Iron Ore Miner CVRDs 4th-Quarter Profit Up 28 Percent; 2006 Profit Soars 29 Percent

Profits at CVRD, the world’s largest iron ore miner, soared 28 percent in the fourth quarter amid seemingly insatiable global demand for the raw ingredient used to make steel, the company said Wednesday. The miner’s profits for all of 2006 rose 29 percent compared with the year before.

Companhia Vale do Rio Doce SA earned 3.4 billion Brazilian reals ($1.8 billion) in the October-December period, or 1.4 reals (66 cents) per share, compared with 2.6 billion reals ($1.2 billion), or 1.2 reals (57 cents) per share, in the same period a year ago.

The result, however, fell short of CVRD’s record quarterly earnings posted in the third quarter of 2006, when profits hit 4 billion reals ($1.9 billion), skyrocketing 47 percent compared with the same period a year earlier.

For all of 2006, profits were 13.4 billion reals ($6.7 billion) compared with 10.4 billion reals ($5 billion) for 2005. On a per share basis, CVRD earned 5.56 reals ($2.65) in 2006 compared to 4.54 reals ($2.16) in 2005.

Revenue surged 81 percent to 16.7 billion reals ($7.9 billion) during the quarter, compared with 9.2 billion reals in the fourth quarter of 2005. Annual revenues for 2006 stood at 46.7 billion reals ($22.1 billion), up from 35.4 billion reals in 2005.

CVRD has benefited handsomely from iron ore price increases it managed negotiate with global steel makers due to crushing demand, much of it from China.

The company last year purchased Canada’s Inco Ltd., the world’s second largest nickel miner, for $16.8 billion. And last month, CVRD announced it will buy Australia’s AMCI Holdings Australia Pty for $661 million in cash, moving to boost its presence in coal mining.

The purchase of Inco made the Brazilian company the world’s second-largest mining company, after Anglo-Australian BHP Billiton Ltd. Nickel is used in everything from stainless steel to cell phone batteries, and analysts praised the deal for helping to diversify CVRD.

CVRD said its purchase of AMCI is aimed at continuing the company’s drive to diversify its mining operations.

The company’s American depository shares rose 14 cents, or 0.4 percent, to $34.27 on the New York Stock Exchange before the results were announced Wednesday.