Companhia
     Vale do Rio Doce




    Pursuing long-term
          value growth
                         Dublin, May 2007
1
Disclaimer

    ”This
    ”This presentation
             presentation may
                            may contain
       ...
Agenda




      A multilane road to value

      creation

      Continuous improvement

      Growth outlook remains str...
A multilane road to value creation




4
Over the last years we delivered 20 major
    projects creating new platforms of value
    creation                       ...
Portfolio management has been an
    important source of value creation
                           2000-2006

            ...
Coal, our newest growth platform

     Investment in coal is consistent with our growth and
                              ...
Redefining market boundaries in
    iron ore
    We intend to become a player in the Chinese domestic market
             ...
Continuing to develop options for
    profitable growth



       An all-time high capex budget (revised) of US$

       7...
An exciting project portfolio is under
     development
     Iron ore & pellets
      Carajás
      Fazendão Bauxite & Alu...
A new execution strategy was developed
     for Goro

      Focus on risk management of political,
      environmental, te...
Goro is a long-term growth platform

       One of the best nickel deposits in the world:
       120 million metric tons o...
The pursuit of discipline in capital
     allocation pays off: pre-tax ROIC stays
     above 50% Return on capital investe...
As a consequence we became the world’s
         second largest metals & mining
         company…
                         ...
… with a global base of world-class assets


               Asset base                        Asset portfolio
            ...
… and a global footprint




16
Continuous improvement




17
Record year to date sales underpinned by
     strong demand growth
                                                       ...
High performance leveraged by asset
     portfolio diversification


                                       Adjusted EBIT ...
Net earnings remain on a strong upward
      trend for the fifth year

                                                 LT...
Twenty consecutive quarters of EBITDA
       growth

                    Composition
                                     ...
One of our priorities: a battle against
     rising costs. Winning another round
                                         ...
Growth outlook remains strong




23
The global economy remains on track for
     continued robust growth in 2007/2008

                             Global GDP...
We revised our medium-term forecast for
     iron ore seaborne demand: a stronger
     growth is expected
                ...
There is a structural change in nickel
     supply

        Current production depends on nickel sulphide

        deposit...
Medium term view of nickel demand

      China will drive global stainless steel production increase
      with India also...
We are increasing production to meet
     demand growth from our clients

                                                ...
CVRD – A global leader




               www.cvrd.com.br
                e-mail: rio@cvrd.com.br
29
Upcoming SlideShare
Loading in …5
×

CVRD Company Presentation, May 2007

1,516 views

Published on

Published in: Business, Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,516
On SlideShare
0
From Embeds
0
Number of Embeds
34
Actions
Shares
0
Downloads
129
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

CVRD Company Presentation, May 2007

  1. 1. Companhia Vale do Rio Doce Pursuing long-term value growth Dublin, May 2007 1
  2. 2. Disclaimer ”This ”This presentation presentation may may contain contain statements that that express statements express management’s expectations about future events or results rather than management’s expectations about future events or results rather than historical facts. These forward-looking statements involve risks and historical facts. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from uncertainties that could cause actual results to differ materially from those projected in forward-looking statements, and CVRD cannot give those projected in forward-looking statements, and CVRD cannot give assurance that such statements will prove correct. These risks and assurance that such statements will prove correct. These risks and uncertainties include factors: relating to the Brazilian and Canadian uncertainties include factors: relating to the Brazilian and Canadian economies and securities markets, which exhibit volatility and can be economies and securities markets, which exhibit volatility and can be adversely affected by developments in other countries; relating to the adversely affected by developments in other countries; relating to the iron ore and nickel businesses and their dependence on the global iron ore and nickel businesses and their dependence on the global steel industry, which is cyclical in nature; and relating to the highly steel industry, which is cyclical in nature; and relating to the highly competitive industries in which CVRD operates. For additional competitive industries in which CVRD operates. For additional information on factors that could cause CVRD’s actual results to differ information on factors that could cause CVRD’s actual results to differ from expectations reflected in forward-looking statements, please see from expectations reflected in forward-looking statements, please see CVRD’s reports filed with the Brazilian Comissão de Valores Mobiliários CVRD’s reports filed with the Brazilian Comissão de Valores Mobiliários and the U.S. Securities and Exchange Commission.” and the U.S. Securities and Exchange Commission.” 2
  3. 3. Agenda A multilane road to value creation Continuous improvement Growth outlook remains strong 3
  4. 4. A multilane road to value creation 4
  5. 5. Over the last years we delivered 20 major projects creating new platforms of value creation Carajás 100 Mtpa Capão Taquari- São Luís Mo I Rana Brucutu Xavier Vassouras Pier III Fábrica Capim Trombetas PDM Nova Branco I 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 Carajás 85 Mtpa Alunorte 3 Sossego Aimorés Alunorte 4&5 Carajás Funil Candonga Capim 70 Mtpa Branco II Paragominas 5
  6. 6. Portfolio management has been an important source of value creation 2000-2006 Acquisitions: US$ 25.4 billion Growth Consolidation plataform in of iron ore Becoming a coal leadership global leader in nickel Divestitures of non-core assets US$ 3.6 billion - Unlocking value - Improving capital allocation 6
  7. 7. Coal, our newest growth platform Investment in coal is consistent with our growth and growth and diversification strategy, supported by a strong long-term diversification strategy, supported by a strong long-term outlook on coking and thermal coal coking and thermal coal Acquisition of AMCI Australia for US$ 656 million provides ongoing operations, experience in coal mining & marketing mining & marketing and diversification into one of the best geographies diversification into one of the best geographies Projects Projects – Moatize, Mozambique – to be approved – Moatize, Mozambique – to be approved – Belvedere, Australia – pre-feasibility – Belvedere, Australia – pre-feasibility JVs – Longyu, China – anthracite coal – Longyu, China – anthracite coal – Yankuang, China – coke & coking coal – Yankuang, China – coke & coking coal 7
  8. 8. Redefining market boundaries in iron ore We intend to become a player in the Chinese domestic market to become a player focusing on a new customer segment Our strategy is supported by: A massive increase in iron ore capacity to 450 million mtpy in 2011 from 300 million in 2007, to meet the rising meet the rising demand from current clients and the new segment the new segment Distribution centers and blending capacity at Chinese ports Distribution centers and blending A dedicated Brazil-China shuttle line serviced by very large line serviced by very large ore carriers under long-term contracts of afreightment, which will contribute to reduce average level and volatility of freight rates 8
  9. 9. Continuing to develop options for profitable growth An all-time high capex budget (revised) of US$ 7.4 billion for 2007 US$ 5.4 billion allocated to organic growth US$ 4.9 billion allocated to projects 9
  10. 10. An exciting project portfolio is under development Iron ore & pellets Carajás Fazendão Bauxite & Alumina Itabiritos Paragominas II Samarco Alunorte 6 & 7 Nickel Onça Puma Goro Copper Vermelho 118 Voisey’s Bay Salobo I Coal Moatize 10
  11. 11. A new execution strategy was developed for Goro Focus on risk management of political, environmental, technological and operational factors CVRD´s proactive relationship with communities and pollution control technology transferred to Goro Key technical parameters resetted to reduce risks A new team with a focus on discipline on execution 11
  12. 12. Goro is a long-term growth platform One of the best nickel deposits in the world: 120 million metric tons of P&P reserves @ 1.48% Ni, 0.11% Co Strategic positioning to meet Asian demand growth Low cost incremental production of nickel Capex of US$ 3.2 billion. Estimated production of 60,000 mtpy of nickel and 4,600 mtpy of cobalt to be commissioned in 4Q08 12
  13. 13. The pursuit of discipline in capital allocation pays off: pre-tax ROIC stays above 50% Return on capital invested Return on capital invested 1 1 35.8 Capital invested (US$ billion) 35.8 Capital invested (US$ billion) 64.4% 64.4% 2 31.2 2 31.2 ROIC (%) ROIC (%) 54.7% 54.3% 54.7% 54.3% 53.4% 53.4% 46.8% 46.8% 11.1 11.1 7.5 7.5 5.4 5.4 3 3 3 1T07 3 3 2003 2004 2005 2006 2003 2004 2005 2006 1T07 ¹ PP&E + working capital + R&D ¹ PP&E + working capital + R&D 2 before income taxes 2 before income taxes 13 3 excludes effect of extraordinary inventory adjustments 3 excludes effect of extraordinary inventory adjustments
  14. 14. As a consequence we became the world’s second largest metals & mining company… TSR 2001-06, 42.7% p.a. Dec 31, 2001 May 4, 2007 Dec 31, 2001 May 4, 2007 160 40 160 40 BHPB BHPB 150 150 US$ 101.2 billion US$ 101.2 billion 140 140 ALCOA ALCOA RIO TINTO RIO TINTO BHPB BHPB 130 130 30 120 30 120 RIO TINTO CVRD RIO TINTO CVRD 110 110 ANGLO ANGLO ANGLO US$ 9.2 billion ANGLO US$ 9.2 billion 100 100 90 90 80 XSTRATA 20 80 XSTRATA 20 70 70 AMPLATS AMPLATS NORILSK NORILSK 60 BARRICK ALCAN 60 BARRICK ALCAN FREEPORT FREEPORT AMPLATS AMPLATS BARRICK CVRD BARRICK ANGLOGOLD CVRD ALCOA ANGLOGOLD 50 ALCOA 50 NEWMONT NEWMONT 40 10 40 10 30 30 20 20 10 10 0 0 0 0 14
  15. 15. … with a global base of world-class assets Asset base Asset portfolio by geography Iron ore & Iron ore & pellets pellets RoW RoW Australia Australia 3% 3% Manganese Manganese Nickel Nickel 2% & 2% & ferroalloys ferroalloys Europe Europe 3% 3% Brazil Brazil Bauxite, Bauxite, 60% 60% Asia Asia alumina & alumina & CVRD Coal CVRD Coal 5% aluminum 5% aluminum Potash & Potash & Copper Copper kaolin kaolin North America North America 27% 27% Logistics Logistics 15
  16. 16. … and a global footprint 16
  17. 17. Continuous improvement 17
  18. 18. Record year to date sales underpinned by strong demand growth 1Q Records YoY 000´metric tons YoY 1Q07 change 1Q07 Iron ore 58,626 1.1% Iron ore 58,626 1.1% Pellets 7,939 34.7% Pellets Finished nickel 71 10.8% Finished nickel 71 10.8% Copper 66 28.8% Copper 66 28.8% Alumina 700 38.9% Alumina 700 38.9% Aluminum 134 19.6% Aluminum 134 19.6% Potash 161 56.3% Potash 161 56.3% Cobalt (tons) 580 19.3% Cobalt (tons) 580 19.3% Railroad cargo¹ 6,035 4.4% Railroad cargo¹ 6,035 4.4% 1 1 general general cargo transportation measured in net ton kilometers (ntk) cargo transportation measured in net ton kilometers (ntk) 18
  19. 19. High performance leveraged by asset portfolio diversification Adjusted EBIT margin 2005 2006¹ 1Q07² Ferrous minerals 49.7% 47.3% 50.9% Non-ferrous minerals 23.7% 47.3% 52.2% Aluminum 31.7% 39.5% 39.1% Logistics 22.4% 28.9% 28.3% Total 42.5% 43.7% 49.2% 1 1 pro pro forma and excluding extraordinary effect of inventory adjustment forma and excluding extraordinary effect of inventory adjustment ² excluding extraordinary effect of inventory adjustment ² excluding extraordinary effect of inventory adjustment 19
  20. 20. Net earnings remain on a strong upward trend for the fifth year LTM net earnings 8.8 8.8 US$ billion 7.1 7.1 6.2 6.2 5.6 5.6 5.3 5.3 4.8 4.8 4.4 4.4 4.0 4.0 2.9 2.9 2.6 2.6 2.1 2.1 1.8 1.8 1.6 1.6 1.6 1.5 1.6 1.5 1.2 1.2 0.8 0.8 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06¹ 1Q07¹ 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06¹ 1Q07¹ ¹ excluding excluding extraordinary effect of inventory adjustment extraordinary effect of inventory adjustment ¹ 20
  21. 21. Twenty consecutive quarters of EBITDA growth Composition LTM adjusted EBITDA 1Q071 US$ billion 12.5 12.5 Ferrous minerals Ferrous minerals Logistics Logistics 42.8% 42.8% 2.9% 2.9% 10.1 10.1 Aluminum Aluminum 8.3 8.3 7.1% 7.1% 7.2 7.3 7.2 7.3 6.5 6.5 5.8 5.8 Non-ferrous Non-ferrous 5.0 5.0 minerals minerals 47.1% 47.1% 4.0 4.0 3.7 3.7 3.3 3.3 2.9 2.9 2.4 2.4 2.1 2.1 1.8 1.8 1.9 2.0 1.9 2.0 1.5 1.6 1.7 1.8 1.8 1.5 1.6 1.7 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06¹ 1Q07¹ 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06¹ 1Q07¹ 1 excluding extraordinary effect of inventory adjustment 1 excluding extraordinary effect of inventory adjustment 21
  22. 22. One of our priorities: a battle against rising costs. Winning another round US$ million US$ million Adjusted COGS1 variation 74 74 (73) (73) (72) (72) 3,091 3,091 3,020 3,020 ER change Volume Cost reduction 4Q06 1Q07 1 COGS less depreciation charges,, excluding inventory adjustment 1 COGS less depreciation charges excluding inventory adjustment 22
  23. 23. Growth outlook remains strong 23
  24. 24. The global economy remains on track for continued robust growth in 2007/2008 Global GDP growth 5.4% 5.4% 5.3% 5.3% 4.9% 4.9% 4.8% 4.8% 4.5% 4.5% 4.5% 4.5% 4.2% 4.2% 4.1% 4.1% 4.0% 4.0% 3.7% 3.6% 3.7% 3.6% 3.1% 3.1% 2.8% 2.8% 2.5% 2.5% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E Source: IMF and CVRD Source: IMF and CVRD 24
  25. 25. We revised our medium-term forecast for iron ore seaborne demand: a stronger growth is expected Global seaborne demand million metric tons million metric tons 1,010 1,010 China RoW China RoW 790 790 725 725 670 670 465 603 465 603 537 537 452 484 452 484 410 410 405 405 400 400 395 395 389 389 372 372 360 545 360 545 380 380 320 320 270 270 208 208 148 148 112 92 112 92 2001 2002 2003 2004 2005 2006 2007E 2011E 2001 2002 2003 2004 2005 2006 2007E 2011E World China RoW CAGR 2001-06 9.9% 28.3% 2.4% CAGR 2006-11E 6.9% 11.2% 2.8% 25
  26. 26. There is a structural change in nickel supply Current production depends on nickel sulphide deposits => lower costs, well known technology Production expansion is dependent on nickel laterites => higher cost, technological and operational challenges New projects ramping up only in 2009-2011 26
  27. 27. Medium term view of nickel demand China will drive global stainless steel production increase with India also growing fast also growing fast Solid demand growth from aerospace, energy demand growth from aerospace, energy Substitution of high Ni steels (300 series) to less Ni content Substitution of high Ni steels (300 series) to less Ni content (200 series) or no Ni (400 series) limited by technology, series) or no Ni (400 series) limited by technology, costs of substitutes and costs for consumers to change costs for consumers to change specifications and production equipment equipment NiCr pig iron production increase lessens incentives to NiCr pig iron substitution but also faces several challenges: costs, quality, challenges: costs, quality, high energy consumption and environmental problems and environmental problems 27
  28. 28. We are increasing production to meet demand growth from our clients Production 2006 2007E ∆% Iron ore 264Mt 300Mt 13.6 Nickel¹ 251kt 287kt 14.3 Alumina 3.9Mt 4.4Mt 12.8 Aluminum 550kt 550kt - Copper 267kt 297kt 11.2 ¹ includes volumes produced based on nickel concentrates purchased from third parties and ¹ includes volumes produced based on nickel concentrates purchased from third parties and processed under toll smelting and refining arrangements. 28 processed under toll smelting and refining arrangements.
  29. 29. CVRD – A global leader www.cvrd.com.br e-mail: rio@cvrd.com.br 29

×