ERM Statement 2006

Environmental Resources Management Limited (ERM) was appointed by Rio Tinto on behalf of the Board Committee on Social and Environmental Accountability to undertake an external assurance assessment of its 2006 Sustainable development review (the Review) and this statement is our public report to them. We were not engaged to assess whether the Review is aligned with the Global Reporting Initiative's G3 Sustainability Reporting Guidelines

We have based our assessment on Rio Tinto's non financial policies, known collectively as The way we work, and the standards and guidelines that support it

Between July 2006 and January 2007, and for Rio Tinto's managed operations only, we:

• Reviewed selected 2005 non financial performance data and information and on a risk basis, identified a sample of operation and business unit locations to visit and topics to assess;
• Visited 12 operations and ten business units to assess the adequacy of Rio Tinto's Internal Control Questionnaire (ICQ) to report on the degree of implementation of The way we work and adequacy of selected underlying controls in place to manage non financial risks;
• Reviewed data collection and internal verification processes for a selection of 2006 health, safety and environment data at sampled operations and corporate offices; and 
• Assessed the content of the Review to comment on its completeness, relevance, responsiveness and accuracy, and its consistency with our findings from the above

Overall opinion

We conclude that the Review provides a fair view of Rio Tinto's programmes and performance during 2006. We believe that the 2006 health, safety and environment performance data reported within the Review are accurate and are supported by robust internal verification processes.

The sample of operations and businesses we visited had in place, or were implementing, internal controls to deliver conformance with The way we work. We identified a number of minor inaccuracies in ICQ reporting, largely as a result of selected questions being open to interpretation. However, we do not believe this materially affects the Review as it is not based solely on the information the ICQ provides.

Detailed findings on performance priorities

Attracting talent

Like many natural resources companies, Rio Tinto faces severe competition to attract and retain skilled personnel for its growing operations in remote locations where limited social infrastructure and a competitive labour market exists, in particular in Australia. Clear policies and guidelines on recruitment are in place and some progress has been made at the majority of operations. However, sustainable employment remains a significant challenge and business risk, requiring the additional focus and allocation of resources

Securing access to new resources

Rio Tinto seeks to maintain high standards over land stewardship and has implemented management controls across its operations

During our site visits ERM found four operations in Australia where the level of identification and protection of indigenous archaeological artefacts could have been improved, and unauthorised land clearing highlighted deficiencies in management controls. While the incidents had been notified to corporate, these deficiencies represent a potential business risk to Rio Tinto as continued good performance at local level is crucial to securing access to new and existing mineral rights

Improving safety

We saw a growing focus towards employee ownership of safety management as a means of enhancing safety culture, at corporate, business unit and operation level

Protecting human rights

Translating human rights policy into practice is a continually evolving process throughout Rio Tinto and the group has placed further emphasis on it during 2006. Written security procedures have been established in line with Rio Tinto's human rights policy at most sites, but at seven operations visited by ERM in both developed and developing countries we found these required updating or completing

Enhancing environmental performance

All businesses and operations visited by ERM have established environmental management and reporting processes, some of which require strengthening. More consistent focus on understanding root causes of incidents is now needed to achieve further performance improvements

Sustainable development

Rio Tinto has stated that sustainable development will be a key differentiator for future success and has reinforced direction through its new Sustainable Development Leadership Panel. Several operations visited by ERM have made good progress in applying Rio Tinto's policy on sustainable development

However, in many cases, formal strategies and programmes in line with corporate policy are at an early stage of development and implementation. This remains a key area of focus in Rio Tinto's pursuit of its stated goal to differentiate its business through excellence in sustainable development

Overall recommendations ERM recommends that Rio Tinto:

• Provides additional support to operations in remote locations to drive through practical solutions to address the recruitment and employment challenges faced; 

• Ensures that all operations have up to date controls around security and human rights; 

• Provides more practical support to operations to enable them to implement sustainable development at ground level; and 

• Continues to review the relevance, clarity and applicability of its internal social and environmental control procedures to ensure they provide an on going, effective internal assurance mechanism

Environmental Resources
Management Limited
February 2007

Rio Tinto management has prepared this Review and is responsible for the collection and presentation of the information in it. ERM's responsibility is to express our opinion on the content of the Review based on the scope agreed with Rio Tinto.

ERM is an independent, global environmental, social and corporate responsibility consultancy with experience in the design, development and assurance of sustainability reporting and performance in a wide range of industry sectors.

During 2006/7 we have worked with Rio Tinto on other consulting engagements. However, we operate strict conflict checks to ensure that the independence of individuals involved in our assurance activities is not compromised.