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Rio Tinto curtails production and cuts costs

The Davis Building
in Montreal, Canada –
global head office
of Rio Tinto Alcan
Montreal, Canada — MININGREVIEW.COM — 21 January 2009 – Rio Tinto Alcan – the global leader in the aluminium business and the world’s largest producer of bauxite, alumina and aluminium – plans to implement further production curtailments to align production with customer demand.

An announcement here revealed that, further to curtailments in the fourth quarter of 2008 totalling 5% of global production, Rio Tinto Alcan planned to reduce aluminium output by another 230 000 tonnes. This would bring the total production decrease to 450 000 tonnes, or approximately 11% of its total annualised aluminium capacity.

The announcement added that there would also be a cost saving programme across all Rio Tinto Alcan regions. This was part of the global cost reduction programme announced by Rio Tinto in December 2008 as part of a series of group-wide initiatives aimed at reducing debt, conserving cash and preserving shareholder value.

“Our goal is to align production with customer demand and reduce our operating costs as much as possible. Increasing efficiency throughout our operations and streamlining our organisation will be crucial to achieving our objectives and preserving value for shareholders,” said Rio Tinto Alcan chief executive Dick Evans. “We are taking steps towards optimising our world class portfolio of low cost, long life assets, the majority of which are in the lowest half of the industry cost curve.”

Rio Tinto Alcan is taking steps to optimise its portfolio of assets to maximise cash preservation and strengthen the overall position of the business, the announcement continued. It is also reviewing expenditures and reorganising operations at higher cost facilities.

Plans are in place to reduce the workforce by approximately 1 100 roles – 300 contractors and 800 employees. In addition, substantial cost reduction programmes are being implemented across all Rio Tinto Alcan facilities.

“We realise that the measures we’re announcing today will have serious impacts on our employees and local communities. The global economic downturn has meant that we must make difficult but necessary choices for our organisation, and we will make sure that those affected are treated with fairness and respect,” said Jacynthe Côté, who becomes chief executive of Rio Tinto Alcan next month. “We will continue to honour our commitments to employees, customers, governments, communities, and other key stakeholders.”

Rio Tinto Alcan will continue discussions with all relevant stakeholders to assist affected employees through various support programmes, and in full compliance with the relevant individual and collective labour agreements.