Rio Tinto and Alcan today announced they have reached an agreement for Rio
Tinto to make an offer to acquire all of Alcan’s outstanding common shares for US$101 per common share in a recommended, all cash transaction. The offer represents a total equity consideration for Alcan of approximately US$38.1 billion.

The offer represents a premium of 65.5 per cent to Alcan’s all time high closing share price of US$61.03 on 4 May 2007 prior to the Alcoa offer. It also represents a premium of 32.8 per cent to the value of Alcoa’s current offer of US$76.03, based on Alcoa’s closing share price on
11 July 2007.

The combined aluminium product group, to be named Rio Tinto Alcan, will be a new global leader in the aluminium industry with large, long life, low cost assets worldwide. The combined Group’s access to significant bauxite reserves, competitive alumina refining, low cost hydro power, leading smelter technology, and a deep and diverse talent pool provides an excellent position to capitalise on the favourable demand fundamentals of the aluminium industry. Rio Tinto Alcan will also have a strong portfolio of growth projects.

Commenting on the offer, Rio Tinto Chairman Paul Skinner said: “This transaction combines two leading and complementary aluminium businesses, and is a further step in Rio Tinto’s strategy of creating shareholder value through investing in high quality, large scale, low cost and long life
assets in attractive sectors.

We believe that Alcan, with its proven operating expertise and unique set of competitively positioned aluminium assets and power sources, will be an excellent complement to our existing diversified portfolio. It also adds to our significant presence in Quebec and Canada, where we have long standing operations in QIT-Fer et Titane, Iron Ore Company of Canada and
Diavik Diamond Mines. We are very pleased that the enlarged aluminium product group, Rio Tinto Alcan, will be headquartered in Montreal and led by the current Alcan chief executive officer, Dick Evans.”

Commenting on the attractiveness of the offer to Alcan shareholders,
Quebec and Canada, Alcan Chairman Yves Fortier said: “The agreed
transaction with Rio Tinto is the outcome of a rigorous and thorough
process conducted by the Alcan board. It achieves all of our stated goals,
providing clearly superior value to Alcan shareholders while remaining true
to our core values and obligations as responsible corporate citizens. In
addition to a very attractive all cash premium, this transaction offers
Alcan shareholders the certainty of a clear path to completion given our
relatively limited operational overlap and a commitment by both parties to
an expeditious close. Importantly, Rio Tinto has agreed to meet Alcan’s
existing business and social commitments to Quebec and Canada and the Alcan
board has therefore determined that the offer meets the terms of our
Continuity Agreement with the Government of Quebec.”
Tom Albanese, Rio Tinto chief executive, stated: “This transaction will
enable Rio Tinto’s shareholders to benefit from the quality of Alcan’s
organisation and asset portfolio, the favourable demand fundamentals of the
aluminium sector and the synergies and enhanced development opportunities
which the combination of our businesses will deliver. The acquisition will
be value enhancing to shareholders, and we expect it to be earnings and
cash flow per share accretive to Rio Tinto in the first full year. Rio
Tinto intends to retain its focus on mining and metals activities by the
divestment of Alcan’s Packaging division, as jointly agreed with Alcan. The
Engineered Products division will be retained with a focus on managing the
portfolio for optimum value.”
Dick Evans, Alcan’s president and chief executive officer, commented,
“With an attractive cost position bolstered by a strong technology
portfolio, complementary refining and smelting assets, and a strong growth
pipeline, the combination of Rio Tinto and Alcan will create a new global
leader in the aluminium industry. We are pleased to have achieved this
outstanding result for Alcan’s shareholders while being able to offer
compelling opportunities for our employees as part of an extremely strong,
diversified global organisation with an expanded presence in Montreal.
Alcan Packaging will have better opportunities for development and success
following its divestiture and we will ensure a smooth transition for all
involved. As we move ahead together, we will remain true to our shared
values, including commitments to the environment, health, safety and
sustainability, and our focus on creating value. I am personally delighted
and excited by the opportunity of leading the new larger aluminium group,
Rio Tinto Alcan.”
Excellent fit with Rio Tinto’s portfolio, strategy and value focus
Alcan has a high quality upstream asset portfolio with a sustainable
low cost position through its excellent access to long life hydro power. In
addition, the Alcan technology and hydro assets complement Rio Tinto’s
existing energy and climate change strategy, which is to position the Group
for a future in which carbon emissions will be constrained.
The transaction is expected to create a new global aluminium industry
leader in bauxite, alumina, power, aluminium and technology – with a strong
pipeline of attractive growth projects for the future. Rio Tinto Alcan
would be the largest global producer of aluminium and bauxite, based on
current production, with a defined pathway through the commissioning of
Gove and the committed expansion of Yarwun to becoming the largest producer
of alumina.
The acquisition of Alcan will position Rio Tinto to capitalise on the
strong demand fundamentals of the aluminium sector. The attractive physical
properties of aluminium have ensured its use in a wide range of
applications at all stages of economic development, including construction
and infrastructure development, transportation, and consumer goods and
packaging.
The offer is value enhancing to Rio Tinto shareholders based on Rio
Tinto’s rigorous project evaluation criteria. Rio Tinto expects the
acquisition to be earnings and cash flow per share accretive to Rio Tinto
in the first full year of consolidation.
Overall anticipated post tax synergies from the transaction are
expected to be around $600 million per year. The combination of the two
companies’ existing assets offers attractive opportunities to consolidate
ownership and achieve capital and operational efficiencies.
The geographical profile of the combined businesses will provide an
enhanced platform to exploit future global growth opportunities.
The increased overall size of Rio Tinto following the transaction will
provide the opportunity for a strategic review of all Rio Tinto assets
focusing on those which lack the long term competitive position to belong
in the larger Group.
Operations in Quebec/ Canada
Rio Tinto has been an investor in Quebec and Canada for decades and
currently has significant business activities in the Province of Quebec
(including QIT-Fer et Titane and Iron Ore Company of Canada), and the
Northwest Territories (Diavik Diamond Mines). In 2006, these assets
generated revenues of US$2.3 billion (representing nine per cent of Rio
Tinto’s gross revenues) and paid taxes of US$409 million (representing 11
per cent of total taxes paid by Rio Tinto). In 2006, Rio Tinto employed
approximately 4,300 people in Canada, with a significant number located in
Quebec.
Rio Tinto is committed to growing the combined Rio Tinto and Alcan
presence in Canada, particularly in the Provinces of Quebec and British
Columbia. In addition to headquartering the combined aluminium product
group in Montreal, Rio Tinto will maintain the product group’s aluminium
smelting technology research and development headquarters in Quebec. This
will involve the relocation of Rio Tinto Aluminium’s existing smelting
technology unit to Quebec.
In addition, Rio Tinto intends to locate one of its regional shared
service hubs in Montreal to support its enlarged asset base and operations
in Canada.
Operations in Australia
Rio Tinto recognises Australia’s strengths in bauxite extraction and
alumina refinery operations and project development. It is committed to
leveraging those strengths by locating the combined global Bauxite and
Alumina business and associated research and development activities in
Queensland. As Rio Tinto and Alcan’s assets in Australia are largely
complementary, it is expected that the merger and integration will provide
opportunities for cost synergies and revenue enhancement as a result of
expansion of Australian output.
Rio Tinto has a significant programme of capacity growth in place
following the recent announcement of the expansion at Rio Tinto’s Yarwun
alumina refinery, and the ongoing bauxite capacity expansion at Weipa.
Operations in France
Rio Tinto has had operations in France since the 1960s, and maintains a
research and development facility for its Diamonds and Minerals product
group in Toulouse. Rio Tinto recognises Alcan’s extensive presence in
France as well as France’s long history of expertise in research and
development in aluminium technology. Rio Tinto is committed to building
upon Alcan’s research and development capabilities in France, including
advanced smelter technology programmes, currently under development by Rio
Tinto Aluminium.
Common cultures
Rio Tinto and Alcan share demonstrated common values, including a
strong commitment to the principles of sustainable development, including
health and safety of employees, excellence in environmental stewardship and
positive engagement with local communities. Accordingly, Rio Tinto is
committed to creating the Rio Tinto Alcan foundation in Canada, which will
have an endowment of C$200 million built-up over a five year period. It
will replace Alcan’s existing practice of donating one per cent of pre-tax
profits to community, educational, cultural and charitable commitments.
Governance, management and employees
Rio Tinto holds Alcan’s organisation in high regard and the current
Alcan executive team will play a role in both the combined aluminium
business and the enlarged Rio Tinto Group. The current Alcan chief
executive officer, Dick Evans, will become chief executive of the combined
aluminium product group, Rio Tinto Alcan, based in Montreal and will report
directly to Rio Tinto’s chief executive, Tom Albanese. Alcan employees will
benefit from opportunities within the enlarged Rio Tinto Group, including a
stronger and more strategically positioned upstream aluminium business. Key
positions in Rio Tinto Alcan will be filled by people from both
organisations. The combination of the two organisations will afford Alcan
and Rio Tinto employees unparalleled opportunities to develop their
careers.
Rio Tinto will add three new members to its board: two non-executive
members of the Alcan board and Dick Evans as chief executive of the
aluminium product group. The size of the board will therefore increase on
closing from 13 to 16.
Rio Tinto intends to pursue the basis for a secondary listing of Rio
Tinto plc shares on the Toronto Stock Exchange.
Rio Tinto plans to establish a Canada Forum comprising the chairman,
chief executive, Canadian non-executive directors, other Canadian advisers
and senior executives based in Canada, including the chief executive of Rio
Tinto Alcan, to advise its board on Canadian economic, political and social
issues. This will be modelled on Rio Tinto’s comparable Australia Forum.
Given the increased importance of France in Rio Tinto’s portfolio which
will result from this transaction, Rio Tinto intends to appoint a suitably
qualified adviser from Alcan’s existing group of non-executive directors to
assist in relation to business developments in France.
Board of Alcan recommendation
The board of Alcan, after consulting with its financial and legal
advisors and the Strategic Committee of directors, has unanimously
recommended that Alcan shareholders should accept the offer. Morgan
Stanley, acting as lead financial advisor to the board of Alcan, has
provided a written opinion to the board of Alcan that the offer is fair,
from a financial point of view, to Alcan shareholders.
Support agreement
The support agreement between Rio Tinto and Alcan provides for a break
fee of US$1,049 million payable by Alcan to Rio Tinto in certain
circumstances, and of a break fee payable by Rio Tinto to Alcan in certain
circumstances equal to the lesser of US$1,049 million and one per cent of
the market capitalisation of Rio Tinto on the date such payment becomes
due. Separately, Rio Tinto or Alcan may become liable to pay expense
reimbursement of US$200 million to the other party in certain
circumstances. In addition, the agreement contains, among other things,
customary terms and conditions for an agreement of this nature, including a
non-solicitation provision, the right of notification should Alcan receive
a third party proposal and the right to match any proposal which the board
of Alcan deems superior.
Continuity agreement
A special feature of the proposed transaction is Alcan’s obligations
under the Continuity Agreement with the Quebec Government.
The Continuity Agreement was signed in 2006 when Alcan, the Government
of Quebec and Hydro Quebec agreed upon investments, loans, and further
water and power rights. Alcan then made an undertaking that it would
maintain its head office and principal place of business in Quebec and that
it would ensure that, in the event of a change of control, the acquirer
would maintain the same level and quality of commitments in Quebec to
socio-economic programmes and to regional development as then existed at
Alcan.
In such eventuality, a potential acquirer needs to demonstrate that, as
a result of the proposed transaction, there is no reasonable basis to
believe that there will be either a diminishment of Alcan’s commitment to
the economy and society of Quebec or a direct or indirect negative impact
on the economy and society of Quebec.
Rio Tinto has given assurances, evidence and commitments to the board
of Alcan and the Government of Quebec that Rio Tinto Alcan will maintain
its head office and principal place of business in Quebec together with the
same level and quality of commitments as now exist at Alcan.
Rio Tinto has demonstrated to the satisfaction of the board of Alcan
that the requirements of the Continuity Agreement have been met and is
notifying the Government of Quebec accordingly.
About the offer
Rio Tinto expects to file the offer and takeover bid circular
containing the full terms, conditions and other details of the offer with
the Canadian Securities regulatory authorities and the Securities and
Exchange Commission of the United States on or about 23 July 2007.
The offer is subject to a number of conditions including valid
acceptances of not less than 66 2/3 per cent of Alcan shares on a fully
diluted basis and the approval of Rio Tinto shareholders. The board of Rio
Tinto has approved the transaction and has undertaken to recommend the
transaction to its shareholders, at the time of mailing the shareholders
circular. The offer will also be subject to certain customary conditions
including receipt of necessary regulatory and antitrust approvals,
including in the United States, Canada, the European Union and Australia,
and the absence of material adverse changes or effects. The offer is
expected to close in the fourth quarter of 2007.
The offer will be made to holders in France of shares admitted to
trading on Euronext-Paris.
An announcement including the main information relating to Rio Tinto’s
offer documents will be prepared and released pursuant to article 231-24 of
the AMF General Regulation and will contain information relating to how and
the time period within which Alcan shareholders residing in France can
accept this offer.
The offer will be made to holders in Belgium of Alcan shares and/or
certificates admitted to trading on Euronext-Brussels (the “IDRs”). A
Belgian supplement, addressing issues specific to holders of shares and/or
IDRs in Belgium (the “Belgian Supplement”) is expected to be approved by
the Belgian Banking, Finance and Insurance Commission. Once such approval
has been obtained, the offer and takeover bid circular can be made
available in Belgium to holders of shares and/or IDRs together with the
Belgian Supplement.
Financing
The acquisition of Alcan will be financed by Rio Tinto through newly
committed bank facilities underwritten by The Royal Bank of Scotland,
Deutsche Bank, Credit Suisse, and Societe Generale. The offer will not be
conditional on financing. Rio Tinto’s goal is to maintain a single A
rating. The commitment to a progressive dividend policy will be maintained.
The existing Rio Tinto buyback programme will be discontinued.
About Rio Tinto
Rio Tinto is a leading international mining group headquartered in the
UK, combining Rio Tinto plc, a London listed company, and Rio Tinto
Limited, which is listed on the Australian Securities Exchange.
Rio Tinto’s business is finding, mining, and processing mineral
resources. Major products are aluminium, copper, diamonds, energy (coal and
uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc)
and iron ore. Activities span the world but are strongly represented in
Australia and North America with significant businesses in South America,
Asia, Europe and southern Africa.
The Group’s objective is to maximise the overall long term return to
shareholders through a strategy of investing in large, cost competitive
mines, driven by the quality of each opportunity, not the choice of
commodity.
Wherever Rio Tinto operates, the health and safety of its employees is
the first priority. The Group seeks to contribute to sustainable
development. It works as closely as possible with host countries and
communities, respecting their laws and customs and ensuring a fair share of
benefits and opportunities.
About Alcan
Alcan Inc. is a leading global materials company, delivering high
quality products, engineered solutions and services worldwide. With
operations in bauxite mining, alumina processing, primary metal smelting,
power generation, aluminium fabrication, engineered solutions as well as
flexible and specialty packaging, and with world class technology, Alcan is
well positioned to meet and exceed its customers’ needs. Alcan is
represented by 68,000 employees, including its joint ventures, in 61
countries and regions.
For the year ended 31 December 2006, Alcan had audited consolidated
revenues of US$23,641 million (2005: US$20,320 million), and profit before
taxation of US$2,373 million (2005: US$323 million). Alcan had audited
gross assets as at 31 December 2006 of US$28,939 million. The Alcan
financial information presented above has been extracted without material
amendment from published financial reports prepared under US GAAP.
Advisers and counsel
Deutsche Bank along with CIBC World Markets have acted as principal
advisers to Rio Tinto on the transaction. Rio Tinto has also taken some
advice from Credit Suisse and Rothschild. Rio Tinto’s legal advisers are
Linklaters LLP and McCarthy Tetrault LLP.
Alcan is being advised by Morgan Stanley, JP Morgan, UBS and RBC
Capital Markets, and legal counsel are Ogilvy Renault LLP and Sullivan &
Cromwell LLP.
Webcast details
There will be a presentation for analysts and investors in
UK/Europe/Australia at 10.00 BST which will be webcast live on Rio Tinto’s
website at http://www.riotinto.com.
There will also be a presentation for analysts and investors in North
America at 15.30 BST / 10.30 EST which will be webcast live on Rio Tinto’s
website at http://www.riotinto.com
Additional information

IMPORTANT INFORMATION:
Deutsche Bank AG is authorised under German Banking Law (competent
authority: BaFin – Federal Financial Supervising Authority) and with
respect to UK commodity derivatives business by the Financial Services
Authority; regulated by the Financial Services Authority for the conduct of
UK business. Deutsche Bank AG is acting exclusively for Rio Tinto plc and
no one else in connection with the Alcan acquisition and will not be
responsible to anyone other than Rio Tinto plc for providing the
protections afforded to clients of Deutsche Bank or for providing advice in
relation to the Alcan acquisition and/or any other matter referred to in
this announcement.
CIBC World Markets Inc. is acting exclusively for Rio Tinto in
connection with the Alcan acquisition and will not be responsible to anyone
other than Rio Tinto for providing advice in relation to the Alcan
acquisition and/ or any other matter referred to in this announcement. CIBC
World markets plc, an affiliate of CIBC World Markets Inc., is authorised
and regulated by the Financial Services Authority of the United Kingdom.
The offer to purchase all of the issued and outstanding common shares
of Alcan (the “Offer”) is being made by RT Canada Acquisition Corp. (the
“Offeror”), a wholly-owned indirect subsidiary of Rio Tinto.
This announcement is for information purposes only and does not
constitute or form part of any offer or invitation to purchase, otherwise
acquire, subscribe for, sell, otherwise dispose of or issue, or any
solicitation of any offer to sell, otherwise dispose of, issue, purchase,
otherwise acquire or subscribe for, any security. The Offer (as the same
may be varied or extended in accordance with applicable law) will be made
exclusively by means of, and subject to the terms and conditions set out
in, the offer and takeover bid circular to be delivered to Alcan and filed
with Canadian provincial securities regulators and the United States
Securities and Exchange Commission (the “SEC”) and mailed to Alcan
shareholders.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore persons in
such jurisdictions into which this announcement is released, published or
distributed should inform themselves about and observe such restrictions.
In connection with the Offer, Rio Tinto will be filing with the
Canadian securities regulatory authorities and the SEC an offer and
takeover bid circular as well as ancillary documents such as a letter of
transmittal and a notice of guaranteed delivery and Alcan is expected to
file a directors’ circular with respect to the Offer. Rio Tinto will also
file with the SEC a Tender Offer statement on Schedule TO (the “Schedule
TO”) and Alcan is expected to file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule
14D-9″). SHAREHOLDERS OF ALCAN ARE URGED TO READ THE OFFER AND TAKEOVER BID
CIRCULAR (INCLUDING THE LETTER OF TRANSMITTAL AND NOTICE OF GUARANTEED
DELIVERY), THE SCHEDULE TO (INCLUDING THE OFFER AND TAKEOVER BID CIRCULAR,
LETTER OF TRANSMITTAL AND RELATED TENDER OFFER DOCUMENTS) AND THE SCHEDULE
14D-9 AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE OFFER.
The offer and takeover bid circular as well as other materials filed
with the Canadian securities regulatory authorities will be available
electronically without charge at http://www.sedar.com. The Schedule TO and the
Schedule 14D-9 will be available electronically without charge at the SEC’s
website, http://www.sec.gov, after they have been filed. Materials filed with the
SEC or the Canadian securities regulatory authorities may also be obtained
without charge at Rio Tinto’s website, http://www.riotinto.com
While the Offer is being made to all holders of Alcan common shares,
this announcement does not constitute an offer or a solicitation in any
jurisdiction in which such offer or solicitation is unlawful. The Offer is
not being made in, nor will deposits be accepted in, any jurisdiction in
which the making or acceptance thereof would not be in compliance with the
laws of such jurisdiction. However, Rio Tinto may, in its sole discretion,
take such action as they may deem necessary to extend the Offer in any such
jurisdiction.
Forward looking statements
This announcement contains statements which constitute “forward-looking
statements” about Rio Tinto and Alcan. Such statements include, but are not
limited to, statements with regard to the outcome of the proposed Offer,
any statements about cost synergies, revenue benefits or integration costs,
capacity, future production and grades, projections for sales growth,
estimated revenues and reserves, targets for cost savings, the construction
cost of new projects, projected capital expenditures, the timing of new
projects, future cash flow and debt levels, the outlook for minerals and
metals prices, the outlook for economic recovery and trends in the trading
environment and may be (but are not necessarily) identified by the use of
phrases such as “will”, “intend”, “estimate”, “expect”, “anticipate”,
“believe” and “envisage”. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future and may be outside the control
of Rio Tinto or Alcan. Actual results and developments may differ
materially from those expressed or implied in such statements because of a
number of factors, including the outcome of the proposed Offer, revenue
benefits and cost synergies being lower than expected, integration costs
being higher than expected, levels of demand and market prices, the ability
to produce and transport products profitably, the impact of foreign
currency exchange rates on market prices and operating costs, operational
problems, political uncertainty and economic conditions in relevant areas
of the world, the actions of competitors, activities by governmental
authorities such as changes in taxation or regulation and such other risk
factors identified in Rio Tinto’s most recent Annual Report on Form 20-F
filed with the SEC or Form 6-Ks furnished to the SEC or Alcan’s most recent
periodic and current reports on Form 10-K, 10-Q or 8-K filed with the SEC
(as the case may be). Forward-looking statements should, therefore, be
construed in light of such risk factors and undue reliance should not be
placed on forward-looking statements.
Nothing in this announcement should be interpreted to mean that the
future earnings per share of Rio Tinto will necessarily match or exceed its
historical published earnings per share.
Other than in accordance with their legal and regulatory obligations
(including, in the case of Rio Tinto, under the UK Listing Rules and the
Disclosure and Transparency Rules of the Financial Services Authority),
neither Rio Tinto nor Alcan is under any obligation and each of Rio Tinto
and Alcan expressly disclaim any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

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