Performance

The aluminium product group, Rio Tinto Alcan, is the global leader in the aluminium industry. Its operations, which are closely integrated across the world, include mining high quality bauxite, refining alumina for both primary aluminium production and specialty markets, and producing primary aluminium at some of the lowest cost, most technologically advanced aluminium smelters in the industry.

Rio Tinto Alcan is well regarded for its leadership in research and technology as well as its leading position in clean, hydroelectric generation. It has decided to divest its Engineered Products unit of seven downstream businesses, as well as the Packaging unit.

At 31 December 2008, Rio Tinto Alcan's bauxite production was the highest in the industry, at 35.0 million tonnes per annum, up from 31.4 million tonnes in 2007 (on a 12 month comparative basis). At the same time, Rio Tinto Alcan had a leading position in alumina refining and full ownership or participation in 24 aluminium smelters with a total annual capacity of nearly 4.2 million tonnes, the vast majority of which are located in OECD countries.

In the current environment of weaker than average demand, the group retains a competitive advantage, as about two thirds of its aluminium is produced in the lowest cost segment of the industry and it is curtailing higher cost production. The favourable cost position, especially regarding energy inputs, will benefit it during the current global economic downturn.

At 31 December 2008, Rio Tinto Alcan had operating assets of US$35,730 million (excluding Packaging), which accounted for 60 per cent of the Group's operating assets and compared to US$43,885 million of operating assets at 31 December 2007. In 2008, Rio Tinto Alcan contributed US$23,839 million in revenue and US$1,184 million in underlying earnings, which accounted for 41 per cent and 12 per cent of the Group's gross sales revenue and underlying earnings, respectively, compared to US$7,359 million of revenue and US$1,097 million of underlying earnings in 2007. The year 2008 was the first full 12 months of combined Rio Tinto and Alcan operations. At year end Rio Tinto Alcan employed approximately 39,000 people worldwide, excluding the Packaging unit.

Jacynthe Côté, chief executive, Rio Tinto Alcan, succeeded Dick Evans on 1 February 2009 and is based in Montreal, Canada.

*A reconciliation of the net earnings with underlying earnings for 2006, 2007 and 2008 as determined under EU IFRS is set out in the Group financial performance.
All amounts presented by the product groups exclude net interest and other centrally reported items.