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Press Release

Rio Tinto Alcan responds to downturn in commodity prices

7 April 2009

Rio Tinto Alcan today announced it will slow the construction of the Yarwun alumina refinery expansion in Gladstone and curtail annual bauxite production at its Weipa mine to 15 million tonnes (from 19.4 million tonnes in 2008) due to the sharp fall in alumina and aluminium demand and prices in recent months.

Announcing the decision, Rio Tinto Alcan Bauxite and Alumina president Steve Hodgson said the depressed state of the market and a sharp cutback in demand made further tough decisions necessary.

Mr Hodgson said that the current demand for aluminium remained poor and despite major industry wide production cutbacks, stocks continue to increase.

"Even with alumina industry capacity cuts equivalent to 21 million tonnes per year since the beginning of the crisis, including cuts of 12 million tonnes made since January, there is still little improvement in the alumina price.

"At current prices around 70 per cent of the industry is currently operating at a financial loss," Mr Hodgson said.

Work on the Yarwun alumina refinery expansion will be slowed to reduce the rate of capital expenditure. The change to the construction schedule will result in a revised completion date in the second half of 2012.

The decisions announced today will result in the loss of around 100 permanent roles at Weipa and approximately 570 contractor roles in Gladstone. Additionally, approximately 35 permanent roles will be lost from the Yarwun refinery and at Boyne Smelters also in Gladstone.

Mr Hodgson said cost reduction and cash conservation initiatives were being implemented across all Rio Tinto Alcan business units and operations.

"We are strongly focused on minimising costs and conserving cash, and this work is ongoing in our operations as we continue to closely monitor market conditions."

The role and contractor reductions include:

· Approximately 500 contractor roles at the Yarwun alumina refinery expansion near Gladstone, Queensland
· Approximately 20 permanent roles at Boyne Smelters Limited in Gladstone, Queensland
· 100 permanent roles at the Weipa bauxite mine, Cape York, Queensland
· Approximately 15 permanent roles at the Yarwun Alumina Refinery in Gladstone.

Additionally a change to the maintenance arrangement at the Yarwun refinery has recently resulted in a reduction of about 70 operational maintenance contract roles.

"We will ensure all impacted employees receive their full entitlements and ensure they have the support and assistance they need in the coming weeks," Mr Hodgson said.



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