Directors' test of independence

Corporate governance standards in the jurisdictions where Rio Tinto is listed require that a majority of directors are independent of the Group, and that all members of the Remuneration committee and a majority of members of the Audit committee and Nominations committee are similarly independent.

The boards of Rio Tinto have developed this policy in the light of corporate governance developments in Australia, the United Kingdom and the United States, including the criteria for independence established by the Australian Stock Exchange (ASX) Corporate Governance Council, the UK Combined Code, the United States Sarbanes-Oxley Act and the Corporate Governance rules of the New York Stock Exchange (NYSE).

Independence
The Nominations committee will assess whether directors are independent of management and any business or other relationship that could materially interfere with the exercise of objective, unfettered or independent judgement by the director or the director's ability to act in the best interests of the Rio Tinto Group. Following that process, the Nominations committee will make a recommendation to the boards prior to their final determination of individual directors' independence. The boards retain ultimate discretion in their judgment to determine if a director is independent.

The board has adopted a policy on directors' independence. The policy, which contains the materiality thresholds approved by the board, can be downloaded at the bottom on this page.

The tests of director independence in the jurisdictions where Rio Tinto is listed are not wholly consistent. The board has, therefore, adopted the following criteria for independence: independence of management, the absence of any business relationship which could materially interfere with the director's independence of judgement and ability to provide a strong, valuable contribution to the board's deliberations or which could interfere with the director's ability to act in the best interest of the Group.

Where contracts in the ordinary course of business exist between Rio Tinto and a company in which a director has declared an interest, these are reviewed for materiality to both companies. Applying these criteria, the board is satisfied that the majority of the non executive directors - Sir David Clementi, Vivienne Cox, Sir Rod Eddington, Mike Fitzpatrick, Yves Fortier, Richard Goodmanson, Andrew Gould, Lord Kerr, Paul Tellier and Sir Richard Sykes are independent. David Mayhew, who is chairman of one of Rio Tinto plc's stockbrokers, is not independent.

Paul Skinner was, until his appointment as chairman in 2003, an independent, non executive director in compliance with the Code. He satisfies the tests for independence under the ASX Best Practice Corporate Governance Guidelines and the NYSE Code.