Rio Tinto: Modelling Rio Tinto Alcan

16 January 2008

Modelling Rio Tinto Alcan

Following Rio Tinto’s successful acquisition of Alcan Inc. (“Alcan”) in the fourth quarter of 2007, Rio Tinto will report its 2007 full year financial results inclusive of Alcan with effect from 24 October 2007.

As an interim step, Alcan’s contribution to Rio Tinto’s 2007 full year financial results will be reported as a separate line in the financial information by business unit. Rio Tinto’s other aluminium businesses will be reported separately and in a format that is consistent with previous financial results announcements.

For 2008 and beyond, Rio Tinto intends to report Rio Tinto Alcan as three separate business units – Bauxite & Alumina, Primary Metal and Engineered Products. The Packaging business unit will be classified for accounting purposes as an asset held for sale. As previously announced on 26 November 2007, the Group is exploring options for the divestment of the Engineered Products business unit taking into account broad stakeholder interests.

Salient points

. Annual post tax synergies of $940 million are expected from the end of 2009*.
. Estimated $372 million pre-tax interest cost in respect of the $40 billion Alcan acquisition facility for the period to 31 December 2007.
. Rio Tinto is continuing with the sale process for the Packaging business and is exploring options for the divestment of Engineered Products as part of the overall $15 billion asset divestment target. $10 billion of this total is targeted for 2008.
. Packaging will be shown as an asset held for sale in the 2007 accounts.
. The approximate long-term effective tax rate on underlying earnings for Rio Tinto Alcan, before one-off items and excluding the impact of foreign exchange rate movements, is expected to be 31%.

This release provides some clarification on key issues relating to the modelling of Rio Tinto Alcan assets.

The financial information contained in this release is unaudited.

It should be noted that the provisional values for the purchase price adjustments incorporated in the 2007 financial statements will be subject to revision within 12 months of the date of acquisition as permitted by the relevant accounting standard, IFRS 3, “Business Combinations and Goodwill”.

* Further analysis of the $940 million synergies was provided at the 26 November 2007 Investor Seminar, available on the Rio Tinto website.

All dollars are US dollars unless otherwise stated.

A full copy of the press release is also available on the Rio Tinto website: www.riotinto.com/media

High resolution photographs available at Newscast www.newscast.co.uk

Rohini Meisuria
Adviser – Digital Communications
Communications and External Relations