Pre-tax 2007 US$m	Taxation 2007 US$m	Outside interests 2007 US$m	Net amount 2007 US$m	Net amount 2006 US$m
Cash generating unit
Argyle Diamonds (a)	(466)	138	-	(328)	(289)
Palabora (b)	272	(99)	(73)	100	(2)
Tarong coal mine (c)	166	(32)	-	134	(152)
Kennecott Utah Copper (KUC) (d)	-	-	-	-	381
Iron Ore Company of Canada (IOC) (e)	-	-	-	-	111
Other	(30)	11	-	(19)	(5)
	(58)	18	(73)	(113)	44

Notes
The impairment of Argyle in 2006 followed adverse changes in assumptions about future prices, capital and operating costs. The value in use was assessed by reference to cash flows forecast in real terms and discounted at a pre-tax rate of 8 per cent. The 2006 impairment provision included goodwill of US$223 million. Further deterioration in value during the first half of 2007, relating mainly to large increases in the estimated capital cost of Argyle's underground project, triggered another assessment of its recoverable amount. Impairment of property, plant and equipment was assessed by reference to fair value less costs to sell. The determination of fair value less costs to sell was based on the estimated amount that would be obtained from sale in an arm's length transaction between knowledgeable and willing parties. This estimate was derived from discounting projections of cash flows, using valuation assumptions that a buyer might be expected to apply. The US dollar amount of the impairment is US$14 million higher than reported at the half year as a result of retranslation from Australian dollars at the average exchange rate for the full year. An increase in the Group's long term copper price assumption triggered an assessment of the recoverable amount of Palabora. The value in use was based on cash flows forecast in real terms and discounted at a pre-tax rate of 12 per cent. This led to a full reversal of the remainder of the impairment provision recognised in 2004. During 2006, a continuation of operating losses triggered an assessment of the recoverable amount of Tarong, one of the Group's coal mines in Australia. The value in use was based on cash flows forecast in real terms and discounted at a pre-tax rate of 8 per cent. During 2007, the sale of Tarong was announced for an amount that led to full reversal of the remainder of the provision recognised in the previous year. In 2006, an increase in the Group's long term copper price assumption triggered an assessment of the recoverable amount of KUC. The value in use was based on cash flows forecast in real terms and discounted at a pre-tax rate of 8 per cent. This led to a full reversal of the remainder of the impairment provision recognised in 2002. In 2006, an increase in the Group's long term iron ore price assumption triggered an assessment of the recoverable amount of IOC. The value in use was based on cash flows forecast in real terms and discounted at a pre-tax rate of 8 per cent. This led to a full reversal of the impairment provision recognised in 2002, which had aligned the carrying value with the value negotiated between shareholders during that year as part of a financial restructuring exercise.

	2007 US$m	2006 US$m
Cash at bank and in hand	579	555
Short term bank deposits	1,066	181
	1,645	736
Bank overdrafts repayable on demand (unsecured)	(104)	(14)
Balance per Group cash flow statement	1,541	722

Notes
Cash and cash equivalents include US$93 million (2006: US$55 million) for which there are restrictions on remittances.

	Pensions and post retirement healthcare	Other employee entitlements	Close down and restoration/ environmental	Other	2007 Total	2006 Total
	US$m	US$m	US$m	US$m	US$m	US$m
At 1 January	770	393	3,359	146	4,668	4,186
Adjustment on currency translation	59	36	211	14	320	113
Amounts capitalised	-	-	293	-	293	619
Acquisition of subsidiary (note 41)	2,550	126	1,518	444	4,638	-
Charged/(credited) to profit:
- new provisions	-	1	9	9	19	25
- increases to existing provisions	102	259	127	10	498	277
- unused amounts reversed	-	(5)	(200)	(4)	(209)	(242)
Amortisation of discount	-	1	164	1	166	137
Utilised in year	(119)	(49)	(82)	(33)	(283)	(271)
Transfer to liabilities of disposal groups held for sale	-	(12)	(124)	-	(136)	-
Liability incurred as a result of acquisition	-	-	-	189	189	-
Actuarial gains recognised in equity	(87)	-	-	-	(87)	(245)
Transfers and other movements	-	-	(4)	(54)	(58)	69
At 31 December	3,275	750	5,271	722	10,018	4,668
Balance sheet analysis:
Current	80	304	215	184	783	366
Non current	3,195	446	5,056	538	9,235	4,302
Total	3,275	750	5,271	722	10,018	4,668

Notes

The main assumptions used to determine the provision for pensions and post retirement healthcare, and other information, including the expected level of future funding payments in respect of those arrangements, are given in note 49. The provision for other employee entitlements includes a provision for long service leave of US$107 million (2006: US$86 million), based on the relevant entitlements in certain Group operations. It also includes the provisions relating to the Group's cash-settled share-based payment plans of US$219 million (2006: US$43 million), which are described in note 48. The Group's policy on close down and restoration costs is described in note 1(k). Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure is incurred at the end of the relevant operation. Remaining lives of mines and infrastructure range from 1 to over 50 years with an average, weighted by closure provision, of around 19 years. Although the ultimate cost to be incurred is uncertain, the Group's businesses estimate their respective costs based on feasibility and engineering studies using current restoration standards and techniques. Provisions of US$5,271 million (2006: US$3,359 million) for close down and restoration costs and environmental clean up obligations, include estimates of the effect of future inflation and have been adjusted to reflect risk. These estimates have been discounted to their present value at an average rate of approximately five per cent per annum, being an estimate of the long term, risk free, pre-tax cost of borrowing. Excluding the effects of future inflation, and before discounting, this provision is equivalent to some US$8.1 billion (2006: US$4.7 billion). Some US$214 million (2006: US$50 million) of environmental clean up expenditure is expected to take place within the next five years. The remainder includes amounts for the operation and maintenance of remediation facilities in later years. The provision for environmental clean up expenditure includes the issue described in (e) below. In 1995, Kennecott Utah Copper ('KUC') agreed with the US Environmental Protection Agency ('EPA') and the State of Utah to complete certain source control projects and perform specific environmental studies regarding contamination of ground water in the vicinity of the Bingham Canyon mine. A remedial investigation and feasibility study on the South Zone ground water contamination, completed in March 1998, identified a range of alternative measures to address this issue. Additional studies were conducted to refine the workable alternatives. A remedial design document was completed in 2002. A joint proposal and related agreements with the State of Utah Natural Resource Damage Trustee, the State of Utah and the Jordan Valley Water Conservancy District were approved in 2004. KUC entered into a formal agreement with the EPA in 2007 on the remedial action. The provision was reduced by US$101 million during 2007 (2006: US$37 million) following a reassessment of the expected cost of remediation to reflect recent experience. The ultimate cost of remediation remains uncertain, being dependent on the responsiveness of the contamination to pumping and acid neutralisation. Other provisions deal with a variety of issues and include US$191 million relating to the Rio Tinto Alcan Foundation commitment in Canada, involving payments of C$200 million over a five year period. Provisions for close down, restoration and environmental obligations increased by US$279 million in 2006 as the result of a reduction in the discount rate. Of this amount, US$221 million is included in 'Amounts capitalised'.

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2007 Acquisitions

Alcan acquisition

On 23 October 2007, the Rio Tinto Group acquired a controlling 79.42 per cent interest in the issued share capital of Alcan Inc. The remaining 20.58 per cent was acquired by 14 November 2007. The total purchase price to acquire Alcan Inc amounted to US$38.7 billion.

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 for the year exclude amounts relating to Alcan Packaging.

The fair values of the identifiable assets and liabilities of Alcan Inc. as at the date of acquisition were provisionally estimated as follows:

	IFRS carrying values in US$m	Fair value adjustments US$m	Provisional fair value to Group US$m
Intangible assets	804	6,663	7,467
Property, plant & equipment	11,579	6,703	18,282
Equity method investments	1,415	2,770	4,185
Inventories	2,643	213	2,856
Assets held for sale	6,984	-	6,984
Cash	991	-	991
Deferred tax assets	223	5	228
Other assets	4,353	231	4,584
Loans and borrowings	(5,580)	115	(5,465)
Liabilities of disposal groups held for sale	(2,642)	-	(2,642)
Deferred tax liabilities	(461)	(3,721)	(4,182)
Provisions for liabilities and charges	(4,581)	(57)	(4,638)
Other liabilities	(4,265)	(211)	(4,476)
Minority interest	(55)	-	(55)
Goodwill	2,055	12,478	14,533
Net attributable assets including goodwill	13,463	25,189	38,652
Total consideration:
Cost of shares			37,996
Acquisition costs			74
Liabilities assumed			132
Loans to acquired subsidiary			450
Total consideration - Alcan			38,652
Other subsidiaries and equity accounted units acquired			54
Total consideration			38,706
Cash outflow on acquisitions:
Total consideration			38,706
Net cash of acquired companies			(991)
Liabilities assumed			(132)
Other (including disposal proceeds of US$13 million)			(57)
Net acquisitions per cash flow statement			37,526

The future economic benefits represented by the goodwill include those associated with synergies, future development and expansion projects and the assembled workforce. As a result of the size of the acquisition and complexity of the valuation process, the above fair values are provisional. These will be subject to further review during the 12 months from the acquisition date.

For the period since acquisition, sales revenue of US$3,544 million (excluding equity accounted units) and profit after tax of US$293 million attributable to continuing operations are included in the consolidated income statement.

The following pro forma summary presents the Group as if Alcan Inc. had been acquired on 1 January 2007. The pro forma amounts include the results of the acquired group, recognising the amortisation of the fair values attributed to the assets acquired and the interest expense on debt incurred as a result of the acquisition. The proforma interest charge for the whole of 2007 on the acquisition debt has been based on the one month LIBOR rate as at 31 December 2007, of 4.6 per cent. The pro forma amounts do not take account of synergies anticipated as a result of the acquisition; but include non recurring costs borne by Alcan Inc. relating to the acquisition and suffer the costs of financing assets held for sale. The pro forma information does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined companies.

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	2007 US$m
Consolidated sales revenue	45,590
Profit for the year (including amounts attributable to outside equity shareholders)	7,727

2006 Acquisitions

Name of operation	Location	Principal activities	Ownership acquired %	Date of acquisition
Associates
Ivanhoe Mines	Canada	Copper and gold mining	9.95	18 October 2006
Proportionally consolidated units
Hope Downs Joint Venture	Australia	Iron ore mining	50	16 March 2006

2006 Disposals

Name of operation	Location	Principal activities	Ownership disposed %	Date of disposal
Jointly controlled entities
Eurallumina SpA	Italy	Alumina production	56.16	2 November 2006

Notes
The aggregate profit on disposal of interests in businesses in 2006 was US$5 million (US$3 million net of tax). These gains have been excluded from Underlying earnings, as shown in note 2. The Cash flow statement includes the following relating to acquisitions and disposals of interests in businesses: US$279 million in '(Acquisitions)/disposals of subsidiaries, joint ventures and associates', comprising US$303 million paid for acquisitions, net of US$24 million of disposal proceeds. In accordance with IAS 7, these proceeds were stated net of US$17 million of cash and cash equivalents transferred on sale of subsidiaries. US$167 million included in 'Purchase of financial assets'. Non cash disposal proceeds of US$23 million were received during the year.

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