Joint ventures and convertible bonds to deliver US$19.5 billion in cash to Rio Tinto

12 February 2009

The Boards of Rio Tinto plc and Rio Tinto Limited (together ?Rio Tinto?) announce today that they are unanimously recommending to shareholders a transaction with Aluminium Corporation of China (?Chinalco?), a leading Chinese diversified resources company. The transaction will forge a pioneering strategic partnership through the creation of joint ventures in aluminium, copper, and iron ore as well as the issue of convertible bonds to Chinalco, which would, if converted, allow Chinalco to increase its existing shareholding in Rio Tinto.

The transaction is intended to position Rio Tinto to lead the resources industry into the next decade and beyond by ensuring the continuity of its strategy with the benefit of Chinalco?s relationships, resources and capabilities.

The Rio Tinto Boards have extensively considered a range of strategic options, and have concluded that the opportunity offered by the strategic partnership with Chinalco, together with the value on offer for the investments by Chinalco in certain of Rio Tinto?s mineral assets and in the convertible bonds, is superior to other identified options and offers greater medium term certainty and long term value for Rio Tinto?s shareholders.

Transaction highlights

• Delivers substantial aggregate cash proceeds of US$19.5 billion through:

o        Investment by Chinalco in certain aluminium, copper and iron ore joint ventures totalling US$12.3 billion

o        The issue of subordinated convertible bonds in two tranches with conversion prices of US$45 and US$60 in each of Rio Tinto plc and Rio Tinto Limited for a total consideration of US$7.2 billion. If converted, the subordinated convertible bonds would increase Chinalco?s current shareholding to 19.0% in Rio Tinto plc and 14.9% in Rio Tinto Limited, equivalent to an 18.0% interest in the Rio Tinto Group

• Raises significant funds at a time when financial markets are distressed, materially reducing Rio Tinto?s indebtedness, strengthening its balance sheet and increasing its flexibility to pursue attractive investment opportunities throughout the cycle

• Creates a pioneering strategic partnership with a leading Chinese diversified resources company:

o        Rio Tinto will benefit from Chinalco?s strong relationships within China, which Rio Tinto believes will continue to be the main driver of growth in commodity markets over the longer term

o        The strategic partnership creates the opportunity for joint ventures and project development in emerging economies. The two groups bring complementary skills, including Chinalco?s capabilities to deliver infrastructure projects and Rio Tinto?s leadership in operational excellence and sustainable development

o        Rio Tinto will enter into a landmark joint venture for exploration in China, in partnership with Chinalco

o        The Chinalco relationship will facilitate access for Rio Tinto to funding for project development from Chinese financial institutions

• Chinalco will be entitled to nominate two new non-executive Board members (one independent under applicable corporate governance criteria) to add to the fifteen current Board members of Rio Tinto. Independent non-executive directors will continue to comprise a majority of the Rio Tinto Boards, consistent with corporate governance best practice
• Rio Tinto retains operational control of the joint venture assets, with clear governance arrangements and continued commercial marketing of joint venture product while maintaining its commitment to best practice and sustainable development
• The transaction is subject to approval by the shareholders of Rio Tinto, governments and other regulators

The Boards of Rio Tinto plc and Rio Tinto Limited propose unanimously to recommend that shareholders vote in favour of the resolutions to be proposed at the shareholders' meetings in order to effect the transaction.

Commenting on the transaction, Paul Skinner, Chairman of Rio Tinto, said:

?This transaction will deliver superior value for Rio Tinto shareholders. Chinalco?s cash investment of US$19.5 billion will strengthen Rio Tinto?s balance sheet, increase our flexibility to deliver growth as markets recover and position Rio Tinto for the next decade and beyond.

?We have long recognised and welcomed the growing participation of China in the global economy and the opportunities this presents to Rio Tinto. We believe this transaction is a logical step in advancing our capability in the Chinese market and the Boards of Rio Tinto recommend it to shareholders.

?Chinalco?s investment is a clear vote of confidence in Rio Tinto?s strength, its growth prospects and the outlook for the commodities we produce.?

Commenting on the transaction, Xiao Yaqing, President of Chinalco, said:

?This transaction follows our acquisition of a significant stake in Rio Tinto in February 2008 which laid a solid foundation for our broader strategic partnership. It reflects our continued confidence in the long-term prospects of the industry and the Chinese economy, the strength of Rio Tinto?s world-class management team and its long term growth prospects. Our objectives are to seek commodity and geographic diversification, with a view to achieving long term financial returns from our investments.

?The strategic partnership with Rio Tinto is a perfect fit with these goals. It aligns us with a leading global diversified miner with superb tier one assets and a track record of innovation. It also allows Chinalco a significant role in a strong industry with excellent growth prospects and direct economic exposure to Rio Tinto?s leading aluminium, copper and iron ore assets. With the portfolio of these global assets, Chinalco will be better positioned to serve its customers in China and globally. We will embrace Rio Tinto?s expertise in sustainable development, and with our complementary areas of expertise will combine to bring the best of both to project development. This strategic partnership represents a key step in Chinalco?s development into one of the world?s leading natural resources companies.?

Commenting on the transaction, Tom Albanese, Chief Executive of Rio Tinto, said:

?Since Chinalco made its initial investment a year ago, it has become clear to both companies that a partnership makes great strategic sense. Today?s announcement is the culmination of many months of exploring how we might do this. Rio Tinto has over 20 years experience of joint ventures with Chinese partners and a proven track record of delivering value for our shareholders from existing joint ventures with customers. The transaction will forge a pioneering strategic partnership with one of China?s leading and fastest-growing resource companies. Together we will create value from joint ventures and will have more options in project development and exploration - particularly in emerging economies. We will benefit from Chinalco?s insight in China, the largest and the fastest growing market in the world for our products.

?Chinalco has a strong commercial focus and an outstanding track record of growth and value creating investments. Together we will make both businesses stronger, to the benefit of shareholders and other stakeholders.?

About Rio Tinto

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

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