Brazilian mining giant Companhia Vale do Rio Doce (RIO), or CVRD, reported its best quarterly earnings performance in the company's history, fueled by the full consolidation of CVRD's acquisition of Canadian nickel miner Inco, the company said in a statement late Thursday.

CVRD, the world's largest producer and exporter of iron ore and iron pellets, said first-quarter net profit more than doubled to 5.1 billion Brazilian reals ($2.5 billion), up from BRL2.2 billion in the same quarter a year ago.

CVRD said the record results were due to the company's efforts to take advantage of the current peak in the mining and metals sectors through organic growth and acquisitions.

"These efforts have resulted in strong expansion of the company's production capacity and greater diversification of its mineral portfolio that, among other things, has permitted the company to increase its exposure to the current economic cycle," CVRD said in the statement.

The company, which is also the world's second-largest nickel producer, said revenue for the quarter also doubled to BRL16.6 billion from BRL8.3 billion.

In no area was CVRD's diversification more evident than in the company's nonferrous metals segment, which consolidated for the first time a full quarter of base metals unit CVRD Inco.

Driven by record-high nickel prices on the London Metals Exchange, nonferrous metals accounted for 43% of CVRD's gross revenue. It was the first time in the company's history that nonferrous metals topped iron ore, the company's primary product, in terms of revenue. Iron ore sales accounted for 40.7% of CVRD's first-quarter revenue.

In addition, earnings before interest, taxes, depreciation and amortization, or Ebitda, more than doubled to BRL8.9 billion in the first quarter, up from BRL3.8 billion in the year-ago period. The margin on earnings before interest and taxes, or Ebit, increased to 49.7% in the first quarter from 40.7%.

CVRD said demand in the first quarter continued to be driven by China, which posted its fifth consecutive quarter of economic growth higher than 10%.

China imported iron ore at an annual rate of 418 million metric tons in the first quarter, a volume 28% higher than imports of 326 million tons a year earlier, CVRD said.

The Asian giant was CVRD's No. 1 customer in the first quarter, receiving shipments of 33 million metric tons of iron ore, or 50.4% of the company's exports.

CVRD sold 65.373 million metric tons of iron ore and iron pellets in the first quarter, up 4.4% from 62.627 million tons in the year-ago quarter.

The company has boosted sales volumes in recent quarters after a series of new mines and expansion projects came on line last year.

However, heavy seasonal rains crimped production from the record levels seen in the first quarter, CVRD said. The first quarter is typically the company's worst for production because of seasonal effects.

CVRD produced 65.645 million metric tons of iron ore in the first quarter, up 8.4% from 60.56 million tons in the year-ago quarter.

Pellet production advanced 21.3% in the first quarter to 4.175 million metric tons, up from 3.443 million tons in the same period a year ago. However, production at the company's Sao Luis pellet plant was temporarily halted in the first quarter last year, skewing the year-ago production figures.

In the first quarter of 2006, the company shut down the Sao Luis plant for maintenance and to shift iron ore fines destined for pellet production to export markets. Normal pellet production resumed in August 2006.

Nickel production rose 4.6% in the first quarter to 61,400 metric tons, up from a pro-forma 58,700 tons in the first quarter of 2006.

CVRD said nickel output in the first quarter was undermined by maintenance stops at two mines in Canada and a lack of rain that affected energy supplies in Indonesia. The company expects to produce 270,200 metric tons of nickel in 2007 and process an additional 16,500 tons acquired from third-party concentrate purchases and tolling contracts.

The consolidation of CVRD Inco also boosted copper output, which is a byproduct of nickel production, as well as improved operations at the company's Sossego mine in Brazil. CVRD produced 77,400 metric tons of copper in concentrate in the first quarter, up 35.1% from 57,300 tons in the year-ago quarter.

The company's efforts to diversify its mineral portfolio also continued to bear fruit in the aluminum production cycle, despite licensing woes that delayed the start of operations at the company's new Paragominas bauxite mine.

CVRD produced 1.731 million metric tons of bauxite at its Trombetas mine, up 4% from 1.665 million tons in the year-ago period. However, commissioning of the Paragominas mine, which is expected to produce 5.5 million tons annually, was delayed until March, CVRD said.

Production at Paragominas, which is in northern Brazil's Para state, started in April, the company said.

Alumina output surged 34.3% to 978,000 metric tons in the first quarter, despite the delays at Paragominas and a ship accident that affected bauxite deliveries from Trombetas, CVRD said. In addition, the Alunorte refinery also suffered energy shortages during summer hours. The refinery is expected to return to normal operations in the second quarter.

CVRD's shares ended 3.1% higher at BRL73.09 Thursday on the Brazilian Stock Exchange, or Bovespa. The company's American depositary receipts, which are listed on the New York Stock Exchange, closed up 2.7% at $42.77.