Palabora Mining Company

Rio Tinto PLC
27 March 2003



Rio Tinto's 49.2 per cent owned subsidiary, Palabora Mining Company, issued the
following news release in Johannesburg. All dollars are US$ unless otherwise
stated.





 Palabora underground production delays lead to additional finance requirements





The Board of Palabora Mining Company (PMC) announced today that they are in
discussions with several leading domestic and international bankers to refinance
the Company. The requirement to do this is a direct result of the strengthening
of the Rand against the US Dollar, and the delayed ramp up of the underground
mine's production to design capacity.



PMC is in the process of converting from large-scale open cast operations to an
underground mine. Expenditure on the development of the underground mine has
been US$409 million and construction progress was 94% complete at the end of
February 2003.



While the development of the underground mine project is on schedule and within
budget, production has been limited by the inability efficiently to clear
drawpoints that have been blocked with poorly fragmented, large rocks.
Consequently, production levels of between 10 000 and 12 000 tonnes per day are
being achieved against an expected 30 000 tonnes per day.



The Company uses specialised secondary breaking equipment to clear the oversize
rock and to allow the ore to be taken from the drawpoints to the crushers. Past
practices in the mining industry have allowed oversize rock hang-ups to be freed
by manually placing small explosive charges in the blocked draw bells.  However,
this can be a fatally dangerous practice and Palabora's management will not
expose its miners to this risk - hence the decision to use alternative, safe
methods of secondary breaking. The effectiveness of current secondary breaking
equipment has, to date, been disappointing and the Company has taken various
steps to improve its position.



While the ramp up of production has been slower than planned, these are early
stages of the mine life and experience at other similar mines around the world
suggests that fragmentation will improve as the cave develops and that the need
for secondary breaking will decline considerably.



Notwithstanding the above, Palabora Mining Company cautions that the aggregate
impact of the limited production from the underground mine and the strength of
the Rand against the US Dollar, partly offset by the cost saving actions taken
by the Company, will impact negatively on the earnings of the Company.



The cumulative effect of these issues is that Palabora will require additional
finance facilities during 2003. PMC currently has borrowing facilities of US$185
million and aims to increase these by some US$90 million. Palabora has therefore
approached a number of leading domestic and international banks in order to
commence the process of obtaining these facilities.



In light of the current US$/Rand exchange rate, the low copper price and the
delayed ramp up to full production, Palabora's major shareholder, Rio Tinto plc
has agreed to provide a short-term loan facility of up to US$50 million at
commercial rates until the refinancing programme is in place.



The discussions with the bankers are progressing and indications are that the
necessary refinancing of the business will be in place during the second half of
the year. Although PMC has not yet discussed the covenants associated with a
possible refinancing, it is possible that such covenants may include further
restrictions on dividend payment to shareholders.



In the meantime, management will continue to focus on ramping up underground
production and will use all reasonable endeavours to achieve design production
by the end of 2003.  Shareholders will be kept informed of developments.





For further information, please contact:


LONDON                                             AUSTRALIA
Media Relations                                    Media Relations
Lisa Cullimore                                     Ian Head
+ 44 (0) 20 7753 2305                              [phone]
Investor Relations                                 Investor Relations
Peter Cunningham                                   Dave Skinner
+ 44 (0) 20 7753 2401                              [phone]
Richard Brimelow                                   Daphne Morros
+ 44 (0) 20 7753 2326                               [phone]

Website: www.riotinto.com




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