Stmnt re - Kaltim Prima Coal

Rio Tinto PLC
17 October 2001



                              Kaltim Prima Coal

Kaltim Prima Coal (KPC), in which Rio Tinto has a 50% joint venture interest,
announced today that the East Kalimantan Regional Government has filed a civil
suit with the District Court of South Jakarta, Indonesia, in relation to the
matter of the KPC Divestment. The claim has been made against KPC, its
shareholders, some of its directors and its legal advisers.

Damages of US$772million and legal costs of US$4million and seizure of the
Company's and other defendants assets are being sought by the East Kalimantan
Regional Government.

KPC believes that the claims are baseless and intends to defend them
vigorously to the full extent of the law. The firm of Lubis, Santosa and
Maulana has been retained to act on behalf of KPC and its shareholders and
named directors in this matter.

KPC and its shareholders believe that the action taken by the Regional
Government will cause concern to all existing and potential investors in East
Kalimantan specifically and Indonesia as a whole, and may deter future
investment in the country.

For its part KPC remains committed to fulfilling all of its obligations under
the Coal Agreement and will continue to pursue divestment in an open and
transparent manner fully in accordance with the process laid out in the
Agreement.

For further information, please contact:
LONDON                                   AUSTRALIA
Media Relations                          Media Relations

Lisa Cullimore:      + 44 (0) 20 7753    Ian Head:      [phone]
2305


Investor Relations                       Investor Relations

Peter Cunningham: + 44 (0) 20 7753 2401  Dave Skinner: [phone]

Jonathan Murrin: + 44 (0) 20 7753 2326   Daphne Morros: [phone]

 Website: www.riotinto.com



Background to KPC's Divestment obligation

KPC's operations in Indonesia are carried out under a contract between KPC and
the Central Government known as the Coal Agreement.

As part of that contract KPC has agreed to offer shares for sale to local
investors, being the Indonesian government, Indonesian nationals or Indonesian
companies controlled by Indonesians.

The initial obligation was to offer shares after the first four years of
operations as per the following schedule:

Fifth year                                 (1996)                  15%
Sixth year                                 (1997)                  +8%
Seventh year                               (1998)                  +7%
Eight year                                 (1999)                  +7%
Ninth year                                 (2000)                  +7%
Tenth year                                 (2001)                  +7%

Any shares not sold in a particular year must be offered again the following
year until a total of 51% of the shares have been sold.

As a result of the government restructuring its coal interests and publicly
announcing intentions to amend the provisions of Coal Agreements it was not
practical to proceed with offers in 1996 and 1997 and so by written agreement
with the government the process was deferred.

The divestment process commenced in 1998 with offers made by KPC to sell 23%
of its shares that year. Further offers were made by KPC in 1999 to sell 30%
and in 2000 to sell 37%. There were no acceptances of any of these offers, and
so no shares have yet been sold.

During 2000 and the early part of 2001 the Government altered its position
with respect to the deferrals and requested that KPC return to the original
divestment schedule in the Coal Agreement, which meant that 51% would be
offered in 2001. This KPC agreed to do in May 2001. However the divestment
offers have not yet been made for 2001 as the price has not yet been
finalised.

The price at which the shares are to be offered for sale is based on 'the fair
value of KPC as a going concern' and 'giving due consideration to the project
investment risk.' There is a process set out in the Coal Agreement for that
price to be determined.

In summary it is a three stage process involving:

(1) discussions on the price between the Central Government and KPC and if
agreement can not be reached,

(2) appointment of two independent valuers, one to represent each party to the
contract and if agreement still can not be reached,

(3) appointment of a third independent valuer to work with the two already
appointed to reach a majority discussion on the price.

In 2001 the process remains at stage one with discussions still being held
between the Government and KPC over the price. KPC has had a valuation
prepared by its advisors Salomon Smith Barney indicating a price of $889m
(100% basis). The Government is of the view that the price should be between
$583m and $625m (100% basis).

Given the difference in the positions, KPC believes it is appropriate to move
to the second stage of the process.