0 0 Ferrous Minerals The Iron Ore Market & CVRD’s Long Term Commitment to the Steel Industry MINING LOGISTICSCVRD ENERGY 2nd International Meeting on Ironmaking 1st International Symposium on Iron Ore September , Vitória - Espírito Santo – Brazil

1 1 Ferrous Minerals The largest diversified mining company of the Americas CVRD World Class Assets Manganese and Ferro-alloys Ferro-alloys Iron Ore and Pellets Logistics Logistics Aluminium Bauxite, Alumina and Aluminium Aluminium Copper, Gold and Nickel SteelSteel Industrial Minerals Kaolin and Potash Industrial Minerals Kaolin and Potash

2 2 Ferrous Minerals Sources of Cash Generation E The Ferrous Minerals business is and will continue to be CVRD’s largest revenue generator

3 3 Ferrous Minerals Sepetiba Northern System Pelletizing Plant São Luís 6 Mtpa Reserves of Carajás 1.5 billion tons Carajás Railroad 892 km Ponta da Madeira Port 70 Mtpa Southern System Pelletizing Complex 30 Mtpa Reserves CVRD Minas Gerais State 3.4 billion tons Vitória to Minas Railroad 905 km Tubarão+ Sepetiba Ports 100 Mtpa Urucum 1 Mtpa Produc.Cap. (Mtpa)2003 IOPelletsSales (Mt) Samarco50Brazil21416 MBR60Brazil36- GIIC50Bahrain-44 Localization% CVRD Flexibility & Reliability CVRD can produce & deliver fines, pellets and lump from both systems

4 4 Ferrous Minerals CVRD´s contribution to the Brazilian economy recovery n nInvestments of US$ 1.8 billion in 2004 n nAnnualized exports of US$ 4 billion in 1Q04 - nearly 15% of total Brazilian trade balance surplus. CVRD Exports (US$ million)

5 5 Ferrous Minerals The ‘soft landing’ of the Chinese economy has not been translated into steel production. There has been no landing at all! Chinese crude steel production Chinese Crude Steel Production Source: Deutsche Bank (Basic Materials Chartbook, 30/07/04) Mt

6 6 Ferrous Minerals   Finished steel consumption in China may reach 275 Kg/cap by 2010 Steel consumption in China shows a strong potential for growth 179 Kg per capita 2003 Source: IISI, CVRD Steel Consumption Kg... Finished steel consumption per capita - China

7 7 Ferrous Minerals CHINA: Yesterday Pudong

8 8 Ferrous Minerals CHINA: Now Pudong

9 9 Ferrous Minerals The China Factor China is the key driver of global iron ore trade   Steel production is growing at a rapid rate.   Seaborne iron ore demand is growing at an even higher pace.   China’s requirement of high quality fines and pellets is increasing due to its need for: – – Higher productivity; – – Efficiency gains; – – Improvements in steel product quality; – – Lower emissions.   China is committed to infrastructure development.   Improvements have been made that provide the conditions to receive larger volumes of Brazilian ore more efficiently.

10 Ferrous Minerals Iron Ore seaborne demand should maintain a higher growth rate than steel and pig iron production Sources: Pig Iron/Steel Production: IISI; IO seaborne: Fearnleys (f) Forecasts: CRU and CVRD 1992 = 100 Seaborne Iron Ore Demand...

11 Ferrous Minerals Source: CVRD Seaborne Iron Ore Demand Between 2003 and 2010, seaborne iron ore demand will grow 5% p.a. and China will account for 90% of this growth CAGR % +17.6% +1.3% Rest of the World China World (Mt) China´s share in world seaborne trade ´02 23% ´02 23% ´03 28% ´03 28% ´04E 31% ´04E 31% ´10E 45% ´10E 45% ´05E 34% ´05E 34%...

12 Ferrous Minerals Brazilian Steel Market Trends Brazilian steel sector is on course to lift its crude steel capacity to 40 Mtpa by 2007 from the current 34 Mtpa. Source: Credit Suisse First Boston, Aug2004 Source: IBS (Instituto Brasileiro de Siderurgia) Crude Steel Mt CVRD is investing to comply with the need of the steel industry

13 Ferrous Minerals Investment Capability is Key From 2000 to 2003, CVRD total investment reached US$ 6 billion. US$ 3.8 billion, representing 63% of the total amount, were dedicated to the iron ore business. E - Budgeted Source: CVRD CVRD Capex US$ million 1,602 1, ,988 1,815 Iron Ore Capex = Acquisitions + Organic growth 1,2301,

14 Ferrous Minerals from tostart-up Capex US$ per ton million tons per year CVRD is investing in iron ore capacity expansion to meet growing Brazilian and global seaborne demand Iron Ore Capacity Expansion Carajás Carajás Itabira Brucutu I Brucutu II n.a. Fábrica Nova I Fábrica Nova II Fazendão Total Capex* : US$ 706 million * Excludes Brucutu II Capex n.a.: not available

15 Ferrous Minerals Conclusion CVRD’s strategy is aligned with market needs   Investing to meet increasing demand;   Able to produce and to load iron ore products according to clients´ needs, focusing on value-in-use to customers;   Stability of supply of high quality iron ore in a changing resource base;   Long term contracts maximizing CVRD´s potential to optmize the steel industry value chain.

16 Ferrous Minerals CVRD The Iron Ore Company

17 Ferrous Minerals N4E N5 N4W Carajás N4E

18 Ferrous Minerals Carajás N5E N5N5-W N5-E N4W N4E

19 Ferrous Minerals Carajás N5W N4W N4E N5 N5-W

20 Ferrous Minerals Mining Brucutu

21 Ferrous Minerals Brucutu

22 Ferrous Minerals Fábrica Nova

23 Ferrous Minerals Fábrica Nova – Secondary Crusher Assembly

24 Ferrous Minerals Mining Fazendão