franco
Rafael Azevedo
Phone: (5521) 3814-4540

SALES, OPERATING INCOME AND CASH FLOW REACHING ALL TIME HIGHS

Rio de Janeiro, August 11, 2004 – Companhia Vale do Rio Doce (CVRD) achieved an extraordinary performance in the second quarter of 2004 (2Q04), marked by several new operating and financial records.

This performance was due to the good execution of CVRD’s strategy, discipline in allocation of capital and management of operations, and the strong expansion in global demand for minerals and metals.

2Q04 net earnings reached US$ 504 million, equivalent to earnings per share of US$1.31, 10.5% higher than the net earnings of US$ 456 million achieved in 2Q03, and 24.4% higher than the 1Q04 net earnings of US$ 405 million.

Return on equity (ROE) was 31.8%, higher than the 26.9% achieved in 2Q03 and the 31.4% of 1Q04.

Operating income – adjusted EBIT – was a record US$ 832 million, 114.4% higher than in 2Q03 (US$ 388 million), and 42.7% higher than in 1Q04 (US$ 583 million). Operating margin, at 43.3%, was also a record, exceeding the 2Q03 operating margin of 33.2% by 1,010 basis points (bp).

Cash flow, as measured by adjusted EBITDA, reached the highest quarterly level in CVRD’s history, at US$ 971 million, 98.2% higher than in 2Q03 and 30.7% higher than in 1Q04.

Various other records were also achieved:

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CVRD’s capital expenditure in 2Q04 was US$ 488.3 million, totaling US$ 846.3 million in the first half of the year. These investments continue to position CVRD on the path to achieve profitable growth and shareholder value creation.

In June, the Company began shipping copper concentrate produced by Sossego, the mine in the Carajás mineral province in the Brazilian state of Pará, generating in the 2Q04 revenue of US$ 24 million. The implementation of the Sossego operations fully met expectations and confirmed CVRD’s technical skills in the development of non-ferrous mineral projects, already proven over the years with its experience in bauxite, kaolin, gold and potash.

There was a substantial reduction in financial leverage, and an increase in interest coverage – both indicators reached excellent levels, demonstrating the Company’s capacity to distribute good dividends to shareholders and finance its own growth initiatives without concern for liquidity problems in the short term.

BUSINESS OUTLOOK

Global economic growth has shown itself to be resilient despite the negative impact of higher nominal oil prices. The influence of expansionist monetary and fiscal policies and the improvement in corporate profitability has allowed a solid and synchronized global recovery to take place. Leading indicators of global economic activity continue to signal expansion over the next few months.

The growth gap between the US economy and other industrialized economies appears to be narrowing, in contrast to what happened in the most recent cycles. We believe Japan is likely to register economic growth rates at least equal to those of the US, with the Japanese economy showing excellent signs of vitality, expressed, for example, in the good domestic consumption performance and the level of private investment.

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Improved corporate performance, with better earnings and liquidity, is stimulating investment in capital equipment. In the US and Europe, we expect investment to substitute consumption as the principal source of GDP growth in the short term. In Japan, consumer spending behaviour appears, for the first time in many years, to be the most important element in determining the performance of its economy.

Restrictive measures put into practice by the Chinese economic authorities appear, up to now, to be having the desired result. Although it is premature to make a more fundamental diagnosis, data available thus far is pointing towards a soft landing for the Chinese economy. July was the fifth consecutive month to show a reduction in the rate of industrial production expansion, which amounted to 15.5%, compared to 23.2% in February, 19.4% in March, 19.1% in April, 17.5% in May and 16,2% in June.

In the iron ore market these measures had an impact on imports through the spot market, with a strong drop in prices and total volumes imported. In May and June, China’s imports of iron ore averaged 14.7 million tons a month, compared to 18.5 million for the previous three months, a drop of 20.5%. External Chinese purchases of iron ore in the first half of 2004 amounted to 97.8 million tons, an increase of 34.9% compared to the same period a year earlier, while steel production, of 124.7 million tons, increased by 21.1%.

CVRD does not participate in transactions on the iron ore spot market — it gives priority to commercial relationships based on medium and long-term contracts.

The spot alumina price fell to 17.5% of the aluminum price on the LME (London Metal Exchange), still much higher than the price prevailing up to the middle of 2003, reflecting restrictions on credit and the rise in the cost of electricity for the Chinese aluminum industry. However, the spot price represents a quote of marginal volumes in an alumina market which is dominated by inter-company product transfers and long-term contracts. Alumina imported by China during the first half of the year amounted to 2.85 million tons, an increase of 11.1% on the same period in 2003.

One of the aims of the Chinese government in implementing a selective tightening approach to slow down its GDP growth rate is to seek higher levels of efficiency and productivity, which are key to sustainable long-term economic growth. In the case of steel, this means the consolidation of an industry which is extremely fragmented, with some 1,000 players, into a small group of companies with competitive operations. If successfully implemented, in our opinion, this would result in greater demand for imported iron ore and increasingly sophisticated buying policies, with the more frequent use of long-term contracts and joint ventures with suppliers, which will tend to benefit CVRD.

In contrast to what occurred in the period 2001/2003, the synchronized recovery in the global economy has made demand for ores and metals less dependent on Chinese expansion. For example, there are forecasts that Japanese steel production for the fiscal year 2004/2005 will be the highest since 1973/1974. In the case of copper and particularly aluminum, the premia of Comex prices relative to LME prices reflect strengthening demand in North America compared to the rest of the world.

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We consider that the slowdown in the growth rate of Chinese demand for ores and metals, and the fall seen in spot market prices, to be healthy trends which will help to preserve sustainable growth in the global markets for these products. World demand for metals and their respective ore inputs continues strong, exceeding current levels of production; no reversal in this picture is expected in the short term.

RECENT MATERIAL EVENTS

In 2Q04, a number of events occurred which were of significant importance for the future performance of the Company. Of particular note were: the start-up of operations at Sossego; the signing of contracts to form joint ventures with Chinese companies for the production of alumina, metallurgical coal and coke; the sale of the Company’s stake in CST; and the signing of new long-term contracts for the supply of iron ore.

The Sossego mine, CVRD’s first copper project, began shipping copper concentrate on June 3, establishing a new value creation platform for shareholders.

Sossego, the only greenfield project in the world to begin operations in 2004, has proven and probable reserves of 244.7 million tons of copper ore – not including the reserves contained in satellite mines – with copper content estimated at 1%, with approximately 0.26 grams of gold per tonne as a by-product. The ore is processed by a plant which has an annual average production capacity of 467,000 tons of copper concentrate, equivalent to 140,000 tons of copper.

CVRD invested US$ 413 million in the Sossego project, which once again demonstrates the Company’s discipline in the allocation of capital. Only six years elapsed between the initial discovery of the ore deposits and the start of operations, which can be considered a record development time for the copper industry.

At the end of May, CVRD signed contracts with Chinese companies for joint investment in alumina, metallurgical coal and coke.

In association with Chalco – Aluminum Corporation of China Limited, CVRD is planning to build an alumina refinery (ABC Refinery) in Barcarena, state of Pará, Brazil, as a greenfield project, with an initial nominal production capacity of 1.8 million tons per year. The refinery is expected to begin operations by 2007, supplied with bauxite from the Paragominas mine, currently being developed by CVRD, which will also supply stages 4 and 5 at Alunorte.

The estimated investment cost of the refinery is US$ 810 million, equivalent to US$ 450 per ton, which is extremely competitive for an alumina greenfield project.

CVRD has signed a joint venture agreement with the Shanghai Baosteel Group Corporation and the Yongcheng Coal & Electricity Group, for the production of anthracite and metallurgical coal in China. CVRD’s stake in this project will amount to 25%, involving an investment of US$ 60 million.

The Company has also entered into an agreement with the Yankuang Group, of China, and the Japanese trading company, Itochu Corporation, for the creation of the Shandong Yankuang International Coking Co. Ltd, for the production of coke. The industrial plant will be located in China, with an annual production capacity of

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2 million tons of coke and 200,000 tons of methanol as a by-product. Operational start-up is planned for 2006, with investment by CVRD of around US$ 27 million, guaranteeing a 25% stake in the joint venture.

A contract has also been signed between CVRD and the Yankuang Group for the development of a coking coal mine at Zhaolou, in China, with production capacity estimated at 3 million tons a year.

These agreements strengthen CVRD’s relationship with important players in the aluminum, steel and coal industries and the Company’s presence in the Chinese economy, while also heralding the Company’s entrance into the coal market, complementing its portfolio of products and services for the steel industry.

CVRD has signed a contract with Arcelor for the complete sale of its 28.02% stake in Companhia Siderúrgica de Tubarão (CST) for US$ 578.5 million, corresponding to US$ 40.50 per share.

This transaction is consistent with CVRD’s strategy of focusing its efforts on exploiting profitable growth opportunities in the global metals and mining markets.

CVRD’s long-term contracts with its clients provide support for investment in iron ore production capacity expansion while, at the same time, eliminating risks attached to the future supply of raw material to the steel industry.

Two contracts were signed in July. The first was with the Nippon Steel Corporation, Japan’s largest steel producer, for the supply of 70 million tons of iron ore for 10 years, starting in 2005. The second was with COSIPA - Companhia Siderúrgica Paulista for the annual supply of 1.1 million tons of iron ore, for a period of three years.

CONSOLIDATION OF ALBRAS IN THE FINANCIAL STATEMENTS

The consolidation of Albras, a primary aluminum producer in which CVRD holds 51% of the voting capital, in our US GAAP financial reporting starting on January 1, 2004 conforms with Interpretation 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (FIN 46), issued in January 2003 by the US Financial Accounting Standards Board (FASB), and revised in December 2003 (FIN 46-R).

The financial statements for the second quarter thus reflect the consolidation of Albras, as do those for 1Q04. All 1Q04 information presented herein reflects the consolidation of Albras in our restated 1Q04 US GAAP financial statements.

The consolidation required by FIN 46-R should enable market participants to obtain a more thorough assessment of the operating and financial performance of CVRD.

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BEST OPERATING PERFORMANCE IN CVRD’S HISTORY

CVRD’s gross operating revenue in 2Q04 was US$ 2.033 billion, 66.8% higher than in 2Q03 and 17.4% higher than in 1Q04.

The increase of US$ 814 million in revenue from 2Q03 to 2Q04 was mainly due to expansion in sales volume – which contributed US$ 546 million, or 67.1%, while the increase in prices was responsible for US$ 268 million. The consolidation of Albras added US$ 61 million to the 2Q04 revenue.

The ferrous minerals businesses – iron ore, pellets, manganese and ferroalloys – generated revenue of US$ 1.426 billion, representing 70.1% of the Company’s total revenue. Iron ore produced sales revenue of US$ 943 million, pellets US$ 304 million, operating service fees at the Tubarão pelletizing plants US$ 15 million, manganese ore US$ 11 million, and ferro alloys US$ 139 million.

CVRD’s revenue from sales to Europe, its main market, were US$ 706 million, 34.7% of the Company’s total revenue. The domestic market contributed with US$ 580 million, 28.5% of the total; China accounted for US$ 203 million, 10.0% of the total; Japan US$ 197 million, 9.7% of the total; and the rest of emerging Asia US$ 87 million, 4.3% of the total.

Shipments of iron ore and pellets totaled 55.816 million tons, a volume 34.5% greater than that of 2Q03 and 5.4% more than that of 1Q04. The increase in volume shipped, a new quarterly record, surpassing the prior record achieved in 4Q03, resulted from the growth in production in response to strong global demand. In 2Q04 CVRD produced 51.516 million tons of iron ore, an increase of 10.7% relative to 1Q04.

In 2Q04, CVRD sold 48.357 million tons of iron ore and 7.459 million tons of pellets. The Company also acquired 4.372 million tons of iron ore from mining companies operating in the Iron Quadrangle, in the state of Minas Gerais, Brazil, to complement its own production and meet the growing demand from clients for iron ore and pellets.

The average sale price of iron ore was US$ 19.50 per ton, an increase of 10.5% vis-à-vis 1Q04. The average price obtained for pellets, of US$ 40.76 per ton, was 11.9% higher than in 1Q04. The increase in average prices reflects the fact that the price increases negotiated for 2004 were in effect for a full quarter for the first time in 2Q04.

The Chinese market, with 8.4 million tons, was the principal destination of CVRD’s exports of iron ore and pellets in 2Q04, accounting for 15.0% of total iron ore and pellet sales, followed by Japan with 12.2%, Germany with 11.1% and France with 5.5%. The domestic market absorbed 25.1% of CVRD’s iron ore and pellet sales in the quarter.

Sales of manganese ore in the quarter reached 203 thousand tons, 13.3% less than in 2Q03, but 24.5% more than in 1Q04. Ferro alloy sales, at 137 thousand tons, were 33.0% higher than in 2Q03, and 31.1% lower than in 1Q04. The significant increase, in comparison with 2Q03, mainly reflects the operation of RDMN starting in June 2003; whereas, in 2Q04, there was a maintenance stoppage in the electric furnace of RDME, resulting in the fall in volume sold from 1Q04.

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The aluminum chain products – bauxite, alumina and primary aluminum – produced revenue of US$ 289 million in 2Q04, 14.2% of the Company’s total revenue. The consolidation of Albras added US$ 61 million to this amount.

The consolidation of Albras results in the reduction in the accounting figures for alumina volumes and sales revenue by an amount equal to the transactions involving the supply to Albras by Alunorte, since both are consolidated in the result. Thus, the consolidated volume of alumina sales in 2Q04 was 336 thousand tons, not considering the 212 thousand tons sold by Alunorte to Albras.

The average price obtained for alumina shipments reached US$ 244.05 per ton in 2Q04, a substantial increase of 41.7% in relation to 2Q03, and 12.0% more than in 1Q04.

Sales volume of primary aluminum totaled 119 thousand tons in 2Q04. The average sale price was US$ 1,655.46 per ton, 2.9% higher than in 1Q04.

CVRD sold 34 thousand tons of copper concentrate in the quarter, generating revenue of US$ 24 million.

Sales of potash provided revenue of US$ 31 million in 2Q04, 1.5% of the Company’s total revenue, representing an increase of 34.8% vis-à-vis 1Q04, and of 47.6% relative to 2Q03. With the resumption of full activitiy at Taquari-Vassouras mine, which had been reduced in 1Q04 due to capacity expansion work, shipments in 2Q04 were 166 thousand tons, 20.3% higher than the 138 thousand tons sold in 1Q04, and 11.4% higher than the 149 thousand tons sold in 2Q03. Furthermore, the price of potash has been rising, from US$ 140.94 in 2Q03 to US$ 166.67 in 1Q04, and US$ 186.75 in 2Q04, due to excess global demand.

Kaolin sales generated revenue of US$ 39 million, 1.9% of the Company’s total revenue, practically unchanged from 1Q04. The volume sold reached 293 thousand tons, an increase of 2.8% vis-à-vis the 285 thousand tons sold in 1Q04.

Logistics services provided revenue of US$ 220 million in 2Q04, 59.4% greater than the US$ 138 million generated in 2Q03, and 15.2% greater than the US$ 191 million achieved in 1Q04. Logistics services provided 10.8% of the Company’s revenue in the quarter. Rail transportation for clients in the Estrada de Ferro Carajás (EFC), the Estrada de Ferro Vitória a Minas (EFVM) and Ferrovia Centro-Atlântica (FCA) contributed revenue of US$ 153 million. Revenue from port services reached US$ 45 million and revenue from coastal shipping and port support services was US$ 22 million.

CVRD’s railroads transported 7.632 billion ntk of general cargo for clients in 2Q04, an increase of 10.6% vis-à-vis 2Q03 and of 22.4% relative to 1Q04, surpassing their prior record of 7.371 billion ntk established in 3Q03. The main types of cargo carried for clients were steel industry inputs and products (43.8%), agricultural products (37.1%), and fuels (9.0%).

In all three railroads, there were increases in revenue per 1,000 ntk of general cargo carried: at EFVM, from US$ 15.99 in 1Q04 to US$16.08 in 2Q04; at EFC, from US$ 13.94 to US$13.97; and at FCA from US$ 20.02 to US$ 20.62.

Due to the repressed demand in Brazil for efficient cargo transportation, the improvement in the performance of the railroads is much more a function of the increase in supply than demand. With the significant capital expenditure alocated to increase the number of wagons and locomotives, volume of cargo transported has grown rapidly in the last three years, at a compound annual growth rate of 9.1%.

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The operating productivity of locomotives on CVRD’s railroads has increased: EFVM carried 8.53 ntk per horse power (HP) in 2Q04, compared with 8.15 in 1Q04; EFC increased locomotive productivity from 14.97 in 1Q04 to 15.18 in 2Q04; and FCA increased it from 1.18 to 1.33.

Fuel consumption levels in CVRD railroads also improved. In EFVM, it decreased from 2.32 liters per 1,000 gross tons kilometer (gtk) in the 1Q04 to 2.28, in FCA, from 7.79 liters per 1,000 gtk to 7.55 in the 2Q04, while EFC showed a small increase, from 1.39 per gtk in the 1Q04 to 1.40.

CVRD’s ports and maritime terminals handled 7.614 million tons of cargo for clients in 2Q04, an increase of 5.2% on 2Q03, and of 19.0% on 1Q04.

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In 2Q04, CVRD’s operating income, as measured by adjusted EBIT, reached US$ 832 million, the highest quarterly operating income in its history and 42.7% higher than the prior record of US$ 583 million achieved in 1Q04, and an increase of 114.4% in relation to the US$ 338 million achieved in 2Q03. The consolidation of

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Albras starting in January 2004 added US$ 74 million to CVRD’s operating income in 2Q04, and US$ 54 million in 1Q04. Adjusted EBIT margin was 43.3%, another record, 1,010 and 810 bps higher than the margins of 33.2% in 2Q03 and 35.2% in 1Q04, respectively.

The consolidation of Albras added 250 bp to the 2Q04 operating margin, and 230 bp to the 1Q04 operating margin.

The increase of US$ 750 million in CVRD’s net operating revenue was a key element in the improvement of adjusted EBIT from 2Q03 to 2Q04.

Cost of goods sold (COGS) increased US$ 242 million vis-à-vis 2Q03. The consolidation of Albras contributed US$ 20 million to this figure.

The main causes of the increase in COGS from 2Q03 to 2Q04 were: (a) an increase of US$ 76 million in outsourced services, mainly expenditures on rail transportation of the iron ore produced by Caemi; (b) growth of US$ 52 million in the cost of materials resulting from the increased volume of activity; (c) increase of US$ 40 million in the cost of electricity due to the increase in electricity tariffs; (d) an additional US$ 38 million in depreciation and amortization due to the expansion of the asset base with the consolidation of Caemi, FCA and Albras; (e) increase of US$ 33 million in expenses on acquisition of iron ore from third parties – the purchase of 4.4 million tons in 2Q04 compared to 2.3 million tons in 2Q03. A factor which reduced COGS were the decrease of US$ 42 million in purchases of other products, mainly due to the consolidation of Albras, removing the volume of alumina that Albras purchases from Alunorte from the financial statements.

Net operating revenue was US$ 264 million higher than in 1Q04, while cost of goods sold increased by only US$ 4 million, explaining the increase in operating income.

Demurrage expenses, which are an indicator of global iron ore market tightness, totaled US$ 14 million, an increase of US$ 2 million from 1Q04. In the second quarter of 2003, US$ 12 million was spent on such penalties for delays in ship loading.

The adjusted EBIT margin of the ferrous minerals division in 2Q04 reached 45.8%, an increase of 890 bp, from 36.9% in 1Q04, and of 730 bp higher than the 38.5% reached in 2Q03. This increase in operating margin mainly reflects the inclusion of the full 2004 increase in the iron ore and pellet prices for a whole quarter for the first time this year.

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The adjusted EBIT margin of logistics services continues to improve, reaching 28.1% in 2Q04, 340 bp higher than the 24.7% obtained in 1Q04, though still lower than the 32.0% EBIT margin of 2Q03. The increase from 1Q04 is explained by the improvement in the performance of FCA, due to cost reduction and price increases.

The adjusted EBIT margin of the aluminum businesses in 2Q04 reached 47.5%, an increase of 750 bp from the 40.0% adjusted EBIT margin of 1Q04. This high figure reflects the full capture of the performance of the primary aluminum operations and increased prices resulting from strong world demand and declining inventories.

RECORD CASH FLOW GENERATION: US$ 971 MILLION

Cash flow generation as measured by adjusted EBITDA reached US$ 971 million, the highest quarterly amount in CVRD’s history – the previous record was US$ 743 million established in 1Q04. The 2Q04 adjusted EBITDA surpassed the prior record by 30.7% and was 98.2% higher than the 2Q03 adjusted EBITDA.

Adjusted EBITDA in the 12 months to the end of June 2004 was US$ 2.912 billion. 2Q04 is the ninth consecutive quarter of growth in CVRD’s LTM adjusted EBITDA. From 1Q02 to 2Q04, LTM adjusted EBITDA grew at a compound annual rate of 33.7%, providing a clear illustration of the success of the strategy adopted, its good execution, and the Company’s focus on profitable growth.

The US$ 228 million increase in adjusted EBITDA from 1Q04 to 2Q04 is primarily due to a US$ 249 million increase in adjusted EBIT. The consolidation of Albras added US$ 77 million and US$ 58 million, respectively, to 2Q04 and 1Q04 adjusted EBITDA.

Dividends received by CVRD in 2Q04 totaled US$ 60 million, of which US$ 30 million were paid by Samarco, US$ 20 million by MRN, US$ 7 million by Valesul, and US$ 3 million by other companies.

By business area, 2Q04 adjusted EBITDA was generated as follows: ferrous minerals 69.8%, aluminum 16.9%, logistics 10.2%, non-ferrous minerals 2.9% and other businesses – corresponding to dividends received from steel companies – 0.2%.

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NET INCOME OF US$ 504 MILLION

2Q04 net income of US$ 504 million, represented an increase of 10.5% vis-à-vis the US$ 456 million achieved in 2Q03 and of 24.4% relative to the 1Q04 net income of US$ 405 million.

The earnings growth from 2Q03 to 2Q04 had two basic causes: (a) improvement of US$ 444 million in operating income; and (b) increase of US$ 115 million in results from shareholdings in spite of the consolidation of Albras.

The 6.8% depreciation of the Real against the US dollar, which occurred between the end of March and the end of June 2004, produced a negative effect of US$ 245 million on the 2Q04 net income via foreign exchange losses. 2Q03 net income was positively impacted by the Real appreciation of 14.3% against the US Dollar on that quarter when US$ 257 million in gains in foreign exchange were achieved.

There were two reasons the result from shareholdings was US$ 115 million higher in 2Q04 than in 2Q03. There were no provisions for losses in 2Q04, while US$ 66 million was provisioned in 2Q03. In 2Q03, provisions for losses were made in FCA (US$ 73 million) and CFN (US$ 2 million), while US$ 9 million was reversed.

Equity income was US$ 49 million higher in 2Q04 relative to 2Q03.

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The strong equity income reflects an increase of US$ 76 million in the contribution from steel companies and an increase of US$ 80 million in the contribution from the logistics companies. The result of the aluminum companies fell by US$ 29 million, mainly as a result of the consolidation of Albras. Equity income from iron ore and pellet companies fell US$ 10 million, basically due to the consolidation of Caemi.

The US$ 53 million increase in interest from minority shareholdings, mainly due to the consolidation of Albras, and the US$ 52 million increase in net financial expenses, also negatively affected 2Q04 income in comparison to 2Q03.

In the 2Q04 gains in the amount of US$ 23 million were realized in derivatives transactions to protect against market risks (exchange rate, interest rate and commodity price volatility). In the 2Q03, the financial result from these transactions was a gain of US$ 4 million.

DEBT: LEVERAGE AND COVERAGE INDICATORS AT EXCELLENT LEVELS

CVRD’s total debt on June 30, 2004 was US$ 4.514 billion, a small reduction from the position at March 31, 2004, of US$ 4.526 billion. The consolidation of Albras added US$ 295 million to the total debt in 2Q04. Without the consolidation, the total debt would have been US$ 4.219 billion at the end of June 2004.

Short-term debt was reduced by US$ 40 million from the end of March 2004, while long-term debt increased by US$ 28 million. The debt average life rose to 6.43 years at the end of 2Q04, more than double the level at the end of 2002. The lengthening of the maturity profile of the debt was achieved without any significant increase in average cost, which remains below 7% per year.

Net debt⁴ increased slightly, from US$ 3.442 billion at the end of March 2004, to US$ 3.455 billion at the end of June 2004.

The value of guarantees given to non-consolidated affiliates and joint ventures totaled only US$ 8 million (Samarco, US$ 7 million and Valesul, US$ 1 million), given that out of the US$ 260 million in guarantees existing at March 31, 2004, US$ 252 million was related to Albras, now consolidated.

Reflecting the strong expansion of LTM adjusted EBITDA, to US$ 2.912 billion, total debt/LTM adjusted EBITDA fell to 1.55x. Also, it is important to consider that this ratio is still artificially inflated, since its numerator takes into account all the debt of Albras, Caemi and FCA, while the denominator includes only the adjusted EBITDA generated by these companies from their respective consolidation dates (September 2003 for Caemi and FCA, January 2004 for Albras). Total debt/enterprise value6 at the end of 2Q04 was 21.7%.

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There was a strong improvement in interest coverage, as measured by LTM adjusted EBITDA/LTM interest payments⁵, which increased from 11.51x at the end of 2003 to 12.94x at the end of 2Q04.

At the end of July 2004, Alunorte obtained a syndicated loan of US$ 310 million, with total tenor of 10 years, average life of 7.3 years, at a cost of six-month Libor plus 2% p.a. This cost will be changed to six-month Libor plus 3% p.a. upon the completion of the construction of stages 4 and 5 of the refinery which the loan was obtained to finance.

Enterprise Value = market capitalization + net debt

CONTINUING TO POSITION THE COMPANY ON A PROFITABLE GROWTH PATH: INVESTMENT OF US$ 488.3 MILLION IN THE 2Q04

During the second quarter of 2004, CVRD carried out investments of approximately US$ 488.3 million, accumulating a total of US$ 846.3 million in the first half of the year.

In 2Q04, investment in organic growth (growth capex) amounted to US$ 311.3 million, while investment in the maintenance of existing operations (stay-in-business capex) amounted to US$ 177.0 million.

Of the amount invested in growth, US$ 22 million was spent on mineral exploration, of which 84% in Brazil and 16% in other countries, mainly Chile, Peru, Gabão, Angola and Mongólia. Mineral exploration focused on the search for copper, nickel, gold, kaolin, bauxite, manganese and metals of the platinum group.

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All projects are within budget and running according to schedule. In 2004, the Sossego copper mine and the Carajás iron ore mine expansion for 70 million tons per year were concluded. In addition to these two projects, all the remaining expansion projects in the iron ore and alumina businesses are supported by medium and long-term supply contracts.

Status of the main ongoing projects

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SELECTED FINANCIAL INDICATORS FOR THE MAIN AFFILIATES AND JOINT VENTURES

Selected financial indicators for the Company’s main non-consolidated affiliates and joint ventures are available on CVRD’s Quarterly Financial Statements, on the Company’s website, www.cvrd.com.br, investor relations.

CONFERENCE CALL/WEBCAST

On Friday, August 13, CVRD will be holding a conference call/webcast at 12:00 pm, local time (Rio de Janeiro, Brazil), 11:00 am United States Eastern Standard Time and 4:00 pm British Standard Time. Instructions to participate in these events are available on CVRD’s website, www.cvrd.com.br, investor relations. A recording of CVRD’s conference call/webcast will be available for a period of 90 days after August 13, 2004.

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US GAAP

17

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APPENDIX

Reconciliation of “non-GAAP” information with corresponding US GAAP figures

(1) Adjusted EBIT

(2) Adjusted EBITDA

The term “EBITDA” refers to a financial measure that is defined as earnings (losses) before interest, taxes, depreciation and amortisation; we use the term “Adjusted EBITDA” to reflect that our financial measure also excludes monetary gains/losses, equity in results of affiliates and joint ventures less dividends received from those companies, changes in provision for losses on equity investments, adjustments for changes in accounting practices, minority interests and non-recurring expenses. However, Adjusted EBITDA is not a measure determined under GAAP in the United States of America and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA should not be construed as a substitute for operating income or as a better measure of liquidity than cash flow from operating activities, which are determined in accordance with GAAP. We have presented Adjusted EBITDA to provide additional information with respect to our ability to meet future debt service, capital expenditure and working capital requirements. The following schedule reconciles Adjusted EBITDA to net cash provided by (used in) operating activities reported on our Consolidated Statements of Cash Flows, which we believe is the most directly comparable GAAP measure:

(3) Gross Debt / last 12 months’ Adjusted EBITDA

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(4) Net Debt

(5) LTM Adjusted EBITDA / LTM interest expenses

(6) Gross Debt / Enterprise Value

Entreprise Value = net debt + market capitalization

“This communication may include declarations which represent the expectations of the Company’s Management about future results or events. All such declarations, when based on future expectations and not on historical facts, involve various risks and uncertainties. The Company cannot guarantee that such declarations turn out to be correct. Such risks and uncertainties include factors relative to the Brazilian economy and capital markets, which are volatile and may be affected by developments in other countries; factors relative to the iron ore business and its dependence on the steel industry, which is cyclical in nature; and factors relative to the high degree of competitiveness in industries in which CVRD operates. To obtain additional information on factors which could cause results to be different from those estimated by the Company, please consult the reports filed with the Comissão de Valores Mobiliários (CVM — Brazilian stock exchange regulatory authority) and the U.S. Securities and Exchange Commission — SEC, including the most recent Annual Report — CVRD Form 20F.”

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COMPANHIA VALE DO RIO DOCE
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION

F-1

Report of Independent Registered Public Accounting Firm

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

We have reviewed the accompanying unaudited condensed consolidated balance sheet of Companhia Vale do Rio Doce and subsidiaries as of June 30, 2004, and the unaudited condensed consolidated statements of income, of cash flows and of changes in stockholders’ equity for the three-month periods ended June 30 and March 31, 2004 and June 30, 2003 and for the six-month periods ended June 30, 2004 and 2003, respectively. This interim financial information is the responsibility of the Company’s management. The unaudited financial information of certain affiliates, the equity in earnings which total US$ 9 million and US$ 19 million for the three and six-month periods ended June 30, 2003, respectively were reviewed by other independent accountants whose reports thereon have been furnished to us.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews and the reports of the other accountants, we are not aware of any material modifications that should be made to the condensed consolidated interim financial information referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Companhia Vale do Rio Doce and subsidiaries as of December 31, 2003, and the related consolidated statements of income, of change in stockholders’ equity, and cash flows for the year then ended (not presented herein) and in our report dated February 20, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

As discussed in Note 4 to the financial statements, the Company changed its method of accounting for asset retirement obligations, as from January 1, 2003 and, as discussed in Note 5 to the financial statements, the Company also changed its accounting policy for consolidation of variable interest entities as from January 1, 2004.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
August 6, 2004

F-2

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars

F-3

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

(Continued)

See notes to condensed consolidated financial information.

F-4

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