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Press Release

Record cash flow from volume growth in strong markets

Cash flow from operations was at record levels for a first half, at $5,641 million, 11 per cent higher than the first half of 2006.

Underlying EBITDA* was a record $6,613 million, seven per cent above the first half 2006 level of $6,174 million.
Underlying earnings* of $3,529 million were six per cent below the corresponding period of 2006, which included $257 million from recognition of additional net tax assets.

Net earnings* were $3,253 million, down 14 per cent on the 2006 level of $3,796 million, mainly as a result of an impairment of Argyle.

Increased volumes from investment in additional capacity, particularly in iron ore, contributed $302 million to earnings.
Rising prices and strong demand for most products increased underlying earnings by $513 million.
Industry wide cost pressures impacted the business in the first half, reducing underlying earnings by $503 million, adjusted for inflation.

The Group's extensive organic growth pipeline led to record first half capital expenditure of $1.9 billion in 2007. The major iron ore expansions in Western Australia are on track, and studies are underway targeting further significant growth.
The approval in July of a two million tonne per annum expansion of the Yarwun alumina refinery in Queensland will strengthen the Group's position in alumina.

The accelerated expansion of the Hope Downs mine development to 30 million tonnes per annum was approved.
Recommended cash offer for Alcan to create a global aluminium industry leader was announced on 12 July 2007.



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