Rio Tinto Alcan results

Rio Tinto PLC
12 March 2008

Rio Tinto Alcan confirmed as third major pillar of Rio Tinto Group



12 March 2008



•  Pro forma 2007 underlying EBITDA of $4,813 million for Primary Metal
and Bauxite & Alumina, making Rio Tinto Alcan the third major pillar of Group
EBITDA along with iron ore and copper.

•  Pro forma 2007 underlying earnings for Primary Metal and Bauxite &
Alumina of $2,092 million, representing 23 per cent of Rio Tinto's pro forma
underlying earnings before corporate items and interest.

•  Pro forma capital expenditure for Primary Metal and Bauxite & Alumina
of $2,296 million in 2007, reflecting continuing investment in value adding
growth projects.

•  Pro forma share of production of 4.2 million tonnes of aluminium, 8.5
million tonnes of alumina and 32.0 million tonnes of bauxite in 2007.

•  Significant earnings momentum anticipated in 2008 with each 10 c/lb
movement in the average annual aluminium price from the 2007 level of 120c/lb
expected to change Rio Tinto Alcan's underlying earnings by $620 million. 2008
underlying earnings are also expected to be affected by exchange rate movements
with a 10 US cent movement in the Canadian dollar rate expected to impact full
year underlying earnings by $150 million. Rising energy, pitch, coke, oil and
freight costs are also expected to partly offset any gain from higher LME
prices.

•  Bauxite reserves totalling 1,387 million tonnes of recoverable mineral
(Rio Tinto share) at the end of 2007 compared with 1,193 million tonnes at the
end of 2006. The 2007 numbers incorporate the Rio Tinto assets and Alcan assets
combined under the Rio Tinto Alcan name for the first time. Detailed bauxite
reserves and resources data have been included within this release on pages 5
and 6.



Rio Tinto completed the acquisition of Alcan on 23 October 2007, and the new
product group, comprising the combination of Alcan and the original Rio Tinto
Aluminium businesses, was named Rio Tinto Alcan. In order to aid analysis of the
Rio Tinto Alcan product group going forward this pro forma information is being
provided illustrating the enlarged product group, as though Alcan were part of
Rio Tinto for the whole of 2007. The above financial summary numbers exclude
Packaging and Engineered Products.  A sale process is underway for these assets.
They have been excluded to present a view of the future Rio Tinto Alcan
product group.



Tom Albanese, Rio Tinto's chief executive said, 'These pro forma numbers
reinforce the significance of the Alcan acquisition, which has transformed our
aluminium group into an industry leader and the third major business within Rio
Tinto. The strong fundamentals of the aluminium industry and the excellent long
term demand outlook augur well for Rio Tinto Alcan's future financial
performance. In addition to these earnings, we look forward to the synergies
from the acquisition. Our internal target is $1.1 billion, exceeding the $940
million after tax synergies announced in November 2007.'



Dick Evans, Rio Tinto Alcan chief executive said, 'The combination of the Rio
Tinto and Alcan assets has created a world leader in bauxite and aluminium
production with a clear pathway to becoming the largest alumina producer. Our
modern, low cost smelting assets benefit from a competitive hydro power position
which is becoming ever more valuable in today's energy constrained world. This
is a business which we intend to grow and from which we are ideally positioned
to deliver value in the future.'




Rio Tinto Alcan pro forma financial information by business unit
Year ended 31 December 2007

US$ millions                                    Gross sales        Underlying         Underlying
(unaudited)                                     revenue (a)        EBITDA (b)        earnings (c)

Aluminium
Primary Metal                                         11,756              3,711              1,597
Bauxite & Alumina                                      3,272              1,102                495
Product group operations                              15,028              4,813              2,092
Other Product Group items                                 66               (19)                548
Rio Tinto Alcan                                       15,094              4,794              2,640

Rio Tinto Group pro forma                                                                    7,859
underlying earnings



Reference above are to notes on page 3



Basis of preparation

The Rio Tinto Alcan data presented above comprises the Primary Metal and Bauxite
& Alumina business units before interest and does not include Engineered
Products or Packaging. The pro forma underlying earnings for the Rio Tinto Group
include the full year underlying earnings of Primary Metal and Bauxite & Alumina
as well as Engineered Products, less the pro forma interest cost in respect of
the acquisition facility for a full year and a number of other items. The Rio
Tinto Group pro forma numbers exclude Packaging which is shown as an asset held
for sale.



Debt and interest

In support of its acquisition of 100 per cent of Alcan's common shares, Rio
Tinto arranged $40 billion of term loan and revolving credit facilities, fully
underwritten and subsequently syndicated. The $40 billion term loan and
revolving credit facilities are divided into four tranches with maturities
ranging from 364 days (with an option to extend for an additional year at the
borrower's option) out to five years and one business day.  The total amount
drawn under the facility as at 31 December 2007 was $37.9 billion. The pro forma
interest charge for the whole of 2007 has been based on the one month LIBOR rate
as at 31 December 2007, plus the appropriate margins.



Other Product Group items

To give a more representative indication of the underlying earnings of the
business units, the positive impact of the reduction in the Canadian tax rate
and certain other one-off items, together with Product Group project evaluation
and other costs have been included within the line 'Other Product Group items'.



Tax

The approximate long-term effective tax rate on underlying earnings for Rio
Tinto Alcan, before one-off items and excluding the impact of foreign exchange
rate movements, is expected to be 31%.



Rio Tinto Group pro forma underlying earnings

'Underlying earnings' is an alternative measure of earnings, which is reported
by Rio Tinto to provide greater understanding of the business performance of its
operations.  Items excluded from net earnings in arriving at underlying earnings
include impairment charges less reversals, certain exchange differences and
derivatives and non-recurring consequences of the Alcan acquisition.




Rio Tinto Alcan pro forma financial information by business unit
Year ended 31 December 2007
US$ millions                                        Capital          Depreciation &
                                                  expenditure       amortisation (e)
(unaudited)                                           (d)

Aluminium
Primary Metal                                            1,175                  1,316
Bauxite & Alumina                                        1,121                    445
Corporate                                                   10                     53
Total Rio Tinto Alcan                                    2,306                  1,814




Notes to financial information by business unit



(a)     Gross sales revenue includes 100 per cent of subsidiaries' sales revenue
and Rio Tinto Alcan's share of the sales revenue of equity accounted units.



(b)     EBITDA of subsidiaries and Rio Tinto Alcan's share of EBITDA relating to
equity accounted units represents profit before: tax, net finance items,
depreciation and amortisation.



(c)     Underlying earnings represent profit after tax for the period
attributable to Rio Tinto Alcan.  Earnings of subsidiaries are stated before
finance items but after the amortisation of the discount related to provisions.
Earnings attributable to equity accounted units include interest charges and
amortisation of discount.  Earnings attributed to business units do not include
amounts that are excluded in arriving at Underlying earnings.



(d)     Capital expenditure comprises the net cash outflow on purchases less
disposals of property, plant and equipment, capitalised evaluation costs and
purchases less disposals of other intangible assets. The details provided
include 100 per cent of subsidiaries' capital expenditure and Rio Tinto Alcan's
share of the capital expenditure of equity accounted units, whether this is
funded by Rio Tinto Alcan or not.



(e)     Depreciation and amortisation includes 100% of subsidiaries and Rio
Tinto Alcan's share of depreciation and amortisation relating to equity
accounted units.  The provisional assessment of the incremental depreciation &
amortisation on the fair value up-lift is included within these amounts.




Bauxite reserves



Ore reserves and mineral resources for Rio Tinto managed operations are reported
in accordance with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, December 2004 (the JORC Code) as required by
the Australian Stock Exchange (ASX).  Codes or guidelines similar to JORC with
only minor regional variations have been adopted in South Africa, Canada, USA,
Chile, UK, Ireland and Europe, Peru, and the Phillipines.  Together these Codes
represent current best practice for reporting ore reserves and mineral
resources.



The JORC Code envisages the use of reasonable investment assumptions, including
the use of projected long term commodity prices, in calculating reserve
estimates.  However, for US reporting, the US Securities and Exchange Commission
require historical price data to be used.  For this reason, some reserves
reported to the SEC in the Form 20-F will differ from those reported below.



Ore reserve and mineral resource information in the tables below is based on
information compiled by Competent Persons (as defined by JORC), or 'recognised
overseas mining professionals' as defined by the ASX, most of whom are full time
employees of Rio Tinto or related companies.  Each has had a minimum of five
years relevant estimation experience and is a member of a recognised
professional body whose members are bound by a professional code of ethics.
Each Competent Person consents to the inclusion in this report of information
they have provided in the form and context in which it appears.  A register of
the names of the Competent Persons who are responsible for the estimates is
maintained by the Company Secretaries in London and Melbourne and is available
on request.  Where operations are not managed by Rio Tinto the reserves are
published as received from the managing company.



The ore reserve figures in the following tables are as of 31 December 2007.
Summary data for year end 2006 are shown for comparison.  Metric units are used
throughout.  The figures used to calculate Rio Tinto's share of reserves are
often more precise than the rounded numbers shown in the tables, hence small
differences might result if the calculations are repeated using the tabulated
figures.





(a)  Type of mine: O/P = open pit

(b)  Reserves of bauxite (as alumina) are shown as recoverable reserves of
saleable product after accounting for all mining and processing losses.  Mill
recoveries are therefore not shown.

(c) Rio Tinto acquired the operating assets of Alcan with effect from 24 October
2007.  The Rio Tinto assets and the Alcan assets have been combined under the
Rio Tinto Alcan name. Reserves are presented here for the first time. The Weipa
deposit includes the reserve for Ely.
Bauxite resources



As required by the Australian Stock Exchange, the following tables contain
details of other mineralisation that has a reasonable prospect of being
economically extracted in the future but which is not yet classified as Proved
or Probable Reserves.  This material is defined as Mineral Resources under the
JORC Code.  Estimates of such material are based largely on geological
information with only preliminary consideration of mining, economic and other
factors.  While in the judgement of the Competent Person there are realistic
expectations that all or part of the Mineral Resources will eventually become
Proved or Probable Reserves, there is no guarantee that this will occur as the
result depends on further technical and economic studies and prevailing economic
conditions in the future.  Where operations are not managed by Rio Tinto the
resources are published as received from the managing company.



Resources are stated as additional to the reserves reported earlier.




(a)  Likely mining method: O/P = open pit

(b) Rio Tinto acquired the operating assets of Alcan with effect from 24 October
2007.  The Rio Tinto assets and the Alcan assets have been combined under the
Rio Tinto Alcan name. Resources are presented here for the first time. The Weipa
deposit includes the resource for Ely; Rio Tinto Alcan has an 80% interest in
the Awaso mine in Ghana but the resource estimate is still under review.



Metal prices and exchange rates

                                                                                  2007

Metal prices - average for the period

Aluminium                                               US cents/lb               120c

Average exchange rates in US$

Australian dollar                                                                 0.84
Canadian dollar                                                                   0.93
Euro                                                                              1.37

Period end exchange rates in US$

Australian dollar                                                                 0.88
Canadian dollar                                                                   1.01
Euro                                                                              1.47



Price, exchange and interest rate sensitivities

The following sensitivities give the estimated effect on underlying earnings
assuming that each individual price, exchange rate or interest rate moved in
isolation. The relationship between currencies and commodity prices is a complex
one and movements in exchange rates can cause movements in commodity prices and
vice versa.  The exchange rate sensitivities quoted below only include the
effect on operating costs of movements in exchange rates. They do not include
the effect of the revaluation of foreign currency financial assets and
liabilities.  They should therefore be used with care.


                               2007 average price/                                Effect on
                                     exchange rate                Rio Tinto Alcan full year
                                                                   underlying earnings ($m)

Aluminium                                  120c/lb      +/-10c/lb                       620
Canadian dollar                              93USc         +/-10c                       150
Australian dollar                            84USc         +/-10c                       165
Euro                                        137USc         +/-10c                        50





Availability of this report



This report is available on the Rio Tinto website.



Further information on modelling Rio Tinto Alcan can be found on the Rio Tinto
website at

www.riotinto.com/media/5157_7016.asp




About Rio Tinto



Rio Tinto is a leading international mining group headquartered in the UK,
combining Rio Tinto plc, a London and NYSE 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.



Pro forma Financial Information



Pro forma financial information included in this announcement has not been
audited and has not been prepared in accordance with the rules and regulations
of the United States Securities and Exchange Commission. Such pro forma
information has been prepared on the basis of IFRS. Actual financial results may
have differed from those reported herein.



Forward-Looking Statements



This announcement includes 'forward-looking statements' within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this announcement, including, without
limitation, those regarding Rio Tinto's financial position, business strategy,
plans and objectives of management for future operations (including development
plans and objectives relating to Rio Tinto's products, production forecasts and
reserve and resource positions), are forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Rio Tinto, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.



Such forward-looking statements are based on numerous assumptions regarding Rio
Tinto's present and future business strategies and the environment in which Rio
Tinto will operate in the future. Among the important factors that could cause
Rio Tinto's actual results, performance or achievements to differ materially
from those in the forward-looking statements include, among others, levels of
actual production during any period, 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 United States
Securities and Exchange Commission (the 'SEC') or Form 6-Ks furnished to the
SEC. Forward-looking statements should, therefore, be construed in light of such
risk factors and undue reliance should not be placed on forward-looking
statements. These forward-looking statements speak only as of the date of this
announcement. Rio Tinto expressly disclaims any obligation or undertaking
(except as required by applicable law, the City Code on Takeovers and Mergers
(the 'Takeover Code'), the UK Listing Rules, the Disclosure and Transparency
Rules of the Financial Services Authority and the Listing Rules of the
Australian Securities Exchange) to release publicly any updates or revisions to
any forward-looking statement contained herein to reflect any change in Rio
Tinto's expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.



Nothing in this announcement should be interpreted to mean that future earnings
per share of Rio Tinto plc or Rio Tinto Limited will necessarily match or exceed
its historical published earnings per share.



Subject to the requirements of the Takeover Code, none of Rio Tinto, any of its
officers or any person named in this announcement with their consent or any
person involved in the preparation of this announcement makes any representation
or warranty (either express or implied) or gives any assurance that the implied
values, anticipated results, performance or achievements expressed or implied in
forward-looking statements contained in this announcement will be achieved.




For further information, please contact:

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Investor Relations, London                     Investor Relations, Australia
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Email:  [e-mail]



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