Sarawak smelter

Rio Tinto PLC
07 August 2007


Rio Tinto and Cahya Mata Sarawak sign Heads of agreement for Sarawak smelter


Rio Tinto and Malaysian conglomerate Cahya Mata Sarawak Berhad (CMS) today
signed a Heads of Agreement for the proposed development of a world class
aluminium smelter in the State of Sarawak.


Under the signing of the Heads of Agreement, detailed feasibility studies on the
design, engineering, construction, commissioning and operation of an aluminium
smelter will commence.  The studies will take between 12 to 18 months to
complete. They will examine the technical, environmental, operational, social
and economic aspects of a smelter development.


The initial participating interests in the project will be 60 per cent Rio Tinto
Aluminium and 40 per cent CMS. The smelter will be known as Sarawak Aluminium
Company (SALCO).


The proposed smelter, to be located in Similajau, 60 kilometres from Bintulu
town, would have an initial production capacity of 550,000 tonnes per year, with
the capability to be expanded to 1.5 million tonnes. First production from the
smelter could be expected in the fourth quarter of 2010. It is proposed that
electricity for the smelter will come from the Bakun Hydroelectric Dam, which is
currently under construction.


'This is a very positive development for Rio Tinto and an important step in our
plans to develop new greenfield aluminium smelting capacity', said Rio Tinto
Aluminium chief executive Oscar Groeneveld.


'We look forward to working with the Malaysian Federal Government and Sarawak
State Government, and CMS on this project which has the potential to generate
significant social and economic benefits for Malaysia and local communities in
Sarawak.


'The smelter would provide approximately 1,200 direct jobs, and up to 3,500
indirect jobs, and the opportunity to build an outstanding technical skill base
for Malaysian nationals, while adding billions of US dollars to Malaysia's Gross
Domestic Product.


'CMS and Rio Tinto Aluminium are committed to develop the project to world
class environmental and community standards,' Mr Groeneveld said.


The Heads of Agreement allows for the training of Malaysian nationals in
overseas smelters and educational institutions. As well, significant training
and skills development will take place in Sarawak. Once developed the project
will represent one of the largest direct foreign investments in Malaysia,
provide significant ongoing employment, boosts to small business in the region,
and foster the development of support industries.


CMS Group Chairman Tan Sri Syed Anwar Jamalullail said Rio Tinto was the right
partner for the project given its experience in developing and operating world
class smelters. CMS Group's resources, capabilities and experience in Sarawak's
infrastructure development sector will complement the technical and management
skills of Rio Tinto.


At the signing of the Heads of Agreement, Sarawak Chief Minister Pehin Sri Abdul
Taib Mahmud said development of the aluminium smelter project in Similajau will
be the catalyst for the next phase of growth of Sarawak's economy based on
energy intensive industries. This is a project of national significance bringing
considerable benefit to the economies of both Sarawak and Malaysia.


In support of the 9th Malaysia Plan, the State Government has recently
ear-marked Sarawak's central region as a new industrial development corridor.
With ample energy resources of oil and natural gas, coal deposits and hydro
power from river systems, the Sarawak Government is looking to establish energy
intensive industries in the area between Mukah and Similajau.


Rio Tinto Aluminium is a major integrated producer of bauxite, alumina and
aluminium with extensive experience in the design, engineering, construction,
commissioning and operation of world class aluminium smelters.


Rio Tinto Aluminium owns and operates four smelters including Australia's
largest, Boyne Smelters Limited in Queensland, which produces more than half a
million tonnes of aluminium each year from its three production lines.


CMS is Sarawak's largest company in infrastructure development with business
interests in construction, road maintenance, cement manufacturing, quarrying,
construction materials and property development. The Group is also involved in
trading of construction materials, technology, education and financial services.


For further information, please contact:

LONDON                                              AUSTRALIA

Media Relations                                     Media Relations

Christina Mills                                     Ian Head

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Nick Cobban                                         Amanda Buckley
                                                    
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Investor Relations                                  Investor Relations

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Website: www.riotinto.com

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



Rio Tinto Aluminium                                 Cahya Mata Sarawak

Jim Singer                                          Eda Ahmad
                                                    
Manager External Affairs                            Head - Group Corporate Communications
                                                    
Office: [phone]                         Office: [phone]
                                                    
Mobile: [phone]                         Mobile: [phone]
                                                    
Website:  www.riotintoaluminium.com.au              Website:  www.cmsb.com.my

                                                    Email:  [e-mail]



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