Cash offer for Alcan

Rio Tinto PLC
12 July 2007


Rio Tinto makes a recommended all cash offer for Alcan

     
•    Cash offer price of US$101 per common share values Alcan at US$38.1 
     billion.

•    Excellent fit with Rio Tinto's overall asset portfolio, strategy and
     value focus.

•    Creation of a new global leader in the aluminium industry to be called
     Rio Tinto Alcan.

•    Alcan's board of directors unanimously recommends acceptance of the offer 
     and states that Rio Tinto's proposal fully meets the requirements of the
     Continuity Agreement.

•    Global headquarters of Rio Tinto Alcan to be in Montreal, led by
     current Alcan chief executive Dick Evans.

•    Rio Tinto and Alcan agree to divest Alcan Packaging business.


Montreal, Melbourne and London (12 July 2007) - 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
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
www.riotinto.com


Contacts


Rio Tinto

Media Relations
London                                             Australia
Nick Cobban                                        Ian Head
Office:  [phone]                      Office:  [phone]
Mobile: [phone]                       Mobile: [phone]

Christina Mills
Office:   [phone]
                                                     
France                                             Canada/ USA
Tara Hopkins                                       Louie Cononelos
+ 33 1 41 05 44 57                                 Office:  [phone]
                                                   Mobile: [phone]

Investor Relations
London                                             Australia
Nigel Jones                                        Dave Skinner
Office:  [phone]                      Office:  [phone]
Mobile: [phone]                       Mobile: [phone]

David Ovington                                     Susie Creswell
Office:  [phone]                      Office:  [phone]
Mobile: [phone]                        Mobile: [phone]

Email: [e-mail]

Website: www.riotinto.com

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


Alcan


Media contact

Anik Michaud
Office:  [phone]
[e-mail]

Investor contact

Ulf Quellmann
Office :  [phone]
[e-mail]


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 Rio Tinto Canada Holding Inc. (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 www.sedar.com. The Schedule TO and the Schedule 14D-9 will be
available electronically without charge at the SEC's website, 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, 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.


                      This information is provided by RNS
            The company news service from the London Stock Exchange