20-F 1 u54907-20f.htm  

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 20-F

(Mark One)      
       
Registration statement pursuant to Section 12 (b) or 12(g) of the Securities Exchange Act of 1934  
       
    or   
     
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
  For the financial year ended: 31 December 2007  
       
    or   
     
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
  For the transition period from:________________ to________________  
       
    or   
     
Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
  Date of event requiring this shell company report ________________  

 

Commission file number: 1-10533 Commission file number: 0-20122
   
Rio Tinto plc Rio Tinto Limited
  ABN 96 004 458 404
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
   
England and Wales Victoria, Australia
(Jurisdiction of incorporation or organisation) (Jurisdiction of incorporation or organisation)
   
5 Aldermanbury Square Level 33, 120 Collins Street
London, EC2V 7HR, United Kingdom Melbourne, Victoria 3000, Australia
(Address of principal executive offices) (Address of principal executive offices)

     Roger Dowding, T: +44 (0)20 7781 1623, E: roger.dowding@riotinto.com
(Name, Telephone, E-mail and/or Facsimilie number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
               
Title of each class   Name of each exchange   Name of each exchange   Title of each class  
    on which registered   on which registered      
American Depositary Shares*   New York Stock Exchange       None  
               
Ordinary Shares of 10p each**   New York Stock Exchange          
   
* Evidenced by American Depository Receipts. Each American Depository Share Represents four Rio Tinto plc Ordinary Shares of 10p each.
** Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission

Securities registered or to be registered pursuant to Section 12(g) of the Act:
Title of each class Title of each class
None Shares

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None None

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Title of each class   Number   Number   Title of each class
Ordinary Shares of 10p each   1,071,799,661   456,815,943   Shares
DLC Dividend Share of 10p   1   1   DLC Dividend Share
Special Voting Share of 10p   1   1   Special Voting Share

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in rule 405 of the Securities Act.

Yes   No

If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days:

Yes   No

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   Accelerated filer   Non-accelerated filer
         

Indicate by check mark which basis of accounting the registrants have used to prepare the financial statements included in this filing:

US GAAP        International Financial Reporting Standards as issued by the International Accounting Standards Board         Other

If ‘Other’ has been checked in response to the previous question, indicate by check mark which financial statement item the registrants have elected to follow:

Item 17   Item 18
     

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No

EXPLANATORY NOTE


The Rio Tinto Group is a leading international mining group, combining Rio Tinto plc and Rio Tinto Limited in a dual listed companies (‘DLC’) merger which was designed to place the shareholders of both Companies in substantially the same position as if they held shares in a single enterprise owning all of the assets of both Companies.

TABLE OF CONTENTS
     
    Page
   
PART I
Item 1. Identity of Directors, Senior Management and Advisers 4
     
Item 2. Offer Statistics and Expected Timetable 4
     
Item 3. Key Information 4
     
Item 4. Information on the Company 9
     
Item 4A. Unresolved Staff Comments 47
     
Item 5. Operating and Financial Review and Prospects 47
     
Item 6. Directors, Senior Management and Employees 114
     
Item 7. Major Shareholders and Related Party Transactions 153
     
Item 8. Financial Information 155
     
Item 9. The Offer and Listing 156
     
Item 10. Additional Information 158
     
Item 11. Quantitative and Qualitative Disclosures about Market Risk 168
     
Item 12. Description of Securities other than Equity Securities 168
 
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies 169
     
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 169
     
Item 15. Controls and Procedures 169
     
Item 16A. Audit Committee Financial Expert 169
     
Item 16B. Code of Ethics 170
     
Item 16C. Principal Accountant Fees and Services 170
     
Item 16D. Exemptions from the Listing Standards for Audit Committees 170
     
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 171
 
PART III
     
Item 17. Financial Statements 172
     
Item 18. Financial Statements 172
     
Item 19. Exhibits 172

 

Rio Tinto 2007 Form 20-F 3

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RIO TINTO

PART I

 

Item 1. Identity of Directors, Senior Management and Advisers
 
Not applicable.
   
Item 2. Offer Statistics and Expected Timetable
 
Not applicable.
   
Item 3. Key Information

SELECTED FINANCIAL DATA

The selected consolidated financial data below has been derived from the 2007 Financial statements of the Rio Tinto Group. The selected consolidated financial data should be read in conjunction with, and qualified in their entirety by reference to, the 2007 Financial statements and notes thereto. The 2007 Financial statements were prepared in accordance with IFRS as issued by the IASB (IFRS).

RIO TINTO GROUP

Income Statement Data                    
For the years ending 31 December     2004   2005   2006   2007  
Amounts in accordance with IFRS (a)     US$m   US$m   US$m   US$m  










 
Consolidated revenue     12,954   19,033   22,465   29,700  
Group operating profit (b)     3,327   6,922   8,974   8,571  
Profit for the year     3,244   5,498   7,867   7,746  
Group operating profit per share (US cents)     241.3   507.5   673.0   666.6  
Earnings per share (US cents)     239.1   382.3   557.8   568.7  
Diluted earnings per share (US cents)     238.7   381.1   555.6   566.3  










 
                     
                     
Dividends per share 2003   2004   2005   2006   2007  










 
US cents (c)                    
– ordinary dividends 60.5   66.0   83.5   81.5   116.0  
– special dividend       110.0    
UK pence (c)                    
– ordinary dividends 37.05   36.22   45.69   44.77   58.22  
– special dividend       61.89    
Australian cents (c)                    
– ordinary dividends 96.89   90.21   108.85   107.34   143.53  
– special dividend       145.42    
Weighted average number of shares (millions) 1,378   1,379   1,364   1,333   1,286  










 
                     
                     
Balance Sheet Data                    
at 31 December     2004   2005   2006   2007  
Amounts in accordance with IFRS (a)     US$m   US$m   US$m   US$m  










 
Total assets     26,308   29,803   34,494   101,391  
Share capital / premium     3,127   3,079   3,190   3,323  
Total equity / Net assets     12,591   15,739   19,385   26,324  
Equity attributable to Rio Tinto shareholders     11,877   14,948   18,232   24,772  










 
                     
Notes
(a) In accordance with the General Instructions for Form 20-F, Section G, audited information under IFRS is presented for 2004 through 2007 only, as IFRS was adopted from 1 January 2004.
(b) Operating profit under IFRS includes the effects of charges and reversals resulting from impairments and profit and loss on disposals of interests in businesses, including investments. IFRS operating profit amounts shown above exclude equity accounted operations.
(c) Dividends presented above are those paid in the year.
(d) The results for all years relate wholly to continuing operations.
(e) As a result of adopting IAS 32, IAS 39 and IFRS 5 on 1 January 2005, the Group changed its method of accounting for financial instruments and non-current assets held for sale. In line with the relevant transitional provisions, the prior period comparatives have not been restated.

 

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RISK FACTORS

The following describes some of the risks that could affect Rio Tinto. There may be additional risks unknown to Rio Tinto and other risks, currently believed to be immaterial, could turn out to be material. These risks, whether they materialise individually or simultaneously, could significantly affect the Group’s business and financial results. They should also be considered in connection with any forward looking statements in this document and the cautionary statement on page 7.
     Rio Tinto’s overriding corporate objective is to maximise long term shareholder value through responsible and sustainable investment in mining and related assets. The directors recognise that creating shareholder value is the reward for taking and accepting risk.
     The directors have established a process for identifying, evaluating and managing the significant risks faced by the Group.
     The following highlight the Group’s exposure to risk without explaining how these exposures are managed and mitigated or how some risks are also potential opportunities.

Acquisitions
The Group has grown partly through the acquisition of other businesses and most notably through the acquisition of Alcan Inc. for US$38.7 billion during 2007. Business combinations commonly entail a number of risks and Rio Tinto cannot be sure that management will be able to effectively integrate businesses acquired or generate the cost savings and synergies anticipated. Failure to do so could have a material and adverse impact on the Group’s costs, earnings and cash flows. Furthermore, the Group may, under the terms of the acquisition, be liable for the past acts or omissions of the acquired businesses in circumstances where the price paid does not adequately reflect the eventual cost of these liabilities.

Divestments
Following the acquisition of Alcan the Group undertook a strategic review which has highlighted approximately US$30 billion of potential divestments and has announced a target of US$15 billion. The Group intends to explore options for the sale of a shortlist of assets but any sales would be value driven and dependent on price. The amount and timing of sale proceeds that might eventually be realised is subject to considerable uncertainty and the Group cannot anticipate by when and by how much its borrowings might be reduced.

Economic conditions
Commodity prices, and demand for the Group’s products, are cyclical and influenced strongly by world economic growth, particularly that in the US and Asia. The Group’s normal policy is to sell its products at prevailing market prices. Commodity prices can fluctuate widely and could have a material and adverse impact on the Group’s asset values, revenues, earnings and cash flows.
     The strong underlying economic conditions and commodity prices have led to a rapid growth in demand for technical skills in mining, metallurgy and geological sciences, and for materials and supplies related to the mining industry, causing skills and materials shortages. The retention of skilled employees, the recruitment of new staff and the purchasing of materials and supplies may lead to increased costs, interruptions to existing operations and to delays in new projects.
     Further discussion can be found on page 15, Business environment, markets and regulation, and on page 104, commodity prices.

Exchange rates
The Group’s asset values, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the Group’s sales and areas of operation. The majority of the Group’s sales are denominated in US dollars. The Australian, Canadian, Euro and US dollars are the most important currencies influencing costs. The relative value of currencies can fluctuate widely and could have a material and adverse impact on the Group’s asset values, costs, earnings and cash flows. Further discussion can be found under Exchange rates, reporting currencies and currency exposure on page 102.

Exploration and new projects
The Group seeks to identify new mining properties through an active exploration programme. The Group has also undertaken the development or expansion of other major operations. There is no guarantee, however, that such expenditure will be recouped or that existing ore reserves will be replaced. Failure to do so could have a material and adverse impact on the Group’s financial results and prospects. In particular, Rio Tinto has commenced or recommenced exploration for and development of new projects in a number of new countries which may increase risks around land and resource tenure.
     The Group develops new mining properties and expands its existing operations as a means of generating shareholder value. Unanticipated delays and project execution complications along with increasing regulatory, environmental and social approvals can result in significant increases in construction costs and/or significant delays in construction. These increases could materially and adversely affect the economics of a project and, consequently, the

 

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Group’s asset values, costs, earnings and cash flows.

Energy cost and supply
The Group’s operations are energy intensive and, as a result, the Group’s costs and earnings could be adversely affected by rising energy costs or by energy supply interruptions. The following factors could materially adversely affect the Group’s energy position: the unavailability of energy or fuel due to a variety of reasons including fluctuations in climate, significant increases in costs of supplied electricity or fuel, interruptions in energy supply due to equipment failure or other causes, and the inability to extend contracts for the supply of energy on economical terms.

Greenhouse gas emissions
Rio Tinto’s smelting and mineral processing operations are energy intensive and depend heavily on coal, oil, diesel and gas. Increasing regulation of greenhouse gas emissions, including the progressive introduction of carbon emissions trading mechanisms, in numerous jurisdictions in which the Group operates could adversely impact access to, and cost of, the Group’s energy supply. Regulation of greenhouse gas emissions in the jurisdictions of the Group’s major customers could also have an adverse effect on the demand for the Group’s products.

Interest rate fluctuations
Increases in benchmark interest rates will likely increase the interest cost associated with the Group’s debt and will increase the cost of future borrowings, which could harm the Group’s earnings and financial condition.

Ore reserve estimates
There are numerous uncertainties inherent in estimating ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available.
     Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being restated. Such changes in reserves could impact on depreciation and amortisation rates, asset carrying values, deferred stripping calculations and provisions for close down, restoration and environmental clean up costs. Further discussion can be found under Ore reserves on page 108.

Political and community
The Group has operations in jurisdictions having varying degrees of political and commercial instability. Political instability can result in civil unrest, expropriation, nationalisation, renegotiation or nullification of existing agreements, mining leases and permits, changes in laws, taxation policies or currency restrictions. Commercial instability caused by bribery and corruption in their various guises can lead to similar consequences. Any of these can have a material adverse effect on the profitability or, in extreme cases, the viability of an operation.
     Some of the Group’s current and potential operations are located in or near communities that may now, or in the future, regard such an operation as having a detrimental effect on their economic and social circumstances. Should this occur, it may have a material adverse impact on the profitability or, in extreme cases, the viability of an operation. In addition, such an event may adversely affect the Group’s ability to enter into new operations in the country.

Defined benefit pension plans
Certain of the Group’s businesses sponsor defined benefit pension plans. If the assets of these pension plans do not achieve expected investment returns for any fiscal year, such deficiency would result in one or more charges against the Group’s earnings. In addition, changing economic conditions, poor pension investment returns or other factors may require the Group to make substantial cash contributions to these pension plans in the future, preventing the use of such cash for other purposes.

Unions and labour disputes
Some of the Group’s employees are represented by labour unions under various collective labour agreements. The Group may not be able to satisfactorily renegotiate its collective labour agreements when they expire. In addition, existing labour agreements may not prevent a strike or work stoppage at its facilities in the future, and any such work stoppage could have a material adverse effect on the Group’s earnings and financial condition.

Technology
The Group has invested in and implemented information system and operational initiatives. Several technical aspects of these initiatives are still unproven and the eventual operational outcome or viability cannot be assessed with certainty. Accordingly, the costs and benefits from these initiatives and the consequent effects on the Group’s future earnings and financial results may vary widely from present expectations.

Land and resource tenure
The Group operates in several countries where title to land and rights in respect of land and resources (including indigenous title) may be unclear and may lead to disputes over resource development. Such disputes could disrupt relevant mining projects and/or impede the Group’s ability to develop new mining properties.

 

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Health, safety and environment
Rio Tinto operates in an industry that is subject to numerous health, safety and environmental laws and regulations as well as community expectations. Evolving regulatory standards and expectations can result in increased litigation and/or increased costs all of which can have a material and adverse effect on earnings and cash flows.

Mining operations
Mining operations are vulnerable to a number of circumstances beyond the Group’s control, including natural disasters and unexpected geological variations. These can affect costs at particular mines for varying periods. Mining, smelting and refining processes also rely on mining inputs. Appropriate insurance can provide protection from some, but not all, of the costs that may arise from unforeseen events. Disruption to the supply of key inputs, or changes in their pricing, may have a material and adverse impact on the Group’s asset values, costs, earnings and cash flows.

Rehabilitation
Costs associated with rehabilitating land disturbed during the mining process and addressing environmental, health and community issues are estimated and provided for based on the most current information available. Estimates may, however, be insufficient and/or further issues may be identified. Any underestimated or unidentified rehabilitation costs will reduce earnings and could materially and adversely affect the Group’s asset values, earnings and cash flows.

Non managed projects and operations
Where projects and operations are controlled and managed by the Group’s partners, the Group may provide expertise and advice, but it cannot guarantee compliance with its standards and objectives. Improper management or ineffective policies, procedures or controls could not only adversely affect the value of the related non managed projects and operations but could also, by association, harm the Group’s other operations and future access to new assets.

Regulation
The group is subject to extensive governmental regulations in all jurisdictions in which it operates. Operations are subject to general and specific regulations governing mining and processing, land tenure and use, environmental regulations (including site specific environmental licences, permits and statutory authorisations), workplace health and safety, trade and export, corporations, competition, access to infrastructure, foreign investment and taxation. Some operations are conducted under specific agreements with respective governments and associated acts of parliament. Changes to any regulation or agreement may have an adverse effect on the profitability and viability of an operation.

CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS

This document 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 document, 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 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 the section entitled, “Risk factors” herein. 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 document. 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.

 

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IMPORTANT INFORMATION

This document contains statements which could be deemed recommendations or solicitations under the US federal securities laws in the context of the pre-conditional offer by BHP Billiton. If BHP Billiton does commence a tender offer within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, Rio Tinto will file a Solicitation/Recommendation Statement with the SEC on Schedule 14D-9 thereafter and holders of Rio Tinto’s shares and ADRs are advised to read it when it becomes available as it will contain important information. Copies of any such Solicitation/Recommendation Statement and other related documents filed by Rio Tinto will be available free of charge on the SEC’s website at http://www.sec.gov and on Rio Tinto’s website at www.riotinto.com

 

 

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Item 4. Information on the Company

INTRODUCTION

Rio Tinto is a leading international mining group whose business is finding, mining and processing the Earth’s mineral resources. The Group’s interests are diverse both in geography and product. Our activities span the world but we are strongly represented in Australia and North America and we have significant businesses in South America, Asia, Europe and southern Africa. Businesses include open pit and underground mines, mills, refineries and smelters as well as a number of research and service facilities.
     The Group combines Rio Tinto plc, which is listed on the London Stock Exchange, and headquartered in London, and Rio Tinto Limited, which is listed on the Australian Securities Exchange and has executive offices in Melbourne. The Group consists of wholly and partly owned subsidiaries, jointly controlled assets, jointly controlled entities and associated companies, the principal ones being listed in notes 37 to 40 of the 2007 Financial statements.
     On 31 December 2007, Rio Tinto plc had a market capitalisation of £53.0 billion (US$105.9 billion) and Rio Tinto Limited had a market capitalisation of A$38.3 billion (US$33.5 billion). The combined Group’s market capitalisation in publicly held shares at the end of 2007 was US$139.4 billion.

Objective, strategy and management structure
Our fundamental objective is to maximise the overall long term value and return to our shareholders. We do this by operating responsibly and sustainably in areas of proven expertise such as exploration, project evaluation, mining, smelting and refining where the Group has a competitive advantage.
     Our strategy is to maximise net present value by investing in large, long life, cost competitive mines and processing plants. Investments are driven by the quality of each opportunity, not by the choice of commodity.
     Rio Tinto’s management structure is designed to facilitate a clear focus on the Group’s objective. This structure, reflected in this report, is based on the following principal product and global support groups:

Aluminium
Copper
Diamonds and Industrial Minerals
Energy
Iron Ore
Exploration
Technology and Innovation
Business Resources
The chief executive of each product group reports to the chief executive of Rio Tinto. Diamonds and Industrial Minerals report to the product group heads of Copper and Energy respectively.

Nomenclature and financial data
Rio Tinto Limited and Rio Tinto plc operate as one business organisation, referred to in this report as Rio Tinto, the Rio Tinto Group or, more simply, the Group. These collective expressions are used for convenience only, since both Companies, and the individual companies in which they directly or indirectly own investments, are separate and distinct legal entities.
     “Limited”, “plc”, “Pty”, “Inc”, “Limitada”, or “SA” have generally been omitted from Group company names, except to distinguish between Rio Tinto plc and Rio Tinto Limited.
     Financial data in United States dollars (US$) is derived from, and should be read in conjunction with, the 2007 Financial statements which are in US$. In general, financial data in pounds sterling (£) and Australian dollars (A$) have been translated from the consolidated financial statements and have been provided solely for convenience; exceptions arise where data, such as directors’ remuneration, can be extracted directly from source records. Certain key information has been provided in all three currencies in the 2007 Financial statements.
     Rio Tinto Group sales revenue, profit before tax and net earnings and operating assets for 2006 and 2007 attributable to the product groups and geographical areas are shown in notes 31 and 32 to the 2007 Financial statements. In the Operating and financial report (OFR), operating assets and sales revenue for 2006 and 2007 are consistent with the financial information by business unit in the 2007 Financial statements.
     The tables on pages 28 to 42 show production for 2007, 2006 and 2005 and include estimates of proven and probable ore reserves. Words and phrases, often technical, have been used which have particular meanings; definitions of these terms are in the Glossary on pages 175 to 177. The weights and measures used are mainly metric units; conversions into other units are shown on page 177.

History
Rio Tinto’s predecessor companies were formed in 1873 and 1905. The Rio Tinto Company was formed by investors in 1873 to mine ancient copper workings at Rio Tinto, near Seville in southern Spain. The Consolidated Zinc Corporation was incorporated in 1905 to treat zinc bearing mine waste at Broken Hill, New South Wales, Australia.
     The RTZ Corporation (formerly The Rio Tinto-Zinc Corporation) was formed in 1962 by the merger of The Rio

 

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Tinto Company and The Consolidated Zinc Corporation.
     CRA Limited (formerly Conzinc Riotinto of Australia Limited) was formed at the same time by a merger of the Australian interests of The Consolidated Zinc Corporation and The Rio Tinto Company.
     Between 1962 and 1995, both RTZ and CRA discovered important mineral deposits, developed major mining projects and also grew through acquisition.
     RTZ and CRA were unified in 1995 through a dual listed companies structure. This means the Group, with its common board of directors, is designed to place the shareholders of both Companies in substantially the same position as if they held shares in a single enterprise owning all of the assets of both Companies.
     In 1997, The RTZ Corporation became Rio Tinto plc and CRA Limited became Rio Tinto Limited, together known as the Rio Tinto Group. Over the past decade, the Group has continued to invest in developments and acquisitions in keeping with its strategy.
     In 2007, Rio Tinto completed an agreed takeover of the Canadian aluminium producer Alcan Inc. in a US$38.7 billion transaction that transforms the Group’s aluminium product group into a global leader in aluminium.

Contact details
The registered office of Rio Tinto plc is at 5 Aldermanbury Square, London, EC2V 7HR (telephone: +44 20 7781 2000) and the registered office of Rio Tinto Limited is at Level 33, 120 Collins Street, Melbourne, Victoria 3000 (telephone: +61 3 9283 3333). Rio Tinto’s agent for service in the US is Shannon Crompton, secretary of Rio Tinto’s US holding companies, who may be contacted at Rio Tinto Services Inc., 80 State Street, Albany, New York, 12207-2543.

 

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CAPITAL PROJECTS

Rio Tinto is investing heavily in future growth opportunities from the Group’s broad portfolio of assets. Projects have been financed out of internally generated funds. Major projects completed in 2005-2007, together with ongoing projects are summarised below.

Project Estimated cost   Status
  (100% basis)    
  US$m    




Completed in 2005      




Iron ore – HIsmelt® plant (Rio Tinto: 60%) at Kwinana in Western Australia. 200   The plant produced 115,000 tonnes of pig iron during 2007, its second year of ramp up towards a planned capacity of 800,000 per annum.




Iron ore – Expansion of Yandicoogina mine. 200   Expansion completed in the third quarter.




Iron ore – Expansion of West Angelas mine (Rio Tinto: 53%). 105   Project completed in the third quarter.




Titanium dioxide – Expansion of upgraded slag plant. 76   Commissioning started in first quarter.




Copper – Development of the Escondida Norte satellite deposit (Rio Tinto: 30%) to provide mill feed to keep Escondida’s capacity above 1.2 million tonnes of copper per year to the end of 2008. 400   First production occurred in 2005.




Iron ore – Expansion of port capacity to 116 million tonnes per annum, 685   Focus on production ramp up following completion of construction.




Completed in 2006      




Iron ore – Expansion of Hamersley Iron’s (Rio Tinto: 100%) Tom Price and Marandoo mines and construction of new mine capacity at Nammuldi. 290   The Marandoo and Nammuldi components are complete and Tom Price was completed during first quarter of 2007.




Iron ore – Expansion by Robe River (Rio Tinto: 53%) of rail capacity including completion of dual tracking of 100 km mainline section. 200   The project was completed on budget and ahead of schedule.




Copper – Escondida sulphide leach (Rio Tinto: 30%). The project will produce 180,000 tonnes per annum of copper cathode for more than 25 years. 925   The first cathode production from the sulphide leach plant occurred in June 2006.




Titanium dioxide – expansion of annual capacity at UGS plant from 325,000 tonnes to 375,000 tonnes. 79   The project was completed in October three months ahead of schedule and under budget.




Boric acid – Phase 2 of Rio Tinto Minerals boric acid Expansion 50   The project was completed on schedule and under budget.




Coking coal – Hail Creek (Rio Tinto: 82%) Expansion of annual capacity from 6 million tonnes to nameplate 8 million tonnes per annum, with washing plant increased to 12 million tonnes per annum. 223   The new dragline was commissioned early in the third quarter of 2006.




Completed in 2007      




Iron ore – Expansion of Hamersley’s (Rio Tinto share 100%) Mount Tom Price mine to 28 million tonnes per annum capacity. 226   Project completed in March 2007.




Iron ore – Brownfields mine expansion of Hamersley’s (Rio Tinto 100%) Yandicoogina mine from 36 million tonnes per annum to 52 million tonnes per annum. 530   First ore was produced in May 2007, with the project completed at the end of the third quarter of 2007 on time and on budget.




Iron ore – Expansion of Hamersley’s (Rio Tinto 100%) Dampier port (Phase B) from 116 million tonnes per annum to 140 million tonnes per annum capacity and additional rolling stock and infrastructure. 803   This project was completed at the end of 2007 on schedule and on budget.




Iron ore – Hope Downs development (Rio Tinto share: 50% of mine and 100% of infrastructure). Construction of 22 million tonnes per annum mine and related infrastructure. 980   First production occurred in November 2007, three months ahead of schedule. The first train load took place in December 2007.




 

Rio Tinto 2007 Form 20-F 11

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CAPITAL PROJECTS (continued)





Ongoing      




Copper – Kennecott Utah Copper (Rio Tinto 100%) East 1 pushback. The project extends the life of the open pit to 2017 while retaining options for further underground or open pit mining thereafter. 170   The project was approved in February 2005 and work on the pushback continues. The pebble crushing unit was commissioned in the third quarter of 2006.




Titanium dioxide – Construction by QMM (Rio Tinto 80%) of a greenfield ilmenite operation in Madagascar and associated upgrade of processing facilities at QIT in Canada. 1,000   Construction is under way. The budget was revised in 2007. First production is expected at the end of 2008.




Alumina – Expansion of the Gove Alumina Refinery (Rio Tinto 100%) from 2.0 to 3.8 million tonnes per annum. 2,300   Approved in September 2004, the expansion is expected to reach full nameplate capacity by the end of 2008.




Aluminium – Development of the 370,000 tonne per annum greenfield Sohar smelter in Oman (Rio Tinto 20%) 1,700   Approved in February 2005, first production is expected in the third quarter of 2008.




Aluminium – Aluminium spent pot lining recycling plant in Quebec (Rio Tinto 100%). 180   Approved in September 2006, the plant is expected to begin pot lining treatment operations in the second quarter of 2008.




Gold – Development of Cortez Hills (Rio Tinto 40% as at 31 December 2007; on 5 March 2008, Rio Tinto completed the sale of its interest in Cortez). 504   Approved in September 2005, the project continues to focus on permitting requirements. The project is on time and on budget.




Uranium – Rössing (Rio Tinto 68.6%) uranium mine life extension to 2016. 112   Approved in December 2005, works are on schedule and on budget to prolong the life of the mine to 2016 and beyond. The mine life extension estimate remains at US$82 million with US$30 million of sustaining capital expenditure.




Diamonds – Argyle (Rio Tinto 100%) development of underground mine and open pit cutback, extending the life of the mine to 2018. 1,500   Approved in December 2005, the underground development consisting of 34 km of tunnels and excavations is currently 40% complete. Construction of the major underground infrastructure commenced in February 2008. Full production from the underground mine is on schedule to be achieved by December 2010.




Copper – Northparkes (Rio Tinto 80%) E48 block cave project extending mine life to 2016. 160   Approved in November 2006. Underground development has commenced and is on schedule for May 2009 production start.




Energy – Clermont (Rio Tinto 50.1%) is expected to produce 12.2 million tonnes per annum, replacing Blair Athol. 750   Approved in January 2007, first shipments are expected in the second quarter of 2010 with full capacity being reached in 2013.




Iron ore – Cape Lambert port expansion (Rio Tinto 53%) from 55 to 80 million tonnes per annum and additional rolling stock and infrastructure. 952   Approved in January 2007, the project is forecast to be complete by the end of 2008, with progressive capacity ramp up in the first half of 2009. The estimated capital cost now includes US$92m for additional rolling stock and infrastructure.




Iron ore – Wharf upgrade and shiploader replacement at East Intercourse Island (Rio Tinto 100%). 65   The project is in progress and is expected to be complete by May 2009.




Alumina – Expansion of Yarwun Alumina Refinery from 1.4 to 3.4 million tonnes per annum. 1,800   Approved in July 2007, the expansion will more than double annual production at Yarwun and is expected to come onstream by 2011.




Iron ore – Expansion of Hope Downs Stage 2 (Rio Tinto 50%) from 22 to 30 million tonnes per annum. 350   Approved in August 2007, the expansion will be complete by early 2009.




 

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CAPITAL PROJECTS (continued)

Recently approved      




Diamonds – Construction at Diavik (Rio Tinto 60%) of an underground mine. 787   Capital investment of US$563 million was approved in November 2007 in addition to US$224 million invested in 2006-2007 for the feasibility studies and related capital projects. First production from the underground mine is expected to commence in 2009




Iron ore – Mesa A development (Rio Tinto 53%): construction of a 25 million tonne per annum mine and related infrastructure. 901   Approved in November 2007, the mine is forecast to be complete by 2010 with a progressive ramp up to 25 million tonnes per annum by 2011.




Iron ore – Brockman 4 development (Rio Tinto 100%): construction of a 22 million tonne per annum mine (Phase A) and related infrastructure. 1,521   Approved in November 2007, Phase A of the project, to 22 million tonnes is forecast to be complete by 2010, with scope to expand further to 36 million tonnes per annum by 2012.




Coking coal – extension and expansion of Kestrel mine (Rio Tinto share 80%). 991   Approved in December 2007, the investment will extend the life of the mine to 2031 and increase production to an average of 5.7mtpa.




Nickel – Development of Eagle nickel mine in Michigan, US. 300   Approved in December 2007, this high grade nickel and copper mine is expected to commence production in late 2009, delivering 16,000 tonnes of nickel per annum over a seven year period.




Aluminium – Replacement of overhead cranes and upgrade of crane runways on Lines 1 and 2 at Boyne Smelters (Rio Tinto 59.4%). 270   Approved in January 2008, the mobile cranes and associated runways on reduction Lines 1 and 2 will be replaced. The project is estimated to be completed by late 2010.




Aluminium – Replacement of Lines 1 and 2 carbon bake furnace at Boyne Smelters (Rio Tinto 59.4%). 347   Approved in January 2008, the carbon baking furnace that supplies anodes to Lines 1 and 2 will be replaced. The project is estimated to be completed by mid 2011.




Iron ore – Expansion to increase the production of iron ore concentrate by the Iron Ore Company of Canada (Rio Tinto 58.7%) 475   Approved March 2008, the first phase of an expansion programme intended to increase production capacity by 50 per cent to 22 million tonnes per annum by 2011.




ACQUISITIONS

Rio Tinto is also investing heavily in future growth opportunities from acquisitions. These opportunities have been financed out of internally generated funds and, in the the case of Alcan Inc., out of a US$40 billion credit facility which was fully underwritten and subsequently syndicated at floating rates of interest.

Asset Estimated   Status
  cost    
  US$m    




Acquired in 2005      




Iron ore – Hope Downs iron ore assets in Western Australia n/a   Rio Tinto reached agreement with Hancock Prospecting Pty Ltd to purchase a 50% interest.




Acquired in 2006      




Copper – Ivanhoe Mines (Rio Tinto: 9.9%) 303   Agreement to acquire a strategic stake including, upon completion of satisfactory a long term investment agreement with the Mongolian government, a second tranche of 9.9% for US$338m.




Copper – Northern Dynasty Minerals (Rio Tinto: 9.9%)     Increased stake to 19.8% during February 2007




Acquired in 2007      




Aluminium – Alcan Inc 38,652   Acquisition of Alcan Inc announced in July 2007 and completed in October 2007




Energy – Hydrogen Energy (Rio Tinto: 50%) 35   Joint venture with BP




Diamonds & Industrial Minerals – Dampier Salt (Rio Tinto: 3%) 19   The purchase of a 3% interest in Dampier Salt from a minority shareholder that increased the Group’s total interest to 68.4%.




 

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DIVESTITURES

On the acquisition of Alcan Inc the Group announced an asset divestment target of at least US$10 billion and following the completion of a strategic review, which highlighted approximately US$30 billion of potential divestments, increased this target to at least US$15 billion. Rio Tinto will explore options for the sale of a shortlist of assets. These are all good businesses and any sales will be value driven and dependent on price.

Asset Estimated   Status
proceeds  
US$m  




Divested in 2005    




Iron ore – Labrador Iron Ore Royalty Income Fund (LIORIF) (Rio Tinto: 19%) 130   LIORIF has an interest of 15.1% in, and receives royalties from, Iron Ore Company of Canada (IOC), a subsidiary of Rio Tinto. The transaction had no effect on Rio Tinto’s 59% direct interest in IOC.




Other operations – Lihir Gold (Rio Tinto: 14.5%) 295   Rio Tinto relinquished its management agreement with Lihir, and subsequently sold its interest.




Divested in 2006    




Aluminium – Eurallumina SpA (Rio Tinto: 56.2%) n/a   Sold to RUSAL




Diamonds – Ashton Mining of Canada Inc (Rio Tinto: 51.7%) n/a   Sold to Stornaway Diamond Corporation for US$26m plus shares representing an interest of 17.7%.




Divested in 2007    




Diamonds and Industrial Minerals – Lassing and Ennsdorf 6   Rio Tinto Minerals disposed of its operations at Lassing and Ennsdorf for consideration of $6m.




Divested in 2008    




Copper – Greens Creek mine (Rio Tinto: 70%) 750   Sale agreed to Hecla Mining Company, the Group’s minority partner.




Copper – Cortez joint venture (Rio Tinto: 40%) 1,695   Sold to Barrick Gold Corporation, the Group’s partner, for a cash consideration plus a deferred bonus payment and a contingent royalty interest.




 

Rio Tinto 2007 Form 20-F 14

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BUSINESS ENVIRONMENT, MARKETS AND REGULATION

Competitive environment
Rio Tinto is a major producer in all the metals and minerals markets in which it operates. It is generally among the top five global producers by volume. It has market shares for different commodities ranging from five per cent to 40 per cent. The competitive arena is spread across the globe.
     Most of Rio Tinto’s competitors are private sector companies which are publicly quoted. Several are, like Rio Tinto, diversified in terms of commodity exposure, but others are focused on particular commodity segments. Metal and mineral markets are highly competitive, with few barriers to entry. They can be subject to price declines in real terms reflecting large productivity gains, increasing technical sophistication, better management and advances in information technology.
     High quality, long life mineral resources, the basis of good financial returns, are relatively scarce. Rio Tinto’s ownership of or interest in some of the world’s largest deposits enables it to contribute to long term market growth. World production volumes are likely to grow at least in line with global economic activity. The emergence of China and eventually India as major economies requiring metals and minerals for development could mean even higher market growth.

Economic overview
The world economy grew by 5.2 per cent in 2007 on a purchasing power parity basis, marking the fifth successive year of global growth in excess of four per cent.
     This extended global economic boom has inevitably not been without its stresses and strains. The implications of some of the excesses driven by previous loose monetary conditions and easy credit availability emerged last year. The full implications of the US housing downturn which started in the second half of 2005 began to be felt last year and this has led to financial market volatility and asset writedowns by some of the major banking institutions. Despite this, the manufacturing sector of the US economy performed well during 2007 and growth across the country averaged 2.2 per cent.
     Growth in the rest of the developed world was reasonably supportive for the mining sector. European Union economies, which in general are not subject to same imbalances as the US, grew above their long run trend rate for the second year in a row. The Japanese economy, whilst volatile and still dependent for growth on external demand, expanded by 1.8 per cent.
     The developed world accounts for around half of global metals demand but its importance to commodity markets is much less than it was as recently as the start of this decade. Changes in demand in other regions – most notably in China, but also increasingly in other emerging countries – has become much more important to the mining sector than cyclical fluctuations in consumption in the developed world.

     So whilst weaker economic growth in the US, Europe and Japan acted to hold down growth in commodity demand last year, the effect of this was more than offset by accelerating economic activity elsewhere. China has been the principal driver behind this change. Its economy expanded 11.4 per cent last year and apparent copper demand in the country rose by close to 30 per cent. Aluminium demand was up a remarkable 40 per cent. Other emerging markets also achieved buoyant growth. The Asia region excluding Japan expanded by eight per cent and Latin America grew by five per cent.
     Given that 2007 started with already depleted stocks, and with the mining industry still struggling to add capacity despite increased levels of capital investment, the macroeconomic conditions outlined above were more than sufficient to generate some further increases in what were already high prices at the start of the year. A number of historic price highs were breached. Slower growth and additions to supply caused some metals prices to fall back in the second half of the year, but a number of bulk and energy commodities prices continued their upwards trajectory.
     Amongst the base metals, lead, tin and nickel registered the greatest increase in annual average prices in 2007 (up 82 per cent, 59 per cent and 65 per cent year on year respectively). Aluminium and copper saw more modest increases of three per cent and six per cent, respectively. Zinc was the only LME metal to return a 2007 average price lower than in 2006, following a sharp sell off through the year.
     Iron ore benchmark prices increased by 9.5 per cent in April but with additions to low cost supply still not keeping pace with demand the market has become even more dependent on high cost Indian and Chinese production. As a result of this and higher freight costs, spot prices for iron ore to China doubled over the course of the year. Benchmark prices are likely to see more of the benefit of these strong market conditions in 2008.
     In February 2008, Rio Tinto noted the announced settlements between another iron ore producer and steelmakers, and indicated it would continue to negotiate for a freight premium to reflect Australia’s proximity to Asia and major customers.
     Australian thermal coal export prices ended the year on a high note of US$90 per tonne due to tight market conditions resulting from diminishing Chinese exports and infrastructure constraints on supply. The average annual price of US$65 per tonne was one third up on the 2006 level. In contrast, average US coal prices in the Powder River Basin were down some 20 per cent on their 2006 level, reflecting softer demand in the US. The star performer amongst energy prices was uranium, with average reported spot prices doubling year on year. Most trade in uranium takes place on longer contracted terms, and these have begun to reflect stronger market conditions.
     Demand for industrial minerals such as borates and titanium minerals has held up well with prices holding

 

Rio Tinto 2007 Form 20-F 15

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steady. The same applies to the diamond market, where supply trends have been supportive of prices.
     One of the beneficiaries of financial uncertainty are often precious metals prices. The average gold price rose 15 per cent in 2007 to US$691 per ounce. Most of this increase took place later in the year and gold finished 2007 selling at record levels of over US$830 per ounce, compared to a 2006 average of around US$602 per ounce.
     Many less widely traded metals have also continued to benefit from firm demand. In particular, the molybdenum price continued its remarkable performance, averaging US$30 per pound in 2007, close to its record level in 2005.

Marketing channels
Rio Tinto’s marketing channels are described under ‘Marketing’ on page 93.

Governmental regulation
Rio Tinto is subject to extensive governmental regulation affecting all aspects of its operations and consistently seeks to apply best practice in all of its activities. Due to Rio Tinto’s product and geographical spread, there is unlikely to be any single governmental regulation that could have a material effect on the Group’s business. Rio Tinto’s operations in Australia, New Zealand, and Indonesia are subject to state, provincial and federal regulations of general application governing mining and processing, land tenure and use, environmental requirements, including site specific environmental licences, permits and statutory authorisations, workplace health and safety, trade and export, corporations, competition, access to infrastructure, foreign investment and taxation. Some operations are conducted under specific agreements with the respective governments and associated acts of parliament. In addition, Rio Tinto’s uranium operations in the Northern Territory, Australia and Namibia are subject to specific regulation in relation to mining and the export of uranium.
     US and Canada based operations are subject to local, state, provincial and national regulations governing land tenure and use, environmental aspects of operations, product and workplace health and safety, trade and export administration, corporations, competition, securities and taxation. In relation to hydro-electric power generation in Canada, water rentals and royalties, as well as surplus power sales, are regulated by the Quebec and British Columbia provincial governments.
     The South African Mineral and Petroleum Resources Development Act 2002, as read with the Empowerment Charter for the South African Mining Industry, targets the transfer (for fair value) of 26 per cent ownership of existing South African mining assets to historically disadvantaged South Africans (HDSAs) within ten years. Attached to the Empowerment Charter is a “scorecard” by which companies will be judged on their progress towards empowerment and the attainment of the target transfer of 26 per cent ownership. The scorecard also provides that in relation to existing mining assets, 15 per cent ownership should vest in HDSAs within five years of 1 May 2004. Rio Tinto anticipates that the government of South Africa will continue working towards the introduction of new royalty payments in respect of mining tenements, expected to become effective during 2009.

Environmental regulation
Rio Tinto measures its performance against environmental regulation referred to in the previous section by rating incidents on a low, moderate, high, or critical scale of likelihood and consequence of impacting the environment. High and critical ratings are reported to the Executive committee and the board Committee on social and environmental accountability, including progress with remedial actions. Prosecutions and other breaches are also used to gauge Rio Tinto’s performance.
     In 2007, there were nine high or critical environment incidents compared with eight in 2006. These incidents were of a nature to impact the environment or may have concerned local communities. Of these two impacted air quality, five resulted from water discharge and two were spills. Examples of these include:

Air emission concentrations of fluorine exceeded license conditions at Boyne smelters, Australia.
Unauthorised discharge of mine water downstream of a dam as a result of poor communications with a contractor at Kestrel, Australia.
Sewage discharged into a holding pond following a blockage in pumps at Weipa, Australia.
Sea water used in cooling was discharged to the ocean at a higher temperature and pH than limits imposed by the license at Yarwun, Australia.
Minor land clearing inside an area identified as having heritage value at Hope Downs, Australia.
Diesel leak from below the floor of a bulk storage tank at West Angelas, Australia.

During 2007 three operations incurred fines amounting to US$9,633 (2006: US$56,779).
     Further information in respect of the Group’s environmental performance is included throughout this annual report and on the website.

 

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GROUP MINES

Mine   Location   Access   Title/lease







RIO TINTO ALCAN            







CBG Sangaredi (23%)   Conakry, Guinea   Road and air   Lease expires in 2038







Ely   Weipa, Queensland, Australia   Road and air   Alcan Queensland Pty. Limited Agreement Act 1965 expires in 2048 with 21 year right of renewal with a two year notice period







GBC Awaso (80%)   Awaso, Ghana   Road   Lease expires in 2022, renewable in
25 year periods







Gove   Gove, Northern Territory, Australia   Road, air and port   100% Leasehold (held in trust by the Commonwealth on behalf of the Traditional Owners until end of mine life)







Porto Trombetas (MRN) (12%)   Porto Trombetas, Brazil   Air or port   Mineral rights granted for undetermined period

 

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GROUP MINES (continued)

Mine   History   Type of mine   Power source







RIO TINTO ALCAN            







CBG Sangaredi (23%)   Bauxite mining commenced in 1973. Shareholders are 51% Halco and 49% Guinea. Alcan holds 45% of Halco since 2004 and off-takes 45%. Current annual capacity is 13 million tonnes.   Open cut   On site generation (fuel oil)







Ely   Discovered in 1957; 100% secured in 1965. In 1997, Ely Bauxite Mining Project Agreement signed with the local Aboriginal land owners. Bauxite Mining and Exchange Agreement signed in 1998 with Comalco to allow for extraction of the ore by Comalco. Mining commenced in 2006, first ore extracted in 2007.       Supplied by Weipa







GBC Awaso (80%)   Bauxite mining commenced in 1940 (100% British Aluminium). From 1974 to 1997, Ghana held 55%, Alcan 45%; since 1998 Alcan 80% Ghana 20%. Annual capacity is one million tonnes, currently limited to 750,000 tonnes by rail infrastructure.   Open cut   Electricity grid with on site generation back up







Gove   Bauxite mining commenced in 1970 feeding both the Gove refinery and export market capped at two million tonnes per annum. Bauxite export ceased in 2006 with feed intended for the expanded Gove Refinery. Current production capacity about ten million tonnes per annum with mine life estimated to 2025.   Open cut   Central power station located at the Gove refinery







Porto Trombetas (MRN) (12%)   In June 1974, an agreement was signed between the shareholders of Mineração Rio do Norte S.A, consisting at that time of the following companies: CVRD (41%), Alcan Aluminum Limited (19%), CB-Votorantim (10%), Reynolds Alumínio do Brasil Ltda (5%), Norsk Hydro a.s. (5%), Mineração Rio Xingu Ltda (5%), A/S Aaardal og Sunndal Verk (5%), Instituto Nacional de Industria (5%) and Rio Tinto Zinc do Brasil Ltda (5%). Mineral extraction commenced in April 1979. Initial production capacity 3.4 million tonnes annually. From October 2003, production capacity up to 16.3 million tonnes per year. Capital structure currently: Vale (40%), BHP-Billiton (14.8%), Rio Tinto Alcan(12%), CBA (10%), Alcoa/Abalco (18.2%) and Hydro (5%). Production 17.8 million tonnes of wet and dry bauxite annually.   Open cut   On site generation (heavy oil, diesel)







 

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GROUP MINES (continued)

Mine   Location   Access   Title/lease







Weipa   Weipa, Queensland, Australia   Road, air and port   Queensland Government lease expires in 2041 with option of 21 year extension, then two years’ notice of termination







COPPER            







Escondida (30%)   Atacama Desert, Chile   Pipeline and road to deep sea port at Coloso   Rights conferred by Government under Chilean Mining Code
   







Grasberg joint venture (40%)   Papua, Indonesia   Pipeline, road and port   Indonesian Government Contracts of Work expire in 2021 with option of two ten year extensions







Kennecott Minerals
Cortez/Pipeline (40%) (a)
  Nevada, US   Road   Patented and unpatented mining claims







Kennecott Minerals
Greens Creek (70%) (b)
  Alaska, US   Port   Patented and unpatented mining claims







Kennecott Utah Copper
Bingham Canyon
  Near Salt Lake City,
Utah, US
  Pipeline, road and rail   Owned







Northparkes (80%)   Goonumbla, New South Wales, Australia   Road and rail   State Government mining lease issued in 1991 for 21 years







Palabora (58%)   Phalaborwa, Limpopo Province, South Africa   Road and rail   Lease from South African Government until deposits exhausted. Base metal claims owned by Palabora







DIAMONDS            







Argyle Diamonds   Kimberley Ranges, Western Australia   Road and air   Mining tenement held under Diamond (Argyle Diamond Mines Joint Venture) Agreement Act 1981-1983; lease extended for 21 years from 2004







Diavik (60%)   N orthwest Territories, Canada   Air, ice road in winter   Mining leases from Canadian federal government expiring in 2017 and 2018







Murowa (78%)   Zvishavane, Zimbabwe   Road and air   Claims and mining leases







ENERGY            







Energy Resources of Australia (68%)
Ranger
  Northern Territory, Australia   Road   Leases granted by State







 

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GROUP MINES (continued)

Mine   History   Type of mine   Power source







Weipa   Bauxite mining commenced in 1961. Major upgrade completed in 1998. Open cut Rio Tinto interest increased from 72.4% to 100% in 2000. In 2004 a mine expansion was completed that has lifted annual capacity to 16.5 million tonnes. Mining commenced on the adjacent Ely mining lease in 2006, in accordance with the 1998 agreement with Alcan. A second shiploader that increases the shipping capability of the Weipa operation was commissioned in 2006   Open pit   On site generation; new power station commissioned in 2006







COPPER            







Escondida (30%)   Production started in 1990 and expanded in phases to 2002 when the new concentrator was completed; production from Norte commenced in 2005 and the sulphide leach produced the first cathode during 2006   Open pit   Supplied from SING grid under various contracts with Norgener, Gas Atacama and Edelnor







Grasberg joint venture (40%)   Joint venture interest acquired in 1995. Capacity expanded to over and 200,000 tonnes of ore per day in 1998 with addition of underground production of more than 35,000 tonnes per day in 2003, with an expansion to a sustained rate of 50,000 tonnes per day by mid 2007   Open pit and underground   Long term contract with US-Indonesian consortium operated, purpose built, coal fired generating station







Kennecott Minerals
Cortez/Pipeline (40%) (a)
  Gold production started at Cortez in 1969; at Pipeline deposit in 1997; Cortez Hills was approved in 2005   Open pit   Public utility







Kennecott Minerals
Greens Creek (70%) (b)
  Redeveloped in 1997   Underground/drift and fill   On site diesel generators







Kennecott Utah Copper
Bingham Canyon
  Interest acquired in 1989. Modernisation includes smelter complex and expanded tailings dam   Open pit   On site generation supplemented by long term contracts with Utah Power and Light







Northparkes (80%)   Production started in 1995; interest acquired in 2000   Open pit   Supplied from State grid







Palabora (58%)   Development of 20 year underground mine commenced in 1996 with open pit closure in 2003   Underground   Supplied by ESKOM via grid network







DIAMONDS            







Argyle Diamonds   Interest increased from 59.7% following purchase of Ashton Mining in 2000. Underground mine project approved in 2005 to extend mine life to 2018   Open pit to underground in future   Long term contract with Ord Hydro Consortium and on site generation backup







Diavik (60%)   Deposits discovered 1994-1995. Construction approved 2000. Diamond production started 2003. Second dike closed off in 2005 for mining of additional orebody   Open pit to underground in future   On site diesel generators; installed capacity 27MW with an upgrade under way







Murowa (78%)   Discovered in 1997. Small scale production started in 2004   Open pit   Supplied by ZESA with diesel generator backup







ENERGY            







Energy Resources of Australia (68%)
Ranger
  Mining commenced in 1981. Interest acquired through North in 2000. Life of mine extension to 2020 announced in 2007   Open pit   On site diesel/steam power generation







 

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GROUP MINES (continued)

Mine   Location   Access   Title/lease







Rio Tinto Coal Australia
Bengalla (30%)
Blair Athol (71%)
Hail Creek (82%)

Hunter Valley Operations (76%)
Kestrel (80%)
Mount Thorley Operations (61
%)
Warkworth (42%)
  New South Wales and Queensland, Australia   Road, rail, conveyor and port   Leases granted by State







Rio Tinto Energy America
Antelope
Colowyo (20%)
Cordero Rojo
Decker (50%)
Jacobs Ranch
Spring Creek
  Wyoming, Montana and Colorado, US   Rail and road   Leases from US and State Governments and private parties, with minimum coal production levels, and adherence to permit requirements and statutes







Rössing Uranium (69%)   Namib Desert, Namibia   Rail, road and port   Federal lease







INDUSTRIAL MINERALS            







Rio Tinto Minerals: Boron   California, US   Road, rail and port   Owned







Rio Tinto Minerals: Salt (68.4%)   Dampier, Lake MacLeod and Port Hedland, Western Australia   Road and port   State agreements (mining leases) expiring in 2013 at Dampier, 2018 at Port Hedland and 2021 at Lake MacLeod with options to renew in each case







Rio Tinto Minerals: Talc   Trimouns, France (other smaller operations in Australia, Europe and North America)   Road and rail   Owner of ground (orebody) and long term lease agreement to 2012







QIT-Fer et Titane   The Saguenay, Quebec, Canada   Rail and port (St Lawrence River)   Mining covered by two concessions granted by State in 1949 and 1951 which, subject to certain Mining Act restrictions, confer rights and obligations of an owner







Richards Bay Minerals (50%)   Richards Bay, KwaZulu- Natal, South Africa   Rail, road and port   Long term renewable mineral leases; State lease for Reserve 4 initially runs to the end of 2022; Ingonyama Trust lease for Reserve10 runs to 2010. Both mineral leases are required to be converted to new order mining rights by 30 April 2009 in terms of South African legislation. An application for conversion was made in 2006 for the Ingonyama Trust mineral lease, and an application is expected to be made by mid 2008 for the conversion of the State mineral lease







IRON ORE            







Hamersley Iron
Brockman
Marandoo
Mount Tom Price
Nammuldi

Paraburdoo
Yandicoogina
Channar (60%)

Eastern Range (54%)
  Hamersley Ranges, Western Australia   Railway and port (owned by Hamersley Iron and operated by Pilbara Iron)   Agreements for life of mine with Government of Western Australia







 

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GROUP MINES (continued)

Mine   History   Type of mine   Power source







Rio Tinto Coal Australia
Bengalla (30%)
Blair Athol (71%)
Hail Creek (82%)
Hunter Valley Operations (76%)
Kestrel (80%)
Mount Thorley Operations (61%)
Warkworth (42%)
  Peabody Australian interests acquired in 2001. Production started for export at Blair Athol and adjacent power station at Tarong in 1984. Kestrel acquired and recommissioned in 1999. Hail Creek started in 2003   Open cut and underground (Kestrel)   State owned grid







Rio Tinto Energy America
Antelope
Colowyo (20%)
Cordero Rojo
Decker (50%)
Jacobs Ranch
Spring Creek

 

  Antelope, Spring Creek, Decker and Cordero acquired in 1993, Colowyo in 1995, Caballo Rojo in 1997, Jacobs Ranch in 1998 and West Antelope in 2004   Open cut   Supplied by IPPs and Cooperatives through national grid service







Rössing Uranium (69%)   Production began in 1978. Life of mine extension to 2016 approved in 2005   Open pit   Namibian National Power







INDUSTRIAL MINERALS          







Rio Tinto Minerals: Boron   Deposit discovered in 1925, acquired by Rio Tinto in 1967   Open pit   On site co-generation units







Rio Tinto Minerals:
Salt (68.4%)
  Construction of the Dampier field started in 1969; first shipment in1972. Lake MacLeod was acquired in 1978 as an operating field. Port Hedland was acquired in 2001 as an operating field   Solar evaporation of seawater (Dampier and Port Hedland) and underground brine (Lake MacLeod); dredging of gypsum from surface of Lake MacLeod   Dampier supply from Hamersley Iron Pty Ltd; Lake MacLeod from Western Power and on site generation units; Port Hedland from Western Power







Rio Tinto Minerals:
Talc
  Production started in 1885; acquired in 1988 . (Australian mine acquired in 2001)   Open pit   Supplied by Atel and on site generation units. Australian mine power supplied by Western Power







QIT-Fer et Titane   Production started in 1950; interest acquired in 1989   Open pit   Long term contract with Hydro-Quebec







Richards Bay Minerals (50%)   Production started in 1977; interest acquired in 1989. Fifth dredge commissioned in 2000   Beach sand dredging   Contract with ESKOM







           
           
           
           
IRON ORE          







Hamersley Iron
Brockman
Marandoo
Mount Tom Price
Nammuldi
Paraburdoo
Yandicoogina
Channar (60%)
Eastern Range (54%)
  Annual capacity increased to 68 million tonnes during 1990s. Yandicoogina first ore shipped in 1999 and port capacity increased. Eastern Range first shipped ore in 2004   Open pit   Supplied through the integrated Hamersley and Robe power network operated by Pilbara Iron







 

Rio Tinto 2007 Form 20-F 22

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GROUP MINES (continued)

Mine   Location   Access   Title/lease







Hope Downs Joint Venture (50% mine, 100% infrastructure)   Pilbara region, Western Australia   Railway owned and operated by Rio Tinto   Agreements for life of mine with Government of Western Australia







Iron Ore Company of Canada (59%)   Labrador City, Province of Newfoundland and Labrador   Railway and port facilities in Sept-Iles, Quebec(owned and operated by IOC)   Sublease with the Labrador Iron Ore Royalty Income Fund which has lease agreements with the Government of Newfoundland and Labrador that are due to be renewed in 2020 and 2022







Rio Tinto Brasil Corumbá   Matto Grosso do Sul, Brazil   Road, air and river   Government licence for undetermined period







Robe River Iron Associates
(53%) Mesa J West Angelas
  Pilbara region, Western Australia   Railway and port (owned by Robe River and operated by Pilbara Iron)   Agreements for life of mine with Government of Western Australia







 

Rio Tinto 2007 Form 20-F 23

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GROUP MINES (continued)

Mine   History   Type of mine   Power source







Hope Downs Joint Venture (50% mine, 100% infrastructure)   Joint venture venture between Rio Tinto and Hancock Prospecting Pty Limited. Construction of Stage 1 to 22 million tonnes per annum commenced April 2006 and first production occurred November 2007. Stage 2 to 30 million tonnes per annum has been approved and is forecast to be completed by Q1 2009   Open pit   Supplied through the integrated Hamersley and Robe power network operated by Pilbara Iron







Iron Ore Company of Canada (59%)   Current operation began in 1962 and has processed over one billion tonnes of crude ore since. Annual capacity now 17.5 million tonnes of concentrate of which 13.5 million tonnes can be pelletised Interest acquired in 2000 through North acquisition   Open pit   Supplied by Newfoundland Hydro under long term contract







Rio Tinto Brasil Corumbá   Iron ore production started in 1978; interest acquired in 1991   Open pit   Supplied by ENERSUL







Robe River Iron Associates (53%) Mesa J West Angelas   First shipment in 1972. Annual sales reached 30 million tonnes in late 1990s. Interest acquired in 2000 through North acquisition. West Angelas first ore shipped in 2002 and mine expanded in 2005   Open pit   Supplied through the integrated Hamersley and Robe power network operated by Pilbara Iron







 
Notes
(a) On 5 March 2008 the Group completed the sale of its interest in the Cortez joint venture to its joint venture partner for a cash consideration of US$1,695 million, a deferred bonus payment in the event of additional reserves and a contingent royalty interest.
(b) On 12 February 2008 the Group reached agreement for the sale of Greens Creek to its minority partner for US$750 million.

 

Rio Tinto 2007 Form 20-F 24

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GROUP SMELTERS AND REFINERIES










Smelter/refinery   Location   Title/lease   Plant type/product   Capacity as of
31 December 2007









RIO TINTO ALCAN                









Alma   Alma, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium rod, t-foundry, sow, molten metal   415,000 tonnes per year aluminium









Alouette (40%)   Sept-Iles, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium ingot, sow   572,000 tonnes per year aluminium









Alucam (46.7%)   Edea, Cameroon   100% Freehold   Aluminium smelter producing aluminium slab, ingot   100,000 tonnes per year aluminium









Anglesey (51%)   Anglesey, Wales, UK   100% Freehold   Aluminium smelter producing aluminium billet, block, sow   145,000 tonnes per year aluminium









Arvida   Arvida, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium billet, molten metal   166,000 tonnes per year aluminium









Beauharnois   Beauharnois, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium ingot foundry   52,000 tonnes per year aluminium









Becancour (25%)   Becancour, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium billet, slab,
t-foundry,
t-bar
  404,000 tonnes per year aluminium









Bell Bay   Bell Bay, Northern Tasmania, Australia   100% Freehold   Aluminium smelter producing aluminium ingot, block, t-bar   178,000 tonnes per year aluminium









Boyne Island Smelters (59%)   Boyne Island, Queensland, Australia   100% Freehold   Aluminium smelter producing aluminium ingot, billet, t-bar   545,000 tonnes per year aluminium
 









Dunkerque   Dunkerque, France   100% Freehold   Aluminium smelter producing aluminium slab, t-foundry,
t-bar
  259,000 tonnes per year aluminium









Gardanne   Gardanne, France   100% Freehold   Refinery producing specialty aluminas   635,000 tonnes per year specialty aluminas(including 133 000 tonnes of smelter grade aluminas)









Gove   Gove, Northern Territory, Australia   100% Leasehold. Commonwealth land held (in trust on behalf of Traditional Owners). Numerous lots with varying expiry dates starting 2011   Refinery producing alumina   2,000,000 tonnes per year alumina









La Grande-Baie   Grande-Baie, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium slab, sow, molten metal   207,000 tonnes per year aluminium









ISAL   Reykjavik, Iceland   100% Freehold   Aluminium smelter producing aluminium slab, t-bar   179,000 tonnes per year aluminium









Kitimat   Kitimat, British Columbia, Canada   100% Freehold   Aluminium smelter producing aluminium billet, slab, ingot   277,000 tonnes per year aluminium









Laterriere   Laterriere, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium slab, t-bar, molten metal   228,000 tonnes per year aluminium









Lochaber   Fort William, Scotland, UK   100% Freehold   Aluminium smelter producing aluminium slab, t-bar   43,000 tonnes per year aluminium









Lynemouth   Lynemouth, Northumberland, UK   100% Freehold   Aluminium smelter producing aluminium slab, t-bar   178,000 tonnes per year aluminium









Ningxia (50%)   Qingtongxia, China   100% Freehold   Aluminium smelter producing aluminium ingot   152,000 tonnes per year aluminium









Queensland Alumina (80%)   Gladstone, Queensland, Australia   73.3% Freehold.
26.7% Leasehold (of which more than 80% expires in 2026 and after)
  Refinery producing alumina   3,953,000 tonnes per year alumina









Sao Luis (Alumar) (10%)   Sao Luis, Maranhao, Brazil   100% Freehold   Refinery producing alumina   140,000 tonnes per year(10%) of alumina which will increase to 350,000 tonnes per year after expansion in 2009









St-Jean-de- Maurienne   St-Jean-de-Maurienne, France   100% Freehold   Aluminium smelter producing aluminium slab, rod   135,000 tonnes per year aluminium









 

Rio Tinto 2007 Form 20-F 25

Back to Contents

GROUP SMELTERS AND REFINERIES (continued)










Smelter/refinery   Location   Title/lease   Plant type/product   Capacity as of
31 December 2007









Sebree   Kentucky, US   100% Freehold   Aluminium smelter producing aluminium billet, ingot foundry, t-bar   196,000 tonnes per year aluminium









Shawinigan   Shawinigan, Quebec, Canada   100% Freehold   Aluminium smelter producing aluminium billet, sow   99,000 tonnes per year aluminium









SORAL (50%)   Husnes, Norway   100% Freehold   Aluminium smelter producing aluminium billet   164,000 tonnes per year aluminium









Tiwai Point (New Zealand Aluminium Smelters) (79%)   Invercargill, Southland, New Zealand   19.6% Freehold.
80.4%
Leasehold (expiring in 2029 and use of certain Crown land)
  Aluminium smelter producing aluminium ingot, billet, t-bar   352,000 tonnes per year aluminium









Tomago (51.6%)   Tomago, New South Wales, Australia   100% Freehold   Aluminium smelter producing aluminium billet, slab, ingot   520,000 tonnes per year aluminium









Vaudreuil (Jonquiere)   Quebec, Canada   100% Freehold   Refinery producing alumina   1,300,000 tonnes per
  year alumina









Yarwun   Gladstone, Queensland, Australia   97% Freehold.
3% Leasehold (expiring in
2101 and after)
  Refinery producing alumina   1,400,000 tonnes per year alumina









COPPER GROUP                









Kennecott Utah Copper   Magna, Salt Lake City, Utah, US   100% Freehold   Flash smelting furnace/Flash convertor furnace copper refinery   335,000 tonnes per year refined copper









Palabora (58%)   Phalaborwa, South Africa   100% Freehold   Reverberatory Pierce Smith copper refinery   130,000 tonnes per year refined copper









Boron   California, US   100% Freehold   Borates refinery   565,000 tonnes per year boric oxide









QIT-Fer et Titane Sorel Plant   Sorel-Tracy, Quebec, Canada   100% Freehold   Ilmenite smelter   1,100,000 tonnes per year titanium dioxide slag, 900,000 tonnes per year iron









Richards Bay Minerals (50%)   Richards Bay, South Africa   100% Freehold   Ilmenite smelter   1,060,000 tonnes per year titanium dioxide slag









IRON ORE GROUP                









HIsmelt® (60%)   Kwinana, Western Australia   100% Leasehold (expiring in 2010 with rights of renewal for further 25 year terms)   HIsmelt® ironmaking plant producing pig iron   800,000 tonnes per year pig iron









IOC Pellet Plant (59%)   Labrador City, Newfoundland, Canada   100% Leaseholds (expiring in 2020, 2022 and 2025 with rights of renewal for further terms of 30 years)   Pellet induration furnaces producing multiple iron ore pellet types   13,500,000 tonnes per year pellet









 

Rio Tinto 2007 Form 20-F 26

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GROUP POWER PLANTS










Smelter/refinery   Location   Title/lease   Plant type/product   Capacity as of
              31 December 2007









RIO TINTO ALCAN                









Daba Power Plant (21.8%)   Qingtongxia, China   100% Freehold   Thermal power station   1,200 megawatts









Gladstone Power Station (42%)   Gladstone, Queensland, Australia   100% Freehold   Thermal power station   1,680 megawatts









Highlands Power Stations   Lochaber, Kinlochleven, UK   100% Freehold   Hydro-electric power   80 megawatts









Lynemouth Power Station   Lynemouth, UK   100% Freehold   Thermal power station   420 megawatts









Kemano Power Plant   Kemano, British Columbia, Canada   100% Freehold   Hydro-electric power   896 megawatts









Quebec Power Stations   The Saguenay, Quebec, Canada (Chute-a-Caron, Chute a la Savanne, Chute- des-Passes, Chute du Diable, Isle-Maligne, Shipshaw)   100% Freehold    Hydro-electric power   2,687 megawatts









Vigelands Power Station   Nr Kristiansand, Norway   100% Freehold   Hydro-electric power   26 megawatts









 

Rio Tinto 2007 Form 20-F 27

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METALS AND MINERALS PRODUCTION

      2007   2006   2005  
      Production (a)   Production (a)   Production (a)  










 
  Rio Tinto   Total   Rio Tinto   Total   Rio Tinto   Total   Rio Tinto  
  % share (b)       share       share       share  














 
ALUMINA (’000 tonnes)                            
Eurallumina (Italy) (c)       914   513   1,070   601  
Gardanne (France) (d) 100.0   21   21                  
Gove (Australia) (d) 100.0   405   405                  
Jonquiere (Canada) (d) 100.0   252   252                  
Queensland Alumina (Australia) (d) (e) 80.0   3,816   1,766   3,871   1,494   3,953   1,526  
Sao Luis (Alumar) (Brazil) (d) 10.0   288   29                  
Yarwun (Australia) (d) (f) 100.0   1,260   1,260   1,240   1,240   835   835  
Speciality Plants (Canada/France/Germany) (d) 100.0   144   144                  














 
Rio Tinto total         3,877       3,247       2,963  














 
ALUMINIUM (refined) (’000 tonnes)                            
Alma (Canada) (d) 100.0   80.1   80.1                  
Alouette (Sept-Iles) (Canada) (d) 40.0   108.9   43.5                  
Alucam (Edea) (Cameroon) (d) 46.7   18.8   8.8                  
Anglesey (UK) 51.0   144.7   73.3   143.8   73.3   143.9   73.4  
Arvida (Canada) (d) 100.0   31.8   31.8                  
Beauharnois (Canada) (d) 100.0   9.8   9.8                  
Becancour (Canada) (d) 25.1   80.1   20.1                  
Bell Bay (Australia) 100.0   178.3   178.3   177.5   177.5   173.8   173.8  
Boyne Island (Australia) 59.4   550.3   329.6   545.1   325.0   544.9   326.2  
Dunkerque (France) (d) 100.0   49.5   49.5                  
Grande-Baie (Canada) (d) 100.0   39.7   39.7                  
ISAL (Reykjavik) (Iceland) (d) 100.0   35.0   35.0                  
Kitimat (Canada) (d) 100.0   46.8   46.8                  
Lannemezan (France) (d) 100.0   5.0   5.0                  
Laterriere (Canada) (d) 100.0   44.0   44.0                  
Lochaber (UK) (d) 100.0   8.3   8.3                  
Lynemouth (UK) (d) 100.0   33.3   33.3                  
Ningxia (Qingtongxia) (China) (d) 50.0   30.9   15.5                  
Sebree (USA) (d) 100.0   36.8   36.8                  
Shawinigan (Canada) (d) 100.0   18.3   18.3                  
SORAL (Husnes) (Norway) (d) 50.0   32.0   16.0                  
St-Jean-de Maurienne (France) (d) 100.0   25.2   25.2                  
Tiwai Point (New Zealand) 79.4   353.0   280.9   337.3   268.9   351.4   280.3  
Tomago (Australia) (d) 51.6   97.4   50.2                  














 
Rio Tinto total         1479.7       844.7       853.7  














 
BAUXITE (’000 tonnes)                            
Awaso (Ghana) (d) (g) 80.0   216   173                  
Gove (Australia) (d) 100.0   985   985                  
Porto Trombetas (MRN) (Brazil) (d) 12.0   3,392   407                  
Sangaredi (Guinea) (d) (h)   2,774   1,248                  
Weipa (Australia) 100.0   18,209   18,209   16,319   16,319   15,604   15,604  














 
Rio Tinto total         21,022       16,319       15,604  














 
BORATES (’000 tonnes) (i)                            
Rio Tinto Minerals – Boron (US) 100.0   541   541   538   538   540   540  
Rio Tinto Minerals – Argentina (Argentina) 100.0   19   19   15   15   20   20  














 
Rio Tinto total         560       553       560  














 
COAL – HARD COKING (’000 tonnes)                            
Rio Tinto Coal Australia                            
Hail Creek Coal (Australia) 82.0   5,012   4,110   4,544   3,726   5,900   4,838  
Kestrel Coal (Australia) 80.0   2,586   2,069   2,729   2,183   2,946   2,357  














 
Rio Tinto total hard coking coal         6,179       5,909       7,195  














 

 

Rio Tinto 2007 Form 20-F 28

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METALS AND MINERALS PRODUCTION (continued)

          2007       2006       2005  
      Production (a)   Production (a)   Production (a)  










 
  Rio Tinto   Total   Rio Tinto   Total   Rio Tinto   Total   Rio Tinto  
  % share (b)       share       share       share  














 
COAL – OTHER* (’000 tonnes)                            
Rio Tinto Coal Australia                            
Bengalla (Australia) 30.3   5,155   1,561   5,544   1,679   5,965   1,806  
Blair Athol (Australia) 71.2   7,924   5,645   10,190   7,259   10,600   7,551  
Hunter Valley Operations (Australia) 75.7   10,094   7,642   12,024   9,104   12,374   9,369  
Kestrel Coal (Australia) 80.0   1,035   828   863   691   774   619  
Mount Thorley Operations (Australia) 60.6   2,924   1,771   3,895   2,359   3,962   2,400  
Tarong Coal (Australia) 100.0   4,510   4,510   6,979   6,979   6,470   6,470  
Warkworth (Australia) 42.1   5,775   2,430   7,342   3,089   6,293   2,647  














 
Total Australian other coal         24,388       31,159       30,863  














 
Rio Tinto Energy America                            
Antelope (US) 100.0   31,267   31,267   30,749   30,749   27,174   27,174  
Colowyo (US) (j)   5,077   5,077   5,754   5,754   5,325   5,325  
Cordero Rojo (US) 100.0   36,712   36,712   36,094   36,094   34,234   34,234  
Decker (US) 50.0   6,340   3,170   6,449   3,225   6,288   3,144  
Jacobs Ranch (US) 100.0   34,565   34,565   36,258   36,258   33,823   33,823  
Spring Creek (US) 100.0   14,291   14,291   13,181   13,181   11,881   11,881  














 
Total US coal         125,083       125,260       115,580  














 
Rio Tinto total other coal         149,471       156,419       146,443  














 
COPPER (mined) (’000 tonnes)                            
Bingham Canyon (US) 100.0   212.2   212.2   265.6   265.6   220.6   220.6  
Escondida (Chile) 30.0   1,405.5   421.6   1,313.4   394.0   1,270.2   381.1  
Grasberg – Joint Venture (Indonesia) (k) 40.0   569.4   28.4   115.5   46.2   273.9   109.6  
Northparkes (Australia) 80.0   43.1   34.5   83.3   66.6   54.0   43.2  
Palabora (South Africa) (l) 57.7   71.4   41.2   61.5   31.1   61.2   30.0  














 
Rio Tinto total         737.9       803.5       784.4  














 
COPPER (refined) (’000 tonnes)                            
Escondida (Chile) 30.0   238.4   71.5   134.4   40.3   143.9   43.2  
Kennecott Utah Copper (US) 100.0   265.6   265.6   217.9   217.9   232.0   232.0  
Palabora (South Africa) (l) 57.7   91.7   52.9   81.2   40.9   80.3   39.3  














 
Rio Tinto total         390.0       299.2       314.5  














 
DIAMONDS (’000 carats)                            
Argyle (Australia) 100.0   18,744   18,744   29,078   29,078   30,476   30,476  
Diavik (Canada) 60.0   11,943   7,166   9,829   5,897   8,272   4,963  
Murowa (Zimbabwe) 77.8   145   113   240   187   251   195  














 
Rio Tinto total         26,023       35,162       35,635  














 
GOLD (mined) (‘000 ounces)                            
Barneys Canyon (US) 100.0   11   11   15   15   16   16  
Bingham Canyon (US) 100.0   397   397   523   523   401   401  
Cortez/Pipeline (US) (m) 40.0   538   215   444   178   904   361  
Escondida (Chile) 30.0   187   56   170   51   183   55  
Grasberg – Joint Venture (Indonesia) (k) 40.0   2,689   423   238   95   1,676   670  
Greens Creek (US) (m) 70.3   68   48   63   44   73   51  
Kelian (Indonesia) 90.0           43   38  
Lihir (Papua New Guinea) (n)           424   61  
Northparkes (Australia) 80.0   79   63   95   76   57   46  
Rawhide (US) 51.0   19   10   26   13   35   18  
Others   19   11   18   9   15   7  














 
Rio Tinto total         1,233       1,003       1,726  














 
GOLD (refined) (’000 ounces)                            
Kennecott Utah Copper (US) 100.0   523   523   462   462   369   369  














 
   
* Coal – other includes thermal coal, semi-soft coking coal and semi-hard coking coal.

 

Rio Tinto 2007 Form 20-F 29

Back to Contents

METALS AND MINERALS PRODUCTION (continued)

          2007       2006       2005  
      Production (a)   Production (a)   Production (a)  










 
  Rio Tinto   Total   Rio Tinto   Total   Rio Tinto   Total   Rio Tinto  
  % share (b)       share       share       share  














 
IRON ORE (’000 tonnes)                            
Channar (Australia) 60.0   10,549   6,330   9,798   5,879   8,644   5,186  
Corumbá (Brazil) 100.0   1,777   1,777   1,982   1,982   1,410   1,410  
Eastern Range (Australia)              (n)   6,932   6,932   8,215   8,215   6,559   6,559  
Hamersley Iron (Australia) 100.0   94,567   94,567   79,208   79,208   74,387   74,387  
Hope Downs (Australia) (p) 50.0   64   32          
Iron Ore Company of Canada (Canada) 58.7   13,229   7,768   16,080   9,442   15,647   9,188  
Robe River (Australia) 53.0   51,512   27,301   52,932   28,054   52,385   27,764  














 
Rio Tinto total         144,707       132,780       124,494  














 
LEAD (’000 tonnes)                            
Greens Creek (US) (m) 70.3   17.0   11.9          16.9   11.9   16.9   11.9  














 
MOLYBDENUM (’000 tonnes)                            
Bingham Canyon (US) 100.0   14.9   14.9          16.8   16.8   15.6   15.6  














 
PIG IRON (’000 tonnes)                            
HIsmelt® (Australia) 60.0   115   69   89   53   9   5  














 
SALT (’000 tonnes)                            
Rio Tinto Minerals – salt (Australia) (q) 68.4   7,827   5,242   8,323   5,405   8,480   5,507  














 
SILVER (mined) (’000 ounces)                            
Bingham Canyon (US) 100.0   3,487   3,487   4,214   4,214   3,958   3,958  
Escondida (Chile) 30.0   7,870   2,361   6,646   1,994   6,565   1,970  
Grasberg – Joint Venture (Indonesia) (k) 40.0   5,238   477   1,675   670   3,410   1,364  
Greens Creek (US) (m) 70.3   8,646   6,075   8,866   6,230   9,664   6,791  
Others   914   602   1,345   861   1,422   843  














 
Rio Tinto total         13,002       13,968       14,926  














 
SILVER (refined) (’000 ounces)                            
Kennecott Utah Copper (US) 100.0   4,365   4,365   4,152   4,152   3,538   3,538  














 
TALC (’000 tonnes)                            
Rio Tinto Minerals – talc 100.0   1,281   1,281   1,392   1,392   1,364   1,364  
(Australia/Europe/North America) (r)                            














 
TITANIUM DIOXIDE FEEDSTOCK (’000 tonnes)                          
Rio Tinto Iron & Titanium 100.0   1,458   1,458   1,415   1,415   1,312   1,312  
(Canada/South Africa) (s)                            














 
URANIUM (’000 lbs U3 O8 ) (t)                            
Energy Resources of Australia (Australia) 68.4   11,713   8,011   10,370   7,092   13,013   8,900  
Rössing (Namibia) 68.6   6,714   4,605   7,975   5,469   8,182   5,611  














 
Rio Tinto total         12,616       12,561       14,511  














 
ZINC (mined) (’000 tonnes)                            
Greens Creek (US) (m) 70.3   50.8   35.7          47.5   33.4   52.9   37.2  














 

 

Rio Tinto 2007 Form 20-F 30

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METALS AND MINERALS PRODUCTION (continued)

Notes
(a) Mine production figures for metals refer to the total quantity of metal produced in concentrates or doré bullion irrespective of whether these products are then refined onsite, except for the data for iron ore and bauxite (beneficiated plus calcined) which represent production of saleable quantities of ore.
(b) Rio Tinto percentage share, shown above, is as at the end of 2007 and has applied over the period 2005–2007 except for those operations where the share has varied during the year and the weighted average for them is shown below. The Rio Tinto share varies at individual mines and refineries in the “others” category and thus no value is shown.
               
  Rio Tinto Share %            
 





 
  Operation See note 2007   2006   2005  
  Queensland Alumina (e) 46.3   38.6   38.6  
  Palabora (l) 57.7   50.5   49.0  
  Rio Tinto Minerals – salt (q) 67.0   64.9   64.9  
 





 
   
(c) Rio Tinto sold its 56.2 per cent share in Eurallumina with an effective date of 31 October 2006 and production data are shown up to that date.
(d) Rio Tinto acquired the operating assets of Alcan with effect from 24 October 2007; production is shown as from that date. The Rio Tinto assets and the Alcan assets have been combined under the Rio Tinto Alcan name.
(e) Rio Tinto held a 38.6 per cent share in QAL until 24 October 2007; this increased to 80.0 per cent following the Alcan acquisition
(f) Yarwun was previously known as Comalco Alumina Refinery.
(g) Rio Tinto has an 80 per cent interest in the Awaso mine but purchases the additional 20 per cent of production
(h) Rio Tinto has a 22.9 per cent shareholding in the Sangaredi mine but receives 45 per cent of production under the partnership agreement.
(i) Borate quantities are expressed as B2O3.
(j) In view of Rio Tinto Energy America’s responsibilities under a management agreement for the operation of the Colowyo mine, all of Colowyo’s output is included in Rio Tinto’s share of production.
(k) Through a joint venture agreement with Freeport-McMoRan Copper & Gold (FCX), Rio Tinto is entitled to 40 per cent of additional material mined as a consequence of expansions and developments of the Grasberg facilities since 1998.
(l) Rio Tinto’s shareholding in Palabora varied during 2005 and 2006 due to the progressive conversion of debentures into ordinary shares.
(m) In February 2008 Rio Tinto reached agreement for the sale of Greens Creek and on 5 March 2008 the Group completed the sale of its interest in the Cortez joint venture to its partner.
(n) On 30 November 2005, Rio Tinto sold its 14.5 per cent interest in Lihir Gold; it had agreed in September 2005 to relinquish the management agreement for Lihir. The production data are shown up to 30 September 2005, from which date the Rio Tinto interest in Lihir was held as an investment rather than being equity accounted.
(o) Rio Tinto’s share of production includes 100 per cent of the production from the Eastern Range mine. Under the terms of the joint venture agreement (Rio Tinto 54 per cent), Hamersley Iron manages the operation and is obliged to purchase all mine production from the joint venture.
(p) Hope Downs started production in the fourth quarter of 2007
(q) Rio Tinto increased its shareholding in Rio Tinto Minerals – salt to 68.4 per cent at the beginning of July 2007.
(r) Talc production includes some products derived from purchased ores.
(s) Quantities comprise 100 per cent of QIT and 50 per cent of Richards Bay Minerals’ production.
(t) With effect from the second quarter of 2007 Rio Tinto is reporting uranium production as ‘000 lbs U3O8 rather than tonnes.

 

Rio Tinto 2007 Form 20-F 31

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ORE RESERVES (under Industry Guide 7)

Reserves have been prepared in accordance with Industry Guide 7 under the United States Securities Act of 1933 and the following definitions:

An ‘Ore Reserve’ means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserves determination. To establish this, studies appropriate to the type of mineral deposit involved have been carried out to estimate the quantity, grade and value of the ore mineral(s) present. In addition, technical studies have been completed to determine realistic assumptions for the extraction of the minerals including estimates of mining, processing, economic, marketing, legal, environmental, social and governmental factors. The degree of these studies is sufficient to demonstrate the technical and economic feasibility of the project and depends on whether or not the project is an extension of an existing project or operation. The estimates of minerals to be produced include allowances for ore losses and the treatment of unmineralised materials which may occur as part of the mining and processing activities. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proven Ore Reserves as defined below.
The term "economically", as used in the definition of reserves, implies that profitable extraction or production under defined investment assumptions has been established through the creation of a mining plan, processing plan and cash flow model. The assumptions made must be reasonable, including costs and operating conditions that will prevail during the life of the project.
Ore reserves presented in accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices were to be in line with the average of historical prices for the three years to 30 June 2007, or contracted prices where applicable. For this purpose, contracted prices are applied only to future sales volumes for which the price is predetermined by an existing contract; and the average of historical prices is applied to expected sales volumes in excess of such amounts. Moreover, reported ore reserve estimates have not been increased above the levels expected to be economic based on Rio Tinto's own long term price assumptions.
The term "legally", as used in the definition of reserves, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for reserves to exist, there is reasonable assurance of the issuance of these permits or resolution of legal issues. Reasonable assurance means that, based on applicable laws and regulations, the issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with the Company’s current mine plans.
The term "proven reserves" means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established. Proven reserves represent that part of an orebody for which there exists the highest level of confidence in data regarding its geology, physical characteristics, chemical composition and probable processing requirements.
The term "probable reserves" means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. This means that probable reserves generally have a wider drill hole spacing than for proven reserves.
The amount of proven and probable reserves shown below does not necessarily represent the amount of material currently scheduled for extraction, because the amount scheduled for extraction may be derived from a life of mine plan predicated on prices and other assumptions which are different to those used in the life of mine plan prepared in accordance with Industry Guide 7.
The estimated ore reserve figures in the following tables are as of 31 December 2007. 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. Commodity price information is given in footnote (a).

 

Rio Tinto 2007 Form 20-F 32

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ORE RESERVES (under Industry Guide 7) (continued)

  Type   Total ore reserves at end          
  of   2007          
  mine  


         
  (b)   Tonnage   Grade   Interest   Rio Tinto  
              %   share  










 
                  Recoverable  
BAUXITE (c)                 mineral  
      millions           millions  
      of tonnes   %Al2 O3        of tonnes  
Reserves at operating mine                    
Gove (Australia) (d) O/P   143   49.2   100.0   143  
Porto Trombetas (Brazil) (d) O/P   166   51.2   12.0   20  
Weipa (Australia) (d) O/P   1,224   53.6   100.0   1,224  










 
Rio Tinto total                 1,387  










 
                 
              Marketable  
BORATES (e)             product  
      millions       millions  
      of tonnes       of tonnes  
Reserves at operating mine                
Rio Tinto Minerals - Boron (US)                
- mine O/P   19.2   100.0   19.2  
- stockpiles (f) S/P   2.3   100.0   2.3  








 
Rio Tinto total             21.5  








 
                         
      Coal type   Marketable   Marketable coal quality          
      (h)   reserves   (i)   (i)          
         
 


         
                          Marketable  
COAL (g)             Calorific   Sulphur       reserves  
          millions   value   content       millions  
          of tonnes   MJ/kg   %       of tonnes  
Reserves at operating mines                            
Rio Tinto Energy America                            
Antelope (US) O/C   SC   325   20.59   0.24   100.0   325  
Colowyo (US) (j) O/C   SC   9   24.19   0.44   100.0   9  
Cordero Rojo (US) O/C   SC   241   19.54   0.30   100.0   241  
Decker (US) O/C   SC   12   22.10   0.39   50.0   6  
Jacobs Ranch (US) O/C   SC   383   20.35   0.43   100.0   383  
Spring Creek (US) (k) O/C   SC   295   21.75   0.33   100.0   295  














 
Total US coal                         1,259  














 
Rio Tinto Coal Australia                            
Bengalla (Australia) O/C   SC   137   28.21   0.47   30.3   42  
Blair Athol (Australia) O/C   SC   37   26.91   0.30   71.2   26  
Hail Creek (Australia) O/C   MC   174   32.20   0.35   82.0   142  
Hunter Valley Operations O/C   SC + MC   298   28.90   0.58   75.7   226  
(Australia)                            
Kestrel (Australia) (l) U/G   SC + MC   136   31.60   0.59   80.0   109  
Mount Thorley Operations O/C   SC + MC   23   29.48   0.46   60.6   14  
(Australia)                            
Warkworth (Australia) O/C   SC + MC   242   28.87   0.45   42.1   102  














 
Total Australian coal                         661  














 
Rio Tinto total reserves at operating mines                       1,920  














 
Undeveloped reserves (m)                            
Rio Tinto Coal Australia                            
Clermont (Australia) O/C   SC   189   27.90   0.33   50.1   95  
Mount Pleasant (Australia) O/C   SC   350   26.73   0.51   75.7   265  














 
Rio Tinto total undeveloped reserves                         360  














 

 

Rio Tinto 2007 Form 20-F 33

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

  Type of   Total ore reserves at end 2007   Average          
  mine  


  mill          
  (b)   Tonnage   Grade   recovery   Interest   Rio Tinto  
              %   %   share  












 
                      Recoverable  
COPPER                     metal  
      millions               millions  
      of tonnes   %Cu           of tonnes  
                         
Reserves at operating mines                        
Bingham Canyon (US)                        
– mine O/P   563   0.52   86   100.0   2.539  
– stockpiles (f) S/P   49   0.33   86   100.0   0.141  
Escondida (Chile) (n)                        
– sulphide mine O/P   1,690   1.14   86   30.0   4.959  
– sulphide leach mine O/P   2,217   0.53   32   30.0   1.123  
– oxide mine O/P   46   1.12   68   30.0   0.104  
– sulphide stockpiles (f) S/P   14   1.24   86   30.0   0.044  
– sulphide leach stockpiles (f) S/P   182   0.75   32   30.0   0.129  
– oxide stockpiles (f) S/P   112   0.78   68   30.0   0.176  
Grasberg (Indonesia) O/P + U/G   2,712   1.04   88   (o)   7.388  
Northparkes (Australia)                        
– mine U/G   47   0.97   89   80.0   0.325  
– stockpiles (f) S/P   0.7   0.69   85   80.0   0.003  
Palabora (South Africa) U/G   104   0.62   88   57.7   0.327  












 
Rio Tinto total reserves at operating mines                     17.258  












 
Undeveloped reserves (m)                        
Eagle (US) (p) U/G   3.2   3.04   95   100.0   0.092  
Oyo Tolgoi (Mongolia) (q) O/P   930   0.50   87   9.9   0.399  












 
Rio Tinto total undeveloped reserves                     0.491  












 
                         
                      Recoverable  
DIAMONDS (c)                     diamonds  
      millions   carats           millions  
      of tonnes   per tonne           of carats  
                         
Reserves at operating mines                        
Argyle (Australia)                        
– AK1 pipe mine O/P + U/G   89   2.2       100.0   192.3  
– AK1 pipe stockpiles (f) S/P   5.2   1.0       100.0   5.2  
Diavik (Canada) O/P + U/G   22   3.5       60.0   46.2  
Murowa (Zimbabwe)                        
– mine O/P   21   0.7       77.8   11.5  
– stockpiles (f) S/P   0.2   0.5       77.8   0.1  












 
Rio Tinto total                     255.4  












 
                         
                      Recoverable  
GOLD                     metal  
      millions   grammes           millions  
      of tonnes   per tonne           of ounces  
                         
Reserves at operating mines                        
Bingham Canyon (US)                        
– mine O/P   563   0.30   65   100.0   3.567  
– stockpiles (f) S/P   49   0.18   65   100.0   0.183  
Cortez/Pipeline (US) (r)                        
– mine O/P + U/G   129   2.70   81   40.0   3.629  
– stockpiles (f) S/P   1.6   4.47   86   40.0   0.080  
Grasberg (Indonesia) O/P + U/G   2,712   0.90   69   (o)   13.672  
Greens Creek (US) (s) U/G   7.7   3.68   68   70.3   0.437  
Northparkes (Australia)                        
– mine U/G   47   0.40   73   80.0   0.357  
– stockpiles (f) S/P   0.7   0.58   76   80.0   0.008  












 
Rio Tinto total reserves at operating mines                     21.932  












 

 

Rio Tinto 2007 Form 20-F 34

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

  Type of   Total ore reserves at end 2007   Average          
  mine  
  mill          
  (b)   Tonnage   Grade   recovery   Interest   Rio Tinto  
              %   %   share  












 
                      Recoverable  
GOLD                     metal  
      millions   grammes           millions  
      of tonnes   per tonne           of ounces  
                         
Undeveloped reserves (m)                        
Oyo Tolgoi (Mongolia) (q) O/P   930   0.36   71   9.9   0.753  












 
                         
                      Marketable  
IRON ORE (c)                     product  
      millions               millions  
      of tonnes   %Fe           of tonnes  
                         
Reserves at operating mines                        
and mines under construction                        
Channar (Australia)                        
– Brockman Ore O/P   106   63.4       60.0   64  
Corumbá (Brazil)                        
– mine O/P   209   67.0       100.0   209  
– stockpiles (f) S/P   1   66.3       100.0   1  
Eastern Range (Australia)                        
– Brockman Ore (t) O/P   111   63.2       54.0   60  
Hamersley (Australia)                        
– Brockman 2 (Brockman Ore) O/P   25   62.7       100.0   25  
– Brockman 4 (Brockman Ore) O/P   570   62.3       100.0   570  
– Marandoo (Marra Mamba Ore) O/P   50   61.7       100.0   50  
– Mt Tom Price (Brockman Ore)                        
– mine O/P   104   64.4       100.0   104  
– stockpiles (f) S/P   21   64.5       100.0   21  
– Mt Tom Price (Marra Mamba Ore) O/P   33   61.2       100.0   33  
– Paraburdoo (Brockman Ore) (u) O/P   28   63.9       100.0   28  
– Paraburdoo (Marra Mamba Ore) (u) O/P   0.8   63.3       100.0   0.8  
– Nammuldi (Marra Mamba Ore) O/P   30   61.2       100.0   30  
– Yandicoogina (Pisolite Ore HG) (v)                        
– mine O/P   271   58.7       100.0   271  
– stockpiles (f) S/P   5   58.5       100.0   5  
– Yandicoogina (Process Product)                        
– mine O/P   119   58.5       100.0   119  
Hope Downs (Australia)                        
– Marra Mamba Ore O/P   344   61.4       50.0   172  
Iron Ore Company of Canada (w)                        
 (Canada) O/P   538   65.0       58.7   316  
Robe River (Australia)                        
– Pannawonica (Pisolite Ore)                        
– mine O/P   288   57.2       53.0   153  
– stockpiles (f) S/P   16   56.9       53.0   9  
– West Angelas (Marra Mamba Ore)                        
– mine O/P   385   61.8       53.0   204  
– stockpiles (f) S/P   6   59.3       53.0   3  












 
Rio Tinto total                     2,449  












 
                         
                      Recoverable  
LEAD                     metal  
      millions               millions  
      of tonnes   %Pb           of tonnes  
                         
Reserves at operating mine                        
Greens Creek (US) (s) U/G   7.7   3.79   66   70.3   0.136  












 

 

Rio Tinto 2007 Form 20-F 35

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

  Type of   Total ore reserves at end 2007   Average          
  mine  


  mill          
  (b)   Tonnage   Grade   recovery   Interest   Rio Tinto  
              %   %   share  












 
                      Recoverable  
MOLYBDENUM                     metal  
      millions               millions  
      of tonnes   %Mo           of tonnes  
                         
Reserves at operating mine                        
Bingham Canyon (US) (x)                        
– mine O/P   563   0.047   62   100.0   0.166  
– stockpiles (f) S/P   49   0.020   62   100.0   0.006  












 
Rio Tinto total                     0.172  












 
                         
                      Recoverable  
NICKEL                     metal  
      millions               millions  
      of tonnes   %Ni           of tonnes  
                         
Undeveloped reserves (m)                        
Eagle (US) (p) U/G   3.2   3.89   84   100.0   0.105  












 
                         
                      Recoverable  
SILVER                     metal  
      millions   grammes           millions  
      of tonnes   per tonne           of ounces  
                         
Reserves at operating mines                        
Bingham Canyon (US)                        
– mine O/P   563   2.42   77   100.0   33.533  
– stockpiles (f) S/P   49   1.56   77   100.0   1.881  
Grasberg (Indonesia) O/P + U/G   2,712   4.11   68   (o)   77.186  
Greens Creek (US) (s) U/G   7.7   471   72   70.3   58.378  












 
Rio Tinto total                     170.978  












 
                 
              Marketable  
TALC (e)             product  
      millions       millions  
      of tonnes       of tonnes  
                 
Reserves at operating mines                
Rio Tinto Minerals – talc (y)                
Europe/N America/Australia) O/P + U/G   33.5   100.0   33.5  








 
                 
              Marketable  
TITANIUM DIOXIDE             product  
FEEDSTOCK (e)     millions       millions  
      of tonnes       of tonnes  
                 
Reserves at operating mines                
QIT (Canada) O/P   53.5   100.0   53.5  
RBM (South Africa) D/O   24.2   50.0   12.1  








 
Rio Tinto total reserves at operating mines             65.5  








 
Undeveloped reserves (m)                
QMM (Madagascar) D/O   12.4   80.0   9.9  








 

 

Rio Tinto 2007 Form 20-F 36

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

      Total ore reserves              
  Type of    at end 2007   Average          
  mine  


  mill          
  (b)   Tonnage   Grade   recovery   Interest   Rio Tinto share  
              %   %      












 
                      Recoverable  
URANIUM                     metal  
      millions               millions  
      of tonnes   %U3 08            of tonnes  
Reserves at operating mines                        
Energy Resources of Australia                        
(Australia)                        
– Ranger #3 mine O/P   11.8   0.220   88.5   68.4   0.0157  
– Ranger #3 stockpiles (f) S/P   20.3   0.107   86.0   68.4   0.0140  
Rössing (Namibia) (z)                        
– mine O/P   148.4   0.037   85   68.6   0.0318  
– stockpiles (f) S/P   1.8   0.038   85   68.6   0.0004  












 
Rio Tinto total                     0.0618  












 
                         
                      Recoverable  
ZINC                     metal  
      millions               millions  
      of tonnes   %Zn           of tonnes  
Reserves at operating mine                        
Greens Creek (US) (s) U/G   7.7   10.18   76   70.3   0.419  












 

 

Rio Tinto 2007 Form 20-F 37

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

  Type of   Proven ore reserves at end 2007   Probable ore reserves at end 2007  
  mine  


 




 
  (b)   Tonnage   Grade   Drill hole   Tonnage   Grade   Drill hole  
               Spacing (aa)           Spacing (aa)  














 
BAUXITE (c)     millions           millions          
      of tonnes   %Al2 O3        of tonnes   %Al2 O3       
Reserves at operating mine                            
Gove (Australia) (d) O/P   78   49.4   50m x 50m to   65   49.0   100m x 100m to  
              50m x 100m           200m x 200m  
Porto Trombetas (Brazil) (d) O/P   149   51.3   200m x 200m   18   50.1   400m x 400m  
Weipa (Australia) (d) O/P   149   53.2   76m x 76m   1,074   53.7   400m x 800m or  
                          better  














 
BORATES (e)     millions           millions          
      of tonnes           of tonnes          
Reserves at operating mine                            
Rio Tinto Minerals - Boron (US) (j)                            
– mine O/P   14.3       61m x 61m   4.9       61m x 61m  
– stockpiles (f) S/P   0.1           2.2          














 
                             
              Marketable Reserves  
  Recoverable   % Yield to  




 
      reserves   give   Proven   Drill hole   Probable   Drill hole  
      total   marketable       spacing (aa)       spacing (aa)  
          reserves                  
COAL (g)     millions       millions       millions      
      of tonnes       of tonnes       of tonnes      
Reserves at operating mines                            
Rio Tinto Energy America                            
Antelope (US) O/C   325   100   325   350m        
Colowyo (US) (j) O/C   9   100   9   150m          
Cordero Rojo (US) O/C   241   100   241   250m          
Decker (US) O/C   12   100   12   250m          
Jacobs Ranch (US) O/C   383   100   379   300m   4   300m  
Spring Creek (US) (k) O/C   295   100   295   250m          
Rio Tinto Coal Australia                            
Bengalla (Australia) O/C   182   75   75   350m   62   500m  
Blair Athol (Australia) O/C   42   89   37   150m          
Hail Creek (Australia) O/C   258   67   100   300m   73   400m  
Hunter Valley Operations (Australia) O/C   440   68   235   300m   63   500m  
Kestrel (Australia) (l) U/G   163   83   53   500m   83   1000m  
Mount Thorley Operations (Australia) O/C   36   66   21   125m   2   500m  
Warkworth (Australia) O/C   379   64   142   450m   100   1000m  
Undeveloped reserves (m)                            
Rio Tinto Coal Australia                            
Clermont (Australia) O/C   197   96   185   220m   4   150m to 300m  
Mount Pleasant (Australia) O/C   459   76           350   125m to 500m  














 

 

Rio Tinto 2007 Form 20-F 38

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

  Type of                  Proven ore reserves at end 2007   Probable ore reserves at end 2007  
  mine  




 




 
  (b)   Tonnage   Grade   Drill hole   Tonnage   Grade   Drill hole  
              spacing (aa)           spacing (aa)  














 
COPPER     millions           millions          
      of tonnes   %Cu       of tonnes   %Cu      
Reserves at operating mines                            
Bingham Canyon (US)                            
– mine O/P   318   0.57   90m   245   0.47   110m  
– stockpiles (f) S/P   19   0.32       30   0.34      
Escondida (Chile) (n)                            
– sulphide mine O/P   612   1.24   55m x 55m   1,078   1.08   80m x 80m  
– sulphide leach mine O/P   514   0.51   55m x 55m   1,703   0.54   100m x 100m  
– oxide mine O/P               46   1.12   50m x 50m  
– sulphide stockpiles (f) S/P   14   1.24                  
– sulphide leach stockpiles (f) S/P   182   0.75                  
– oxide stockpiles (f) S/P   112   0.78                  
Grasberg (Indonesia) O/P + U/G   771   1.10   13m to 40m   1,941   1.01   42m to 100m  
Northparkes (Australia)                            
– mine U/G               47   0.97   40 x 40 x 80m  
– stockpiles (f) S/P   0.7   0.69                  
Palabora (South Africa) U/G   104   0.62   76m              
Undeveloped reserves (m)                            
Eagle (US) (p) U/G               3.2   3.04   25m  
Oyo Tolgoi (Mongolia) (q) O/P   127   0.58   50m   803   0.48   70m  














 
                             
DIAMONDS (c)     millions   carats       millions   carats      
      of tonnes   per tonne       of tonnes   per tonne      
Reserves at operating mines                            
Argyle (Australia)                            
– AK1 pipe mine O/P + U/G   19   1.2   50m x 50m   70   2.4   50m x 50m  
– AK1 pipe stockpiles (f) S/P   0.4   2.6       4.7   0.9      
Diavik (Canada) O/P + U/G   9.0   3.4   27m to 34m   13   3.6   30m to 34m  
Murowa (Zimbabwe)                            
– mine O/P               21   0.7   25m  
– stockpiles (f) S/P               0.2   0.5      














 
                             
GOLD     millions   grammes       millions   grammes      
      of tonnes   per tonne       of tonnes   per tonne      
Reserves at operating mines                            
Bingham Canyon (US)                            
– mine O/P   318   0.33   90m   245   0.27   110m  
– stockpiles (f) S/P   19   0.18       30   0.18      
Cortez/Pipeline (US) (r)                            
– mine O/P + U/G   12   4.34   27m to 30m   116   2.53   48m  
– stockpiles (f) S/P   1.6   4.47                  
Grasberg (Indonesia) O/P + U/G   771   1.09   13m to 40m   1,941   0.82   42m to 100m  
Greens Creek (US) (s) U/G               7.7   3.68   30m  
Northparkes (Australia)                            
– mine U/G               47   0.40   40 x 40 x 80m  
– stockpiles (f) S/P   0.7   0.58                  
Undeveloped reserves (m)                            
Oyo Tolgoi (Mongolia) (q) O/P   127   0.93   50m   803   0.27   70m  














 

 

Rio Tinto 2007 Form 20-F 39

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

      Proven ore reserves   Probable ore reserves  
  Type of   at end 2007   at end 2007  
  mine  










 
  (b)   Tonnage   Grade   Drill hole   Tonnage   Grade   Drill hole  
              spacing (aa)           spacing (aa)  














 
IRON ORE (c)     millions         millions        
      of tonnes   %Fe     of tonnes   %Fe    
Reserves at operating mines                        
and mines under construction                        
Channar (Australia)                        
– Brockman Ore O/P   89   63.4   60m x 60m   18   63.3   Max 120m  
Corumbá (Brazil)                        
   – mine O/P   102   66.9   100m x 100m   107   67.0   200m x 400m  
   – stockpiles (f) S/P   1   66.3              
Eastern Range (Australia)                        
Brockman Ore (t) O/P   81   63.2   60m x 60m   30   63.2   Max 120m  
Hamersley (Australia)                        
Brockman 2 (Brockman Ore) O/P   18   62.7   50m x 50m   8   62.6   Max 100m  
Brockman 4 (Brockman Ore) O/P   336   62.4   50m x 50m   233   62.1   200m x 100m  
Marandoo (Marra Mamba Ore) O/P   48   61.7   75m x 75m   2   60.7   Max 150m  
Mt Tom Price (Brockman Ore)                        
   – mine O/P   59   64.2   30m x 30m   46   64.7   60m x 30m  
   – stockpiles (f) S/P             21   64.5    
- Mt Tom Price (Marra Mamba Ore) O/P             33   61.2   60m x 30m  
Paraburdoo (Brockman Ore) (u) O/P   23   64.0   30m x 30m   6   63.4   60m x 30m  
Paraburdoo (Marra Mamba Ore) (u) O/P             0.8   63.3   60m x 60m  
Nammuldi (Marra Mamba Ore) O/P   25   61.5   60m x 60m   5   59.7   120m x 120m  
Yandicoogina (Pisolite Ore HG)                        
(v)                        
   – mine O/P   271   58.7   50m x 50m            
   – stockpiles (f) S/P             5   58.5    
Yandicoogina (Process Product)                        
   – mine O/P   119   58.5   50m x 50m            
Hope Downs (Australia)                        
Marra Mamba Ore O/P   32   61.9   100m x 50m   312   61.4   200m x 50m  
Iron Ore Company of Canada (w)                        
   (Canada) O/P   406   65.0   122m x 61m   131   65.0   122m x 122m  
Robe River (Australia)                        
Pannawonica (Pisolite Ore)                        
   – mine O/P   262   57.3   Max 70m x 70m   27   56.4   Max 100m x 100m  
   – stockpiles (f) S/P   2   57.0     13   56.9    
West Angelas (Marra Mamba Ore)                        
   – mine O/P   196   62.1   25m x 25m   190   61.6   Max 200m x 50m  
   – stockpiles (f) S/P             6   59.3    














 
                         
LEAD     millions         millions        
      of tonnes   %Pb     of tonnes   %Pb    
Reserves at operating mine                        
Greens Creek (US) (s) U/G             7.7   3.79   30m  














 
                         
MOLYBDENUM     millions         millions        
      of tonnes   %Mo     of tonnes   %Mo    
Reserves at operating mine                        
Bingham Canyon (US) (x)                        
mine O/P   318   0.049   90 m 245   0.045   110m  
stockpiles (f) S/P   19   0.022     30   0.018    














 
                         
NICKEL     millions         millions        
      of tonnes   %Ni     of tonnes        
Undeveloped reserves (m)                   %Ni    
Eagle (US) (p) U/G             3.2   3.89   25m  














 

 

Rio Tinto 2007 Form 20-F 40

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

      Proven ore reserves   Probable ore reserves  
  Type of   at end 2007   at end 2007  
  mine  










 
  (b)   Tonnage   Grade   Drill hole   Tonnage   Grade   Drill hole  
              spacing (aa)           spacing (aa)  














 
SILVER     millions   grammes     millions   grammes    
      of tonnes   per tonne     of tonnes   per tonne    
Reserves at operating mines                        
Bingham Canyon (US)                        
– mine O/P   318   2.59   90m   245   2.19   110m  
stockpiles (f) S/P   19   1.51     30   1.58    
Grasberg (Indonesia) O/P + U/G   771   4.31   13m to 40m   1,941   4.03   42m to 100m  
Greens Creek (US) (s) U/G             7.7   471   30m  














 
                         
TALC (e)     millions         millions        
      of tonnes         of tonnes        
Reserves at operating mines                        
Rio Tinto Minerals - talc (y) O/P + U/G   25.7       10m to 60m   7.8       15m to 100m  
(Europe/N.America/Australia)                        














 
                         
TITANIUM DIOXIDE     millions         millions        
FEEDSTOCK (e)     of tonnes         of tonnes        
Reserves at operating mines                        
QIT (Canada) (w) O/P   30.0       <60m x 60m   23.5       >60m x 60m  
RBM (South Africa) D/O   5.6       50m x 50m   18.6       800m x 100m  
Undeveloped reserves (m)                        
QMM (Madagascar) D/O   12.0       200m x 100m   0.4       400m x 200m  














 
                         
URANIUM     millions         millions        
      of tonnes   %U3 08      of tonnes   %U3 08     
Reserves at operating mines                        
Energy Resources of Australia                        
(Australia)                        
Ranger #3 mine O/P   4.8   0.224   25m   6.9   0.217   50m  
Ranger #3 stockpiles (f) S/P   20.3   0.107              
Rössing (Namibia) (z)                        
mine O/P   17.8   0.051   20m x 20m   130.6   0.035   60m  
stockpiles (f) S/P   1.8   0.038              














 
                         
ZINC     millions         millions        
      of tonnes   %Zn     of tonnes   %Zn    
Reserves at operating mine                        
Greens Creek (US) (s) U/G             7.7   10.18   30m  














 

 

Rio Tinto 2007 Form 20-F 41

Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

Notes
(a) Commodity prices (based on a three year average historical price to 30 June 2007) used to test whether the reported reserve estimates could be economically extracted, include the following benchmark prices:
   
Ore reserves Unit   US$  




Aluminium pound   1.02  
Copper pound   2.31  
Gold ounce   529  
Iron ore        
      Australian benchmark (fines) dmtu**   0.61  
     Atlantic benchmark (fines) dmtu**   0.64  
Lead pound   0.56  
Molybdenum pound   27  
Silver ounce   9.66  
Zinc pound   1.05  

* = non managed operations
** = dry metric tonne unit
 
  Prices for all other commodities are determined by individual contract negotiation. The reported reserves for these commodities have been tested to confirm that they could be economically extracted using a combination of existing contract prices until expiry and thereafter three year historical prices.
(b) Type of mine: O/P = open pit, O/C = open cut, U/G = underground, D/O = dredging operation, S/P = stockpile.
(c) Reserves of iron ore, bauxite (as alumina) and diamonds are shown as recoverable reserves of saleable product after accounting for all mining and processing losses. Mill recoveries are therefore not shown.
(d) 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 and reserves are presented here for the first time. The Weipa deposit now includes the reserve for Ely as this deposit is contiguous with Weipa.
(e) Reserves of industrial minerals are expressed in terms of marketable product, i.e. after all mining and processing losses. In the case of borates, the saleable product is B2O3.
(f) Stockpile components of reserves are shown for all operations.
(g) Coal reserves are shown as both recoverable and marketable. The yield factors shown reflect the impact of further processing, where necessary, to provide marketable coal. All reserves at operating mines are assigned, all undeveloped reserves are unassigned. By “assigned” and “unassigned,” we mean the following: assigned reserves means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others; unassigned reserves represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property.
(h) Coal type: SC = steam/thermal coal; MC = metallurgical/coking coal.
(i) Analyses of coal from the US were undertaken according to "American Standard Testing Methods" (ASTM) on an "As Received" moisture basis whereas the coals from Australia have been analysed on an "Air Dried" moisture basis according to Australian Standards (AS). MJ/kg = megajoules per kilogramme. 1 MJ/kg = 430.2 Btu/lb.
(j) Rio Tinto Energy America has a partnership interest in the Colowyo mine but, as it is responsible under a management agreement for the operation of the mine, all of Colowyo's reserves are included in Rio Tinto's share shown above.
(k) Acquisition of additional leases increased the Spring Creek reserves
(l) Approval of the Kestrel mine extension resulted in an increase in reserves by upgrading of mineralised material from the Kestrel West area.
(m) The term 'undeveloped reserves' is used here to describe material that is economically viable on the basis of technical and economic studies but for which construction and commissioning have yet to commence.
(n) Reporting for Escondida and Escondida Norte is combined for 2007. The increase in reserves results from updated geological models and the application of new economic parameters.
(o) Under the terms of a joint venture agreement between Rio Tinto and FCX, Rio Tinto is entitled to a direct 40 per cent share in reserves discovered after 31 December 1994 and it is this entitlement that is shown.
(p) Following completion of economic and technical studies at the Eagle project, mineralised material was upgraded to reserves that are presented here for the first time.
(q) Whilst economic and technical studies continue at the Oyu Tolgoi deposits, reserves are presented here for the first time.
(r) The increase in grade at Cortez is due to the addition of higher grade material from mineralised material together with production depletion of lower grade material. On 5 March 2008 the Group completed the sale of its interest in the Cortez joint venture to its partner.
(s) In February 2008 Rio Tinto entered into an agreement to sell its interest in Greens Creek.
(t) Life of mine studies at Eastern Range resulted in development of new pit designs that in turn increased the reserves.
(u) Life of mine studies at Paraburdoo resulted in transfer of mineralised material that increased the reserves.
(v) The reduction in reserves at Yandicoogina is the result of production and economic studies
(w) Reserves at IOC increased as a result of revised economic studies leading to an enlarging of the optimal pits
(x) Molybdenum grades reflect reconciliation of model and plant grades.
(y) The increase in reserves at the talc operations results from updated models following increased drilling and the application of new economic parameters; this transferred mineralised material to reserves.
(z) Economic and technical studies at Rossing resulted in revisions of pit shape thus increasing reserves.
(aa) Drill hole spacings are either average distances, a specified grid distance (a regular pattern of drill holes - the distance between the drill holes along the two axes of the grid will be aligned to test the size, shape and continuity of the mineral deposit; as such there may be different distances between the drill holes along the two axes of a grid) or the maximum drill hole spacing that is sufficient to determine the reserve category for a particular deposit. As the continuity of mineralisation varies from deposit to deposit, the drill hole spacing required to categorise a reserve varies between and within deposit types.

 

Rio Tinto 2007 Form 20-F 42

Back to Contents

LOCATION OF GROUP OPERATIONS

Note
Wholly owned unless stated otherwise

 

Rio Tinto 2007 Form 20-F 43

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LOCATION OF GROUP OPERATIONS (continued)

Aluminium  
   
Operating assets US$43,846 million
Sales revenue US$7,309 million
Underlying earnings US$1,097million

Rio Tinto’s Aluminium product group is the wholly owned, integrated aluminium subsidiary, Rio Tinto Alcan, which owns and manages operations predominately located in Canada and Australia, with other significant interests in the UK, France, New Zealand, Brazil, Guinea, China, Iceland, Ghana, Norway and the US. The group is currently organised into four business units – Bauxite & Alumina, Primary Metal, Engineered Products and Packaging. Rio Tinto announced in 2007 the intention to divest both the Engineered Products and Packaging business units. Sites relating to these businesses are not shown.

Aluminium
Operating sites
1 Alma
20 Alouette (40%)
7 Alucam (Edea) (47%)
2 Anglesey Aluminium (51%)
1 Arvida
9 Awaso (80%)
1 Beauharnois
1 Becancour (25%)
3 Bell Bay
4 Boyne Island (59%)
5 CBG Sangaredi (23%)
6 Dunkerque
8 Gardanne
10 Gove alumina refinery
11 Gove bauxite mine
1 Grande-Baie
12 ISAL
1 Jonquiere
13 Kitimat
1 Laterriere
14 Lochaber
15 Lynemouth
17 Ningxia (50%)
16 Porto Trombetas (MRN) (12%)
4 Queensland Alumina Limited (80%)
18 Sao Luis (Alumar) (10%)
19 Sebree
1 Shawinigan
21 SORAL (50%)
22 St-Jean-de-Maurienne
23 Tiwai Point (79%)
24 Tomago (52%)
25 Weipa
4 Yarwun
Copper  
   
Operating assets US$4,118 million
Sales revenue US$8,501 million
Underlying earnings US$3,479 million

The Copper group comprises Kennecott Utah Copper and Kennecott Minerals in the US, and interests in the copper mines of Escondida in Chile, Grasberg in Indonesia, Northparkes in Australia, Palabora in South Africa. Projects under evaluation include the Resolution, Pebble and Eagle projects in the US, Oyu Tolgoi in Mongolia, La Granja in Peru and Sulawesi in Indonesia.

 

Copper and gold
Operating sites
26 Bougainville (not operating) (54%)
27 Cortez/Pipeline (40% - sale completed on 5 March 2008)
28 Escondida (30%)
29 Grasberg joint venture (40%)
30 Kennecott Utah Copper
31 Northparkes (80%)
32 Palabora (58%)
33 Rawhide (51%)
 
Projects
34 La Granja
35 Oyu Tolgoi (10%)
36 Pebble (10%)
37 Resolution (55%)
 
Nickel
Projects
38 Eagle
39 Sulawesi
 
Zinc, lead, silver
Operating sites
40 Greens Creek (70% - sale agreed during February 2008)

 

Rio Tinto 2007 Form 20-F 44

Back to Contents

LOCATION OF GROUP OPERATIONS (continued)

Diamonds and Industrial Minerals  
   
Operating assets US$4,632 million
Sales revenue US$3,921 million
Underlying earnings US$488 million

The Diamond and Industrial Minerals group comprises Rio Tinto’s diamond interests in the Diavik mine in Canada, the Argyle mine in Australia, and the Murowa mine in Zimbabwe, served by diamond sales offices in Belgium and India. Rio Tinto’s industrial minerals businesses comprise Rio Tinto Minerals, made up of borate and talc operations in the US, South America, Europe and Australia, and salt in Australia, as well as Rio Tinto Iron & Titanium interests in North America, South Africa and Madagascar.

Diamonds
Operating sites
41 Argyle
42 Diavik (60%)
43 Murowa (78%)
 
Borates
Operating sites
44 Boron
45 Coudekerque Plant
46 Tincalayu
47 Wilmington Plant
 
Potash
Projects
48 Rio Colorado Potash
 
Salt
Operating sites
49 Dampier (68%)
50 Lake MacLeod (68%)
49 Port Hedland (68%)
 
Talc
Operating sites (only major sites are shown)
51 Ludlow
52 Talc de Luzenac
53 Three Springs
54 Yellowstone
 
Titanium dioxide feedstock
Operating sites
55 QIT-Fer et Titane Lac Allard
56 QIT-Fer et Titane Sorel Plant
57 Richards Bay Minerals (50%)
 
Projects
58 QIT Madagascar Minerals (80%)
Energy  
   
Operating assets US$3,399 million
Sales revenue US$4,621 million
Underlying earnings US$484 million

The Energy group is represented in coal by Rio Tinto Coal Australia and Coal & Allied in Australia and by Rio Tinto Energy America in the US. It also includes uranium interests in Energy Resources of Australia and the Rössing Uranium mine in Namibia.

 

Coal
Operating sites
59 Antelope
60 Bengalla (30%)
61 Blair Athol (71%)
62 Colowyo (20%)
59 Cordero Rojo
63 Decker (50%)
61 Hail Creek (82%)
64 Hunter Valley Operations (76%)
59 Jacobs Ranch
65 Kestrel (80%)
64 Mt Thorley Operations (61%)
63 Spring Creek
66 Warkworth (42%)
 
Projects
61 Clermont (50%)
60 Mt Pleasant (76%)
 
Uranium
Operating sites
67 ERA (68%)
68 Rössing (69%)
 
Projects
69 Kintyre
70 Sweetwater

 

Rio Tinto 2007 Form 20-F 45

Back to Contents

LOCATION OF GROUP OPERATIONS (continued)

 

Iron Ore  
Operating assets US$9,038 million
Sales revenue US$8,799 million
Underlying earnings US$2,651million

The Iron Ore group’s interests comprise Hamersley Iron and Robe River in Australia, Iron Ore Company of Canada, the Corumbá mine in Brazil and the Simandou, Guinea, and Orissa, India, projects. The group includes the HIsmelt® direct iron making plant in Australia.

Iron ore
Operating sites
71   Corumbá
72   Hamersley Iron mines:
    Brockman Channar (60%)
    Eastern Range (54%)
    Hope Downs (50% joint venture)
    Marandoo
    Mt Tom Price
    Nammuldi
    Paraburdoo
    Yandicoogina
73   HIsmelt® (60%)
74   Iron Ore Company of Canada (59%)
72   Robe River mines: (53%)
    Pannawonica
    West Angelas
Projects
75   IOC Pellet Plant (59%)
76   Orissa (51%)
77   Simandou (95%)

 

Exploration

The Exploration group is organised into five geographically based teams in North America, South America, Australasia, Asia and Africa/Europe and a sixth project generation team that searches the world for new opportunities and provides specialised geological, geophysical and commercial expertise to the regional teams. The Asia team was formed in 2006, reflecting a significant expansion in exploration effort in Russia, Mongolia and the Former Soviet Union.

Technology and Innovation

Technology and Innovation, previously Operational and Technical Excellence, has bases in Australia, Canada, the UK and the US. Its role is to identify and promote best operational technology practice across the Group and to pursue step change innovation of strategic importance to orebodies of the future.


 

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Item 4A. Unresolved Staff Comments

As far as Rio Tinto is aware there are no unresolved written comments from the SEC staff regarding its periodic reports under the Exchange Act received more than 180 days before 31 December 2007.

Item 5. Operating and Financial Review and Prospects

This Item contains forward looking statements and attention is drawn to the Cautionary statement on page 7.

This Item includes a discussion of the main factors affecting the Group’s “Profit for the year”, as measured in accordance with International Financial Reporting Standards (‘IFRS’). In monitoring its financial performance, the Group also focuses on that part of the Profit for the year attributable to equity shareholders of Rio Tinto, which is referred to as “Net earnings”, and on an additional measure called “Underlying earnings”. The latter measure, which is also based on the amounts attributable to Rio Tinto shareholders, is reported to provide greater understanding of the underlying business performance of Rio Tinto operations. This measure is used by management to track the performance of the Group on a monthly basis. The earnings of the Group’s product groups as reviewed by management exclude amounts that are outside the scope of underlying earnings. Net earnings and underlying earnings have been reconciled on page 53 and the exclusions in arriving at underlying earnings have been analysed on page 55. Segmental information is provided in note 50 to the 2007 Financial statements.
     In this report, the sales revenue of the parent companies and their subsidiaries is referred to as ‘Consolidated sales revenue’. Rio Tinto also reports a sales revenue measure that includes its share of jointly controlled entities and associates, which is referred to as ‘Gross sales revenue’. This latter measure is considered informative because a significant part of the Group's business is conducted through operations that are subject to equity accounting.
     This Item is comprised of the following:
Chairman’s statement providing a high level review of the Group
Interview with the chief executive providing a high level review of the Group’s operations
Group financial performance
Operating reviews for each of the principal product groups and global support groups
Financial review of the Group

Chairman’s statement

2007 was another record year for Rio Tinto characterised by continuing strong demand and prices for our metals and minerals, a change in chief executive and the transformational acquisition of Alcan. Once again Rio Tinto’s consistent strategy, focused on value creation and business excellence, delivered significant returns for our shareholders and major benefits to the countries and communities in which we operate.
     The purchase of Alcan, announced in July and completed in October created a world leader in aluminium. Alongside this major acquisition we continued to invest heavily in our existing business with a programme totalling US$5.0 billion, further strengthening our platform for future production and earnings growth. The Alcan acquisition, and the many other initiatives which the new executive team launched in 2007, further demonstrated the strength and depth of Rio Tinto’s managerial capability to deliver value to shareholders.

Results and dividends
The Group’s underlying earnings in 2007 were a record US$7,443 million, one per cent above 2006. Net earnings were US$7,312 million compared with US$7,438 million in 2006. Cash flow from operations increased 15 per cent to a record US$12,569 million.
     The total dividends declared for 2007 of 136 US cents per share represent an increase of 31 per cent over the 2006 dividends. We have committed to further increases in the dividends of at least 20 per cent in each of 2008 and 2009. This underpins our confidence in the growth of our business and is a strong signal of our belief in the strength of future demand and prices. We have always said that our priority for excess capital after meeting our investment in profitable growth is the ordinary dividend, and we are pleased to reinforce this commitment to our shareholders.
     Our growth potential is further evidenced by our planned capital expenditure in 2008 and 2009 of US$9 billion in each year, including the commitments we have made to completing Rio Tinto Alcan’s growth projects. This indicative programme will, of course, be subject to rigorous appraisal of each investment.

Strategy
Our acquisition of Alcan was fully consistent with our long standing strategy. We remain focused on large, long life, low cost resources capable of delivering superior returns across the economic cycle. Alcan’s extensive global asset base has among the lowest cost aluminium smelters in the world and is an industry leader in production technology and self generated energy, particularly hydro-electricity. This will be important in a carbon constrained world.

 

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     Creating value for shareholders is Rio Tinto’s primary objective and the addition of Alcan enables us to capture value from growing aluminium demand alongside our established leadership positions in iron ore and copper.

Sustainable development
A successful business is one that is sustainable. It is one that maintains long term profitability by pursuing value creating projects which recognise the importance of good social and environmental outcomes. Moreover, I believe making our business sustainable is about recognising and managing the full spectrum of risk, thereby making the best opportunities available to us.
     The value of this approach was demonstrated in the agreed transaction to acquire Alcan. Our positive reputation for social and environmental responsibility was welcomed by the Alcan board and led to the Government of Quebec readily agreeing to Rio Tinto continuing Alcan’s commitments to social and economic development in Quebec.
     For our part we recognised the strategic advantage of expanding our position in aluminium, a recyclable metal which, in the case of Rio Tinto Alcan, is produced with a high proportion of hydro-generated electricity.
     Our joint venture with BP to seek cleaner uses of coal through production of hydrogen energy coupled with storage of carbon dioxide underground reflects similar thinking. Our reputation supports our position as the developer of choice in Guinea where we are investing to develop a major iron ore project.
     We were accepted into the FTSE4Good index in the UK after its policy committee decided to include companies involved in the production of uranium. Rio Tinto has maintained membership of the Dow Jones Sustainability World index since its inception in 1999 and has been an active member of the World Business Council for Sustainable Development and the International Council on Mining and Metals (ICMM), whose members are committed to superior business practices in sustainable development.

Board and management developments
As you know, Tom Albanese succeeded Leigh Clifford as chief executive in May 2007. We thank Leigh for his many years of service to Rio Tinto, and its predecessor companies, including the last seven as chief executive. He contributed much to creating Rio Tinto’s platform for the future and we owe him a lot. As his successor, Tom has a long and proven track record in Rio Tinto and has made a very strong start in his first year as chief executive.
     Following the acquisition of Alcan we were pleased to welcome Yves Fortier and Paul Tellier to the board as non executive directors, and Dick Evans, chief exective of Rio Tinto Alcan, as an executive director.
     Yves joins the Nominations committee and the Committee on social and environmental accountability. Paul joins the Audit committee and the Remuneration committee. This strong representation from Canada will provide important continuity in the integration of Alcan and brings valuable new perspectives to the board.
     As announced at the 2007 annual general meetings, Sir Richard Sykes, currently the senior non executive director, will retire at the conclusion of the 2008 annual general meetings after ten years on the board. Richard has made a highly valued contribution to Rio Tinto over the period based on his prior experience of leading a major global company and across the technology field. We thank him for that. Andrew Gould, currently chairman of the Audit committee, will become the senior non executive director on Sir Richard’s retirement and will become chairman of the Remuneration committee. Sir David Clementi will replace Andrew as chairman of the Audit committee. These changes will take effect at the conclusion of the 2008 annual general meetings.
     Ill health led to the resignation of Ashton Calvert from the board in November and we were deeply saddened to hear of his death shortly afterwards. Ashton joined the board in 2005 following a long and distinguished career in the Australian foreign service. He made a major contribution to Rio Tinto and provided valuable insights across a range of major strategic issues, notably in relation to our businesses in Australia and Asia. He was a wonderful colleague.

Forward outlook
We are seeing a dramatic change in the world’s centres of economic power, with rapid growth, urbanisation and industrialisation in many parts of the developing world. We expect a large part of the world’s population – billions of people – to move through increasingly metal intensive phases of economic development. This will transform our industry and underpin future growth in markets.
     Commodity markets appear to be entering the fifth straight year of growth with mineral and metal prices at levels well above their long term average. Projections for Rio Tinto’s main product groups – iron ore, aluminium and copper – suggest that demand could potentially triple over the next 25 years.
     While it is premature to say that the current price cycle has peaked, we are mindful of short term risks associated with the expected slowdown in the US economy. However, the US is now somewhat less important in world commodity demand than it was five years ago. Our analysis suggests a sharp slowdown in the US would have only a modest impact on growth in China and India.
     In the short term, with low commodity stocks and a likely continuation of supply side challenges, we expect solid global economic growth, led by China, to support strong increases in demand for most metals and minerals during 2008 and 2009.

Approach from BHP Billiton
In November Rio Tinto received an unsolicited approach from BHP Billiton proposing a combination of the companies. This was fully considered by the board and rejected on the basis that it significantly undervalued Rio Tinto’s assets and

 

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future prospects.
     On 6 February 2008, BHP Billiton announced pre-conditional takeover offers for Rio Tinto of 3.4 BHP Billiton shares for each Rio Tinto share. The board gave this careful consideration and concluded that the offers still significantly undervalue Rio Tinto. The board unanimously rejected the pre-conditional offers as not being in the best interests of Rio Tinto shareholders.
     The offers, while improved, still fail to recognise the underlying value of Rio Tinto’s high quality assets and prospects. Our plans are unchanged and will remain so unless a proposal is made that fully reflects the value of Rio Tinto. Meanwhile we will forge ahead with our stated strategy.

Our people
As I hope this message has demonstrated, 2007 was an important year for Rio Tinto and, following a number of significant developments, I believe the Group is even more strongly positioned to deliver value for shareholders in the future. Managing major strategic initiatives places strong demands on management and they have responded with great resilience. In strong markets meeting the demands of customers, and developing new projects within tight timetables and budgets, places considerable pressure on every individual in the Rio Tinto organisation. Our record results in 2007 are very much a product of the commitment, dedication and hard work of all our people across the world. On behalf of the board and you, our shareholders, I thank them for all they have done to deliver success in another record year.

Paul Skinner Chairman
5 March 2008

Interview with the Chief executive

How would you describe the past year?
It would be a bit of an understatement to say it’s been exciting. We announced the Alcan deal in July. We successfully closed it, as we said we would, in October. The integration with Alcan is going well and we are looking forward to reaping synergies of US$940 million per annum by the end of 2009. The acquisition of Alcan is just the beginning. In May and June, we announced major expansion plans in iron ore and uranium, and we followed this with further expansion announcements in the fourth quarter. We predict rapid expansion in iron ore and strong prospects across our portfolio of assets.
     I deeply regret that four people lost their lives at operations we manage. I am pleased to see a continued reduction in the lost time injury frequency rate and the all injury frequency rate.

What is the plan?
Rio Tinto is all about value, and 2008 heralds a greatly expanded development pipeline. Major investments in growth projects made or approved in 2007 total US$46 billion. This includes the acquisition of Alcan Inc. for US$38 billion, and, on a 100 per cent basis, construction of two new iron ore mines in the Pilbara of Australia for US$2.42 billion, the underground development of the Diavik diamond mine in Canada (US$563 million) bringing total investment in the underground mine to US$787 million, the expansion to 30 million tonnes per year of the Hope Downs iron ore project (US$350 million), the Yarwun alumina refinery expansion to 3.4 million tonnes per year (US$1.8 billion), the Cape Lambert port expansion to 80 million tonnes per year (US$860 million), the US$991 million investment in the extension of the Kestrel coal mine and US$300 million for the Eagle nickel project in the US.
     To feed a metal hungry world we have the people, execution capability and resources to deliver these projects better than anyone else.

Is this fast growth profile a departure from your strategy?
I am a strong believer in our core values and our strategy, which is to invest in large, cost efficient, long life assets and to leverage these with the people, capital, and technologies to create enduring value for our shareholders. There has never been a time when a development pipeline like ours is worth as much as it is today. Our plans are all aligned with our strategy. What has changed is the market environment, which is the strongest it has been in a generation. Our proven strategy positions us to meet the challenges that this level of demand imposes. We intend to stick to our mantra around value, but we’ll need to do this smarter, we’ll need to do this faster and we’ll need to do this better than anyone else. We’ll be doing this by bringing on more projects, which we can develop at a faster pace, which can be sold at higher prices. This is what we’ve been doing this year, and this is what I intend to continue to do into the future.
     One thing that we must take account of in applying our strategy going forward is that the world is rapidly changing and we have to change with it. The world’s best orebodies include many beyond our Australia and North America heartlands, so we cannot afford to ignore more challenging parts of the world. While being sensitive to government and stakeholder expectations, we have to be capable of operating where the world’s leading orebodies are located. We are also in the midst of a period of unprecedented industry change. We should not assume our asset and business mix is static. We should continue to be alert to value adding investments and portfolio changes where we see opportunity, and where we can deliver competitive value in line with our strategy.

 

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How long will the current market environment last?
Over the past five years we have watched the growth of China and its impact on our business with an initial measure of optimism and healthy scepticism to now what I would best describe as very high expectations based on real facts. Markets appear to be entering the fifth straight year of demand strength with virtually all minerals and metals prices at levels significantly above their long term historical trends. We are continuing to see a fundamental shift in the global economy towards fast and resource intensive growth as countries like China and India continue to industrialise, urbanise and expand their per capita GDP, and I would expect these conditions to continue for some time, perhaps for several decades. With this strong demand, supply growth continues to be constrained, held back by literally decades of underinvestment in people, in exploration and in mines and infrastructure. While this bodes well for the future, it is of absolute importance that our mines and businesses stay globally competitive and sufficiently robust to weather any possible downturns.

But what about the slowdown in the US?
I think we should be insulated from the effects of a major US slowdown. While many of our markets, like North American copper, aluminium and industrial minerals, depend on important sectors like US housing, our overall business is increasingly focused on global demand trends. Clearly China, and to a lesser extent India, has become extremely important to these global trends, and this will be even more so in the future based on strong demographic and economic growth prospects. The importance of the US has declined substantially relative to that of China since 2000. Specific examples include seaborne iron ore, where the US is a negligible market participant, or copper and aluminium, where China now consumes more than twice as much as the US. The key issue for the health of commodity markets over the medium term is the magnitude of any negative spillover effect from a slowing US economy on economic activity in the rest of the world and China in particular. We don’t think a recession in the US will have a significant effect on demand for steel, copper and aluminium in China. If there is a recession in the US, the impact on growth in Chinese GDP is expected to be one per cent or less. This would still leave scope for Chinese growth at levels of ten per cent. For India, the impact of any further US slowdown would likely be smaller because of India’s more limited exposure to world trade.

How do you describe Rio Tinto’s performance in 2007?
Rio Tinto set new annual records for production of iron ore, bauxite, alumina, aluminium, refined copper and refined gold. Production is running at full tilt and accelerated in the second half. Our excellent production results show the momentum in our business and the volume growth that is the fruit of our investments over recent years. With significant expansions on track in iron ore and in aluminium, as well as the contribution of the Alcan acquisition which creates the world’s leading aluminium producer, 2008 is expected to see an acceleration of this growth.

What are the highlights of your growth plan?
One driver is iron ore, where we have developed a conceptual pathway to more than triple our production capacity to more than 600 million tonnes per annum (Mt/a), primarily from expansions of up to 420 Mt/a from the Pilbara and 170 Mt/a from Simandou in Guinea. At Simandou, feasibility studies are likely to be completed by 2010 for first production to start in 2013 at a rate of 70 Mt/a. Additional phases of development are being considered to increase production in 50 Mt/a increments to 170 Mt/a.
     Rio Tinto has 1.9 billion tonnes of ore reserves and further iron ore mineralisation in the Pilbara. Exploration is targeting to increase the mineralisation inventory. Exploration drilling at Simandou has also been active with more than 35,000 metres undertaken in 2007. At Simandou we are targeting to add iron ore mineralisation to Rio Tinto’s inventory.
     The targeted mineralisation in both the Pilbara and Simandou areas is based on an assessment of tenure areas using surface mapping, drilling results and other information. Technical and economic studies are not complete to enable classification as ore reserves, but results so far provide an indication of just how much potential we have in these areas.
     In aluminium, Rio Tinto Alcan is the global leader in bauxite production and aluminium smelting with low cost capacity derived from a unique combination of sustainable hydropower and industry leading technology. With the commissioning of the Gove expansion and the expansion at the Yarwun refinery in Australia under way, we are also on a path to become the world leader in alumina production, doubling capacity by 2015. The integration with Alcan is expected to yield US$940 million per year in operating synergies by 2009, US$340 million per year more than was estimated at mid year. We have a range of smelter upgrades in Quebec and British Columbia planned, in addition to greenfield projects in Oman, Malaysia, Saudi Arabia, Abu Dhabi and South Africa, plus other projects just entering the development process. Global aluminium demand is growing strongly. Global consumption grew by more than ten per cent in 2007, with Chinese growth at 38 per cent. Besides strong Chinese consumption, increased marginal costs of Chinese supply will continue to support this business. However, we will need to be particularly mindful of the impact of a strong Canadian dollar on this business.
     In copper, Rio Tinto’s most profitable producer, Bingham Canyon in Utah, offers opportunities for growth, could operate until 2036, and hosts a newly discovered world class molybdenum deposit underneath the current open pit. New porphyry mineralisation has also been discovered below the pit walls and there are more exploration targets within three to four kilometres of the open pit. I am especially proud of everything the team at Kennecott Copper has done, from

 

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difficult days just a few years ago, to its current success and its promising outlook. Exploration and evaluation at La Granja in Peru has increased the extent of mineralised material several times since Rio Tinto acquired the property in late 2005. This makes it potentially the largest undeveloped copper project in South America with a possible production rate of up to 500,000 tonnes of copper a year by 2014.
     Rio Tinto has a stake in three more of the largest undeveloped copper projects in the world. At Oyu Tolgoi in Mongolia we are targeting to produce up to 440,000 tonnes of copper per year with valuable gold by-products and at Resolution in the US we are targeting an operation of up to 500,000 tonnes per year for 40 years or more.
     Exploration, southwest of Oyu Tolgoi, has been very promising with a new discovery called Heruga. We also have a 19.8 per cent interest in the Canadian company that controls the Pebble copper-gold deposit in Alaska, still in the early stages of planning. We are reentering the nickel market with two significant projects – Eagle in Michigan and Sulawesi in Indonesia – that could make us one of the top nickel producers globally. We announced the go-ahead for Eagle a few months ago. First production is scheduled to begin in late 2009.
     The current uranium market outlook is very positive, with prices close to record highs, and Rio Tinto is in an excellent position to sustain higher levels of production going forward. With spot prices having risen sixfold since 2004, we have a window of opportunity to lock in higher contract prices over the next several years. We are already the second largest uranium producer in the world and we have identified significant opportunities to expand our business at Energy Resources of Australia and at Rössing.
     In coal, our reserve position is one of the largest in Australia, but performance has been hampered by a lack of infrastructure, the result of a legacy of uncoordinated responses by miners, rail carriers and ports. We hope to see the new government in Australia begin to address this national issue as a matter of the greatest urgency. As infrastructure challenges in New South Wales and Queensland are alleviated and we overcome weather related disruptions, we will enjoy significant brownfield and greenfield expansion capabilities from thermal coal mines such as Clermont and Mount Pleasant and our coking coal mines at Hail Creek and Kestrel. Recently we reaffirmed our commitment to the Australian coal sector with an investment to extend and expand Kestrel. Meanwhile, we continue to explore for coal throughout the world.
     Turning to industrial minerals, we have some exciting growth prospects here as well. We are now beginning to see increasing Chinese demand for titanium dioxide feedstock, as we have been foreshadowing for the past several years. China is estimated to have made up 17 per cent of global titanium dioxide feedstock demand in 2007, and this is growing rapidly. Our mineral sands project in Madagascar is proceeding well. The 750,000 tonnes per year operation is due to come on stream at the end of 2008, producing some of the highest grade titanium dioxide in ilmenite in the world. We’ve increased our feasibility expenditure on the Potasio Rio Colorado potash project which remains subject to final permitting and approval by the board.
     In diamonds, we are making better progress with the Argyle underground development and the Diavik underground project we announced late last year will extend the mine life beyond 2020. Diavik is without doubt the most profitable diamond mine in Canada.

What are your project priorities?
We are focusing on the commodities closely linked to the metals, minerals, and energy intensive stage of development of the world’s growth economies. Our capital expenditure in 2008 and 2009 is expected to be US$9 billion in each year, primarily on projects in iron ore, copper and aluminium. As I outlined above, we have every reason to have confidence in demand growth in these key areas. For example, China’s steel production is now five times more than the amount produced in the US. China is building from scratch a city the size of Brisbane every month. That takes a lot of steel from iron ore, as well as copper, for electrification, aluminium and other metals and minerals. Last year, China consumed over 30 per cent of the world’s aluminium and its annual rate of consumption grew at 38 per cent.

What are you doing about rising production costs?
We are a global company and we are applying advantages of scale and breadth to improve efficiencies and create value. Working through our One Rio Tinto concept we continue to improve, with greater cohesion and collaboration, as a single operating organisation. We expect to achieve considerable savings by operating common systems across our diverse businesses to leverage off the critical mass of the whole. This proved successful when applied to our safety systems, how we run procurement, and in implementing our business improvement programme Improving performance together (IPT). In the two years of the IPT programme it yielded more than US$800 million of extra value and I fully expect this to continue to grow under One Rio Tinto. We have a target to reduce corporate function costs by US$500 million before 2010. Every effort is being made to capture the benefits of global standardisation and the transfer of best practice between our operations. Our rapid integration of Alcan, with higher than originally targeted synergies, is a great example of these new systems at work.
     I envisage that One Rio Tinto will also allow us to be better positioned to introduce innovative technologies across the Group. We are by our nature a capital and process intensive industry, and we are repositioning ourselves from being a fast follower to a targeted innovator of technology in areas where we can make a difference. An example is our goal of developing a fully automated iron ore mine in the Pilbara within the next five years.
     Our 2007 second half results show that we are doing better than most in stemming the effects of industry inflation.

 

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Where are new opportunities coming from?
In exploration, we believe we’ve had an unrivalled company track record in discovery among the major mining companies. Many of our major value adding projects are the result of exploration successes, which means they were acquired at a very competitive initial investment. For example, La Granja in Peru was acquired for US$22 million plus a minimum investment of US$60 million and has the potential to become one of the world’s largest copper producers. We’ve maintained our commitment to exploration over the years and the consistency of expenditure and activity over the cycle has produced extraordinary results. Looking ahead, our exploration portfolio is an exciting multi-commodity mix of brownfield and greenfield opportunities ranging from iron ore in the Pilbara to bauxite prospects in Brazil, potash in Canada and coking coal in Mongolia. We have an exceptional set of assets and growth opportunities, both in established projects and exploration prospects. We have well trained and motivated people throughout our organisation. And we have a great track record for management delivery in safety, in daily operations and in the execution of our capital projects. We face the future with confidence.

Any reflections on the future?
I’ve inherited a great business and a great organisation. Our primary objective is the creation of further value for our shareholders in a market environment that is nothing short of spectacular. Rio Tinto, with its 135 year heritage of assets, its strong organisation, people and prospects, is well positioned to capitalise on the terrific opportunities available at this point in the market cycle. We cannot rest on our laurels though, and the fast pace of events in 2007 should be seen as a guide to how we have to look to the future, being ever more competitive in an ever more dynamic world. The modernisation of our head office, introduction of our new Rio Tinto brand, and the development of new global systems under a unified One Rio Tinto is all evidence of this vision. I’m very excited about the way things are going and our plans for value creation for the shareholders of Rio Tinto.
     In closing, I would like to express my thanks and appreciation to all Rio Tinto people around the world for their strong support and dedication at this time.

Tom Albanese Chief executive
5 March 2008

Group financial performance

The Group uses a number of key performance indicators (‘KPI’s) to monitor financial performance. These are summarised below and discussed later in this report.

KPI Description 2007   2006   2005  
    US$m   US$m   US$m  








Underlying earnings Underlying earnings is the key financial performance indicator which management use internally to assess performance. It is presented here as an additional measure of earnings to provide greater understanding of the underlying business performance of the Group’s operations. Items excluded from net earnings to arrive at underlying earnings are explained in note 2 to the 2007 Financial statements. The Group’s underlying earnings for the past three years are discussed below. 7,443   7,338   4,955  








Gearing (net debt to total capital) The Group’s total capital is defined as Rio Tinto’s shareholders’ funds plus net debt and outside equity shareholders’ interests. The Group’s approach to capital management is discussed in the Liquidity and capital resources section on page 100. 63 % 11 % 8 %








Capital investment Continuing investment in value adding growth projects. The Group’s capital projects are listed on pages 11 to 13.      








Total shareholder return (‘TSR’) Total shareholder return measures the Group’s performance in terms of generating shareholder wealth through dividends and the share price. The Group’s TSR performance compared to the FTSE 100 index, the ASX All Ordinaries index and the HSBC Global Mining Index is shown on page 128. The relationship between TSR and executive remuneration is also discussed on page 122. 91.8 % 7.6 % 78.4 %








Acquisition of Alcan
During 2007, the Rio Tinto Group acquired 100 per cent of the issued share capital of Alcan Inc. The total cost of acquisition amounted to US$38.7 billion, including fees. Alcan’s results are included within the Group’s results from 24 October 2007.
     Alcan Inc. is the parent company of an international group of companies involved in bauxite mining, alumina refining, aluminium smelting, engineered products, flexible and specialty packaging, as well as related research and development.
     The Group has decided to dispose of Alcan Packaging, which is presented in the balance sheet in the lines: ‘Assets held for sale’ and ‘Liabilities of disposal groups held for sale’. Therefore, the income and cash flow statements

 

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for the year exclude amounts relating to Alcan Packaging. Following a company wide strategic review of the combined Rio Tinto and Alcan assets, on 26 November 2007 the intention to divest the Engineered Products business was also announced.

Net earnings and underlying earnings
Both net earnings and underlying earnings deal with amounts attributable to equity shareholders of Rio Tinto. However, IFRS requires that the profit for the period reported in the income statement should also include earnings attributable to outside shareholders in subsidiaries. The profit for the period is reconciled to net earnings and to underlying earnings as follows:

  2007   2006   2005  
  US$m   US$m   US$m  







Profit for the year 7,746   7,867   5,498  
Less: attributable to outside equity shareholders (434 ) (429 ) (283 )







Attributable to equity shareholders of Rio Tinto (net earnings) 7,312   7,438   5,215  
Less: exclusions from underlying earnings 131   (100 ) (260 )







Underlying earnings attributable to shareholders of Rio Tinto 7,443   7,338   4,955  







2007 financial performance compared with 2006
Net earnings of US$7,312 million in 2007 were US$126 million below 2006, a decrease of two per cent. Underlying earnings of US$7,443 million were US$105 million above 2006, an increase of one per cent. Underlying earnings per share increased by five per cent and net earnings per share increased by two per cent in 2007 reflecting the lower number of shares resulting from the share buyback programme in the first half of the year. The principal factors explaining the changes in underlying earnings are shown in the table below.

Changes in underlying earnings 2006 – 2007 US$m  




2006 Underlying earnings 7,338  
Effect of changes in:  
  Prices 1,364  
  Exchange rates (403 )
  Volumes 516  
  General inflation (218 )
  Cash costs (442 )
  Non-cash costs (201 )
  Exploration, evaluation and technology costs (309 )
  Tax/other (202 )




2007 Underlying earnings 7,443  




The effect of price movements on all major commodities was to increase earnings by US$1,364 million. Prices for the major products remained strong throughout the year and were higher overall than those experienced in 2006: average copper prices were six per cent higher whilst average aluminium prices were three per cent higher. The strength of the global iron ore market was reflected in the 9.5 per cent increase in the benchmark price, mainly effective from 1 April 2007. The seaborne thermal and coking coal markets were also strong and strengthened further in the second half.
     Molybdenum prices averaged US$30/lb throughout 2007, an increase of 20 per cent compared with the prior year.
     There was significant movement in the US dollar in 2007 relative to the currencies in which Rio Tinto incurs the majority of its costs. The Australian dollar was 11 per cent stronger, the Canadian dollar was six per cent stronger and the South African rand four per cent weaker. The effect of all currency movements was to decrease underlying earnings relative to 2006 by US$403 million.
     Higher sales volumes predominantly from growth projects increased underlying earnings by US$516 million compared with 2006. The ramp up of new projects in iron ore (including the Yandicoogina and brownfields expansions), higher volumes of copper in concentrate at Escondida from improved grades, higher refined copper sales from the Kennecott Utah Copper (‘KUC’) smelter operating at close to capacity and higher diamond grades at Diavik were the main contributors.
     The Group continued to invest further in the future development of the business with an increased charge to underlying earnings of US$309 million from exploration, evaluation and technology costs. Higher freight and demurrage costs and increased energy costs reduced underlying earnings by US$163 million and US$82 million, respectively. Significant shipping congestion at the port of Newcastle affected coal sales with a resulting impact on costs at Rio Tinto Coal Australia, through higher demurrage and a higher unit cost of sale. General inflation and mining inflation increased costs by US$218 million and US$140 million respectively as higher contractor, maintenance and input costs were experienced throughout the Group, notably in the iron ore and copper operations, as industry supply constraints persisted.
     An increase in non cash costs reduced 2007 earnings by US$201 million compared with 2006, following the

 

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completion of several large capital investment projects.
     The effective tax rate on underlying earnings, excluding equity accounted units, was 25.7 per cent compared with 24.2 per cent in 2006. The tax charge in 2007 was reduced by US$392 million as a result of the impact of the reduction in the Canadian tax rate enacted in December 2007 on deferred tax provisions. The 2006 tax rate benefited from US$335 million of US Alternative Minimum Tax credits, which were recognised on the balance sheet as a result of improved prospects for recovery of these from future taxable earnings from the Group’s US operations, as well as the utilisation of US$140 million of previously unrecognised tax assets.
     Alcan’s contribution to underlying earnings for the nine weeks to 31 December 2007 was US$424 million, including a benefit relating to the change in the Canadian tax rate as described above. Exploration divestments increased 2007 underlying earnings by US$139 million relative to 2006. A higher interest charge from an increase in net debt following the Alcan acquisition reduced earnings by US$248 million relative to 2006. These variances and the tax variances referred to above are included within the US$202 million adverse variance for ‘Tax/other’.

2006 financial performance compared with 2005
Net earnings of US$7,438 million in 2006 were US$2,223 million above 2005, an increase of 43 per cent. Underlying earnings of US$7,338 million were US$2,383 million above 2005, an increase of 48 per cent. Underlying earnings per share, which increased by 52 per cent, also reflected the lower number of shares resulting from the share buyback programme. The principal factors explaining the changes in underlying earnings are shown in the table below.

    US$m  




2005 Underlying earnings 4,955  
Effect of changes in:  
  Prices 3,068  
  Exchange rates (35 )
  General inflation (174 )
  Volumes (135 )
  Cash costs (629 )
  Non cash costs (66 )
  Exploration, evaluation and technology costs (46 )
  Tax/other 400  




2006 Underlying earnings 7,338  




The effect of price movements on all major commodities was to increase earnings by US$3,068 million. Prices for the major products remained strong throughout the year and were considerably higher than those experienced in 2005: average copper prices were 84 per cent higher whilst average aluminium prices were 35 per cent higher. The strength of the global iron ore market was reflected in the 19 per cent increase in the benchmark price, mainly effective from 1 April 2006. The seaborne thermal coal market was also strong, although it weakened in the second half.
     Molybdenum prices averaged US$25/lb throughout 2006, a decline of 20 per cent compared with the prior year.
     The net effect of changes in average levels of exchange rates against the US dollar for those currencies influencing the Group’s costs was to reduce underlying earnings relative to 2005 by US$35 million.
     Lower sales volumes decreased underlying earnings by US$135 million compared with 2005. As anticipated, significantly reduced volumes from lower grades at Grasberg impacted earnings by US$355 million year on year. This more than offset higher volumes at other operations. The ramp up of new projects in iron ore (including the Yandicoogina and brownfields expansions), higher copper in concentrate volumes from improved grades and throughput at Northparkes, higher ore grades and the commencement of sulphide leach production at Escondida, along with higher molybdenum and gold production at KUC, were the main contributors. Record volumes of thermal coal sales at Rio Tinto Energy America and alumina at Yarwun, also contributed to higher volumes. Lower sales volumes were recorded at Argyle with a build up of diamond inventories due to softer market conditions, at Kennecott Minerals from lower grades at Cortez, and at Hail Creek from lower coking coal volumes in response to lower customer demand.
     Excluding the effects of general inflation, higher costs reduced earnings by US$741 million, of which US$77 million was the result of higher energy costs. Ongoing acute shortages in the mining industry, in particular in the Pilbara, continued to put pressure on costs. Costs at KUC were affected by an extended, scheduled smelter maintenance shutdown whilst Escondida experienced higher wages, following the strike in August. Significant shipping congestion at the port of Newcastle affected coal sales in the second half of the year with a resulting impact on costs at Rio Tinto Coal Australia, through higher demurrage and a higher unit cost of sale.
     The effective tax rate on underlying earnings, excluding equity accounted units, was 24.2 per cent compared with 29.2 per cent in 2005, following the recognition of US$335 million of US Alternative Minimum Tax (AMT) credits expected to be utilised in future years. This reflected improved projections of long term taxable earnings from the Group’s US operations. Additionally, the high levels of profit generated by the Group’s US operations in 2006 resulted in the realisation of US$140 million of previously unrecognised deferred tax assets in the year. Deferred tax provisions decreased by US$46 million as a result of a reduction in Canadian tax rates. These favourable tax variances are included within the favourable variance of US$400 million for ‘Tax/other’.

 

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Exclusions in arriving at underlying earnings 2005–2007
Earnings contributions from Group businesses and business segments are based on underlying earnings. Amounts excluded from net earnings in arriving at underlying earnings are summarised in the discussion of year on year results below.

  2007   2006   2005  
  US$m   US$m   US$m  






 
Profit less losses on disposal of interests in businesses 1   3   311  
Impairment reversals less (charges) (113 ) 44   4  
Exchange gains/(losses) on US$ net debt and intragroup balances (including those relating to equity accounted units) 156   (14 ) (99 )
Gains/(losses) on currency and interest rate derivatives not qualifying for hedge accounting      
(including those relating to equity accounted units) 34   30   (40 )
Other exclusions (209 ) 37   84  






 
Total excluded in arriving at underlying earnings (131 ) 100   260  






 

In 2007 an impairment charge of US$328 million after tax was recognised at Argyle following a decline in value as a result of large increases in the estimated capital costs of the underground project. This was partly offset by the reversal of the residues of the impairments of Tarong Coal and Palabora.
     Other exclusions from underlying earnings in 2007, a charge of US$209 million, mainly comprised non-recurring consequences of the Alcan acquisition, including integration costs. Of this total, US$146 million resulted from the sale of Alcan inventories that were revalued based on selling prices at the date of acquisition.
     Net earnings in 2006 included net impairment reversals totalling US$44 million. Impairments were reversed at KUC and IOC which more than offset impairment charges at Argyle and Tarong Coal.
     Exchange gains and losses on US dollar net debt and intragroup balances that are recorded in the Group’s income statement, together with gains and losses on currency and interest rate derivative contracts that do not qualify as hedges under IFRS are excluded from underlying earnings. In 2007, these items produced a gain of US$190 million (2006: a gain of US$16 million) reflecting the weakening of the US dollar against the Australian and Canadian dollars. In 2005 these items represented a loss of US$139 million.
     In 2005, gains from disposals of interests in businesses amounted to US$311 million, relating mainly to the sale of Rio Tinto’s interests in the Labrador Iron Ore Royalty Income Fund and in Lihir Gold.

     The effective tax rate on net earnings in 2007, excluding equity accounted units was 25.3 per cent compared with 26.8 per cent in 2006. The reduction in the Canadian tax rate reduced the 2007 effective tax rate and the recognition of US deferred tax assets lowered the effective tax rate in 2006. There were significant untaxed gains in 2005 which lowered the effective tax rate and the tax benefits referred to above reduced the tax rate for 2006.

Group financial results by product group
The table below summarises the Group’s underlying earnings by product group for each of the three years to 2007. These are discussed on pages 56 to 98.

  2007   2006   2005  
  US$m   US$m   US$m  






 
Iron Ore 2,651   2,251   1,722  
Energy 484   706   730  
Aluminium 1,097   746   392  
Copper 3,479   3,538   1,987  
Diamonds and Industrial Minerals 488   406   438  
Other operations 15   33   40  
Other items (526 ) (241 ) (186 )
Exploration and evaluation 20   (84 ) (124 )
Net interest (265 ) (17 ) (44 )






 
Group underlying earnings 7,443   7,338   4,955  
Exclusions from underlying earnings (131 ) 100   260  






 
Net Earnings 7,312   7,438   5,215  






 

Trend information
The demand for the Group’s products is closely aligned with changes in global Gross Domestic Product. Changes in the GDP of developing countries are expected to have a greater impact on materials such as iron ore and coal that can be used to improve infrastructure, whereas changes in the GDP of developed countries are expected to have a greater impact on industrial minerals that have many applications in consumer products. Copper is used in a wide range of applications from infrastructure to consumer electronics and demand for it has tended to grow in line with or slightly faster than global GDP. Trends in production of the Group’s minerals and metals, gross sales revenue and underlying earnings are set out in this Operating and financial review and prospects.

 

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Aluminium group

Mined Rio Tinto share  
Weipa bauxite  million tonnes  


 
2003 12.1  
2004 12.8  
2005 15.6  
2006 16.3  
2007 21.0  


 
Production Rio Tinto share  
Alumina  ‘000 tonnes  


 
2003 2,014  
2004 2,231  
2005 2,963  
2006 3,247  
2007 3,877  


 
Aluminium  ‘000 tonnes  


 
2003 817  
2004 837  
2005 854  
2006 845  
2007 1,480  


 
Underlying earnings contribution* US$m  


 
2004 331  
2005 392  
2006 746  
2007 1,097  


 
Changes in underlying earnings 2005 - 2007 US$m  


 
2005 Underlying earnings 392  
Effect of changes in:  
         Prices and exchange rates 454  
         General inflation (36 )
         Volumes 8  
         Costs (65 )
         Tax and other (7 )


 
2006 Underlying earnings 746  
Effect of changes in:  
         Prices and exchange rates (12 )
         General inflation (37 )
         Volumes 11  
         Costs (36 )
         Tax and other 425  


 
2007 Underlying earnings 1,097  


 
* A reconciliation of the net earnings with underlying earnings for 2007, 2006 and 2005 as determined under IFRS is set out on page 53.

STRATEGIC OVERVIEW

Alcan Inc. (Alcan) joined the Rio Tinto Group on 23 October 2007. The total cost of the acquisition amounted to US$38.7 billion, including fees. The expanded aluminium product group, formed by the combination of Alcan and Rio Tinto’s existing aluminium assets, was renamed Rio Tinto Alcan (RTA).
     RTA comprises closely integrated, high quality bauxite, alumina and aluminium businesses with a broad global reach. The business is founded on large reserves of the mineral bauxite, which is refined into the intermediate product alumina, before being smelted into aluminium metal. RTA is a world leader in the production of bauxite and aluminium, with a defined pathway to becoming the largest producer of alumina through the commissioning of the Gove refinery expansion and current expansion of the Yarwun refinery, both in Australia.
     RTA is an industry leader in technology which, combined with an ownership position in clean hydro-electric generating capacity of 3,689 megawatts (MW), provides a significant, sustainable competitive advantage of increasing value in a carbon constrained world. The combined group has one of the industry’s most extensive bauxite mine, alumina refinery and aluminium smelter development portfolios, comprising 16 major projects in 13 countries.

 

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     RTA’s strategy is to maximise shareholder return whilst achieving excellence in health, safety and environmental performance; maximising value generated from existing assets; and optimising and opportunistically growing the bauxite, alumina and aluminium businesses. RTA uses its dedicated business improvement programme, called Lean Six Sigma, to improve operations, process stability and eliminate waste.
     RTA is currently organised into four business units – Bauxite & Alumina, Primary Metal, Engineered Products and Packaging. In the announcement of Rio Tinto’s offer for Alcan in July 2007, it was disclosed that it had been agreed with Alcan that the Packaging business would be divested. The Packaging business has therefore been classified as an Asset held for sale and its results for the period since acquisition have not been included in the earnings of the Rio Tinto Group.
     RTA’s financial results include Alcan businesses from 24 October 2007. On this basis, in 2007 RTA contributed 22 per cent of Rio Tinto’s gross sales revenue and 15 per cent of its underlying earnings. As at 31 December 2007, RTA accounted for 63 per cent of Rio Tinto’s operating assets.
     At year end, RTA employed 71,600 people of whom 67,000 joined the group with Alcan. About 25,000 employees are employed in the Bauxite & Alumina and Primary Metal business units and approximately 45,000 employees in the Engineered Products and Packaging businesses.

Dick Evans, chief executive, Rio Tinto Alcan, is based in Montreal, Canada.

DIVESTMENTS

As part of Rio Tinto’s offer for Alcan on 12 July 2007, it was announced that the Packaging business would be divested. Following a company wide strategic review of the combined Rio Tinto and Alcan assets, on 26 November 2007 the intention to divest the Engineered Products business was also announced.

INTEGRATION OF ALCAN

Rio Tinto’s offer for Alcan on 12 July 2007 aimed at after tax synergies of US$600 million per annum by the end of 2009. Within the parameters of relevant takeover regulations, intensive and cooperative integration efforts were made between 12 July and 23 November 2007 which resulted in an increase in the targeted after tax synergies to US$940 million per annum by the end of 2009. A rigorous and comprehensive integration plan is being progressively executed and is overseen by an Integration Steering Committee and an Integration Management Office.

SAFETY

All injury frequency rate per 200,000 hours  


 
2003 1.43  
2004 1.48  
2005 1.37  
2006 1.40  
2007 1.02  


 

An important factor in Rio Tinto’s acquisition of Alcan was alignment across both businesses on the importance of safety. While philosophies were similar, Alcan’s definitions were different to those used by Rio Tinto and hence 2007 performance is not comparable. Moving forward, former Alcan operations will adopt Rio Tinto definitions and consolidated data will be presented from 2008. The safety results are based on data from the former Rio Tinto Aluminium business; data from former Alcan businesses are not included.
     Regrettably a metal merchant was fatally injured at an Engineered Products operation in December. Alcan’s Recordable Case Rate at the end of 2007 represented a 28 per cent reduction over 2006 and an 84 per cent reduction compared to 2001. This performance was 23 per cent better than Alcan’s target for the period. The Lost Time Injury Illness Rate also declined by 26 per cent but remained eight per cent short of the 2007 target.
     Some notable examples of Alcan’s success in reducing these rates include controlling hazardous energy sources from upstream operations and development and roll out of large scale man machine interface programmes in downstream operations.
     The former Rio Tinto Aluminium business recorded its best ever safety performance in 2007. The All Injury Frequency Rate improved by 26 per cent over 2006 and the number of Lost Time Injuries reduced by 30 per cent compared to the previous year. During the year New Zealand Aluminium Smelters was awarded the Rio Tinto Chief Executive’s Safety Award and Weipa received the award for the Most Improved Site. In 2007, the Safety Leadership Development Programme was introduced across the business and implementation of the Health, Safety and Environment Quality Management System continued.

 

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GREENHOUSE GAS EMISSIONS

The former Rio Tinto Aluminium sites have approached meeting greenhouse gas (GHG) and energy targets by planning improvements in the key metrics of net carbon ratio, anode effects, power efficiency and fuel use. Projects are undertaken to improve overall site performance, including cost and production, in addition to supporting GHG and energy targets. There are a considerable number of individual projects being undertaken through the business improvement system, each supported by a detailed plan of activities to bridge the gap between current and targeted performance.
     To track and encourage focus on target performance, Rio Tinto Aluminium for several years produced and distributed to its management team quarterly tracking of target performance at all sites. Comparing 2007 actual performance with the 2008 targets shows Anglesey is meeting both energy and GHG target performance, Weipa is meeting energy targets and so is Boyne Island Smelters. Other sites are currently not meeting 2008 targets.
     Alcan’s total greenhouse gas emissions were 27.8 million tonnes of CO2 equivalent in 2007, calculated on an equity share basis, representing a four per cent improvement in on site greenhouse gas emissions per tonne of product over a 2005 baseline as a result of efficiency improvements, retrofitting best in class technology and shutdown of some underperforming operations. It is anticipated that the contribution of Alcan will be lower when reported under Rio Tinto greenhouse gas accounting rules. The new RTA is expected to make up about two thirds of Rio Tinto’s gas emissions in the future.
     The expanded RTA group will prepare and present revised plans, incorporating activities and costing, for all assets. The group will combine the best ideas from both Rio Tinto and Alcan and enjoy the benefit of a high percentage of low GHG intensity power sourced from hydro-electricity.

FINANCIAL PERFORMANCE

2007 compared with 2006
In 2007, RTA’s contribution to the Group’s underlying earnings was US$1,097 million, an increase of 47 per cent. The higher contribution was due mainly to the one off impact of the reduction in the Canadian tax rates attributable to the Alcan businesses, but also benefited from higher aluminium prices. The average aluminium price in 2007 was US$2,646 per tonne compared with US$2,557 per tonne in 2006. The performance excludes results from the Packaging business as it is classified as a discontinued operation.

2006 compared with 2005
In 2006, the former Rio Tinto Aluminium’s contribution to the Group’s underlying earnings was US$746 million, an increase of 90 per cent. Higher aluminium prices resulted in earnings increasing by US$451 million, with the average aluminium price in 2006 at US$2,557 per tonne compared with US$1,896 per tonne in 2005.

BAUXITE & ALUMINA OPERATIONS

Bauxite

Bauxite production capacity more than doubled during the year, with the group’s wholly owned bauxite mine at Weipa (Australia) being joined by Alcan’s four operating bauxite mines from around the world (Australia, Brazil, Ghana and Guinea). At year end, RTA’s bauxite production capacity was the largest in the industry, at 34.4 million tonnes per annum, up from 16.5 million tonnes in 2006.

 

The RTA bauxite business benefits from the following:

The largest reserves and mineralisation inventory in the industry which should ensure sufficient bauxite supply to sustain the group’s long term growth strategy.
Regional concentration of reserves (Weipa, Ely, Gove) which should provide the basis for optimisation opportunities going forward.
Scope for expansion of annual production which should underpin expected future alumina production growth.
Interests in three of the four largest mines in the world (Weipa, Porto Trombetas and Sangaredi), located in the top three bauxite reserve countries (Australia, Brazil and Guinea).
Annual production capacity that not only supports internal alumina production, but allows significant sales to third parties.

The Weipa mine located on Cape York, Australia contains reserves of 1,224 million tonnes and additional mineralisation. It has an annual production capacity of 18.2 million tonnes and is by far the largest bauxite mine in the group. In 2007 the mine increased its production capacity by 1.7 million tonnes from 16.5 million tonnes as the result of commissioning of a second shiploader in late 2006. Alcan’s Ely mining lease is situated adjacent to Weipa and is included in the reserve figures for Weipa. Bauxite from Weipa is either shipped to Gladstone for processing at the group’s wholly owned Yarwun refinery and 80 per cent owned Queensland Alumina Limited (QAL) refinery or sold to third parties.

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     RTA’s other Australian mine, at Gove contains reserves of 143 million tonnes and additional mineralisation. It has an annual production capacity of 6.9 million tonnes and is co-located with the Group’s Gove alumina refinery in the Northern Territory, Australia. Output from the mine is consumed mainly by the refinery, although some amounts are sold to third parties.
     RTA owns 12.0 per cent of the Porto Trombetas mine in Brazil. Its share of reserves is 20 million tonnes and share of additional mineralisation, constituting a share of annual production capacity of 2.1 million tonnes. Across the Atlantic, RTA owns 22.9 per cent of the Sangaredi mine in Guinea and 80 per cent of the Awaso mine in Ghana, constituting shares of annual production capacity of 6.2 million tonnes and 1 million tonnes respectively. The reserve positions of these African mines are currently under review.

Alumina
The addition of Alcan’s assets during 2007 boosted RTA’s total alumina production capacity almost threefold, from 3.2 million tonnes per annum in 2006 to 8.3 million tonnes at the end of 2007. In addition to increasing smelter grade alumina refining capacity, the Alcan assets included specialty alumina production capacity of 740,000 tonnes per annum. Specialty alumina represents a range of products that is used extensively in a wide range of industrial and consumer applications.
     The combination of Rio Tinto and Alcan has created an alumina business which is balanced in terms of internal alumina demands from the Primary Metal aluminium business. This is important as a balanced or long net alumina position prevents the group from being negatively exposed to periodic alumina price spikes.
  Additional advantages of the RTA alumina business include:
Demonstrated technological capability backed by a strong research and development team.
Ownership of the Gove, Yarwun and QAL alumina refineries located in north eastern Australia, which along with the Weipa and Gove bauxite mines offer significant scope for optimisation as experience, best practices and supply chain benefits are shared.
A modern set of assets with expansion optionality.
Deployment of the latest technology in significant expansions at Gove and Yarwun.

The Gove refinery is a wholly owned two million tonnes per annum plant which is in the final stages of a 1.8 million tonnes per annum expansion. It is expected to take overall capacity to 3.8 million tonnes per annum by the end of 2008. The refinery is located next to the Gove bauxite mine. Associated infrastructure includes a deep water port, township and oil fired power station. Following completion of the expansion, the Gove refinery is expected to operate in the second quartile of the industry cash cost curve. Alternative energy sources are currently being evaluated for use at Gove, which could result in a significant further reduction in cash operating costs.
     The wholly owned Yarwun refinery, located in Gladstone, Australia, has current nameplate capacity of 1.4 million tonnes per annum. On 3 July 2007, Rio Tinto Aluminium announced an expansion of the Yarwun refinery to increase capacity to 3.4 million tonnes per annum. First shipments are expected in the second half of 2010. An important feature is the inclusion of a gas fired cogeneration facility. Gas will become the primary fuel source, demonstrating RTA’s ongoing commitment to reducing greenhouse gas emissions and improving energy efficiency. There remains potential for the refinery to be ultimately expanded to over four million tonnes per annum. Following completion of the proposed Yarwun expansion, the refinery is expected to operate in the second quartile of the industry cash cost curve.
     The combination of Rio Tinto and Alcan has resulted in an 80 per cent interest in QAL, an increase from 38.6 per cent at the end of 2006. QAL, also located in Gladstone, Australia, is one of the world’s largest alumina refineries, with a capacity of just under four million tonnes per annum. QAL operates in the second quartile of the industry cash cost curve and has opportunities for further development.
     Outside Australia, RTA wholly owns the 1.3 million tonne per annum Jonquière refinery in Quebec, Canada and the Gardanne refinery in France, which produces mainly specialty alumina, but also has capacity to produce 150,000 tonnes of smelter grade alumina per annum. Both refineries are placed in the fourth quartile of the industry cash cost curve. Other wholly owned refinery operations relate to specialty alumina, in which four smaller plants combine with Gardanne and part of Jonquière to provide around 740,000 tonnes of annual production capacity.
     RTA owns a ten per cent share of the Sao Luis (also known as Alumar) refinery in Brazil, which has a current capacity of 1.5 million tonnes per annum. The refinery is currently undergoing a 2.1 million tonnes per annum expansion, of which RTA’s contribution is expected to be approximately US$200 million and which is expected to be completed during 2009. Once completed, the refinery is expected to operate in the first quartile of the industry cash cost curve.

2007 operating performance
Bauxite production during 2007 included output from Alcan’s bauxite mines from 24 October 2007. Accordingly, total production for 2007 of 21 million tonnes exceeded 2006 production by 29 per cent.
     Production of bauxite at Weipa reached record levels in 2007, at 18.2 million tonnes (beneficiated and calcined), 12 per cent higher than in 2006. Increased capacity from the commissioning of the second shiploader in late 2006 was

 

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the major contributor to Weipa’s improved production capability. Adverse weather conditions that impacted production in early 2006 did not occur in 2007. Weipa bauxite shipments rose by 15 per cent, to 18.2 million tonnes.
      Rio Tinto Aluminium advised its calcined bauxite customers in December 2006 that it would withdraw from the production of calcined bauxite by 2008 after 40 years of providing this product to the abrasives and oil and gas exploration industries. Calcined bauxite represents about one per cent of Weipa’s total bauxite production.
     To meet the increased transport needs for bauxite and alumina, Rio Tinto has committed US$210 million to the purchase of five new post Panamax bulk ore carriers to be used on the Weipa to Gladstone run and for international trade. These ships are being built in Japan. The first ship, “Wakamatha” was delivered in the third quarter of 2007. In 2007, Weipa’s improved safety performance was recognised with a Chief Executive’s Safety Award.
     As is the case with bauxite production, 2007 alumina production included the output of Alcan’s alumina refineries from 24 October 2007. Smelter grade alumina production for 2007 was therefore 15 per cent higher than in 2006 at 3.73 million tonnes. The addition of Alcan’s specialty alumina business during 2007 provided 144,000 tonnes of production from 24 October 2007.
     The Yarwun refinery produced at higher levels than 2006 being the first full year of operation since the plant ramped up to nameplate capacity.
     On 31 October 2007, RTA announced that it had reached an agreement with Norsk Hydro ASA to expand its alumina supply to Hydro Aluminium from 500,000 tonnes of alumina per annum to 900,000 tonnes from 2011 to the end of the contract. Under a 20 year contract signed in 2003 with Norsk Hydro, RTA is committed to supplying Hydro Aluminium with 500,000 tonnes of alumina per annum from 2006 until 2030. The new contract underpins RTA’s decision to expand the Yarwun alumina refinery and is consistent with its strategy of maximising the value of RTA’s world class bauxite deposits at Weipa.

PRIMARY METAL OPERATIONS

The addition of Alcan aluminium smelters to the Rio Tinto Group created the world’s premier primary aluminium producer, with year end capacity of 4.1 million tonnes per annum representing nearly five times the group’s 2006 production capacity of 853,700 tonnes.
     The transformation of this business during 2007 was significant. Aside from the enormous increase in primary aluminium smelting capacity, the business added one partly owned and 11 wholly owned power facilities, boosting owned electricity generation capacity by 620 per cent to twice the industry average. In addition, a range of businesses related to aluminium smelting (including technology sales and service, engineering services, smelting equipment sales and smelting consumables production) were added.

Smelting facilities
As of 31 December 2007 the business unit comprised 25 smelters in 11 countries, the vast majority of which are located in OECD countries. The former Rio Tinto Aluminium consisted of interests in four smelters in three countries.
     As with any commodity business, the position on the global cash cost curve is important in determining the relative profitability of operations within the industry. In this regard, RTA enjoys an excellent position, with the world’s largest share of first quartile production capacity and an overall average position at the low end of the second quartile. This position is particularly noteworthy given the number of RTA facilities and the enormous scale of total production capacity. The RTA smelting system has around half of its capacity located in the first quartile of the industry cash cost curve, with another third in the second quartile. Only one fifth of RTA’s current smelting capacity lies in the higher cost part of the industry cash cost curve. This is expected to prove increasingly valuable as the industry’s average cash costs rise as expected, influenced by factors such as rising energy costs, potential Chinese currency revaluations and possible greenhouse gas emission costs.
  Key reasons for RTA’s excellent position on the global aluminium cash cost curve include:
Ownership and utilisation of industry leading AP series pre-bake cell technology, one of the most efficient aluminium smelting technologies in the world from an energy and operating cost perspective.
Ownership of around half of the smelting group’s electricity generation needs, compared to an industry average of around 30 per cent.
The existence of a modern smelter fleet, with over 70 per cent of overall smelting capacity being less than 30 years old, a significantly greater proportion than the industry average.
Operational expertise, as demonstrated during the period since 2001 by both improving safety trends and an ability to extract on average 1.1 per cent per annum production capacity improvement, compared to an industry average over the same period of 0.5 per cent.

The group’s largest concentration of smelting assets is located in Canada. RTA has ownership interests in nine smelters in Canada, seven of which are wholly owned and all but one of which are located in the Province of Quebec. Total annual production capacity in Canada, resulting from the acquisition of Alcan, is 1.77 million tonnes as at 31 December 2007. All of this capacity is powered by clean, renewable hydro-electricity, the majority of which is self owned.
     In the Oceania region, RTA has ownership interests in four smelters, three in Australia and one in New Zealand. The Bell Bay smelter in Australia is wholly owned, while ownership interests range from 52 to 79 per cent in respect of

 

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the other three facilities. The total annual attributable production capacity in this region is 1.06 million tonnes as at 31 December 2007, an increase of 37 per cent over the prior year mainly due to the addition of a 51.6 per cent interest in Australia’s Tomago smelter as a result of the combination with Alcan.
     RTA also has a substantial presence in Europe with ownership interests in eight smelters, principally in France and the UK. The annual production capacity at the end of 2007 was one million tonnes, an increase of over 1,200 per cent due to the combination with Alcan. Two of the smelters in the UK totalling 221,000 tonnes of annual capacity are powered by wholly owned electricity generation facilities. The Lannemezan smelter in France, which had a capacity of 25,000 tonnes as at 31 December 2007, will be closed during the first half of 2008.
      In addition to Canada, Oceania and Europe, RTA wholly owns one smelter in the United States, which, together with interests in smelters in Cameroon and China, represents annual production capacity of 324,000 tonnes as at the end of 2007. Alcan Ningxia Aluminum Company Limited (Ningxia), in which RTA holds a 50 per cent stake in the pre-bake Line 3, is one of the lowest cost aluminium producers in China. Further, the group retains a 20 per cent stake in the 350,000 tonne per annum Sohar smelter in Oman, which is on track to be commissioned during 2008. The smelter will utilise RTA’s AP35 technology which, together with RTA operational expertise, will contribute toward the expected position of the smelter in the first quartile of the industry cash cost curve.

Power facilities
Given the long term nature of a smelter investment, and the fact that electricity costs usually represent around one quarter of industry average smelting cash costs, a secure, long life and competitively priced electricity supply is of vital importance in the aluminium smelting industry. In this respect, RTA is very favourably positioned. As at 31 December 2007, RTA owns electricity generating capacity of 5,076 MW, up from 706 MW at the end of 2006. The group owns generation capacity sufficient to meet around half of its electricity needs, a proportion far above the industry average, while long term power purchase contracts account for a further 46 per cent. An additional advantage is that 75 per cent of the total RTA electricity supply is non fossil fuel based hydropower and nuclear power.
      As with the aluminium smelters, the significant majority of RTA’s power facilities are located in Canada. Six separate wholly owned power stations located on the Peribonka and Saguenay rivers in Quebec comprise a generation capacity of 2,687 MW. The water management system for these power stations, with their associated dams, reservoirs and catchment areas, covers an area of 73,800 square kilometres. The group’s wholly owned Kemano power station in British Columbia has capacity of 896 MW and primarily supplies electricity to the wholly owned Kitimat smelter. It is noteworthy that the group’s Canadian self owned hydropower assets are the result of construction efforts that took place over a period of 50 years, and that such assets would be extremely difficult and costly to replicate today.
      The group owns a 42 per cent share of the coal fired Gladstone Power Station (GPS) in Australia, used to supply the Boyne Island smelter. The GPS interest held by RTA has a capacity of 706 MW.
      In China, RTA owns nearly 22 per cent of the Daba power station, a facility which provides electricity to the Ningxia smelter. The group’s share of generating capacity from this coal fired plant is 261 MW.
      In Europe, the group wholly owns four power stations, three in the UK totalling 500 MW of capacity and one in Norway of 26 MW. Of the total of 526 MW of European generating capacity, 420 MW is coal fired while the remainder is hydro powered.

Technology
 The combination of Rio Tinto and Alcan creates an excellent opportunity to exercise undisputed industry leadership in technology. RTA’s technology strategy is to:
lead through benchmark performance in all aspects of current operations;
maintain and enhance RTA’s industry-leading position with respect to the AP technologies; and
develop new breakthrough, high value future options focusing on significant reductions in energy and environmental impact.

During 2007, design and engineering work continued on schedule in respect of the AP50 pilot plant in Quebec, expected to cost around US$550 million and have a nameplate capacity of 60,000 tonnes per annum. The plant is expected to serve as the basis for commercialisation of the AP50 technology, which incorporates unique design features that make it a superior platform for the fullest exploitation of a suite of breakthrough technologies currently under development.
     An innovative portfolio of breakthrough technologies is being pursued with the overall goal of lowering unit energy consumption by up to 20 per cent while reducing and eventually eliminating GHG and other emissions. RTA is focused on step changes in energy consumption, environmental impact and full economic cost, in order to maintain and extend RTA’s position as industry technology leader, thereby supporting a key corporate objective of sustainable growth.
     RTA also sells technology to third parties. In addition to being a viable business, this product offering has the benefit of enhancing RTA’s appeal as the joint venture partner of choice, given the combination of technological and management skills the group is able to offer. This aspect of the RTA business may prove increasingly valuable in accessing growth options in the future, as the supply side of the industry trends away from the developed world due to diminishing availability of competitively priced, secure power.

 

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Other businesses
RTA’s Primary Metal business unit participates in a number of other businesses related to the smelting of primary metal. These include the production and sale of cathode blocks, anodes, aluminium fluoride and calcined coke, the provision of engineering services and sale of smelting equipment, as well as the sale of electricity where generation is surplus to production needs. These businesses are relatively small compared to the smelting and power operations. During the first half of 2007, they comprised less than ten per cent of Primary Metal’s revenues. The various businesses have a presence in most regions of the world, with particular emphasis in North America and Europe.

2007 operating performance
In 2007, RTA produced 1.5 million tonnes of primary aluminium, up 75 per cent from 2006 levels due to the addition of Alcan aluminium production from 24 October 2007.
      In respect of the four smelters owned by Rio Tinto Aluminium prior to the Alcan acquisition, RTA’s share of aluminium production of 862,000 tonnes was above 2006 production levels of 845,000 tonnes. Much of this improvement was attributable to Tiwai Point, (New Zealand Aluminium Smelters) where production was not hampered by the low lake levels that had been experienced in 2006.
      During 2007, RTA smelters continued to produce close to capacity, with the exception of Edea (Cameroon) which operated at levels of around 85 per cent due to power constraints.
      On 1 October, NZAS and Meridian Energy Limited signed an 18 year electricity price agreement for 572 MW of continuous consumption at the smelter. The agreement runs from 1 January 2013 to 31 December 2030. The new agreement provides NZAS with the basis for a secure and reliable power supply to meet the smelter’s operational requirements during this period. The smelter already has the lowest level of GHG emissions of any smelter of similar technology worldwide and this contract will maintain that position. In November 2007, the smelter received a gold award from the New Zealand Business Excellence Foundation.

BAUXITE & ALUMINA PROJECTS

Weipa (Rio Tinto: 100 per cent)
A 3.5 million tonne per annum expansion of the group’s Weipa bauxite mine is currently under way. The expansion is scheduled to be completed by late 2009 and is expected to cost around US$30 million. The expansion is expected to further leverage the world class Weipa bauxite deposit.

Gove (Rio Tinto: 100 per cent)
As of the date of Rio Tinto’s acquisition of Alcan, a 1.8 million tonnes per annum expansion of the Gove alumina refinery in Australia was nearing completion, with certain components of the expansion already commissioned and being brought into production. The expansion cost is US$2.3 billion, and is expected to bring the Gove refinery to a total capacity of 3.8 million tonnes per annum, making it one of the largest refineries in the world. Nameplate capacity is expected to be reached by the end of 2008. Following completion of the expansion, the Gove refinery is expected to operate in the second quartile of the industry cash cost curve.

Yarwun (Rio Tinto: 100 per cent)
On 3 July 2007, Rio Tinto approved an expansion of the Yarwun alumina refinery in Gladstone, Queensland in order to more than double annual production, increasing output by two million tonnes. First shipments are expected in the second half of 2010. The expansion is expected to cost around US$1.8 billion. Work commenced on the expansion in the third quarter and is expected to take about three years to complete. First shipments are expected in the second half of 2010. All government approvals have been granted. Once completed, the refinery is expected to be positioned in the second quartile of the industry cost curve.

Sao Luis (Alumar) (Rio Tinto: ten per cent)
A 2.1 million tonnes per annum expansion of the Alumar refinery in Brazil (Rio Tinto share 210,000 tonnes) is under way and progress on construction is approximately 35 per cent advanced as at 31 December 2007. The project will cost an estimated US$200 million (Rio Tinto’s share). Alumar is expected to be positioned in the first quartile of the industry operating cost curve once construction is completed.

Guinea (Rio Tinto: 50 per cent)
A 1.6 million tonnes per annum greenfield alumina refinery project in Guinea is being evaluated in partnership with Alcoa Inc. The project is currently at the pre feasibility stage and it is expected that the sponsors will make a decision in the first half of 2008 with regard to undertaking detailed feasibility studies. It is expected that the refinery would be positioned in the first quartile of the industry cost curve.

Ghana (Rio Tinto: 51 per cent)
A 1.5 million tonnes per annum greenfield alumina refinery project is under consideration in partnership with the Government of Ghana. The project is currently at the conceptual study stage and it is expected that the sponsors will

 

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make a decision in the first half of 2008 with regard to undertaking a pre feasibility study. It is expected that the refinery would be positioned in the first quartile of the industry cost curve.

Madagascar (Rio Tinto: 51 per cent)
A 1.6 million tonnes per annum greenfield alumina refinery and associated bauxite mine is being considered in partnership with a Malagasy company. The project is currently at the conceptual study stage and it is expected that the sponsors will make a decision in the first half of 2008 with regard to undertaking a pre feasibility study. It is expected that the refinery would be positioned in the first quartile of the industry cost curve.

PRIMARY METAL PROJECTS

Sohar (Rio Tinto: 20 per cent)
In 2007, construction advanced on time and on budget at the 350,000 tonnes per annum smelter at Sohar, Oman. When complete, the 350,000 tonne potline would be the world’s largest both in terms of capacity and overall length, utilising the world’s most advanced commercial technology, the RTA owned AP35 smelting technology. The smelter is expected to produce aluminium ingot for export commencing in the first half of 2008. Once operational, the smelter is expected to be positioned in the first quartile of the industry cost curve. A second potline of similar size is currently the subject of discussions among the joint venture partners. Under the original agreement between the partners, RTA has the right to take up to 60 per cent of this second potline.

Hydropower (Rio Tinto: 100 per cent)
On 26 April 2007, the former Alcan announced the investment of US$130 million in a new, power efficient hydro generator to be installed at the group’s Shipshaw power facility in Quebec, Canada. The new generator will optimise the performance of the facility and improve the efficiency with which the water flow is utilised. In addition, on 30 January 2008, the group announced an investment of US$90 million in its Lochaber, Scotland hydro-electric facilities, designed to ensure the future of smelting in the Highlands of Scotland for many years to come. The project, which will see the installation of new hydro-electric turbo generators, is expected to commence in 2009 and be completed by 2012.

Spent pot lining facility (Rio Tinto: 100 per cent)
RTA is building a US$180 million aluminium spent pot lining recycling plant in Quebec’s Saguenay-Lac-Saint-Jean region of Canada. This unique industrial scale pilot plant is expected to have a capacity of approximately 80,000 tonnes to recycle spent pot lining using Alcan’s proprietry technology. Spent pot lining is the residual material generated in the de-lining of pots following the aluminium smelting electrolysis process. The spent pot lining is composed of carbon and various inert elements and is typically pre-treated and land filled under strict precautions. Through this new process, all of the spent pot lining will be recycable, providing the global aluminium industry with a sustainable re-usable solution for spent pot lining by-products. The plant’s technology was developed at RTA’s Arvida Research and Development Centre and is expected to begin pot lining treatment operations in 2008.

Kitimat (Rio Tinto: 100 per cent)
In 2006, Alcan announced its intention to modernise the existing Kitimat smelter, replacing the current Soderberg technology with industry leading AP35+ prebake technology and increasing smelter capacity to 400,000 tonnes per annum. The facility will take advantage of the RTA owned Kemano hydro-electric facility, with a capacity of 896 MW, and access to the Pacific Rim in terms of raw materials and metal markets, while reducing the environmental footprint of the existing plant by 40 per cent by reducing GHG generation by around 500,000 tonnes per annum. Total investment in respect of the project is expected to be around US$2 billion. On 30 January 2008, the third and final condition for proceeding to board approval of the project was completed with clearance from the British Columbia Utilities Commission in respect of BC Hydro’s 2007 Energy Purchase Agreement with RTA. The other two hurdles were the securing of an acceptable labour agreement for construction and start up and assurances on environmental permitting issues. Advanced feasibility studies have been completed and the project is expected to be submitted for approval during 2008, on which basis first metal can be expected in 2011. When completed, the smelter is expected to be positioned in the first quartile of the industry cost curve.

Quebec (Rio Tinto: 100 per cent)
In December 2006, the former Alcan announced a plan to build a US$550 million pilot plant at its Complexe Jonquière site in Quebec, Canada to develop the company’s proprietary AP50 smelting technology. The pilot plant is expected to produce approximately 60,000 tonnes of aluminium per annum and will be the platform for future generations of AP50 technology. The first of its kind, the plant is the start of a planned ten year US$1.8 billion investment programme in Quebec’s Saguenay–Lac-Saint-Jean region, involving up to an additional 390,000 tonnes annually of new smelting capacity by 2015. The new AP50 pilot facility will be the cornerstone of an industrial strategy developed by RTA with the support of the Government of Quebec. Engineering and feasibility studies are advancing as are site preparation activities, and initial approval is expected around the middle of 2008. When completed, the smelter is expected to be

 

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positioned in the first quartile of the industry cost curve.

Coega (Rio Tinto: 80 per cent)
Feasibility studies have been substantially completed in respect of the construction of a 720,000 tonnes per annum smelter at Coega, Eastern Cape Province, South Africa. Although an energy contract with the South African utility, ESKOM was signed in November 2006, ongoing discussions are reviewing the terms of the project to align its timing with the availability of secure power generation capacity from ESKOM. When completed, the smelter is expected to be positioned in the first quartile of the industry cost curve.

Saudi Arabia (Rio Tinto: 49 per cent)
In 2007, a heads of agreement was signed with Ma’aden (the Saudi Arabian Mining Company) to investigate the development of a bauxite mine at Az Zabirah, and construction of a power plant, alumina refinery and aluminium smelter complex at Ras Az Zawr, on the Gulf Coast of Saudi Arabia. Under the agreement, RTA is expected to take a 49 per cent interest in the project, with Ma’aden owning the remainder. Pre feasibility work is scheduled to be completed in 2008. The proposed aluminium smelter is planned to have a capacity of 720,000 tonnes per annum and if completed, is expected to be positioned in the first quartile of the industry cost curve. The proposed alumina refinery would have a capacity of 1.6 million tonnes per annum and if completed, is expected to be positioned in the second quartile of the industry cost curve. Most of the smelter output, at least initially, is planned for export.

Sarawak (Rio Tinto: 60 per cent)
On 7 August 2007, Rio Tinto and Cahya Mata Sarawak Berhad signed a heads of agreement for the proposed development of a smelter in the State of Sarawak, Malaysia. Under the signing of the heads of agreement, detailed feasibility studies on the design, engineering, construction, commissioning and operation of a smelter with an initial capacity of 550,000 tonnes are being undertaken. The smelter is expected to have the capability to be expanded to 1.5 million tonnes per annum. It is proposed that electricity for the smelter may come from the Bakun hydro-electric dam, which is currently under construction. If completed, the smelter is expected to be positioned in the first quartile of the industry cost curve.

Abu Dhabi (Rio Tinto: 50 per cent)
Discussions are continuing with General Holding Corporation of Abu Dhabi for a development that could result in a smelter with a first stage production capacity of 720,000 tonnes of metal per annum. Abu Dhabi Aluminium Company (Adalco) has been formed to manage the joint venture. If completed, the smelter is expected to be positioned in the first quartile of the industry cost curve.

Iceland (Rio Tinto: 100 per cent)
During 2007, the community near RTA’s ISAL smelter expressed dissatisfaction with a proposed expansion and modernisation of the facilities, by narrowly rejecting a town planning referendum which included the matter. RTA is continuing to assess options for the possible expansion of its smelting activities in Iceland.

Cameroon (Rio Tinto: 46.7 per cent)
A potential upgrade and expansion of the Alucam smelter by 200,000 tonnes per annum, together with the construction of a new 330 MW hydro-electric power station, is being contemplated. Pre-feasibility studies have been completed and environmental authorisations have been obtained. RTA and the Government of Cameroon committed on 29 November 2007 to additional access to water resources to facilitate the launch of technical and pre-feasibility studies for a new greenfield smelter with potential capacity of 400,000 tonnes per annum. If completed, these smelter projects are expected to be positioned in the first quartile of the industry cost curve.

ENGINEERED PRODUCTS

RTA’s Engineered Products business unit is a portfolio of inter connected aluminium and non aluminium businesses providing innovative, high value added solutions to meet the diverse needs of its global customer base. In particular, the business is the premier supplier of high value added aluminium products to the world’s leading aircraft manufacturers. In Europe, it also produces large profile extrusions for the transportation industry and is a top supplier of beverage can stock. The business is the North American leader in aluminium wire and cable, and a world leader in composite products with a unique portfolio of brands and product solutions. As at 31 December 2007, the business unit comprised 95 operating and sales sites in 34 countries and regions around the world. The unit is organised into seven sub business units; Aerospace, Transport and Industry (ATI), Cable, Extruded Products, Composites, Specialty Sheet, Engineered and Automotive Solutions (EAS) and the Alcan International Network (AIN).
      On 8 November 2007, RTA announced the sale of the non aerospace portion of its service centre operations in Europe, Alcan Service Centres (ASC), to Amari Metals. The transaction was completed on 4 January 2008. Rio Tinto announced on 26 November 2007 the intention to explore options for the divestment of the remainder of the Engineered Products business unit. Although Engineered Products is a market leader in many of its largest businesses, and has

 

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recently experienced strong growth, the business unit does not fit within Rio Tinto’s overall corporate strategy.

PACKAGING

RTA’s Packaging business unit enjoys market leading positions in each of the four packaging segments in which it operates; Food Flexible, Pharmaceutical and Medical, Beauty and Personal Care, and Tobacco. It is one of the few participants in its product markets with a truly global reach having executed considerable expansion into emerging countries and regions over the last few years. The business delivers innovative packaging solutions using plastics, engineered films, aluminium, paper, paperboard and glass to customers worldwide. As at 31 December 2007, the business unit comprised 129 operating sites in 31 countries and regions around the world. The potential divestment of the Packaging business unit was being explored by Alcan during the first half of 2007 and was confirmed in the announcement by Rio Tinto of an agreed bid for Alcan on 12 July, 2007. The sale process for the Packaging business unit is ongoing.

 

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Copper group

Mined Rio Tinto share  
Copper ‘000 tonnes  


 
2003 867  
2004 753  
2005 784  
2006 803  
2007 738  


 
     
Gold ‘000 ounces  


 
2003 2,731  
2004 1,552  
2005 1,726  
2006 1,003  
2007 1,233  


 
     
Refined Rio Tinto share  
Copper ‘000 tonnes  


 
2003 349  
2004 333  
2005 314  
2006 299  
2007 390  


 
     
Underlying earnings contribution* US$m  


 
2004 860  
2005 1,987  
2006 3,538  
2007 3,479  


 
     
Changes in underlying earnings 2005 - 2007 US$m  


 
2005 Underlying earnings 1,987  
Effect of changes in:    
     Prices and exchange rates 1,707  
     General inflation (28 )
     Volumes (179 )
     Costs (196 )
     Tax and other 247  


 
2006 Underlying earnings 3,538  
Effect of changes in:    
     Prices and exchange rates 388  
     General inflation (37 )
     Volumes 309  
     Costs (230 )
     Tax and other (489 )


 
2007 Underlying earnings 3,479  


 
* A reconciliation of the net earnings with underlying earnings for 2007, 2006 and 2005 as determined under IFRS is set out on page 53.

STRATEGIC OVERVIEW

Rio Tinto’s Copper portfolio comprises a diverse mix of operations and projects along the development pipeline. During 2007 the focus on copper and molybdenum was supplemented by nickel.
     The Copper group comprises Kennecott Utah Copper in the US and interests in the producing copper mines of Escondida in Chile, Grasberg in Indonesia, Northparkes in Australia and Palabora in South Africa. The group has management responsibility for Kennecott Minerals Company in the US and includes interests in undeveloped world class copper orebodies at La Granja in Peru, Oyu Tolgoi in Mongolia and Resolution in the US. Nickel projects in Indonesia and the US offer a pathway to becoming a top tier global nickel producer.
      As one of the world’s leading copper businesses, Rio Tinto’s pipeline of projects position the Group to become the world’s leading base metal producer by value creation. Recent exploration at the La Granja project in Peru has highlighted the potential for doubling forecast production to in excess of 500,000 tonnes per annum. Development work on Oyu Tolgoi is progressing well with significant further exploration potential in Mongolia. Average production is projected to be 440,000 tonnes per annum of copper and 320,000 ounces per annum of gold over the life of the mine.

 

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Rio Tinto has a 9.9 per cent interest in the Pebble copper-gold-molybdenum project in Alaska managed by the Northern Dynasty Minerals/Anglo American joint venture. Rio Tinto continues to be involved and monitor progress.
      There are significant extension options in copper, gold and molybdenum at Kennecott Utah Copper and upside on the Resolution project, both in the US. In addition to these world class projects, the group is developing the E48 underground deposit at Northparkes. At Palabora, studies are progressing to evaluate an extension to the existing underground block cave lift, to explore the option of developing a second lift and to review options for enhancing revenue from magnetite stockpiles, a form of iron ore produced as a by-product of copper concentration.
      Historically, the Copper group built the majority of its portfolio through acquisitions (Kennecott) or joint ventures (Escondida, Grasberg) followed by expansions. The current pipeline of projects represents a transition with a greater proportion of opportunities created through exploration and acquisitions at an early stage of development. The Copper group’s long term development plans are not confined to its principal product. Rio Tinto has a number of nickel development opportunities which are currently being evaluated. At the small, high grade Eagle nickel deposit (Rio Tinto: 100 per cent) in Michigan in the US, feasibility studies were completed during 2007 and the decision to construct the underground mine was made in November 2007. In Indonesia, positive progress was made with the government on a Contract of Work for the Sulawesi Nickel project.
      A Copper Projects team was formed in 2007 to manage the planning, development and related technology aspects of the portfolio of major projects, namely La Granja, Oyu Tolgoi, Resolution Copper, Keystone at Kennecott Utah Copper and Sulawesi Nickel. The team will collaborate with the Technology and Innovation group to focus on block cave design (with project work at Palabora), rapid construction (at Diavik), copper leaching (at La Granja) and nickel/cobalt recoveries (trials in Australia). With the significant ramp up of activities at each project site, there has been an elevated focus on safety systems especially in the area of contractor management.
      Oyu Tolgoi, Resolution Copper and Kennecott Utah Copper’s Bingham Canyon are amenable to being mined using the underground block caving technique. Unlike an open pit mine, which involves extensive removal of the surface waste rock to access the orebody, the block cave method accesses the orebody from underneath through a series of deep shafts and tunnels. These shafts and tunnels generate minimal waste rock. The block caving technique is currently being used at both Palabora and Northparkes. La Granja will rely on innovative leaching technology which will be about three times higher than their average level through the 1990s and well above levels achieved in the early part of this decade. Copper stocks have been at critically low levels since a surge of consumption in 2004 depleted available inventories. Since then, supply has been constrained while underlying demand has strengthened with Chinese economic growth. Prices could remain near current levels as long as production growth continues to lag the underlying demand trend. Strong Chinese demand growth is expected in 2008 while on the supply side issues include the likelihood of ongoing disruptions and possible constraints on the availability of sulphuric acid affecting solvent extraction and electro-winning (SxEw) operations. The importance of investment funds in exchange traded commodity markets means that large price movements could take place on the back of commodity specific speculative shifts or broader shifts in investor sentiment, well in advance of any fundamental change in physical markets. Looking to the long run, strong demand growth prospects are based on the expected resource intensive development of economies such as China and associated investment in power distribution networks and other infrastructure. On balance, there has been a structural shift in copper costs supporting the expectation of significantly higher long run prices than would be implied by historical trends.
      Rio Tinto announced in November 2007 that it would explore options for the sale of a shortlist of assets, including three businesses from the Copper product group – Greens Creek (zinc, lead, silver) (Rio Tinto: 70 per cent), Cortez/Pipeline (gold)(Rio Tinto: 40 per cent) and Northparkes (copper, gold)(Rio Tinto: 80 per cent). These are all good businesses and any sales will be value driven and dependent on price. On 12 February 2008 the Group reached agreement for the sale of the Greens Creek interest for US$750 million. On 5 March 2008 the Group completed the sale of its interest in the Cortez gold mine for US$1,695 million, a deferred bonus payment and a contingent royalty.
      At 31 December 2007, the Copper group, which also produces gold and molybdenum as significant co-products, accounted for six per cent of the Group’s operating assets and in 2007 contributed approximately 25 per cent of Rio Tinto’s gross sales revenue, of which 72 per cent was from copper, 12 per cent from molybdenum and the remainder mostly from gold. It accounted for 47 per cent of underlying earnings in 2007.
     Bret Clayton, chief executive, Copper, is based in London.

SAFETY

All injury frequency rate  per 200,000 hours 


2003 1.72
2004 1.25
2005 1.64
2006 1.47
2007 1.28


In 2007 there was one fatality at Resolution Copper and four fatalities at non managed operations (three at Grasberg and one at Escondida). For Copper group managed operations, the all injury frequency rate (AIFR) was 1.27 compared to

 

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1.47 for 2006. There were notable improvements in AIFR at Kennecott Minerals (3.68 to 1.84) and Palabora (1.08 to 0.60) .
      On 10 March 2008 a helicopter under charter to the La Granja copper project in Peru went missing while two pilots were ferrying eight passengers from the La Granja camp to Chiclayo. Wreckage was observed from the air and it was subsequently found that all ten occupants of the helicopter had perished. Rio Tinto is providing support and counselling to the families and colleagues of those involved.

GREENHOUSE GAS EMISSIONS

Kennecott Utah Copper (KUC) currently has 49 projects that will reduce greenhouse gas (GHG) emissions, including reduction of diesel consumption by haul trucks and increasing throughput at the pebble crusher. The challenge in 2008 will be to achieve GHG reductions per unit of copper produced.
     Palabora is expecting a reduction of 13.3 per cent which is below the targeted reduction of 19.8 per cent. The reason is the switch, made for economic reasons, from processing purchased concentrates to processing Palabora owned low grade surface stockpiles. This results in higher energy use and a reduction in production.
     Given the energy limitations in South Africa, Palabora continues to implement energy efficiency measures while maintaining operational flexibility. Northparkes in Australia has set reduction targets although GHG emissions per unit of copper will increase due to the early cessation of the E26 underground phase and processing of harder ore.

FINANCIAL PERFORMANCE

2007 compared with 2006
The Copper group’s contribution to 2007 underlying earnings was US$3,479 million, similar to 2006 record earnings. Higher prices and volumes offset higher costs and the absence of 2006 tax benefits. The average price of copper was 324 US cents per pound during 2007, six per cent higher than in 2006. The average gold price of US$691 per ounce increased by 15 per cent. The average price of molybdenum was US$29.92 per pound compared with US$24.60 per pound in 2006. Higher volumes were achieved across all operations except Northparkes, with the largest increases at Escondida due to a full year’s sulphide leach production, and at KUC due to the absence of the 2006 smelter shutdown. Higher operational costs were due to increased truck numbers resulting from longer haul profiles at KUC, increased diesel power costs due to natural gas restrictions at Escondida and the premature shutdown of Lift 2 at Northparkes. Evaluation projects also impacted cash costs due to higher spending at Resolution, La Granja, the Keystone project at KUC and the share of spending on the Oyu Tolgoi project.
      KUC’s contribution to underlying earnings of US$1,649 million was US$161 million lower than 2006, primarily through the absence of the US$289 million tax credit recognised in the prior year, a higher tax rate due to the shift from the Alternative Minimum Tax accounting basis in the US group and increased depreciation following the impairment reversal during 2006. As well as increased prices, offsetting these decreases in earnings were higher refined copper and gold volumes as smelter performance improved following the extended shutdown in late 2006 as well as a reduction in the environmental liability following a re-assessment of the acid plume clean-up rate.
      Rio Tinto’s share of underlying earnings from Escondida was US$1,525 million, an increase of US$275 million from the prior year. This was achieved through higher prices and increased copper volumes as a result of the continued ramp up of the sulphide leach plant and a higher ore grade which more than compensated for higher energy and material costs.
     The Grasberg joint venture contributed US$159 million to underlying earnings, US$37 million above 2006. This was due to significant increases in gold volumes due to improved grade offset by a fall in copper volumes as grade and mill throughput both fell.
     Palabora’s 2007 earnings of US$58 million were US$6 million above the prior year, as increasing volumes achieved through improved underground production and ore grade and also higher copper rod premiums all benefited earnings.
     
Northparkes contributed US$137 million to underlying earnings, a fall of US$92 million from 2006. Performance was dominated by the premature shutdown of the Lift 2 underground area during the first half of the year, resulting in the processing of low grade open pit stockpiles and increased costs.
      Kennecott Minerals earnings of US$106 million were US$1 million above the prior year, with higher prices and increased gold volumes from Cortez offset by the absence of the US$14 million tax credit from the prior year and the resulting higher effective tax rate in 2007.
      The impact on earnings of expenditure on evaluation projects was US$155 million in 2007, an increase of US$125 million from the prior year as activities increased on a number of projects. Activities included pre-feasibility studies at Resolution Copper and La Granja and early construction work at Oyu Tolgoi in anticipation of the signing of an Investment Agreement with the Mongolian government.

 

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2006 compared with 2005
The Copper group’s contribution to underlying earnings was US$3,538 million, US$1,551 million higher than in 2005. The average price of copper was 306 US cents per pound during 2006, 84 per cent higher than in 2005. The average gold price of US$602 per ounce increased by 36 per cent. The average price of molybdenum was US$24.60 per pound compared with US$30.70 per pound in 2005.
     KUC’s earnings of US$1,810 million were US$767 million higher than in 2005, with the operation benefiting from higher prices and volumes and a tax credit of US$289 million following recognition of deferred tax assets. Record molybdenum production was achieved during the year, offsetting the impact of lower refined copper production due to a scheduled smelter shutdown in the second half of 2006. An increase in the group’s long term copper price assumption triggered an assessment of the amount of recoverable copper at KUC. As a result, impairments recorded in 2001 and 2002 were reversed in 2006.
     Rio Tinto’s share of earnings from Escondida increased by US$648 million to US$1,250 million. Higher prices and the commencement of sulphide leaching counterbalanced higher mining costs and input prices.
      The Grasberg joint venture contributed US$122 million to underlying earnings, US$110 million below 2005. Lower grades of copper, gold and silver, the result of mine sequencing, led to significantly lower production of all three metals.

     Palabora’s 2006 earnings of US$52 million were US$33 million above the prior year, benefiting from higher copper prices and sales volumes and the sale of some smelter stocks.
     Northparkes’ earnings of US$229 million represents a US$172 million increase from 2005. In addition to higher prices, better grades, increased throughput and improved recoveries all contributed to a 54 per cent increase in production of copper contained in concentrates.
     Kennecott Minerals’ 2006 earnings of US$105 million were US$32 million above 2005. The effect of higher gold and zinc prices and the recognition of a US$14 million deferred tax asset were offset by higher costs and lower sales volumes from Cortez, due to lower grades.

OPERATIONS

Kennecott Utah Copper (Rio Tinto: 100 per cent)
Kennecott Utah Copper (KUC) operates the Bingham Canyon mine, Copperton concentrator and Garfield smelter and refinery complex, near Salt Lake City, US. KUC is a polymetallic mine, producing copper, gold, molybdenum and silver. As the second largest copper producer in the US, KUC supplies more than 13 per cent of the nation’s annual refined copper requirements and it employs approximately 1,800 people.
      KUC joined the Climate Registry, a voluntary reporting system for greenhouse gas emissions. KUC will continue to report publicly on greenhouse gas emissions associated with the operations.

2007 operating performance
KUC has been operating for over 100 years, was Rio Tinto’s most profitable mine in 2007 and has extensive optionality for future development. KUC is well positioned on the industry cost curve, benefiting from significant co-product revenues from gold and molybdenum. It continues to demonstrate operating flexibility by delivering high volumes of molybdenum during a continuing period of exceptionally high prices. Building on the foundation of Rio Tinto’s Improving performance together (IPT) methodology, KUC continued to improve its knowledge of molybdenum mineralisation in the orebody to optimise production. The bulk flotation upgrade at the concentrator started in 2007 with an expected capital cost of US$88 million. The project, scheduled for completion in June 2008, is expected to increase recovery by around two per cent and increase concentrate grade by four per cent.
      KUC continues to be one of the most favourable brownfield environments of all Rio Tinto’s mines and retains significant options for further mine life extensions. Over the past two years brownfield exploration has uncovered a world class molybdenum deposit sitting underneath the Bingham open pit, additional porphyry mineralistion below the southern pit wall at depth and multiple targets with further potential both in the immediate three to four kilometre wide orbit of the Bingham pit and within 20 kilometres in the Oquirrh Range.
      The Keystone project continues to evaluate pit expansion options while concurrently establishing underground access, through the dewatering and rehabilitation of an existing mine shaft to provide access for an underground drilling programme. Additional option analysis to accelerate the underground schedule through shaft and level access design will be conducted in 2008. Current open pit options indicate that there is good opportunity to expand mining in the southern area of the pit. Current ore reserves will support open pit operations until 2019 and this could be extended to 2036 through a combination of underground and open pit options.
      KUC is progressing with a feasibility study to advance the molybdenum autoclave process (MAP), which will convert molybdenum concentrates into final saleable products. KUC currently produces a high grade molybdenum concentrate that is shipped to a third party roaster for conversion to metallurgical grade molybdenum products. The proposal is to produce enhanced chemical grade products on a brownfield site west of the smelter. The main economic drivers for the project are attracting a chemical grade premium with contract floor pricing and higher molybdenum recoveries. A decision whether or not to proceed with construction will be made in the first quarter of 2008, with operations commencing in the first quarter of 2010. The estimated capital cost to construct the facility is US$169

 

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million with an additional US$106 million to expand the plant in 2014 to match a predicted increase in mined molybdenum production.

Principal operating statistics at KUC 2005-2007 

  2007   2006   2005  






 
Rock mined (’000 tonnes) 142,297   145,343   140,906  
Ore milled (’000 tonnes) 47,525   47,857   46,664  
Head grades:            
     Copper (%) 0.53   0.63   0.53  
     Gold (g/t) 0.38   0.49   0.37  
     Silver (g/t) 3.00   3.50   3.23  
     Molybdenum (%) 0.050   0.057   0.058  
     Copper concentrates produced (’000 tonnes) 889   1,019   881  
Production of metals in copper concentrates             
     Copper (’000 tonnes) 212.2   265.6   220.6  
     Gold (’000 ounces) 397   523   401  
     Silver (’000 ounces) 3,487   4,214   3,958  
     Molybdenum concentrates produced (’000 tonnes) 26.6   30.2   29.5  
     Contained molybdenum (’000 tonnes) 14.9   16.8   15.6  
     Concentrate smelted on site (’000 tonnes) 1,103   918   1,042  
Production of refined metals             
     Copper (’000 tonnes) 265.6   217.9   232.0  
     Gold (’000 ounces) 523   462   369  
     Silver (’000 ounces) 4,365   4,152   3,538  






 

Grasberg joint venture (Rio Tinto: 40 per cent)
Grasberg, located in the province of Papua in Indonesia, is one of the world’s largest copper and gold mines in terms of reserves and production. It is owned and operated by Freeport Indonesia (PTFI), the principal and 91 per cent owned subsidiary of the US based Freeport-McMoRan Copper & Gold Inc. (FCX). The Government of Indonesia owns the remaining nine per cent of PTFI. The joint venture gives Rio Tinto a 40 per cent share of production above specific levels until 2021 and 40 per cent of all production after 2021, as well as representation on operating and technical committees.
     The joint venture operates under an agreement with the Government of Indonesia, which allows the joint venture to conduct exploration, mining and production activities in a 10,000 hectare area (Block A). Exploration activities are conducted in an approximate 200,000 hectare area (Block B). All of the proved and probable mineral reserves and current mining operations are located in Block A. Rio Tinto and PTFI also have joint ventures in other entities which have exploration rights in areas covering 690,000 hectares in addition to Blocks A and B. Rio Tinto has the right to 40 per cent of the exploration potential in all areas outside of Block A.
     
In meeting the mine’s social obligations to local communities, at least one per cent of Grasberg’s net sales revenues are committed to support village based programmes. In addition, two trust funds were established in 2001 in recognition of the traditional land rights of the local Amungme and Komoro tribes. In 2007, PTFI contributed US$48 million (net of Rio Tinto portion) and Rio Tinto US$4.5 million in total to the funds.
      As a result of training and educational programmes, Papuans represented more than a quarter of PTFI’s approximately 10,776 strong workforce by the end of 2007.

2007 operating performance
In mid 2007, the Deep Ore Zone expansion to 50,000 tonnes per day was completed, and a further expansion to 80,000 tonnes per day is under way. Ninety per cent of the tunnelling on the Common Infrastructure Project was completed, which will provide access to large undeveloped orebodies through a tunnel system 400 metres below existing workings. Feasibility studies for Grasberg block cave operations are well advanced and mine development activities will commence in the first half of 2008. The Big Gossan development will reach full production rates by the end of 2010. The high pressure grinding rolls project which involves new energy saving technology for treating ore in the mill was completed during 2007.
      Rio Tinto’s share of metal is 40 per cent of the production in excess of a level specified in the joint venture agreement (the Product Schedule). This means that Rio Tinto’s share is leveraged to relatively small variations in total production. Rio Tinto’s 2007 share of production showed considerable variation from 2006 – volumes of payable copper decreased to 60 million pounds in 2007 from 99 million pounds in 2006, offset by an increase in the volume of payable gold from 94,000 ounces in 2006 to 411,000 ounces in 2007. The sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production, resulting in varying annual production of copper and gold. This continuing variation in production will continue year on year. It is expected that in the first half of 2008 mining will be in a relatively low grade section of the Grasberg open pit.
      The current mine plan reflects a transition from the Grasberg open pit to the Grasberg underground block cave orebody in mid 2015. PTFI, as manager, continually analyses its longer range mine plans to assess the optimal design of

 

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the Grasberg open pit and the timing of development of the Grasberg underground block cave orebody. The review in 2006 resulted in changes to the expected final Grasberg open pit design which will result in a section of high grade ore previously expected to be mined in the open pit to be mined in Grasberg’s underground block cave operations.

Principal operating statistics for PTFI 2005-2007

  2007   2006   2005  






 
Ore milled (’000 tonnes) 77,593   83,716   78,907  
Head grades:            
     Copper (%) 0.82   0.85   1.13  
     Gold (g/t) 1.24   0.85   1.65  
     Silver (g/t) 3.53   3.84   4.88  
Production of metals in concentrates            
     Copper (’000 tonnes) 569.4   610.8   793.9  
     Gold (’000 ounces) 2,689   1,880   3,546  
     Silver (’000 ounces) 5,238   5,609   7,531  






 

Escondida (Rio Tinto: 30 per cent)
The low cost Escondida copper mine in Chile’s Atacama Desert, is the largest copper mine in the world in terms of annual production, and has a mine life expected to exceed 30 years. It accounts for approximately eight per cent of world primary copper production. BHP Billiton owns 57.5 per cent of Escondida and is the operator and product sales agent.
     The Escondida district hosts two of the largest porphyry copper deposit systems in the world – Escondida and Escondida Norte, located five kilometres from Escondida. A sulphide leach project was completed during 2006 and continued to ramp up during 2007. Escondida employs approximately 2,900 people. Options for future growth at Escondida continue to be evaluated jointly. These include increasing throughput by adding new facilities such as a concentrator to the two existing ones, optimising mining rates through coordinating mine plans with adjacent pits and identifying new ore sources through exploration. A brownfields exploration programme has been in place since 2005, with encouraging results.
     The energy situation in northern Chile is tight and vulnerable to rationing. Diesel power has replaced natural gas and the future energy matrix is likely to shift towards coal and liquefied natural gas (LNG). Escondida is supporting the development of a LNG plant which should provide additional power and reliability to the system. In the longer term, Escondida will secure power through the construction of a coal fired power station which will be operational by 2011.

2007 operating performance
Escondida’s copper concentrate production was 11 per cent higher than 2006 due to higher grades and throughput. Refined copper production was 77 per cent higher than 2006 due to a full year of sulphide leach production which commenced in June 2006.

Principal operating statistics at Escondida 2005-2007

  2007   2006   2005  






 
Rock mined (’000 tonnes) 345,377   338,583   359,569  
Ore milled (’000 tonnes) 90,697   84,158   86,054  
Head grade:             
     Copper (%) 1.64   1.59   1.53  
Production of metals in concentrates             
     Copper (’000 tonnes) 1,247   1,122   1,127  
     Gold (’000 ounces) 187   170   183  
     Silver (’000 ounces) 7,870   6,646   6,565  
Copper cathode (’000 tonnes) 238.4   134.4   143.9  






 

Palabora (Rio Tinto: 57.7 per cent)
Palabora Mining Company (Palabora) is a publicly listed company on the Johannesburg Stock Exchange and operates a mine and smelter complex in South Africa. Palabora developed a US$465 million block cave underground mine with a planned production rate of at least 32,000 tonnes of ore per day. Approximately 678,900 tonnes of copper are expected to be produced over the remaining life of the mine.
      Palabora supplies most of South Africa’s copper needs and exports the balance. It employs approximately 2,050 people. For the first time, three year wage agreements were entered into with organised labour until the end of February 2011.

     Palabora is progressing arrangements to meet the requirements of legislation governing broad based economic empowerment in the South African mining industry.

 

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2007 operating performance
Underground production increased as a result of improved block caving conditions, procedures and equipment availability. Ore milled increased mainly due to higher underground production and the processing of Palabora marginal and oxide ore surface stock piles. Concentrate tonnage was 15 per cent greater than 2006 due to reclaimed low grade concentrate during the first quarter of 2007 and higher milled tonnage. Smelter production also increased on the prior year due to the absence of the 2006 smelter shutdown. Magnetite production in 2007 was up 16 per cent year on year, in line with Palabora’s plans to meet offtake agreements.

Principal operating statistics at Palabora 2005-2007

  2007   2006   2005  






 
Ore milled (’000 tonnes) 12,915   10,730   9,536  
Head grade:            
     Copper (%) 0.70   0.71   0.72  
Copper concentrates produced (’000 tonnes) 239.2   208.9   197.1  
Contained copper (’000 tonnes) 71.4   61.5   61.2  
New concentrates smelted on site (’000 tonnes) 295.8   288.5</