Dec. 27, 2006 — Companhia Vale do Rio Doce (CVRD) has concluded its iron ore price negotiations for 2007 with Baosteel Group Corp.

As a result of the negotiations, iron ore prices for Carajas (SFCJ) and Southern System fines (SSF), FOB Ponta da Madeira and Tubarao, respectively, increased by 9.5% relatively to the 2006 reference prices. The new reference prices, on a dry metric ton (dmt) basis, are US$ 0.7320 per Fe unit for the SFCJ and US$ 0.7211 per Fe unit for the SSF.

These negotiations mark the first time in history that the benchmark prices have been settled with Baosteel, representing all the Chinese steelmakers. In 2006, CVRD became the largest individual iron ore supplier to China, a reflection of the company’s long-term commitment to the development of China’s steel industry. CVRD says the 2007 prices, which reflect global iron ore market conditions, were reached in a considerable speed as a result of a professionally driven negotiation.

CVRD notes that it reinforces its commitment with clients, investing a significant amount of resources in increasing production capacity. Despite the sharp rise of investment costs, the company has increased its iron ore production by 52 million tons over the last several years, reaching a total output of approximately 263 million tons in 2006 and targeting an expected production of 300 million tons in 2007. CVRD says it will continue to invest in order to continue to meet industry needs for high quality iron ore in the near future.

Companhia Vale do Rio Doce (CVRD) is the world's largest iron ore producer. Baosteel Group is the largest steelmaker in China, the country that produced largest volume of steel in the world in 2006.