SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 20-F

(Mark One)
   
Registration statement pursuant to Section 12 (b) or 12(g) of the Securities Exchange Act of 1934
  or
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  For the financial year ended: 31 December 2004
  or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  For the transition period from: __________ to __________
   
Commission file number: 1-10533 Commission file number: 0-20122
   
Rio Tinto plc Rio Tinto Limited
  ABN 96 004 458 404
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
   
England and Wales Victoria, Australia
(Jurisdiction of incorporation or organisation) (Jurisdiction of incorporation or organisation)
   
6 St James’s Square Level 33, 55 Collins Street
London, SW1Y 4LD, England Melbourne, Victoria 3001, Australia
(Address of principal executive offices) (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange Name of each exchange Title of each class
  on which registered on which registered  
American Depositary New York   None
Shares* Stock Exchange    
Ordinary Shares of 10p New York    
each** Stock Exchange    
   
* Evidenced by American Depository Receipts. Each American Depository Share Represents four Rio Tinto plc Ordinary Shares of 10p each.
** Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of each class Title of each class
None American Depositary Shares***
Ordinary Shares
   
*** Evidenced by American Depository Receipts. Each American Depository Share represents four Rio Tinto Limited Ordinary Shares.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None None

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of
the period covered by the annual report:

                Title of each class Number Number Title of each class
Ordinary Shares of 10p each 1,066,674,301 499,058,420 Shares
DLC Dividend Share of 10p 1 1 DLC Dividend Share
Special Voting Share of 10p 1 1 Special Voting Share

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and

(2) have been subject to such filing requirements for the past 90 days:
Yes
           No
Indicate by check mark which financial statement item the Registrants have elected to follow:

Item 17            Item 18  


Back to Contents

EXPLANATORY NOTE

The Rio Tinto Group is a leading international mining group, combining Rio Tinto plc and Rio Tinto Limited in a dual listed companies (‘DLC’) merger that has created a single economic enterprise, nevertheless both companies remain separate legal entities with separate share listings and registrars, and with separate ADR programmes.
      Rio Tinto plc and Rio Tinto Limited prepare annual reports and financial statements for the combined group that are presented to their shareholders as their consolidated accounts in accordance with both United Kingdom and Australian legislation and regulations. The current such document is the 2004 Annual report and financial statements. They also prepare their annual reports on Form 20-F,that are filed with the SEC in accordance with United States legislation and regulations, as a combined document.

Rio Tinto 2004 Form 20-F   2


Back to Contents

CONTENTS

Page
                     PART I  
 
Item 1. Identity of Directors, Senior Management and Advisers 4
Item 2. Offer Statistics and Expected Timetable 4
Item 3. Key Information 5
Item 4. Information on the Company 10
Item 5. Operating and Financial Review and Prospects 27
Item 6. Directors, Senior Management and Employees 67
Item 7. Major Shareholders and Related Party Transactions 90
Item 8. Financial Information 91
Item 9. The Offer and Listing 93
Item 10. Additional Information 95
Item 11. Quantitative and Qualitative Disclosures about Market Risk 104
Item 12. Description of Securities other than Equity Securities 104
 
                  PART II  
 
Item 13. Defaults, Dividend Arrearages and Delinquencies 104
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 104
Item 15. Controls and Procedures 104
Item 16A. Audit Committee Financial Expert 105
Item 16B. Code of Ethics 105
Item 16C. Principal Accountant Fees and Services 105
Item 16D. Exemptions from the Listing Standards for Audit Committees 105
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 105
 
               PART III  
 
Item 17. Financial Statements 105
Item 18. Financial Statements 105
Item 19. Exhibits 106

Rio Tinto 2004 Form 20-F   3


Back to Contents

RIO TINTO

PART I

Item 1.     Identity of Directors, Senior Management and Advisers
Not applicable.

Item 2.     Offer Statistics and Expected Timetable
Not applicable.

Rio Tinto 2004 Form 20-F   4


Back to Contents

Item 3.     Key Information

SELECTED FINANCIAL DATA FOR THE RIO TINTO GROUP for the period 2000 to 2004

 
       
   
       
 
       
 
       
       

Rio Tinto 2004 Form 20-F   5


Back to Contents

The following selected consolidated financial data has been derived from the consolidated financial statements of the Rio Tinto Group and of the Rio Tinto plc and Rio Tinto Limited parts of the Group presented elsewhere herein, restated where appropriate to accord with the current accounting policies and presentations. The selected consolidated financial data should be read in conjunction with, and qualified in their entirety by reference to, the consolidated financial statements and notes thereto included elsewhere in this annual report on Form 20-F.
     The consolidated financial statements are prepared in accordance with UK GAAP, which differs in certain respects from US GAAP. Details of the principal differences between UK GAAP and US GAAP are set out in note 42 on pages A-65 to A-84.

RIO TINTO GROUP

Income Statement Data                    
For the years ending 31 December 2000   2001   2002   2003   2004  
Amounts in accordance with UK GAAP                    
(US$ millions)                    
                     
Consolidated turnover (f) 8,081   8,343   8,715   9,568   11,799  
Group operating profit (a) 2,188   1,562   831   1,496   1,722  
Net earnings (a) 1,507   1,079   651   1,508   2,813  
                     
Group operating profit per share (US cents) 159.4   113.6   60.3   108.6   124.9  
Earnings per share (US cents) 109.8   78.5   47.3   109.5   204.0  
Diluted earnings per share (US cents) 109.7   78.3   47.2   109.3   203.6  
Dividends per share (US cents) (b) 57.5   59.0   60.0   64.0   77.0  
Dividends per share (pence) (b) 38.87   41.68   37.47   37.13   41.48  
Dividends per share (Australian cents) (b) 102.44   115.27   105.93   89.70   103.82  
Weighted average number of shares (millions) (b) 1,373   1,375   1,377   1,378   1,379  
                     
Amounts in accordance with US GAAP                    
(US$ millions)                    
                     
Consolidated turnover (c) (f) 8,065   8,348   8,719   9,545   11,814  
Group operating profit 1,948   1,821   746   1,041   1,442  
Net earnings 1,174   1,038   581   1,977   2,823  
                     
Group operating profit per share (US cents) 141.9   132.4   54.2   75.5   104.6  
Earnings per share (US cents) 85.5   75.5   42.2   143.5   204.7  
Diluted earnings per share (US cents) 85.4   75.4   42.1   143.3   204.4  
                     
Balance Sheet Data                    
at 31 December 2000   2001   2002   2003   2004  
Amounts in accordance with UK GAAP                    
(US$ millions)                    
                     
Total assets 19,367   19,540   20,204   24,081   25,711  
Share capital / premium 2,535   2,486   2,580   2,869   2,938  
Shareholders' funds (net assets) 7,211   7,043   7,462   10,037   12,584  
                     
Amounts in accordance with US GAAP                    
(US$ millions)                    
                     
Total assets 21,530   22,102   22,600   26,959   28,938  
Share capital / premium 2,535   2,486   2,580   2,869   2,938  
Shareholders' funds (net assets) 9,812   9,571   9,517   12,044   14,462  

Rio Tinto 2004 Form 20-F   6


Back to Contents

RIO TINTO PLC - PART OF RIO TINTO GROUP

Income Statement Data                    
for the years ending 31 December 2000   2001   2002   2003   2004  
Amounts in accordance with UK GAAP                    
(US$ millions)                    
                     
Consolidated turnover (f) 4,045   3,769   3,993   4,092   5,275  
Group operating profit (a) 915   137   (19 ) 368   289  
Net earnings (a) 1,064   491   195   956   2,073  
                     
Group operating profit per share (US cents) 86.0   12.9   (1.8 ) 34.5   27.1  
Earnings per share (US cents) 100.1   46.1   18.3   89.7   194.2  
Diluted earnings per share (US cents) 100.0   46.0   18.3   89.5   193.9  
Dividends per share (US cents) (b) 57.5   59.0   60.0   64.0   77.0  
Dividends per share (pence) (b) 38.87   41.68   37.47   37.13   41.48  
Weighted average number of shares (millions) (b) 1,063   1,064   1,065   1,066   1,067  
                     
Amounts in accordance with US GAAP                    
(US$ millions)                    
                     
Consolidated turnover (c) (f) 4,034   3,783   3,993   4,072   5,298  
Group operating profit 747   548   (481 ) (7 ) 162  
Net earnings 820   618   (206 ) 949   2,010  
                     
Group operating profit per share (US cents) 70.2   51.5   (45.2 ) (0.7 ) 15.2  
Earnings per share (US cents) 77.1   58.1   (19.3 ) 89.0   188.3  
Diluted earnings per share (US cents) 77.1   58.0   (19.3 ) 88.9   188.0  
                     
BALANCE SHEET DATA                    
AT 31 DECEMBER 2000   2001   2002   2003   2004  
Amounts in accordance with UK GAAP                    
(US$ millions)                    
                     
Total assets 11,948   11,921   12,606   13,708   15,516  
Share capital / premium 1,741   1,754   1,764   1,784   1,805  
Shareholders’ funds (net assets) 6,325   5,902   5,899   7,343   9,139  
                     
Amounts in accordance with US GAAP                    
(US$ millions)                    
                     
Total assets 13,557   13,735   13,941   15,180   17,375  
Share capital / premium 1,741   1,754   1,764   1,784   1,805  
Shareholders’ funds (net assets) 8,693   8,371   7,697   8,931   10,560  

Rio Tinto 2004 Form 20-F   7


Back to Contents

RIO TINTO LIMITED - PART OF RIO TINTO GROUP

Income Statement Data                    
for the years ending 31 December 2000   2001   2002   2003   2004  
Amounts in accordance with UK GAAP                    
(US$ millions)                    
                     
Consolidated turnover (f) 4,036   4,574   4,722   5,476   6,524  
Group operating profit (a) 1,273   1,425   855   1,128   1,433  
Net earnings (a) 771   942   736   884   1,185  
                     
Group operating profit per share (US cents) 235.7   286.1   171.3   226.1   287.2  
Earnings per share (US cents) 142.8   189.0   147.6   177.2   237.4  
Diluted earnings per share (US cents) 142.7   188.9   147.4   176.9   236.9  
Dividends per share (US cents) (b) 57.5   59.0   60.0   64.0   77.0  
Dividends per share (Australian cents) (b) 102.44   115.27   105.93   89.70   103.82  
Weighted average number of shares (millions) (b) 540   498   499   499   499  
                     
Amounts in accordance with US GAAP                    
(US$ millions)                    
                     
Consolidated turnover (c) (f) 4,027   4,575   4,726   5,473   6,516  
Group operating profit 1,201   1,273   1,231   1,048   1,280  
Net earnings 614   671   1,267   1,647   1,301  
                     
Group operating profit per share (US cents) 222.4   255.6   246.7   210.0   256.5  
Earnings per share (US cents) 113.9   134.6   254.0   330.1   260.6  
Diluted earnings per share (US cents) 113.9   134.5   253.7   330.0   260.1  
                     
                     
BALANCE SHEET DATA                    
AT 31 DECEMBER 2000   2001   2002   2003   2004  
Amounts in accordance with UK GAAP                    
(US$ millions)                    
                     
Total assets 9,542   9,977   10,382   13,542   15,316  
Share capital / premium 939   865   964   1,280   1,336  
Shareholders' funds (net assets) 1,420   1,828   2,510   4,324   5,515  
                     
Amounts in accordance with US GAAP                    
(US$ millions)                    
                     
Total assets 10,236   10,770   11,609   15,234   16,964  
Share capital / premium 939   865   964   1,280   1,336  
Shareholders' funds (net assets) 1,795   1,920   2,922   4,996   6,247  
   
(a) In 2004 Rio Tinto Group operating profit under UK GAAP is stated after charging US$558 million for certain asset write downs and provisions for contract obligations which relate to Rio Tinto plc. In 2004, net earnings for the Rio Tinto Group include net write downs and provisions for contract obligations of US$321 million relating to Rio Tinto plc. In addition the Group’s net earnings for 2004 include exceptional gains of US$913 million arising on the sale of certain operations of which US$827 million relate to Rio Tinto plc and US$137 million relate to Rio Tinto Limited.
In 2003 Rio Tinto Group net earnings under UK GAAP are stated after exceptional gains totalling US$126 million which arose on the sale of certain operations by Rio Tinto Limited.
In 2002 Rio Tinto Group operating profit under UK GAAP is stated after charging US$962 million for asset write downs, of which US$529 million relates to Rio Tinto plc and US$433 million relates to Rio Tinto Limited. In addition, group operating profit for 2002 includes US$116 million for environmental remediation charges which all relate to Rio Tinto plc. In 2002 net earnings for the Rio Tinto Group include US$763 million for asset write downs of which US$623 million relates to Rio Tinto plc and US$225 million relates to Rio Tinto Limited. In addition the Group’s net earnings for 2002 include US$116 million for environmental remediation charges which all relate to Rio Tinto plc.
In 2001 Rio Tinto Group operating profit under UK GAAP is stated after charging US$715 million for exceptional asset write downs, of which US$644 million relates to Rio Tinto plc and US$71 million relates to Rio Tinto Limited. In 2001 Rio Tinto Group net earnings under UK GAAP are after charges of US$583 million for asset write downs of which US$551 million relates to Rio Tinto plc and US$52 million relates to Rio Tinto Limited.
Under UK GAAP asset write downs and the environmental remediation charges are classified as ‘exceptional' but none of these items would be classified as ‘extraordinary’ items under US GAAP.
(b) These figures are the same under both UK and US GAAP.
(c) A cumulative adjustment was made in 2000 to reflect the application of Staff Accounting Bulletin No. 104 (‘SAB104’) Revenue recognition in financial statements. The effect of SAB 104 is described on page A-70.
(d) The results for all years relate wholly to continuing operations.
(e) The decrease in Rio Tinto Limited shareholders’ funds in 2000 reflects the buy back of 91,000,000 shares from Rio Tinto plc in that year.
(f) The historical data for 2000-2003 has been reclassified for the impact of reporting the reimbursement of certain shipping and handling costs incurred by the Group as “turnover” rather than a reduction of “net operating costs”. See note (c) on page A-2.Footnotes.

Rio Tinto 2004 Form 20-F   8


Back to Contents

RISK FACTORS
The following describes some of the risks that could affect Rio Tinto. There may be additional risks unknown to Rio Tinto and other risks, currently believed to be immaterial, could turn out to be material. These risks, whether they materialise individually or simultaneously, could significantly affect the Group’s business and financial results. They should also be considered in connection with any forward looking statements in this document and the cautionary statement below.

Economic condition
Commodity prices, and demand for the Group’s products, are influenced strongly by world economic growth, particularly that in the US and Asia. The Group’s normal policy is to sell its products at prevailing market prices. Commodity prices can fluctuate widely and could have a material and adverse impact on the Group’s asset values, revenues, earnings and cash flows. Further discussion can be found on page 14, Business environment and markets, and on page 39, commodity prices.

Exchange rates
The Group’s asset values, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the Group’s sales and areas of operation. The majority of the Group’s sales are denominated in US dollars. The Australian and US dollars are the most important currencies influencing costs. The relative value of currencies can fluctuate widely and could have a material and adverse impact on the Group’s asset values, costs, earnings and cash flows. Further discussion can be found on page 37, exchange rates, reporting currencies and currency exposure.

Acquisitions
The Group has grown partly through the acquisition of other businesses. Business combinations commonly entail a number of risks and Rio Tinto cannot be sure that management will be able effectively to integrate businesses acquired or generate the cost savings and synergies anticipated. Failure to do so could have a material and adverse impact on the Group’s costs, earnings and cash flows.

Exploration and new projects
The Group seeks to identify new mining properties through an active exploration programme. There is no guarantee, however, that such expenditure will be recouped or that existing mineral reserves will be replaced. Failure to do so could have a material and adverse impact on the Group’s financial results and prospects.
     The Group develops new mining properties and expands its existing operations as a means of generating shareholder value. Increasing regulatory, environmental and social approvals are, however, required which can result in significant increases in construction costs and/or significant delays in construction. These increases could materially and adversely affect a project’s economics, the Group’s asset values, costs, earnings and cash flows.

Reserve estimation
There are numerous uncertainties inherent in estimating ore reserves. Reserves that are valid at the time of estimation may change significantly when new information becomes available. Fluctuations in the price of commodities, exchange rates, increased production costs or reduced recovery rates may render lower grade reserves uneconomic and may, ultimately, result in a restatement. A significant restatement could have a material and adverse impact on the Group’s asset values, costs, cash flows and earnings.

Political and community
The Group has operations in jurisdictions having varying degrees of political instability. Political instability can result in civil unrest, expropriation, nationalisation, renegotiation or nullification of existing agreements, mining leases and permits, changes in laws, taxation policies or currency restrictions. Any of these can have a material adverse effect on the profitability or, in extreme cases, the viability of an operation.
     Some of the Group’s current and potential operations are located in or near communities that may now, or in the future, regard such an operation as having a detrimental effect on their economic and social circumstances. Should this occur, it might have a material adverse impact on the profitability or, in extreme cases, the viability of an operation. In addition, such an event may adversely affect the Group’s ability to enter into new operations in the country.

Technology
The Group has invested in and implemented information system and operational initiatives. Several technical aspects of these initiatives are still unproven and the eventual operational outcome or viability cannot be assessed with certainty. Accordingly, the costs and benefits from these initiatives and the consequent effects on the Group’s future earnings and financial results may vary widely from present expectations.

Land and resource tenure
The Group operates in several countries where title to land and rights in respect of land and resources (including indigenous title) may be unclear and may lead to disputes over resource development. Such disputes could disrupt relevant mining projects and/or impede the Group’s ability to develop new mining properties.

Health, safety and environment
Rio Tinto operates in an industry that is subject to numerous health, safety and environmental laws and regulations as well as community expectations. Evolving regulatory standards and expectations can result in increased litigation and/or increased costs all of which can have a material and adverse effect on earnings and cash flows.

Mining operations
Mining operations are vulnerable to a number of circumstances beyond the Group’s control, including natural disasters, unexpected geological variations and industrial actions. These can affect costs at particular mines for varying periods. Mining, smelting and refining processes also rely on key inputs, for example fuel and electricity. Appropriate insurance can provide protection from some, but not all, of the costs that may arise from unforeseen events. Disruption to the supply of key inputs, or changes in their pricing, may have a material and adverse impact on the Group’s asset values, costs, earnings and cash flows.

Rio Tinto 2004 Form 20-F   9


Back to Contents

Rehabilitation
Costs associated with rehabilitating land disturbed during the mining process and addressing environmental, health and community issues are estimated and provided for based on the most current information available. Estimates may, however, be insufficient and/or further issues may be identified. Any underestimated or unidentified rehabilitation costs will reduce earnings and could materially and adversely affect the Group’s asset values, earnings and cash flows.

Non managed operations
Rio Tinto cannot guarantee that management of mining and processing assets not subject to its management control will comply with the Group’s standards and objectives, nor that effective policies, procedures and controls will be maintained over those assets.

CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS
This document contains certain forward looking statements with respect to the financial condition, results of operations and business of the Rio Tinto Group. The words “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believes”, “expects”, “may”, “should”, “will”, or similar expressions, commonly identify such forward looking statements. Examples of forward looking statements in this annual report on Form 20-F include those regarding estimated reserves, anticipated production or construction commencement dates, costs, outputs and productive lives of assets or similar factors. Forward looking statements involve known and unknown risks, uncertainties, assumptions and other factors set forth in this document that are beyond the Group’s control. For example, future reserves will be based in part on market prices that may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include the ability to produce and transport products profitably, the effect of foreign currency exchange rates on market prices and operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and political uncertainty.
     In light of these risks, uncertainties and assumptions, actual results could be materially different from any future results expressed or implied by these forward looking statements which speak only as at the date of this report. Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information or future events. The Group cannot guarantee that its forward looking statements will not differ materially from actual results.

Item 4.     Information on the Company

INTRODUCTION
Rio Tinto Limited and Rio Tinto plc operate as one business organisation, referred to in this report as Rio Tinto, the Rio Tinto Group or, more simply, the Group. These collective expressions are used for convenience only since both Companies, and the individual companies in which they directly or indirectly own investments, are separate and distinct legal entities.
      “Limited”, “plc”, “Pty”, “Inc”, “Limitada”, or “SA” has generally been omitted from Group company names, except to distinguish between Rio Tinto plc and Rio Tinto Limited.
      Financial data in United States dollars (US$) is derived from, and should be read in conjunction with, the Rio Tinto Group’s consolidated financial statements which are in US$. In general, financial data in pounds sterling (£) and Australian dollars (A$) have been translated from the consolidated financial statements at the rates shown on page 112 and have been provided solely for convenience; exceptions arise where data, such as directors’ remuneration, can be extracted directly from source records.
      Rio Tinto Group turnover, profit before tax and net earnings and operating assets for 2003 and 2004 attributable to the Group’s products and geographical areas are shown in Notes 26 and 27 to the consolidated financial statements on pages A-39 to A-43. In the Operational review, operating assets and turnover are consistent with the financial information by business unit on pages A-63 and A-64.
      The tables on pages 17 to 20 show production for 2002, 2003 and 2004 and include estimates of proven and probable reserves and mineral resources. The weights and measures used are mainly metric units; conversions into other units are shown on page 112. Words and phrases, often technical, have been used which have particular meanings; definitions of these terms are on pages 109 to 111.

AN OVERVIEW OF RIO TINTO
Rio Tinto is a leading international mining group, combining Rio Tinto plc and Rio Tinto Limited in a dual listed companies (DLC) structure as a single economic entity. Nevertheless, both Companies remain legal entities with separate share listings and registers. Rio Tinto plc is incorporated in England and Wales and Rio Tinto Limited is incorporated in Australia.
      Rio Tinto’s international headquarters are in London whilst the Australian representative office in Melbourne provides support for the operations, undertakes external and investor relations and fulfils statutory obligations. The registered office of Rio Tinto plc is at 6 St James’s Square, London, SW1Y 4LD (telephone: +44 20 7930 2399) and the registered office of Rio Tinto Limited is at Level 33, 55 Collins Street, Melbourne, Victoria 3000 (telephone: +61 3 9283 3333).

Rio Tinto 2004 Form 20-F   10


Back to Contents

     For legal purposes, Rio Tinto’s US agent is Shannon Crompton, Secretary of Rio Tinto’s US holding companies, 8309 West 3595 South, Magna, Utah 84044. Investor relations in the US are provided by Makinson Cowell US Limited, One Penn Plaza, 250 W 34th St, Suite 1935, New York, NY 10119.

Objective, strategy and management structure
Rio Tinto’s fundamental objective is to maximise the overall long term return to its shareholders by operating responsibly and sustainably in areas of proven expertise where the Group has competitive advantage. Its strategy is to maximise the net present value per share by investing in large, long life, cost competitive mines. Investments are driven by the quality of opportunity, not choice of commodity. 
     Rio Tinto’s mining interests are diverse both in geography and product. The Group consists of wholly and partly owned subsidiaries, joint ventures, associated companies and joint arrangements, the principal ones being listed in Notes 31 to 34 of the consolidated financial statements on pages A-52 to A-53.
      Rio Tinto’s management structure is designed to facilitate a clear focus on business performance and the Group’s objective. The management structure, which is reflected in this report, is based on principal product and global support groups:
Iron Ore
Energy
Industrial Minerals
Aluminium
Copper
Diamonds
Exploration, and
Technology
The chief executive of each group reports to the chief executive of Rio Tinto.

2004 financial summary
On 31 December 2004, Rio Tinto plc had a market capitalisation of £16.4 billion (US$31.6 billion) and Rio Tinto Limited had a market capitalisation of A$19.5 billion (US$15.2 billion). The combined Group’s market capitalisation in publicly held shares at the end of 2004 was US$41.1 billion.
      At 31 December 2004, Rio Tinto had consolidated operating assets of US$16.6 billion: 61 per cent were located in Australia and New Zealand and 27 per cent in North America. Group turnover, or sales revenue, in 2004 was US$14.6 billion (or US$11.8 billion excluding Rio Tinto’s share of joint ventures’ and associates’ turnover). Net earnings in 2004 were US$2,813 million.

History
The Rio Tinto Company was formed by investors in 1873 to mine ancient copper workings at Rio Tinto in southern Spain. The Consolidated Zinc Corporation was incorporated in 1905, initially to treat zinc bearing mine waste at Broken Hill, New South Wales, Australia.
      The RTZ Corporation (formerly The Rio Tinto-Zinc Corporation) was formed in 1962 by the merger of The Rio Tinto Company and The Consolidated Zinc Corporation. CRA Limited (formerly Conzinc Riotinto of Australia Limited) was formed at the same time by a merger of the Australian interests of The Consolidated Zinc Corporation and The Rio Tinto Company. Between 1962 and 1995, RTZ and CRA discovered important mineral deposits, developed major mining projects and also grew through acquisition.
      RTZ and CRA were unified in December 1995 through a DLC structure. Directed by a common board of directors, this is designed to place the shareholders of both companies in substantially the same position as if they held shares in a single enterprise owning all of the assets of both Companies.
      In June 1997, The RTZ Corporation became Rio Tinto plc and CRA Limited became Rio Tinto Limited, together known as the Rio Tinto Group. Since the 1995 merger, the Group has continued to invest in developments and acquisitions in keeping with its strategy.

RECENT DEVELOPMENTS
Share buybacks and issues 2004-2005 to date
In April 2004, Rio Tinto plc shareholders renewed approvals for the buyback of up to ten per cent of its own shares and Rio Tinto Limited shareholders renewed approvals to buy back up to 100 per cent of Rio Tinto Limited shares held by Tinto Holdings Australia Pty Limited (a wholly owned subsidiary of Rio Tinto plc) plus, on market, up to ten per cent of the publicly held capital in any 12 month period.
      The Group announced on 3 February 2005, its intention to return up to US$1.5 billion of capital to shareholders, therefore, Rio Tinto plc and Rio Tinto Limited obtained renewal of their existing shareholder approvals at their respective annual general meetings in 2005. Both Companies also obtained shareholder approval for Rio Tinto Limited to make off market purchases of its shares within 12 months of the annual general meeting, within the overall limit of ten per cent of publicly held capital described above. This was to be through a tender process at a discount to the market price. The shareholders’ approval obtained would also allow Rio Tinto Limited to buy back its shares from Tinto Holdings Australia, after such an off market tender (at the same price), to maintain the proportional holding of Tinto Holdings Australia following the off market buyback. The number of shares which may eventually be bought back under these authorities will be determined by the directors, based on what they consider to be in the best interests of all shareholders.

Rio Tinto 2004 Form 20-F   11


Back to Contents

     In the year to 31 December 2004, neither Rio Tinto plc nor Rio Tinto Limited purchased any publicly held shares for cancellation in either Company. However, a further 1,346,874 Rio Tinto plc and 280,332 Rio Tinto Limited shares were issued in respect of the Companies’ employee share plans. During the year, options for a further 1,541,367 Rio Tinto plc and 1,339,834 Rio Tinto Limited shares were granted under Rio Tinto’s share plans.
      On 9 May 2005 Rio Tinto Limited announced the successful result of its off market share buy back. A total of approximately 27.3 million shares, representing 8.7 per cent of Rio Tinto Limited’s publicly held issued share capital (2.0 per cent of the Rio Tinto Group), were bought back at A$36.70 per share at a cost of approximately A$1 billion (US$780 million). The buy back price of A$36.70 per share represented a 14 per cent discount to the relevant volume weighted average price of Rio Tinto Limited shares sold on the ASX over the five trading days up to and including the closing date of the buy back. It also represented a discount of 15.6 per cent to the closing price for Rio Tinto Limited shares on 6 May 2005, of A$43.50.
      Under a separate buy back, Tinto Holdings Australia accepted the same A$36.70 buy back price for a proportion of its 37.5 per cent holding of Rio Tinto Limited shares so that there was no change in the proportional shareholding in Rio Tinto Limited as a result of the buy back. Rio Tinto Limited therefore bought back a further 16.4 million shares at a cost of approximately A$600 million (US$470 million).

Share buybacks and issues 2002-2003
In 2002, 887,000 Rio Tinto plc and 360,000 Rio Tinto Limited shares were issued under the Companies’ employee share plans and options were granted over 2.6 million Rio Tinto plc shares and 2.2 million Rio Tinto Limited shares. In 2003, 1,193,000 Rio Tinto plc and 240,000 Rio Tinto Limited shares were issued in respect of the Companies’ employee share plans. During 2003, options were granted over 2.7 million Rio Tinto plc and 1.6 million Rio Tinto Limited shares in respect of the Companies’ employee share plans.
      In the years 2002 and 2003, neither Rio Tinto plc nor Rio Tinto Limited purchased any publicly held shares for cancellation in either Company.

Operations acquired and divested 2004-2005 to date
In January 2004, Rio Tinto completed the sale of its 100 per cent interest in the nickel mining company Mineração Serra da Fortaleza Ltda to Votorantim Metais, a Brazilian controlled mining company. Including an adjustment for future nickel prices, the total cash consideration was approximately US$80 million.
      A 20 per cent interest in the Sepon project in Laos, comprising a gold operation and the Khanong copper project, was sold to Oxiana Limited for a cash consideration of US$85 million.
      In March, Rio Tinto completed the sale of its shareholding in Freeport-McMoRan Copper & Gold Inc (FCX). Rio Tinto received net proceeds of US$882 million for its 23,931,100 FCX shares. Rio Tinto retains its 40 per cent joint venture interest in reserves discovered after 1994 at the Grasberg mine which is managed by FCX. The sale of FCX shares does not affect the terms of the joint venture nor the management of the Grasberg mine.
      In June, Rio Tinto completed the sale of its 100 per cent interest in Zinkgruvan Mining AB to South Atlantic Ventures. Zinkgruvan was acquired in 2000 as part of North. Rio Tinto received US$101 million in cash plus US$5 million for working capital, and can earn a further US$5 million over the next two years in price participation payments based on zinc, lead and silver prices. Also in June, Rio Tinto’s interest in the Boké bauxite deposit in west Africa was divested for US$12 million.
      Rio Tinto and Empresa de Desenvolvimento Mineiro completed the sale of their interests in the Neves Corvo copper mine in Portugal to EuroZinc for a cash consideration and a participation in the average copper price in excess of certain thresholds. Rio Tinto’s share of the consideration for its 49 per cent share of the mine was US$70 million. The remaining price participation rights relating to copper production from Neves Corvo, which was sold in the first half of the year, were themselves sold for US$22 million.
     The directors of Rio Tinto Zimbabwe (RioZim) agreed to a restructuring of Rio Tinto’s 56 per cent shareholding in RioZim. The Murowa diamond project in Zimbabwe had been a 50:50 joint venture between Rio Tinto and RioZim. As a result of the restructuring, Rio Tinto owns a direct 78 per cent interest in Murowa and RioZim became an independent Zimbabwean controlled, listed company owning the remaining 22 per cent of Murowa. Rio Tinto ceased to be an ordinary shareholder in RioZim but retains a reduced cash participation in RioZim’s assets other than the Murowa diamond project for a period of ten years. The transaction had no material effect on Rio Tinto.
      The sale of the Group’s 51 per cent interest in Rio Paracatu Mineração, the owner of the Morro do Ouro mine in Brazil, was completed on 31 December 2004 for US$250 million, subject to an adjustment for working capital.
      The sale to Nippon Steel of an eight per cent interest in the Hail Creek Joint Venture, and the increase in the combined share of the original participants, Marubeni Coal and Sumisho Coal Development, by two per cent was completed in the fourth quarter. Rio Tinto will receive about US$150 million for the sale of these interests in the Hail Creek Joint Venture together with the sale of a 47 per cent interest in the Beasley River iron ore deposit to its joint venture partners in Robe River, which includes Nippon Steel.
      In December Kennecott Energy successfully bid for an additional 177 million tonnes of in-situ coal reserves at West Antelope at a cost of US$146 million.

Rio Tinto 2004 Form 20-F   12


Back to Contents

     In March 2005 the Group announced the sale of its entire holding in the Labrador Iron Ore Royalty Income Fund (LIORIF) for net cash proceeds of US$130 million. LIORIF has an equity interest of 15.1 per cent in, and receives royalties from, the Iron Ore Company of Canada. This transaction has no effect on Rio Tinto’s 59 per cent direct interest in the Iron Ore Company of Canada.

Operations acquired and divested 2002-2003
In January 2002, Kennecott Energy (KEC) purchased the North Jacobs Ranch coal reserves for US$380 million, payable in instalments over a five year period. The reserves are adjacent to KEC’s existing Jacobs Ranch operation and provide a basis for low cost expansion in line with market demand.
     Following the purchase of outstanding units in the Western Australian Diamond Trust, Rio Tinto’s interest in Argyle Diamonds increased from 99.8 per cent to 100 per cent.
     In August 2002, Comalco completed the acquisition of an additional 9.5 per cent interest in reduction lines 1 and 2 of the Boyne Island Smelter for US$80 million. This increased Comalco’s share in lines 1 and 2 of the smelter to 59.5 per cent from 50 per cent. Comalco’s interest in line 3 remains unchanged at 59.25 per cent.
     During the first half of 2002, Coal & Allied Industries completed the sale of its interest in the Moura Joint Venture for US$166 million and in Narama and Ravensworth for US$64 million. These were classified as assets held for resale and consequently their disposal had no effect on net earnings. In September, Rio Tinto acquired for cash in the market a further three per cent in Coal & Allied to bring its shareholding to 75.7 per cent.
     As a result of a refinancing in December 2002, in which the Labrador Iron Ore Royalty Income Fund (LIORF) chose not to participate, Rio Tinto’s interest in Iron Ore Company of Canada increased from 56.1 to 58.7 per cent.
     The sale of Rio Tinto’s 25 per cent interest in Minera Alumbrera Limited in Argentina, acquired as part of North, together with its wholly owned Peak gold mine in New South Wales, Australia, was completed in March 2003. The cash consideration was US$210 million.
     Rio Tinto Zimbabwe sold the Patchway gold mine in 2003. The Framework Agreement signed with the Government of Indonesia in 2002 for divestment of 51 per cent of Kaltim Prima Coal (KPC) to Indonesian interests lapsed in 2003 when no assignment of KPC’s offer was made or accepted within the required timeframe.
     On 21 July 2003 Rio Tinto and BP announced that they had agreed to sell their interests in KPC for a cash price of US$500 million, including assumed debt, to PT Bumi Resources, a public company listed on the Jakarta and Surabaya Stock Exchanges. The sale was completed on 10 October and each company received 50 per cent of the net proceeds.

Development projects 2004-2005 to date
Rio Tinto invested over US$2.2 billion in 2004 on development projects around the world.
     In December 2003, Hamersley Iron announced the US$920 million expansion of its port and mine capacity, with further expenditure on the rail network and power infrastructure being evaluated. In April 2005 a further US$290 million was committed to expand the existing iron ore mines. The partners in the Robe River Joint Venture approved US$214 million (Rio Tinto share US$113 million) to dual track a significant part of the Hamersley Iron rail line. Hamersley Iron will spend a further US$46 million to upgrade power infrastructure in the Pilbara. The port and mine expansions are on track for completion by the end of 2005.
     In January 2004, Rio Tinto approved the expansion of QIT-Fer et Titane Inc.’s upgraded slag (UGS) plant in Quebec, Canada. Total investment will be US$76 million and capacity will be increased from 250,000 tonnes per year to 325,000 tonnes per year in 2005.
     The owners of the Escondida copper mine in Chile approved expenditure of US$870 million (Rio Tinto share US$270 million) on a sulphide leach project to produce 180,000 tonnes (Rio Tinto share 54,000 tonnes) of copper cathode per annum for more than 25 years starting in the second half of 2006.
     Construction of the US$100 million second block cave at the underground Northparkes copper and gold mine in New South Wales, Australia was completed and production commenced in 2004.
     Development of the 54 per cent owned Eastern Range iron ore mine in Australia with a capacity of ten million tonnes per year was completed. First shipments started in the first half of 2004.
     Expansion of the Weipa bauxite mine in Queensland, Australia, was completed, resulting in an increase in production capacity to 16.5 million tonnes per annum. This supports the requirements of the new Comalco Alumina Refinery. A key component of the US$150 million expenditure is a 9.5 million tonne beneficiation plant for ore from the Andoom deposit. In 2005, a new US$42 million power station will be constructed to service the Weipa mining operations and surrounding communities.
     Construction of the first stage of Comalco’s new alumina refinery at Gladstone, Queensland commenced in January 2002 and was completed in late 2004, three months early and in line with its budget of US$750 million. Initial shipments from the 1.4 million tonnes per year plant started in early 2005. There is potential for the refinery capacity to increase to over four million tonnes per year in two additional stages when market conditions allow.
     Construction began in January 2003 on an expanded US$200 million HIsmelt® plant at Kwinana in Western Australia. Cold commissioning commenced in late 2004 and the first hot metal was produced in the hot commissioning process during the second quarter of 2005. The full production rate of 800,000 tonnes per year is expected to be achieved in 2007.

Rio Tinto 2004 Form 20-F   13


Back to Contents

     Approval was given in 2004 for expansion of the Hail Creek coal mine in Australia to eight million tonnes per year at a cost of US$157 million. At the Diavik diamond mine in Canada construction begins in 2005 of a second dike at a cost of US$190 million to enable mining of a third orebody. Also approved was an optimisation study costing US$75 million including construction of an exploration decline to investigate underground mining.
     Kennecott Land’s Project Daybreak in Utah, US, a mixed use land development on a 1,800 hectare site, started in 2003, with the first land sales in 2004 that are expected to ramp up over a period of five to six years.
     Further detail on these investments and projects is provided in the operational review on pages 44 to 67.
     Development projects have been funded using internally generated funds and proceeds of asset disposals.

Development projects 2002-2003
Work on the Robe River Joint Venture’s US$450 million West Angelas iron ore mine and port facilities in Western Australia was completed in mid-2002 and the first shipments were made.
     Freeport Indonesia’s Deep Ore Zone (DOZ) underground block cave project was declared fully operational from 1 October 2002. This achieved design capacity of 25,000 tonnes of ore per day in 2002, a year earlier than originally projected. In the first quarter of 2003, Freeport Indonesia completed a further DOZ expansion to 35,000 tonnes per day at a cost of US$34 million.
     The Diavik diamond project in the Northwest Territories, Canada was completed in January 2003 three months early and within budget. Initial production commenced from the contact zone above the orebody with the main orebody accessed during the second half of 2003.
     Production ramp up at Palabora’s US$465 million underground copper mine in South Africa started in 2003 but was constrained by an inability to clear drawpoints blocked by poorly fragmented, large rocks.
     Development of the Escondida Norte satellite deposit at the 30 per cent owned Escondida copper mine in Chile was started in June 2003 to provide mill feed to keep Escondida’s capacity above 1.2 million tonnes of copper per year to the end of 2008. First production is expected by the end of 2005. Commissioning of the new US$1,045 million, 110,000 tonnes of ore per day Laguna Seca concentrator was completed in the second quarter of 2003.
     In 2003, Rio Tinto Coal Australia completed development of the US$255 million Hail Creek coking coal project in Queensland, Australia with an initial capacity of 5.5 million tonnes annually.

BUSINESS ENVIRONMENT AND MARKETS
Competitive environment
Rio Tinto is a major producer in all the metals and minerals markets in which it operates. It is generally among the top five global producers by volume. It has market shares for different commodities ranging from five per cent to 40 per cent. The competitive arena is spread across the globe, including eastern Europe, Russia and China.
     Most of Rio Tinto’s competitors are private sector companies which are publicly quoted. Several are, like Rio Tinto, diversified in terms of commodity exposure, but others are focused on particular commodity segments. Metal and mineral markets are highly competitive with few barriers to entry. They can be subject to price declines in real terms reflecting large productivity gains, increasing technical sophistication, better management, and advances in information technology.
     High quality, long life mineral resources, the basis of good financial returns, are relatively scarce. Rio Tinto’s ownership of or interest in some of the world’s largest deposits enables it to contribute to long term market growth. World production volumes are likely to grow at least in line with global economic activity. The emergence of China and eventually India as economic forces requiring metals and minerals for development could mean even higher market growth.

Economic overview
World economic activity in 2004 grew at the fastest rate since the 1970s, rising to over five per cent from three per cent the year before on a purchasing power parity basis. Trade growth accelerated even faster, to more than eight per cent in real terms, nearly double the rate seen in 2003.
     The increase in economic activity was widely based, led by the US and China which grew by 4.3 per cent and nine per cent respectively. Japan benefited from strong exports, which stimulated growth of four per cent. Growth elsewhere in Asia was also stimulated by exports. Latin America grew by five per cent, driven by the boom in demand for metals, oil and some agricultural products. European activity lagged, but higher exports enabled growth to rise to over two per cent.
      Inflation remained low by historical standards in spite of the large rise in prices of oil and other commodities. This reflected fierce competition in the manufacturing sector and generally weak labour markets.
      The US benefited from very low real interest rates and a loose fiscal policy in the run up to the presidential election. The twin deficits of government finance and trade increased rapidly. The fact that US growth was based on borrowing was underscored by the decline in the value of the US dollar, which fell eight per cent in trade weighted terms, following an 11 per cent fall in 2003. Some currencies are pegged to the US dollar, notably the Chinese renminbi, and the fall against freely traded currencies such as the euro and the Australian dollar was considerably greater.
      The other pillar of global growth was China, with GDP rising by nine per cent. This was driven by investment in fixed assets, which rose by more than 25 per cent for the second successive year, and industrial output, which grew more than 16 per cent, also for the second year running.

Rio Tinto 2004 Form 20-F   14


Back to Contents

     Growth was strongest in the first half and then slowed. This was most notable in Europe and Japan as their currencies strengthened against the US dollar. The picture in China was less clear. Growth there seems to have slowed from the earlier breakneck pace as the government signalled before the middle of the year that it wanted to reduce growth in investment in fixed assets and introduced curbs. Trade with China in many commodities eased considerably in the second half, but other factors including port congestion also contributed.
      Commodity markets had already started to improve in 2003, but the acceleration in economic activity and trade in 2004 tipped many of them into a zone of extreme tightness. Prices soared, aided by a declining US dollar. Fund activity fluctuated through the year, but provided strong support for prices overall. Demand for many products grew considerably faster than the world economy. Chinese growth continued to be very commodity intensive, and there was some rebuilding of stocks in the supply chain. Global steel production grew nine per cent, the fastest since 1973.
      Copper benefited more than most non ferrous metals from the acceleration in growth, as it was already in deficit and refined output was held back by a series of disruptions to mine output and by smelter capacity. Demand grew by seven per cent, the deficit in refined copper rose sharply and exchange stocks fell below the levels seen in the mid 1990s. Fund buying intensified pricing in a very tight physical market. The average cash LME price rose to US$1.30 per pound from 80 US cents per pound the year before, only just short of the highest ever price in nominal terms (not adjusted for inflation). In contrast, the copper concentrates market, which had been tight for several years, was well supplied in the second half.
      The seaborne iron ore trade continued to grow strongly with China’s iron ore imports nearly 40 per cent above their 2003 level. Price increases of nearly 20 per cent early in the year underlined the tightness of the market. The rapid growth in demand for iron ore caused a shortage of shipping capacity leading to the highest freight rates ever recorded.
      Prices for seaborne thermal coal rose by over 60 per cent. Even a rise of this magnitude, however, did not dampen the market and spot prices remained above the contract settlement price throughout the year. World seaborne thermal coal trade is estimated to have grown by about six per cent during 2004. Coking coal prices rose by less than those of thermal coal but significant increases in demand in Asia meant that some spot cargos were trading at very high prices.
      The North American aluminium market improved significantly in 2004 with demand growth of around ten per cent. Combined with demand in China, the primary aluminium market moved into deficit for the first time since 2000. The annual average price of aluminium increased accordingly to 78 US cents per pound in 2004 from 65 US cents the previous year. However, the rise was not as strong as for copper because stocks were higher. The spot price for alumina remained very high by historical standards throughout 2004 reflecting general market tightness and strong demand from Chinese aluminium smelters.
      The economic recovery in developed countries, the US in particular, benefited the demand for industrial minerals such as borates and titanium minerals. Demand growth for these products, however, generally continued to fall short of that achieved by metal markets. This was partly due to a lower exposure to the present stage of Chinese growth.
      Gold averaged US$409 per ounce, a 16 year nominal high, almost entirely driven by the falling US dollar. Many less widely traded metals also benefited from much higher prices, notably molybdenum, which averaged US$14 per pound for trader oxide, a 25 year nominal high, and silver, which averaged US$6.70 per ounce, up 40 per cent year on year.
      A discussion of the financial results for the three years to 31 December 2004 is given in the Financial review on pages 31 to 44.
      Comments on the financial performance of the individual product groups for the three years to 31 December 2004 are included in the operational review on pages 44 to 67. Details of production, reserves and information on Group mines are given on pages 17 to 20, A-85 to A-95 and 22 to 26, respectively. Analyses of Rio Tinto’s revenues by product group, geographical origin and geographical destination have been set out in Notes 26 to 27 to the consolidated financial statements on pages A-39 to A-43.

Marketing channels
Each business within each product group is responsible for the marketing and sale of their respective metal and mineral production. Consequently, Rio Tinto has numerous marketing channels, which now include electronic marketplaces, with differing characteristics and pricing mechanisms.
      In general, Rio Tinto’s businesses contract their metal and mineral production direct to end users under long term supply contracts and at prevailing market prices. Typically, these contracts specify annual volume commitments and an agreed mechanism for determining prices, for example, businesses producing non ferrous metals and minerals reference their sales prices to the London Metal Exchange (LME) or other metal exchanges such as the Commodity Exchange Inc (Comex) in New York. Fluctuations in these prices, particularly for aluminium, copper and gold, inevitably affect the Group’s financial results.
      Businesses producing coal and iron ore would typically reference their sales prices to annually negotiated industry benchmarks. In markets where international reference market prices do not exist or are not transparent, businesses negotiate product prices on an individual customer basis.
      Rio Tinto’s marketing channels include a network of regional sales offices worldwide. Some products in certain geographical markets are sold via third party agents or to major trading companies.

Rio Tinto 2004 Form 20-F   15


Back to Contents

Governmental regulations
Rio Tinto is subject to extensive governmental regulations affecting all aspects of its operations and consistently seeks to apply best practice in all of its activities. Due to Rio Tinto’s product and geographical spread, there is unlikely to be any single governmental regulation that could have a material effect on the Group’s business.
     Rio Tinto’s businesses in Australia, New Zealand, Papua New Guinea and Indonesia are subject to state and federal regulations of general application governing mining and processing, land tenure and use, environmental requirements, workplace health and safety, trade and export, corporations, competition, foreign investment and taxation. Some operations are conducted under specific agreements with the respective governments and associated acts of parliament. In addition, Rio Tinto’s uranium operation in the Northern Territory, Australia is subject to specific regulation in relation to its mining and export of uranium.
     US and Canada based operations are subject to local and national regulations governing land use, environmental aspects of operations, product and workplace health and safety and trade and export administration.
     The South African Mineral and Petroleum Resources Development Act 2002, as read with the Empowerment Charter for the South African Mining Industry, targets the transfer for fair value of 26 per cent ownership of South African mining assets to historically disadvantaged South Africans (HDSAs) within ten years. Attached to the Empowerment Charter is a “scorecard” by which companies will be judged on their progress towards empowerment and the attainment of the target transfer of 26 per cent ownership. The scorecard also provides that 15 per cent ownership should vest in HDSAs within five years of 1 May 2004. The Mineral and Petroleum Royalty Act, proposed for approval in 2005, will govern state royalties and introduce new royalty payments in respect of mining tenements in South Africa. The royalty will be calculated on a gross sales value basis in relation to any minerals extracted, rather than on the basis of profits generated. The South African government has confirmed that any such royalties would become payable only from 2009.

Rio Tinto 2004 Form 20-F   16


Back to Contents

METALS AND MINERALS PRODUCTION

      2002   2003   2004  
      Production (a)   Production (a)   Production (a)  








 
  Rio Tinto   Total   Rio Tinto   Total   Rio Tinto   Total   Rio Tinto  
  % share (b)       share       share       share  














 
ALUMINA (’000 tonnes)                            
Comalco Alumina Refinery (Australia) (c) 100.0           175   175  
Eurallumina (Italy) 56.2   1,010   567   1,021   573   1,064   597  
Queensland Alumina (Australia) 38.6   3,574   1,380   3,731   1,440   3,778   1,459  














 
Rio Tinto total         1,947       2,014       2,231  














 
ALUMINIUM (refined) (’000 tonnes)                            
Anglesey (UK) 51.0   136.8   69.8   141.9   72.4   144.8   73.8  
Bell Bay (Australia) 100.0   163.9   163.9   166.6   166.6   162.0   162.0  
Boyne Island (Australia) (d) 59.4   520.2   294.6   520.9   311.1   540.5   321.2  
Tiwai Point (New Zealand) 79.4   333.9   265.9   334.4   266.5   350.3   279.5  














 
Rio Tinto total         794.1       816.6       836.5  














 
BAUXITE (’000 tonnes)                            
Boké (Guinea) (e)   12,041   482   12,060   418   5,773   179  
Weipa (Australia) 100.0   11,241   11,241   11,898   11,898   12,649   12,649  














 
Rio Tinto total         11,724       12,316       12,828  














 
BORATES (’000 tonnes) (f)                            
Boron mine (US) 100.0   514   514   541   541   543   543  
Borax Argentina (Argentina) 100.0   15   15   17   17   22   22  














 
Rio Tinto total         528       559       565  














 
COAL – HARD COKING (’000 tonnes)                            
Rio Tinto Coal Australia (g)                            
Hail Creek Coal (Australia) (h) 82.0       883   812   5,104   4,633  
Kestrel Coal (Australia) 80.0   2,406   1,925   1,873   1,499   2,659   2,127  














 
Rio Tinto total hard coking coal         1,925       2,311       6,760  














 
COAL – OTHER* (’000 tonnes)                            
Coal & Allied Industries (i)                            
Bengalla (Australia) 30.3   5,385   1,587   6,203   1,879   5,312   1,609  
Hunter Valley Operations (Australia) 75.7   12,625   9,287   12,008   9,091   13,269   10,046  
Mount Thorley Operations (Australia) 60.6   4,292   2,524   3,153   1,910   3,548   2,149  
Moura (Australia) (j)   2,399   959          
Narama (Australia) (j)   370   135          
Ravensworth East (Australia) (j)   387   281          
Warkworth (Australia) 42.1   6,882   2,817   5,868   2,469   6,954   2,926  














 
Total Coal & Allied Industries other coal         17,590       15,348       16,729  














 
Rio Tinto Coal Australia (g)                            
Blair Athol (Australia) 71.2   11,809   8,412   12,480   8,890   12,229   8,712  
Kestrel Coal (Australia) 80.0   1,685   1,348   1,449   1,159   623   499  
Tarong Coal (Australia) 100.0   5,685   5,685   6,538   6,538   7,004   7,004  














 
Total Rio Tinto Coal Australia other coal         15,445       16,587       16,214  














 
Total Australian other coal         33,035       31,935       32,943  














 
Kaltim Prima Coal (Indonesia) (k)   17,740   8,870   12,655   6,327      














 
Kennecott Energy                            
Antelope (US) 100.0   24,319   24,319   26,806   26,806   26,928   26,928  
Colowyo (US) (l)   4,889   4,889   4,535   4,535   5,788   5,788  
Cordero Rojo (US) 100.0   34,724   34,724   32,671   32,671   35,233   35,233  
Decker (US) 50.0   9,021   4,511   7,358   3,679   7,831   3,916  
Jacobs Ranch (US) 100.0   28,784   28,784   32,418   32,418   34,979   34,979  
Spring Creek (US) 100.0   8,093   8,093   8,069   8,069   10,892   10,892  














 
Total US coal         105,320       108,177       117,734  














 
Rio Tinto total other coal         147,225       146,439       150,677  














 

* Coal – other includes thermal coal, semi-soft coking coal and semi-hard coking coal.
See notes on page 20

Rio Tinto 2004 Form 20-F   17


Back to Contents

      2002   2003   2004
      Production (a)   Production (a)   Production (a)








  Rio   Total   Rio   Total   Rio   Total   Rio
  Tinto       Tinto       Tinto       Tinto
  % share (b)       share       share       share














COPPER (mined) (’000 tonnes)                          
Alumbrera (Argentina) (m)   203.7   50.9   34.9   8.7    
Bingham Canyon (US) 100.0   260.2   260.2   281.8   281.8   263.7   263.7
Escondida (Chile) 30.0   754.5   226.3   992.7   297.8   1,207.1   362.1
Grasberg – FCX (Indonesia) (n)   494.4   107.5   444.1   84.5   396.4   5.5
Grasberg – Joint Venture (Indonesia) (n) 40.0   370.0   148.0   271.7   108.7   120.0   48.0
Neves Corvo (Portugal) (o)   77.2   37.8   77.5   38.0   46.9   23.0
Northparkes (Australia) 80.0   38.4   30.7   27.1   21.7   30.0   24.0
Palabora (South Africa) 49.2   52.2   25.7   52.4   25.8   54.4   26.8














Rio Tinto total         887.1       867.0       753.1














COPPER (refined) (’000 tonnes)                          
Atlantic Copper (Spain) (n)   250.5   41.5   247.1   38.1   58.4   7.0
Escondida (Chile) 30.0   138.7   41.6   147.6   44.3   152.1   45.6
Kennecott Utah Copper (US)   293.7   293.7   230.6   230.6   246.7   246.7
Palabora (South Africa) 49.2   81.6   40.2   73.4   36.1   67.5   33.2














Rio Tinto total         416.9       349.1       332.6














DIAMONDS (’000 carats)                          
Argyle (Australia) (p) 100.0   33,519   33,503   30,910   30,910   20,620   20,620
Diavik (Canada) 60.0       3,833   2,300   7,575   4,545
Merlin (Australia)   117   117   62   62    
Murowa (Zimbabwe) (q) 77.8           47   36














Rio Tinto total         33,620       33,272       25,202














GOLD (mined) (’000 ounces)                          
Alumbrera (Argentina) (m)   754   188   124   31    
Barneys Canyon (US) 100.0   75   75   35   35   22   22
Bingham Canyon (US) 100.0   412   412   305   305   308   308
Cortez/Pipeline (US) 40.0   1,082   433   1,085   434   1,051   421
Escondida (Chile) 30.0   126   38   184   55   217   65
Grasberg – FCX (Indonesia) (n)   1,375   355   1,456   354   1,377   14
Grasberg – Joint Venture (Indonesia) (n) 40.0   1,655   662   1,806   722   207   83
Greens Creek (US) 70.3   103   72   99   70   86   61
Kelian (Indonesia) 90.0   539   485   469   422   328   295
Lihir (Papua New Guinea) (r) 14.5   607   99   551   88   599   87
Morro do Ouro (Brazil) (s)   225   115   201   103   188   96
Northparkes (Australia) 80.0   41   33   49   39   79   63
Peak (Australia) (m)   97   97   20   20    
Rawhide (US) 51.0   82   42   64   32   50   25
Rio Tinto Zimbabwe (Zimbabwe) (t)   38   21   25   14   11   6
Others   17   8   14   7   13   7














Rio Tinto total         3,135       2,731       1,552














GOLD (refined) (’000 ounces)                          
Kennecott Utah Copper (US) 100.0   488   488   308   308   300   300














IRON ORE (’000 tonnes)                          
Channar (Australia) 60.0   10,594   6,356   10,347   6,208   9,759   5,855
Corumbá (Brazil) 100.0   858   858   1,074   1,074   1,301   1,301
Eastern Range (Australia) (u)           2,970   2,970
Hamersley Iron (Australia) 100.0   57,563   57,563   63,056   63,056   65,407   65,407
Iron Ore Company of Canada (Canada) (v) 58.7   12,758   7,168   14,225   8,353   11,139   6,541
Robe River (Australia) 53.0   35,860   19,006   45,136   23,922   48,459   25,684














Rio Tinto total         90,951       102,613       107,757














                           
See notes on page 20                          

Rio Tinto 2004 Form 20-F   18


Back to Contents

      2002   2003   2004  
      Production (a)   Production (a)   Production (a)  














 
  Rio Tinto   Total   Rio Tinto   Total   Rio Tinto   Total   Rio Tinto  
  % share (b)       share       share       share  














 
LEAD (’000 tonnes)                            
Greens Creek (US) 70.3   22.3   15.7   22.5   15.8   19.8   13.9  
Zinkgruvan (Sweden) (w)   24.7   24.7   31.8   31.8   11.2   11.2  














 
Rio Tinto total         40.4       47.6       25.1  














 
MOLYBDENUM (’000 tonnes)                            
Bingham Canyon (US) 100.0   6.1   6.1   4.6   4.6   6.8   6.8  














 
NICKEL (mined) (’000 tonnes)                            
Fortaleza (Brazil) (x)   6.3   6.3   6.0   6.0      














 
NICKEL (refined) (’000 tonnes)                            
Empress (Zimbabwe) (t)   6.4   3.6   6.2   3.5   2.9   1.6  














 
SALT (’000 tonnes)                            
Dampier Salt (Australia) 64.9   7,186   4,667   7,135   4,633   7,380   4,792  














 
SILVER (mined) (’000 ounces)                            
Bingham Canyon (US) 100.0   3,663   3,663   3,548   3,548   3,584   3,584  
Escondida (Chile) 30.0   2,981   894   4,728   1,418   5,747   1,724  
Grasberg – FCX (Indonesia) (n)   3,795   804   3,659   745   3,077   79  
Grasberg – Joint Venture (Indonesia) (n) 40.0   2,607   1,043   2,815   1,126   1,961   784  
Greens Creek (US) 70.3   10,912   7,668   11,707   8,226   9,707   6,821  
Zinkgruvan (Sweden) (w)   1,554   1,554   1,841   1,841   651   651  
Others   3,231   1,582   2,511   1,407   2,025   1,187  














 
Rio Tinto total         17,207       18,311       14,830  














 
SILVER (refined) (’000 ounces)                            
Kennecott Utah Copper (US) 100.0   4,037   4,037   2,963   2,963   3,344   3,344  














 
TALC (’000 tonnes)                            
Luzenac Group (Australia/Europe/N. America) (y) 99.9   1,328   1,327   1,358   1,357   1,444   1,443  














 
TIN (tonnes)                            
Neves Corvo (Portugal) (o)   345   169   203   100   120   59  














 
TITANIUM DIOXIDE FEEDSTOCK (‘000 tonnes)                            
Rio Tinto Iron & Titanium (Canada/South Africa) (z) 100.0   1,274   1,274   1,192   1,192   1,192   1,192  














 
URANIUM (tonnes U3O8)                            
Energy Resources of Australia (Australia) 68.4   4,486   3,068   5,134   3,512   5,143   3,517  
Rössing (Namibia) 68.6   2,751   1,887   2,401   1,647   3,582   2,457  














 
Rio Tinto total         4,955       5,158       5,974  














 
ZINC (mined) (’000 tonnes)                            
Greens Creek (US) 70.3   66.5   46.7   69.1   48.5   62.7   44.1  
Zinkgruvan (Sweden) (w)   48.0   48.0   64.5   64.5   29.7   29.7  














 
Rio Tinto total         94.7       113.0       73.8  














 
                             
See notes on page 20                            

Rio Tinto 2004 Form 20-F  19


Back to Contents

Production data notes
(a) Mine production figures for metals refer to the total quantity of metal produced in concentrates or doré bullion irrespective of whether these products are then refined onsite, except for the data for iron ore and bauxite which represent production of saleable quantities of ore.
(b) Rio Tinto percentage share, shown above, is as at the end of 2004 and has applied over the period 2002 – 2004 except for those operations where the share has varied during the year and the weighted average for them is shown below. The Rio Tinto share varies at individual mines and refineries in the “others” category and thus no value is shown.
                 
  Rio Tinto share %              
  Operation See Note   2002   2003   2004
 







  Atlantic Copper (n)   16.5   15.4   12.0
  Argyle (p)   99.9   100.0   100.0
  Bengalla (i)   29.4   30.3   30.3
  Boyne Island (d)   56.6   59.4   59.4
  Grasberg (n)   15.0   13.9   10.8
  Hail Creek (h)     92.0   90.8
  Hunter Valley Operations (i)   73.6   75.7   75.7
  Iron Ore Company of Canada (v)   56.2   58.7   58.7
  Lihir (r)   16.3   16.0   14.5
  Mount Thorley Operations   (i)   58.9   60.6   60.6
  Moura (i) (j)   40.0    
  Narama (i) (j)   36.4    
  Ravensworth East (i) (j)   72.7    
  Warkworth   (i)   41.2   42.1   42.1
 







   
(c) Comalco Alumina Refinery started production in October 2004.
(d) Rio Tinto acquired an approximately five per cent additional interest in production from the Boyne Island smelter with effect from August 2002.
(e) Rio Tinto completed the sale of its four per cent interest in the Boké mine on 25 June 2004. Production data are shown up to the date of sale.
(f) Borate quantities are expressed as B2O3 
(g) Rio Tinto Coal Australia was previously known as Pacific Coal.
(h) Hail Creek commenced production in the third quarter of 2003. Rio Tinto reduced its shareholding in Hail Creek from 92.0 per cent to 82.0 per cent on 15 November 2004.
(i) Rio Tinto increased its stake in Coal & Allied Industries from 72.7 per cent to 75.7 per cent during September 2002.
(j) On 14 March 2002, Coal & Allied completed the sale of its interests in Narama and Ravensworth. Coal & Allied sold its interest in the Moura coal mine with effect from 24 May 2002. Production data are shown up to the dates of sale.
(k) Rio Tinto had a 50 per cent share in Kaltim Prima and, under the terms of its Coal Agreement, the Indonesian Government was entitled to a 13.5 per cent share of Kaltim Prima’s production. Rio Tinto’s share of production shown is before deduction of the Government share. Rio Tinto completed the sale of its interest in PT Kaltim Prima Coal on 10 October 2003. Production data are shown up to the date of sale.
(l) Kennecott Energy has a partnership interest in the Colowyo mine but, as it is responsible under a management agreement for the operation of the mine, all of Colowyo’s output is included in Rio Tinto’s share of production.
(m) Rio Tinto completed the sale of its 25 per cent interest in Minera Alumbrera together with its wholly owned Peak gold mine on 17 March 2003. Production data are shown up to the date of sale.
(n) From mid 1995 until 30 March 2004, Rio Tinto held 23.93 million shares of Freeport-McMoRan-Copper & Gold (FCX) common stock from which it derived a share of production. This interest was sold on 30 March 2004. Also, through a joint venture agreement with FCX, Rio Tinto is entitled, as shown separately in the above tables, to 40 per cent of additional material mined as a consequence of expansions and developments of the Grasberg facilities since 1998.
(o) Rio Tinto completed the sale of its 49 per cent interest in Somincor on 18 June 2004. Production data are shown up to the date of sale.
(p) Rio Tinto’s interest in Argyle Diamonds increased from 99.8 per cent to 100 per cent on 29 April 2002, following the purchase of the outstanding units in the Western Australian Diamond Trust.
(q) Ore mining and processing at Murowa commenced during the third quarter of 2004.
(r) Following a placement of shares on 13 November 2003, Rio Tinto’s interest in Lihir moved from 16.3 per cent to 14.5 per cent.
(s) Rio Tinto sold its interest in Morro do Ouro on 31 December 2004. Production data are shown up to the date of sale.
(t) As a result of the corporate restructuring completed on 8 July 2004, Rio Tinto has ceased to be an ordinary shareholder in the renamed RioZim but will retain a reduced cash participation in its gold and nickel assets for a period of ten years.
(u) Rio Tinto’s share of production includes 100 per cent of the production from the Eastern Range mine, which commenced production in March 2004. Under the terms of the joint venture agreement, Hamersley Iron manages the operation and is obliged to purchase all mine production from the joint venture.
(v) Rio Tinto increased its shareholding in Iron Ore Company of Canada from 56.1 per cent to 58.7 per cent on 20 December 2002.
(w) Rio Tinto completed the sale of its 100 per cent interest in the Zinkgruvan mine on 2 June 2004. Production data are shown up to the date of sale.
(x) Rio Tinto completed the sale of its 100 per cent interest in the Fortaleza nickel mine on 16 January 2004. This was effective from 1 January 2004.
(y) Talc production includes some products derived from purchased ores.
(z) Quantities comprise 100 per cent of QIT and 50 per cent of Richards Bay Minerals’ production.

ORE RESERVES

Ore reserves prepared in accordance with Industry Guide 7 under the Unites States Securities Act of 1933 have been set out on pages A-85 to A-95.

Rio Tinto 2004 Form 20-F   20


Back to Contents

GROUP OPERATIONS (wholly owned unless stated otherwise)

 

  ALUMINIUM   COPPER AND GOLD   IRON ORE   TALC
  Operating sites   Operating sites   Operating sites   Operating sites
1 Anglesey Aluminium (51%) 20 Bougainville (not operating) 33 Corumbá   (only major sites are
2 Bell Bay   (54%) 34 Hamersley Iron mines:   shown)
3 Boyne Island (59%) 21 Cortez/Pipeline (40%)   Brockman 44 Ludlow
3 Comalco Alumina Refinery 22 Escondida (30%)   Marandoo 45 Talc de Luzenac (99.9%)
3 Gladstone Power Station 23 Grasberg joint venture (40%)   Mt Tom Price 46 Yellowstone
  (42%) 24 Kelian (90%)   Paraburdoo 47 Three Springs
3 Queensland Alumina (39%) 19 Kennecott Utah Copper   Yandicoogina    
4 Eurallumina (56%) 25 Lihir (14%)   Channar (60%)   TITANIUM DIOXIDE
5 Tiwai Point (79%) 26 Northparkes (80%)   Eastern Range (54%)   FEEDSTOCK
6 Weipa 27 Palabora (49%) 35 Iron Ore Company of   Operating sites
    28 Rawhide (51%)   Canada (59%) 48 QIT-Fer et Titane Lac Allard
  BORATES     34 Robe River mines: (53%) 49 QIT-Fer et Titane Sorel
  Operating sites   Projects   West Angelas   Plant
7 Boron 29 Resolution (55%)   Pannawonica 50 Richards Bay Minerals (50%)
8 Coudekerque Plant            
9 Tincalayu   DIAMONDS   Projects   Projects
10 Wilmington Plant   Operating sites 36 HIsmelt® (60%) 51 QIT Madagascar Minerals
    30 Argyle 37 IOC Pellet Plant (59%)   (80%)
  COAL 31 Diavik (60%) 38 Simandou    
  Operating sites 32 Murowa (78%) 39 Orissa (51%)   URANIUM
11 Antelope           Operating sites
12 Bengalla (30%)       NICKEL 52 ERA (68%)
13 Blair Athol (71%)       Projects 53 Rössing (69%)
14 Colowyo (20%)     40 Eagle    
11 Cordero Rojo           ZINC, LEAD, SILVER
15 Decker (50%)       POTASH   Operating sites
13 Hail Creek (82%)       Projects 54 Greens Creek (70%)
16 Hunter Valley Operations     41 Rio Colorado Potash    
  (76%)            
11 Jacobs Ranch       SALT    
17 Kestrel (80%)       Operating sites    
16 Mt Thorley Operations     42 Dampier (65%)    
  (61%)     43 Lake MacLeod (65%)    
15 Spring Creek     42 Port Hedland (65%)    
18 Tarong            
16 Warkworth (42%)         Mines and mining projects
               
  Projects         Smelters, refineries and
13 Clermont (50%)           processing plants remote
12 Mt Pleasant (76%)           from mine

Rio Tinto 2004 Form 20-F   21


Back to Contents

INFORMATION ON GROUP MINES (wholly owned unless stated otherwise)

Mine   Location   Access   Title/lease

ALUMINIUM            

Comalco   Weipa, Queensland, Australia   Road, air, and port   Queensland Government lease expires in 2041 with 21 year extension, then two years’ notice of termination

COPPER            

Escondida (30%)   Atacama Desert, Chile   Pipeline and road to deep sea port at Coloso   Rights conferred by Government under Chilean Mining Code

Grasberg (40% joint venture)   Papua, Indonesia   Pipeline, road and port   Indonesian Government Contracts of Work expire in 2021 with two ten year extensions

Kennecott Minerals   Nevada, US   Road   Patented and unpatented mining claims
Cortez/Pipeline (40%)

Kennecott Minerals   Alaska, US   Port   Patented and unpatented mining claims
Greens Creek (70%)

Kennecott Utah Copper   Near Salt Lake City, Utah, US   Pipeline, road and rail   Owned
Bingham Canyon

Northparkes (80%)   Goonumbla, New South   Road and rail   State Government mining lease issued in 1991 for 21 years
Wales, Australia

Palabora (49%)   Phalaborwa, Northern   Rail and road   Lease from South African Government until deposits exhausted and base metal claims owned by Palabora
Province, South Africa

DIAMONDS            

Diavik (60%)   Northwest Territories, Canada   Air, ice road in winter   Mining leases from Canadian federal government

Argyle Diamonds   Kimberley Ranges, Western Australia   Road and air   Mining tenement held under Diamond (Argyle Diamond Mines Joint Venture) Agreement Act 1981-83; lease extended for 21 years from 2004

Murowa (78%)   Zvishavane, Zimbabwe   Road and air   Claims and mining leases

ENERGY            

Coal & Allied Industries   New South Wales, Australia   Road, rail and port   Leases granted by State
(76%)
Bengalla (30%)
Hunter Valley Operations
(76%)
Mount Thorley (61%)
Warkworth (42%)

Energy Resources of   Northern Territory, Australia   Road   Leases granted by State
Australia (68%)
Ranger







Rio Tinto 2004 Form 20-F   22


Back to Contents

Mine   History   Type of mine   Power source

ALUMINIUM            

Comalco   Bauxite mining commenced in 1961; Major upgrade completed in 1998 to incorporate Alcan’s adjacent Ely reserve in overall mining plan; Rio Tinto interest increased from 72.4% to 100% in 2000; In 2004 a mine expansion was completed to lift annual capacity to16.5 million tonnes   Open cut   On site generation; new power station under construction

COPPER            

Escondida (30%)   Production started in 1990 and expanded in phases to 2002 when new concentrator was completed; approval in 2003 for Norte project   Open pit   Supplied from SING grid under two contracts with Norgener to 2008

Grasberg (40% joint venture)   Joint venture interest acquired 1995; capacity expanded to over 200,000 tonnes of ore per day in 1998 with addition of underground production of more than 35,000 tonnes per day in 2003   Open pit and underground   Long term contract with US-Indonesian consortium operated,

Kennecott Minerals   Gold production started at Cortez in 1969; Pipeline in 1997   Open pit   Public utility
Cortez/Pipeline (40%)

Kennecott Minerals   Redeveloped in 1997   Underground/drift and fill   On site diesel generators
Greens Creek (70%)

Kennecott Utah Copper
Bingham Canyon
  Interest acquired in 1989; modernisation includes smelter complex and expanded tailings dam   Open pit   On site generation supplemented by long term contracts with Utah Power and Light

Northparkes (80%)   Interest acquired in 2000; production   Open pit and underground   Supplied from State grid
    started in 1995        

Palabora (49%)   Development of 20 year underground mine commenced 1996 with open pit closure in 2003   Open pit and underground   Supplied by ESKOM via grid

DIAMONDS            

Diavik (60%)   Deposits discovered 1994-1995; construction approved 2000; diamond production started 2003   Open pit to underground   On site diesel generators; installed capacity 27MW

Argyle Diamonds   Studies into further development options, including underground mining, continue; interest increased from 59.7% following purchase planned of Ashton Mining in 2000   Open pit to underground   Long term contract with Ord Hydro Consortium and on site generation back up

Murowa (78%)   Discovered 1997; small scale production started 2004 Open pit       Supplied by ZESA

ENERGY            

Coal & Allied Industries   Lemington acquired late 2000 and integrated with Hunter Valley Operations. Peabody Australian interests acquired in 2001. Moura, Narama and Ravensworth interests divested in 2002   Open cut   State owned grid
(76%)
Bengalla (30%)
Hunter Valley Operations
(76%)
Mount Thorley (61%)
Warkworth (42%)

Energy Resources of   Mining commenced 1981; interest acquired through North in 2000   Open pit   On site diesel / steam power generation
Australia (68%)
Ranger







Rio Tinto 2004 Form 20-F   23


Back to Contents

Mine   Location   Access   Title/lease

ENERGY            

Kennecott Energy   Wyoming, Montana and Colorado, US   Rail and road   Leases from US and State Governments and private parties, with minimum coal production levels, and adherence to permit requirements and statutes
Antelope
Colowyo (20%)
Cordero Rojo
Decker (50%)
Jacobs Ranch
Spring Creek

Rio Tinto Coal Australia   Queensland, Australia   Conveyor, road, rail and port   Leases granted by State
Blair Athol (71%)
Kestrel (80%)
Hail Creek (82%)
Tarong

Rössing Uranium (69%)   Namib Desert, Namibia   Rail, road and port   Federal lease

INDUSTRIAL MINERALS            

Boron   California, US   Road, rail and port   Owned

Dampier Salt (65%)   Dampier, Lake MacLeod and Port Hedland, Western Australia   Road and port   Mining leases expiring in 2013 at Dampier, 2018 at Port Hedland and2021 at Lake MacLeod with options to renew in each case

Luzenac   Trimouns, France (other smaller operations in Australia, Europe and North America)   Road and rail   Owner of ground (orebody) and long term lease agreement to 2012

QIT-Fer et Titane   Saguenay County, Quebec ,Canada   Rail and port (St Lawrence River)   Mining covered by two Concessions granted by State in 1949 and 1951 which, subject to certain Mining Act restrictions, confer rights and obligations of an owner

Richards Bay Minerals
(50%)
  Richards Bay, KwaZulu- Natal, South Africa   Rail, road and port   Long term renewable leases; State lease for Reserve 4 initially runs to end 2022; Ingonyama Trust lease for Reserve 10 runs to 2010

IRON ORE            

Hamersley Iron   Hamersley Ranges, Western Australia   Railway (owned by Hamersley Iron and operated by Pilbara Rail Company) and port (owned by Hamersley Iron and operated by Pilbara Iron)   Agreements for life of mine with Government of Western Australia
Brockman
Marandoo
Mount Tom Price
Paraburdoo
Yandicoogina
Channar (60%)
Eastern Range (54%)

Iron Ore Company of   Labrador City, Province of Labrador and Newfoundland   Railway and port facilities in Sept-Iles, Quebec (owned and operated by IOC)   Sublease with the Labrador Iron Ore Royalty Income Fund which has lease agreements with the Government of Newfoundland and Labrador that are due to be renewed in 2020 and 2022
Canada (59%)
(Rio Tinto also holds a 19%
interest in the Labrador Iron
Ore Royalty Income Fund
which owns 15.1% of IOC)

Robe River (53%)   Pilbara region, Western Australia   Railway (owned by Robe River Iron Associates and operated by Pilbara Rail Company) and port (owned by Robe River Iron Associates and operated by Pilbara Iron)   Agreements for life of mine with Government of Western Australia
Mesa J
West Angelas

Rio Tinto Brasil   Matto Grosso do Sul, Brazil   Road, air and river   Government licence for undetermined period
Corumbá

OTHER            

Kelian (90%)   Kalimantan, Indonesia   Road, river and port   Contract of Work with Indonesian Government for 30 years

Lihir Gold (14%)   Lihir Island, Papua New Guinea   Own road, airstrip and port   Special Mining Lease with Papua New Guinea Government expires in 2035

Rio Tinto 2004 Form 20-F   24


Back to Contents

Mine   History   Type of mine   Power source

ENERGY            

Kennecott Energy   Antelope, Spring Creek, Decker and Cordero acquired in 1993, Colowyo in 1995, and Jacobs Ranch in 1998; additional North Jacobs Ranch reserves purchased in 2002; West Antelope additional reserves 2004   Open cut   Supplied by IPPs and Cooperatives through national grid service
Antelope        
Colowyo (20%)        
Cordero Rojo          
Decker (50%)          
Jacobs Ranch          
Spring Creek          

Rio Tinto Coal Australia   Production started for export at Blair Athol and adjacent power station at Tarong in 1984. Kestrel acquired and recommissioned in 1999. Hail Creek production commenced 2003   Open cut (Blair Athol, Tarong and Hail Creek) and underground (Kestrel)   State owned grid
Blair Athol (71%)        
Kestrel (80%)        
Hail Creek (82%)          
Tarong          

Rössing Uranium (69%)   Production began in 1978   Open pit   Namibian National Power

INDUSTRIAL MINERALS            

Boron   Mine redesign project completed on budget and schedule in 2000   Open pit   On site cogeneration units
           

Dampier Salt (65%)   Construction of the Dampier field started in 1969; first shipment in 1972. Lake MacLeod was acquired in 1978 as an operating field   Solar evaporation of seawater (Dampier and Port Hedland) and underground brine (Lake MacLeod); dredging of gypsum from surface of Lake MacLeod   Dampier supply from Hamersley Iron Power; Lake MacLeod from Western Power and on site generation units; Port Hedland from Western Power
       
       

Luzenac   Production started in 1885; acquired in 1988. (Australian mine acquired in 2001)   Open pit   Supplied by EdF and on site generation units
         

QIT-Fer et Titane   Production started 1950; interest acquired in 1989   Open pit   Long term contract with Quebec Hydro
         

Richards Bay Minerals   Production started 1977; interest acquired 1989; fifth dredge commissioned 2000   Beach sand dredging   Contract with ESCOM
(50%)          

IRON ORE            

Hamersley Iron   Annual capacity increased to 68 million tonnes during 1990s; Yandicoogina first ore shipped in 1999 and port capacity increased; Eastern Range mine started 2004   Open pits   Supplied by Hamersley Iron Power
Brockman        
Marandoo          
Mount Tom Price          
Paraburdoo          
Yandicoogina          
Channar (60%)          
Eastern Range (54%)          

Iron Ore Company of Canada (59%)
(Rio Tinto also holds a 19% interest in the Labrador Iron Ore Royalty Income Fund which owns 15.1% of IOC)
  Current operation began in 1962 and has processed over one billion tonnes of crude ore since; annual capacity now 17.5 million tonnes of concentrate of which 12.5 million tonnes can be pelletised. Interest acquired in 2000 through North   Open pit   Supplied by Newfoundland Hydro under long term contract
       
       
         
         

Robe River (53%)   First shipment in 1972; annual sales reached 30 million tonnes in late 1990s; interest acquired in 2000 through North; West Angelas first ore shipped in 2002 and port capacity increased   Open pit   Supplied by Robe River Iron Associates; West Angelas supplied by Hamersley Iron Power
Mesa J        
West Angelas        
         

Rio Tinto Brasil   Iron ore production started 1978; interest acquired in 1991   Open pit   Supplied by ENERSUL
Corumbá          

OTHER            

Kelian (90%)   Gold production started in 1992 and will cease in 2005   Open pit   Kelian’s own 29MW generating station with six identical 4.9MW rated units
         

Lihir Gold (14%)   Production started in 1997; refinancing in 1999 and merger with Niugini Mining in 2000   Open pit   12 diesel unit power plant, four steam wells (geothermal power) producing ten per cent of requirements
         
         

Rio Tinto 2004 Form 20-F   25


Back to Contents

INFORMATION ON GROUP SMELTERS, REFINERIES AND PROCESSING PLANTS
(wholly owned unless stated otherwise)


Smelter, refinery or plant   Location   Title/lease   Plant type/product   Capacity









ALUMINIUM GROUP                









Anglesey Aluminium (51%)   Holyhead, Anglesey, Wales   100% Freehold   Aluminium smelter producing aluminium billet, block, sow   145,000 tonnes per year aluminium
         









Bell Bay   Bell Bay, Northern Tasmania, Australia   100% Freehold   Aluminium smelter producing aluminium ingot, block, t-bar   167,000 tonnes per year aluminium
           









Boyne Smelters  (59%)   Boyne Island, Queensland, Australia   100% Freehold   Aluminium smelter producing aluminium ingot, billet, t-bar   541,000 tonnes per year aluminium
           









Comalco Alumina Refinery   Gladstone, Queensland, Australia   97% Freehold   Refinery producing alumina   1,400,000 tonnes per year alumina
    3% Leasehold    









Eurallumina (56%)   Portoscuso, Sardinia, Italy   39% Freehold   Refinery producing alumina   1,065,000 tonnes per year alumina
      61% Leasehold    









Gladstone Power Station (42%)   Gladstone, Queensland, Australia   100% Freehold   Thermal power station   1,680 megawatts
             









New Zealand   Tiwai Point, Southland, New Zealand   19.6% Freehold   Aluminium smelter producing aluminium ingot, billet, t-bar   350,000 tonnes per year aluminium
Aluminium Smelters (NZAS) (79%)     80.4% Leasehold    









Queensland Alumina (39%)   Gladstone, Queensland, Australia   73.3% Freehold   Refinery producing alumina   3,778,000 tonnes per year alumina
    26.7% Leasehold    









COPPER GROUP                









Kennecott Utah Copper   Magna, Salt Lake City, Utah, US   100% Freehold   Flash smelting furnace / Flash convertor furnace copper refinery   335,000 tonnes per year refined copper
               









Palabora (49%)   Phalaborwa, South Africa   100% Freehold   Reverberatory Pierce Smith copper refinery   130,000 tonnes per year refined copper
           









INDUSTRIAL MINERALS                









Boron   California, US   100% Freehold   Borates refinery   584,000 tonnes per year boric oxide
               









QIT-Fer et Titane Sorel Plant   Sorel-Tracy, Quebec, Canada   100% Freehold   Ilmenite smelter   1,100,000 tonnes per year titanium dioxide slag, 900,000 tonnes per year iron
           
               









Richards Bay Minerals (50%)   Richards Bay, South Africa   100% Freehold   Ilmenite smelter   1,060,000 tonnes per year titanium dioxide slag
           









IRON ORE GROUP                









Hlsmelt® (60%)
Kwinana, Western Australia
      100% Leasehold   Hlsmelt® ironmaking plant producing pig iron   800,000 tonnes per year pig iron
           









IOC Pellet Plant (59%)   Labrador City, Newfoundland, Canada   100% Subleased land   Pellet induration furnaces producing multiple iron ore pellet types   12,500,000 tonnes per year pellet
         
           









Rio Tinto 2004 Form 20-F   26


Back to Contents

Item 5.     Operating and Financial Review and Prospects

CHAIRMAN’S LETTER
Dear shareholder
The recovery in the global economy that gathered momentum in 2003 continued in 2004. As a result of strong demand across our portfolio of metals and minerals, accompanied by increased prices, we achieved a record financial performance.
      An important factor has been the strength in metal and minerals demand in the US and Asia, where China has been prominent but markets in Japan and elsewhere have also recovered. Rio Tinto holds a long established position in these markets; 40 years in the case of Japan and 30 years in China. Our strong position today reflects these long term customer relationships.
      China’s rapid economic development has led to the adoption by the Government of measures to achieve more balanced growth in the economy. However, we continue to believe that China’s growth trend will remain well above the global average in the years ahead.
      In 2004, commodity prices were higher across the board and the US dollar was more stable against our main producing currencies than in 2003. Adjusted earnings* were a record US$2,221 million, US$839 million or 61 per cent above 2003 and exceeding the previous high of US$1,662 million achieved in 2001. Net earnings were US$2,813 million, or 204 US cents per share, including a US$592 million net gain on exceptional items.
      Total cash flow from operations including dividends from joint ventures and associates at US$4,449 million was also a record and 28 per cent higher than 2003. An active portfolio management programme, focused on the disposal of non core assets, generated an additional US$1.5 billion in cash. This has further strengthened our balance sheet, allowing us to undertake a major capital investment programme.
      While our record financial performance reflects the strong markets for our products, it also underlines the quality of our asset portfolio which has been developed over many years on the basis of a long term commitment to shareholder value.
      Investments over recent years have created a platform for earnings growth. This, coupled with a positive view of future growth prospects, has given the board confidence to increase our annual dividend to 77 US cents per share for 2004 an increase of 20 per cent from 2003. This also means that the 2005 interim dividend payable in September can be expected to be 38.5 US cents per share. We intend to maintain our progressive dividend policy from this higher baseline. The board has also decided the current strength of the Group’s cash flow means that in addition to comfortably funding the current and planned investments, capital can be returned to shareholders without reducing our flexibility to pursue other development opportunities. Subject to market conditions, Rio Tinto’s intention, therefore, is to return up to US$1.5 billion of capital to shareholders during the course of 2005 and 2006 through share buyback programmes.
      A sustainable business also requires commitment to social and environmental performance alongside delivery of consistently strong financial results. While much remains to be done in this area we are very encouraged by an increasingly productive dialogue with stakeholder organisations. Our sustainable development programmes are responding positively to a range of issues including biodiversity, climate change and HIV/AIDS. The Group’s social and environmental contribution helps to sustain our pipeline of project opportunities in many countries and has a business case which I believe is compelling.
      The year 2005 will see the tenth anniversary of the formation of Rio Tinto’s dual listed structure and unified management, which has fully met its objectives and continues to provide great strength to Rio Tinto’s operations and governance.
      It is with great sadness I report the sudden death on 27 January 2005 of Bob Adams, our executive director for planning and development. Bob was a major contributor to Rio Tinto’s growth over 35 years, having joined our planning department in 1970. He was a key figure in building Rio Tinto into a leading international mining group. He was respected and liked by all who knew him and his wise counsel and advice will be sorely missed.
      At our forthcoming annual meetings we shall see the retirement of Sir Richard Giordano, Leon Davis and John Morschel, all of whom have been outstanding contributors to the board and to our continuing success. I should particularly like to thank Dick and Leon as deputy chairmen for the support they have given me in my initial period as chairman. Their long experience of the Group has been invaluable in a transition period.
      We recently welcomed three new colleagues to the board. Richard Goodmanson, executive vice president and chief operating officer of DuPont, was appointed on 1 December 2004.
      Ashton Calvert, former secretary of the Department of Foreign Affairs and Trade of the Government of Australia, and Vivienne Cox, executive vice president of BP plc for Integrated Supply and Trading and also for Gas Power and Renewables, were both appointed on 1 February 2005. Each of them will add to the overall skill and experience of the Rio Tinto boards which is a vital underpinning of our high standard of corporate governance.
      Looking forward, we expect to see continuing underlying demand growth for metals and minerals despite some economic uncertainties in 2005. We are now beginning to see a supply response to higher prices but this will take some time to impact on the currently tight markets. While prices may ease from current levels in 2005 we expect they will generally remain above the long term trend. The future direction of the US dollar remains a significant uncertainty and, as was the case in 2003, could have a major impact on earnings.

Rio Tinto 2004 Form 20-F   27


Back to Contents

     In 2004 I had the opportunity to visit many of our operating locations. I have been impressed not only with the scale and complexity of the operations themselves but the depth of management and skill with which they are operated. I would therefore like to acknowledge the hard work and dedication of the Group’s employees throughout the world in 2004. Their commitment to Rio Tinto’s core values underpins the strong results they continue to deliver for shareholders.

Paul Skinner
Chairman
24 February 2005

*Adjusted earnings excludes the effect of exceptional items of such magnitude that their exclusion is necessary in order that adjusted earnings fulfil their purpose of reflecting the Group’s underlying performance. A reconciliation to net earnings can be found on pages A-2.

CHIEF EXECUTIVE’S REPORT


 

 

 

 

Note: Product group earnings are stated before exceptional items, net interest, exploration and evaluation costs and other central items. A reconciliation is shown on page A-63.


 

We saw very strong demand across our product range in 2004. This momentum is expected to continue into 2005 though it may be affected by the uncertainties of the US economy and the rate of growth in China. Good market conditions enable us to increase focus on capital management. Our record cash flow gives us considerable options for further organic growth based on our large reserve and resource position.

Operating performance
Product group earnings, excluding exceptional items, were a record US$2,544 million, compared with US$1,584 million in 2003.
      Higher metal and mineral prices and greater output from new projects were the main reasons for the strong result. Improved prices, mainly for copper, aluminium, iron ore and coal, combined with additional output from new or expanded projects such as Diavik in Canada (diamonds), Eastern Range, West Angelas and Hail Creek in Australia (iron ore and coking coal), and Escondida in Chile (copper).
     The depreciation of the US dollar against most major currencies had an effect on earnings, as did higher operating costs. While the mining industry benefits from higher prices received for the commodities we produce, as a business we also incur higher prices for consumables used in our operations.
     To address cost factors more rigorously, we are evolving our business processes to take advantage of Rio Tinto’s scale and to share leading practices around the Group as key levers to creating value. We have been successful in applying these principles in our information technology, procurement and shipping activities. We are working to extend greater capability and sharing of expertise to mining and processing operations, asset management and marketing, to maximise value on several fronts.

Rio Tinto 2004 Form 20-F   28


Back to Contents

     In 2004 I announced a major reallocation of product group responsibilities. With the retirement of David Klingner as head of Exploration and Chris Renwick as chief executive, Iron Ore, Tom Albanese moved to Copper and Exploration, Sam Walsh to Iron Ore, Oscar Groeneveld to Aluminium, and Andrew Mackenzie was recruited to be chief executive Industrial Minerals. Preston Chiaro and Keith Johnson continue as chief executives of Energy and Diamonds respectively. Both David Klingner and Chris Renwick spent most of their working lives with Rio Tinto, each with 35 years’ service, making very valuable contributions in several areas of the business.

Strategy
Earlier this year the board discussed Rio Tinto’s strategic direction to provide a framework for our medium term decisions. The discussion reaffirmed our focus on mining operations to produce minerals and metals. Furthermore, we recognised that medium term growth will be biased towards growth from within – the development of brownfield and greenfield projects inherent in our existing assets.
     The Group has long maintained a commitment to exploration. I believe this is an increasingly important source of competitive advantage. The Group’s diversity and strength, particularly in Australia and North America, enable us to increase our involvement in less familiar territories of the world should opportunities present themselves.
     The centre of gravity of our operations has been firmly in the OECD countries where historically we have found the most opportunities. This need not always be the case. The generation of options globally is an important pathway to growth and we possess the technical, community and environmental management capabilities to do so. Also, a key building block will remain our ability to bring well thought out projects to fruition on time without compromising their performance.
     A more competitive mining industry is developing and Rio Tinto needs to improve faster to keep ahead. Our fundamental strategy will not change as it has stood the test of time, but we contemplate some changes in emphasis. We will continue to focus on large, long life, low cost operations and run them efficiently. Our growth will largely come from our existing operations and reserves, supplemented by opportunistic mergers, acquisitions, structures and alliances, where these make sense.
     While historically the decentralised model of Rio Tinto has delivered enormous benefits, to keep improving we are putting greater emphasis on Rio Tinto’s global scale and specialist skills. We need to continue to improve how we operate, recognising that operational excellence and commercial acumen go hand in hand.

New projects
Over 2005 and 2006, we plan to spend up to US$6 billion on new projects. We have many potential investment options including opportunities in alumina, coal, iron ore, industrial minerals, diamonds and copper. Most of these relate to the large, long life assets we already own. We believe these provide our primary route to value growth and should represent the priority use of shareholders’ funds.
     We have recently completed three development projects. Currently we have ten under way, and three more were approved late in 2004. In addition, we have development studies progressing on 15 more projects. Our level of success reflects efforts we have made over a number of years and is a tangible result of our commitment to exploration.
     Over the past year we have transferred five projects from exploration to the product groups where the necessary skills can be applied to take them through to the next level of evaluation. These projects – in copper, iron ore, nickel, gold and potash – emphasise the continuity of our growth potential for the medium term.
     With a strong market, the outlook for our iron ore businesses remains exciting. The expansion of capacity in Western Australia at a cost of US$1,300 million is the single largest project investment we have made in many years. The major elements of the programme are on track for completion by the end of 2005 with the result that Rio Tinto expects to have a managed capacity of over 170 million tonnes of iron ore per year.
     The expansion is part of a major capital expenditure programme in Western Australia that also includes the US$200 million HIsmelt® iron making plant that will be commissioned early in 2005 after more than 20 years of research and development. The Comalco Alumina Refinery in Australia was successfully commissioned in the fourth quarter of 2004 and made its first shipment to China ahead of schedule.
     The Hail Creek coking coal mine reached its capacity of 5.5 million tonnes per annum in 2004 well ahead of our original expectations. An expansion of capacity to eight million tonnes is already under way for completion by 2006. This is an excellent example of how our focus on assets with large reserves gives us options to expand in line with demand. It is a large, high quality resource with reserves of nearly 200 million tonnes. Hail Creek also illustrates the value of patience and thoroughness; it was under study on and off for 30 years.
     The success of the Diavik diamond project in Canada, where overall performance has comfortably exceeded expectations, prompted us to bring forward development of a second orebody to help sustain the advantages that have been created. Development will necessitate construction of a second dike. Mining of the second orebody is scheduled to begin in early 2008. A study is also under way into the viability of underground mining, including the construction of an exploration decline.
     During 2004, we continued to pursue opportunities for asset disposals in a patient and disciplined manner. We sold our shareholding in Freeport-McMoRan Copper & Gold, receiving net proceeds of US$882 million while retaining our joint venture interest in production from the Grasberg mine. We locked in further value with the sale of the Zinkgruvan zinc mine in Sweden, and our interests in the Neves Corvo copper and tin mine in Portugal and the Morro do Ouro gold mine in Brazil. We restructured our interest in Rio Tinto Zimbabwe to focus on the Murowa diamond project in that country.

Rio Tinto 2004 Form 20-F   29


Back to Contents

Safety, health, environment and communities
There was a marked improvement in our safety record in 2004 even though there is considerable work still to be done to reach Rio Tinto’s goal of zero injuries and illnesses.
     I am sorry to report that there was one fatal accident at a managed operation. While this compares with six deaths at operations in 2003, it remains wholly unacceptable that anyone should be fatally injured at work. There were also a number of near misses. We will redouble our efforts to increase visible leadership from all levels of management and emphasise the role of employees themselves in developing safe work habits. There were 371 lost time incidents during the year, a 21 per cent decrease from 2003. The lost time frequency rate was 0.65 compared with 0.82 in 2003.
     The 2004 winners of the Chief Executive’s Safety Award were Rio Tinto Brasil’s Morro do Ouro gold mine for the second consecutive year, Quebec Metal Powders in Canada, and Rio Tinto Exploration Australasia, which was commended for its performance in 2003. The awards improve recognition of good performance based on Rio Tinto's safety targets and programmes.
     We continued to improve our understanding of the environmental implications of our activities regarding biodiversity, climate change, water and energy use, waste disposal and use of our products. There was no change in the number of significant environmental incidents (16) compared to 2003. There was, however, a decrease, from eight to four, in the number of significant spills.
     At Energy Resources of Australia (ERA) environmental incidents occurred that were unacceptable and which marred an otherwise commendable performance. Numerous changes to systems have been made and increased resources applied so that such shortcomings are not repeated. Three subsequent Australian Government audits were satisfactorily completed.
     To improve consistency and to share good practices, we developed standards and guidance to help our businesses to work more closely with people neighbouring our operations. They aim to arrive at an understanding of what we can do for mutual benefit and then to secure implementation of agreed objectives. We support over 2,000 socio-economic programmes covering health care, education, agriculture, and business development.
     We responded to the Asian tsunami disaster by committing A$1 million (about US$750,000) to the relief effort in countries where we are active. The funds will be donated through appropriate international agencies in Indonesia and India where we can leverage our local knowledge most effectively.

Outlook
The world economy is slowing to a more sustainable pace after growth accelerated sharply in 2004. If the slowdown is well managed, particularly in the US and China, which have been the key drivers for growth in recent years, it will be a welcome development for commodity markets. These are already severely stretched to meet demand. Developments in the foreign exchange markets remain a key economic uncertainty.
     Rio Tinto is benefiting from a very strong business environment as developing countries ramp up their demand for metals and minerals and mature economies enjoy relatively solid economic growth. While this outlook is encouraging for the short and medium term, there remain fundamental uncertainties on the world stage. Among them are the direction the US economy will take, the rate of growth in China and the sustainability of growth in Asia as a whole.
     Our record financial performance under strong market conditions in 2004 enabled us to focus on capital management to achieve a balance between future investment and rewards for shareholders. We have many options for investing in our future growth, with a strong suite of opportunities in the project pipeline. As always we will apply our rigorous capital appraisal processes.
     The world in which we operate is always changing and we are anticipating and reacting to those changes in order to remain successful. Barring the uncertainties I mentioned, the near term looks encouraging. Whatever the economic conditions, Rio Tinto has the assets and the people to maximise shareholder value in a sustainable way.
     In conclusion, I thank my management team and our valued employees all over the world for their continued support during 2004.

Leigh Clifford
Chief executive
24 February 2005

Rio Tinto 2004 Form 20-F   30


Back to Contents

FINANCIAL REVIEW
Financial risk management

The Group’s policies with regard to risk management are clearly defined and consistently applied. They are a fundamental tenet of the Group’s long term strategy.
     The Group’s business is mining and not trading. The Group only sells commodities it has produced. In the long term, natural hedges operate in a number of ways to help protect and stabilise earnings and cash flow, obviating the need to use derivatives or other forms of synthetic hedging for this purpose. Such hedging is therefore undertaken to a strictly limited degree, as described below.
     The Group has a diverse portfolio of commodities and markets, which have varying responses to the economic cycle.
     The relationship between commodity prices and the currencies of most of the countries in which the Group operates provides further natural protection. In addition, the Group’s policy of borrowing at floating US dollar interest rates helps to counteract the effect of economic and commodity price cycles.
     The Group’s Financial statements and disclosures show the full extent of its financial commitments including debt and similar exposures. The Group’s share of the net debt of joint ventures and associates is also disclosed.
     The risk factors to which the Group is subject that are thought to be of particular importance are summarised on pages 8 to 10.
     The effectiveness of internal control procedures continues to be a high priority in the Rio Tinto Group. A statement on this is included in Corporate governance on pages 85 to 86.
     The Group’s policies with regard to currencies, commodities, interest rates and treasury management are discussed below.

Adjusted earnings
UK Financial Reporting Standard 3 permits the presentation of an adjusted measure of earnings. As presented by Rio Tinto, this excludes the effect of exceptional items of such magnitude that their exclusion is necessary in order that adjusted earnings fulfil their purpose of reflecting the Group’s underlying performance. Except where otherwise indicated, earnings contributions from Group businesses and business segments exclude the effect of these exceptional items. Adjusted earnings is reconciled with net earnings on pages A-2.

Group operating results
2004 compared with 2003
Net earnings of US$2,813 million were US$1,305 million above 2003. Adjusted earnings of US$2,221 million were US$839 million above 2003. The principal factors explaining the changes in earnings are shown in the table below.

  US$ m  



2003 Net earnings 1,508  
Exclude: Exceptional gains 126  



2003 Adjusted earnings 1,382  
Prices 1,638  
Exchange rates (247 )
Inflation (118 )
Grasberg slippage (203 )
Volumes 270  
Energy costs (81 )
Other costs (173 )
Other (247 )



2004 Adjusted earnings 2,221  
Add: exceptional net gains 592  



2004 Net earnings 2,813  



Stronger markets resulted in higher prices for most of the Group’s products. Compared with 2003, average copper prices of 130c/lb were over 60 per cent higher, average aluminium prices of 78c/lb were 20 per cent higher and average gold prices of US$409/oz were 13 per cent higher. Average molybdenum prices were over two and a half times those of 2003.
     The benchmark iron ore price increased 18.6 per cent. This resulted in increased seaborne iron ore prices, mainly effective from 1 April 2004. The seaborne thermal coal market also strengthened during the year with the benefit of higher prices flowing through progressively in the second half of the year.
     The US dollar weakened further against those currencies in which the Group incurs the majority of its costs. Against the Australian dollar it averaged 12 per cent weaker. The effect of this and other currency movements on operating costs reduced earnings by US$326 million. The effect on earnings of the revaluation of monetary items to period end exchange rates was also adverse, although relative to a more substantial charge in 2003 it had a positive effect of US$61 million. Gains on currency hedges initiated by North and Comalco before they became wholly owned subsidiaries in 2000 increased earnings by US$18 million compared with 2003.

Rio Tinto 2004 Form 20-F   31


Back to Contents

     Production of copper and gold from the Freeport managed Grasberg mine was significantly below 2003 as a consequence of the material slippage in the fourth quarter of 2003. The effect of this on volumes and costs, net of insurance, was to reduce 2004 earnings by US$203 million. Production had returned to normal by the fourth quarter of 2004.
     Excluding the effects of the Grasberg slippage, higher volumes, mainly from new projects at Diavik (diamonds), Hail Creek (coking coal), West Angelas (iron ore) and additional output from Escondida (copper) increased earnings by US$270 million. As a result of tropical cyclone Monty the volume growth from the Western Australian iron ore operations was more modest than would otherwise have been the case.
     Excluding the effect of inflation, higher energy costs and the Grasberg slippage, the impact on earnings of increased costs was US$173 million. Strong markets create cyclical cost pressures within the industry. Higher prices for skilled labour, steel, rubber, diesel, explosives and freight have all had an effect on operating costs.
     At Hamersley, costs were also higher due to increased material movement, including prestripping, and higher maintenance activity. Tropical cyclone Monty had a prolonged effect on the costs as well as volumes at Hamersley and Robe (iron ore). Adverse cost variances at Argyle (diamonds) were attributable largely to lower production and at Palabora (copper) to lower volumes and increased depreciation following the commissioning of the underground project.
     Excluding exceptional items, the effective tax rate of 29 per cent was in line with that of 2003.
     Other variances included the absence of earnings from divested businesses which reduced earnings by US$122 million.
     The East 1 Pushback project at Kennecott Utah Copper was approved in February 2005. This project is a higher value, lower capital intensive, but shorter life option than the previous mine plan which was predicated on development of an underground mine from 2013. Options to extend operations beyond 2017, including further open pit and underground developments, will be fully studied over the coming years but the results for 2004 include a one off, non cash charge of US$36 million due to the increase in the present value of environmental remediation provisions. Pending any extension of the assumed mine life beyond 2017 there will be an increase in annual charges for depreciation and amortisation of discount from 2005 of around US$45 million.
     In 2004 there were gains on disposals of undeveloped properties totalling US$38 million. Against this, the 2003 earnings of Rio Tinto Brasil included a benefit of US$32 million resulting from the part reversal of an impairment provision.
     The remaining ‘other’ variance includes business interruption insurance claims to the extent that the costs are retained in the Group and reversion to a higher effective tax rate in the US.
     The 2004 exceptional items of US$592 million include a net profit on disposals of businesses (US$913 million), a charge of US$160 million relating to Colowyo (coal) and a provision of US$161 million, after tax and outside shareholder interests, for the write down of the carrying value of Palabora’s copper assets.
     Gains relating to disposals of businesses include US$518 million profit on sale of the Group’s equity interest in Freeport-McMoRan Copper & Gold Inc. (FCX). Rio Tinto invested in the Grasberg ore body through purchase of an equity interest in FCX and participation in the Grasberg joint venture: these were two components of one investment decision. The investment occurred prior to the introduction of FRS10 and the goodwill arising was therefore eliminated directly against reserves in accordance with Rio Tinto’s then current UK GAAP accounting policy. On disposal of the equity interest in FCX, goodwill of US$228 million attributable to this part of the total investment was written back through reserves and deducted from the profit on disposal.
     Against a background of adverse financial results, a review of Palabora’s business was finalised in the third quarter of 2004. Following this review, the workforce was reduced by 13 per cent and the management levels by 20 per cent. These events triggered an assessment of the balance sheet value of Palabora’s copper assets, using forecast long term copper prices, which resulted in the provision for asset impairment.
     A detailed review of the mine plan and projected cash flows of the Colowyo coal business was completed in June 2004. This indicated that future operating and development costs are substantially higher than previously estimated. As a consequence, an exceptional charge was recorded in the first half of 2004 for the writedown of Colowyo’s fixed assets and recognition of related onerous contract obligations.
     The 2003 exceptional items of US$126 million relate to gains on the disposal of Kaltim Prima Coal and Peak/Alumbrera (gold, copper). No tax was payable on these gains.

2003 compared with 2002
Net earnings of US$1,508 million compared with US$651 million reported for 2002. Adjusted earnings of US$1,382 million were US$148 million below 2002. The principal factors explaining the changes in earnings are shown in the table below.

Rio Tinto 2004 Form 20-F   32


Back to Contents

  US$ m  



2002 Net earnings 651  
Exclude: Exceptional charges (879 )



2002 Adjusted earnings 1,530  
Prices 442  
Exchange rates (412 )
Inflation (106 )
Volumes 38  
Energy costs (54 )
Other costs (82 )
Other 26  



2003 Adjusted earnings 1,382  
Add: exceptional gains 126  



2003 Net earnings 1,508  



The weakening of the US dollar against the currencies in which most of the Group’s costs are denominated reduced earnings by US$412 million. The average levels of the Australian dollar, Canadian dollar and South African rand were respectively 20 per cent, 11 per cent and 39 per cent stronger in 2003 than in 2002. The effect of these and other currency movements on operating costs was to reduce earnings by US$352 million. The effect of the shift in exchange rates on balance sheet values expressed in the functional currencies of the relevant units further reduced earnings and this charge was US$100 million more than the corresponding charge in 2002. Gains on currency hedges initiated by North, Ashton and Comalco, before they became wholly owned subsidiaries in 2000, increased earnings by US$40 million relative to 2002.
     The prices of many products were stronger, increasing earnings by US$442 million. Copper prices averaged 13 per cent higher; gold 17 per cent and aluminium seven per cent. The copper price was 51 per cent higher at the end of the year than at the beginning and this led to a favourable effect from provisional pricing of US$39 million. Benchmark iron ore prices increased by nine per cent.
     Over the full year, seaborne thermal coal prices were on average seven per cent lower and realised uranium prices were lower due to some higher priced contracts expiring at Rössing.
     Overall, volume changes increased earnings by US$38 million. Lower gold and molybdenum volumes at Kennecott Utah Copper, as a result of reduced by product grades, partly offset volume growth from new mines at Diavik and West Angelas (iron ore) and capacity expansions at Escondida and Hamersley. The benefit of higher gold grades at Grasberg, particularly in the first half of the year, was negated by lower production following a slippage in the mine in the fourth quarter of the year. Robust demand for diamonds enabled Argyle to reduce inventories. Volumes of titanium dioxide feedstock were affected by weak markets.
     Turning to costs, higher oil, power and gas prices reduced earnings by US$54 million. Average oil prices were US$3.50 per barrel or 14 per cent higher than in 2002. Gas prices in the US market were also higher and there were also increases in electricity prices, principally in New Zealand.
     Excluding the effects of energy prices and the US$106 million impact of inflation, cost increases reduced earnings by US$82 million. Two significant events adversely affected cost performance in the period. In the first half of the year, there was a three week smelter shut down at Kennecott Utah Copper as a result of an acid plant failure. The slippage at the Grasberg mine in the fourth quarter impacted both production volumes and costs.
     Costs at Coal & Allied were affected by higher demurrage caused by a shortage of rail capacity in the Hunter Valley. Lower earnings at Rio Tinto Iron & Titanium included a charge associated with the partial write down of a customer receivable.
     Excluding exceptional items, the effective tax rate at 28.8 per cent compared with 31.2 per cent for 2002. The lower charge in 2003 reflected reduced tax payments in the US and a number of one off benefits including a credit of US$8 million resulting from the proposed entry into the Australian tax consolidation regime, with effect from 1 January 2003.
     The after tax net interest charge was US$36 million less than in 2002, due both to lower interest paid and higher capitalised interest. The net central cost of the Group’s pension schemes was about US$60 million higher than in 2002.
     The net earnings of Rio Tinto Brasil include a credit of US$32 million resulting from the reversal of part of an impairment provision relating to Fortaleza (nickel) recorded in a previous year.
     The 2003 exceptional items of US$126 million relate to gains on the disposal of Kaltim Prima Coal, Peak and Alumbrera. No tax was payable on these gains.

Cash flow
2004 compared with 2003
A record total cash flow from operations, including dividends from associates and joint ventures, of US$4,449 million, was 28 per cent above 2003. Working capital levels increased in absolute terms by US$60 million, which is a relatively small amount compared with the increase in sales and production levels.
     Investment in the business continued. Capital expenditure and financial investment of US$2,085 million was US$412 million above 2003. Purchases of property, plant and equipment included the major expansion of iron ore capacity in Western Australia, the construction of the Comalco Alumina Refinery, and the purchase of West Antelope coal reserves by Kennecott Energy.

Rio Tinto 2004 Form 20-F   33


Back to Contents

     Disposals of interests in businesses generated proceeds of over US$1.5 billion. The largest components of this were the sale of shares in FCX and the sale of Rio Tinto’s interest in the Morro do Ouro gold mine in Brazil.
     The net cash inflow before management of liquid resources and financing, but after dividends, was US$1,888 million.

2003 compared with 2002
The Group’s operating cash flow remained strong. Total cash flow from operations of US$3,486 million, including dividends from associates and joint ventures, was only seven per cent below 2002 despite ten per cent lower adjusted earnings.
     Tax paid included an amount of US$106 million relating to the disputed tax assessments from the Australian Tax Office described in Note 29 of the consolidated financial statements. The amount paid has been recorded as a receivable in these accounts because the directors believe that the relevant tax assessments are not sustainable.
     Investment in the business continued at a high level. Capital expenditure and financial investment of US$1,673 million was US$197 million less than 2002. Purchases of plant and equipment included the expansion of iron ore capacity and the construction of the Comalco Alumina Refinery. Purchases less sales of investments in 2002 of US$323 million mainly related to US Treasury bonds held as security for the deferred consideration on the North Jacobs Ranch acquisition, of which US$76 million were sold in 2003.
     The sale of assets, principally Peak, Alumbrera and Kaltim Prima Coal, generated a cash inflow of US$405 million.

Balance sheet
Shareholders’ funds increased by US$2,547 million. Profits exceeded dividends declared by US$1,751 million and there was a write back of goodwill of US$228 million relating to the disposal of shares in FCX. Exchange rate translation changes increased shareholders’ funds by US$542 million.
     As a result of the strong cash flow, both from operations and from disposals, net debt fell from US$5,646 million to US$3,751 million. The ratio of net debt to total capital fell to 21.7 per cent from 33.8 per cent at 31 December 2003. Interest was covered 20 times (2003: 11 times).
     As detailed in Note 18 to the consolidated financial statements, US$806 million (19 per cent) of the Group’s borrowings at the end of 2004 will mature in 2005.
     At the year end, medium and long term borrowings totalled US$3,337 million. The amount issued under the US$3 billion European Medium Term Notes Programme was US$1.5 billion of which US$204 million is repayable within one year.
     In addition to the above, the Group’s share of the third party net debt of joint ventures and associates totalled US$602 million at 31 December 2004. This debt is set out in Note 14 to the consolidated financial statements, which includes a description of the Group’s responsibilities in relation to Colowyo’s debt. The debt held by other joint ventures and associates is without recourse to the Rio Tinto Group.

Listed Company operating results
The economic interests of Rio Tinto plc and Rio Tinto Limited were merged in December 1995 as a result of the Dual Listed Companies ('DLC') merger. The DLC merger has the effect that shareholders can be regarded as having interests in a single economic enterprise that is under common control and management. Accordingly the Operating and Financial Review and Prospects have been presented on a Group basis with the exception of the separate discussion and analyses relating to Rio Tinto plc and Rio Tinto Limited parts of the Group respectively provided below as a supplement to the discussion of the Rio Tinto Group set out above.

Rio Tinto plc - part of Rio Tinto Group
2004 compared with 2003
Rio Tinto plc's net sales revenue (referred to as consolidated turnover in the financial statements) was US$5,275 million (2003: US$4,092 million). The 29 per cent increase in 2004 is largely due to increases in commodity prices and also the effect of a full year of sales at Diavik.
     Profit on ordinary activities before interest and tax was US$2,652 million, an increase of US$1,140 million compared with 2003. During 2004 higher copper prices contributed to increased profits at Kennecott Utah Copper and Escondida, where there were also higher volumes. 2004 profit also benefited from a full year of sales at Diavik. At Freeport the higher copper and gold prices were offset by the effects of lower production and increased costs arising from the material slippage in 2003. The absence of profit from divested operations also had an adverse impact on profit. 2004 profit on ordinary activities before interest and taxation includes net exceptional gains of US$275 million (2003: US$47 million). These comprise exceptional gains on disposal of interests in operations of US$833 million (2003: US$47 million); a charge of US$160 million relating to Colowyo (coal) and a charge of US$398 million (before tax and minority interests) for the write down of the carrying value of Palabora's copper assets.
     In 2004, net interest payable decreased to US$69 million (2003: US$138 million), as a result of lower net debt which more than offset the effect of interest rate rises. Interest rates for the majority of Rio Tinto plc's borrowings are based on 3 month LIBOR, which averaged 1.6 per cent in 2004 and 1.2 per cent in 2003.

Rio Tinto 2004 Form 20-F   34


Back to Contents

     The effective tax rate was 21.3 per cent in 2004. The reduction from the 2003 tax rate of 26.1 per cent was largely due to the effects of exceptional items. Excluding these, the effective tax rate in 2004, at 28.3 per cent was higher than the 27.1 per cent for 2003 as a result of increased taxable profits and withholding tax in locations with higher effective tax rates.
     Net earnings of US$2,073 million compare with US$956 million in 2003. The increase of US$1,117 million includes the effect of net exceptional gains totalling US$506 million in 2004 and US$47 million in 2003.
     Total cash flow from operations (including dividends from joint ventures and associates) increased from US$1,710 million in 2003 to US$1,951 million in 2004. This is largely the result of dividends received from Rio Tinto Limited (on ordinary shares) and Escondida which offset reduced dividends from the Freeport joint venture, after the material slippage in 2003, and the non recurrence of a special dividend on the Rio Tinto Limited DLC Dividend Share.
      Capital expenditure and financial investment rose from US$1,097 million in 2003 to US$1,986 million in 2004 due to an increase of US$1,423 million in funds advanced to Rio Tinto Limited by Rio Tinto plc. In 2003 a subsidiary company of Rio Tinto plc acquired US$500 million of redeemable preference shares in a subsidiary company of Rio Tinto Limited.
     The net cash inflow from acquisitions and disposals of US$1,306 million in 2004 includes proceeds from the sales of Rio Tinto plc's interests in operations including: Freeport-McMoRan Copper & Gold Inc, Rio Paracatu Mineracao SA and Mineracao Serra de Fortaleza Limitada. The sale of the investment in Freeport-McMoRan Copper & Gold Inc does not affect the terms of the Grasberg joint venture. In 2003 the net cash inflow from disposals of interests in businesses was US$1,208 million and reflected the deferred payment by Rio Tinto Limited for the buy back in 2000 of some of its shares from Rio Tinto plc. Net debt fell from US$1,842 million to US$1,501 million during 2004.
     Shareholders’ funds increased to US$9,139 million at 31 December 2004 (31 December 2003: US$7,343 million), largely due to retained profit and exchange gains.

2003 compared with 2002
Rio Tinto plc's net sales revenue (referred to as consolidated turnover in the financial statements) was US$4,092 million (2002: US$3,993 million). The two per cent increase in 2003 is largely due to the commencement of sales at Diavik
     Profit on ordinary activities before interest and tax was US$1,512 million. The corresponding figure for 2002 was US$602 million lower, but suffered from exceptional charges of US$755 million. Iron and Titanium profits were lower in 2003 as a result of the weak US dollar, soft market conditions and the write down of a customer receivable. The pretax profit impact of reduced volumes at Kennecott Utah Copper was partly offset by benefits from higher copper prices. A loss at Rossing reflected lower prices and adverse exchange rates. 2003 profits also suffered from increased pension finance costs, resulting from the decrease in fund asset values. However, profits benefited in 2003 from Diavik's first year of operation; and there was an increase in operating profit contributed by joint ventures following expansion of capacity at Escondida.
     In 2003, net interest payable decreased to US$138 million (2002: US$156 million), as a result of lower net debt and reduced interest rates. Interest rates for the majority of Rio Tinto plc's borrowings are based on 3 month LIBOR, which averaged 1.2 per cent in 2003 and 1.8 per cent in 2002.
     The effective tax rate was 26.1 per cent in 2003. The reduction from the 2002 tax rate of 61.8 per cent is largely due to the effect of exceptional items. Excluding these, the effective tax rate in 2003, at 27.1 per cent, is lower than the 30.7 per cent for 2002 as a result of lower tax payments in the US.
     Net earnings of US$956 million compare with US$195 million in 2002. The increase of US$761 million includes the effect of exceptional charges of US$739 million in 2002, in contrast with gains of US$47 million in 2003.
     Total cash flow from operations was US$1,710 million (2002: US$1,976 million). Although 2003 operating profit was higher than in 2002, this largely resulted from the absence of exceptional non cash charges. Capital expenditure and financial investment in 2003 was US$1,097 million (2002: US$1,205 million). The decrease was largely due to

an increase in net funds advanced to Rio Tinto plc by Rio Tinto Limited; 2003: US$5 million (2002: US$(87) million)
a reduction in the purchase of property plant and equipment; as Diavik commenced production.
the acquisition by a subsidiary company of Rio Tinto plc of US$500 million of redeemable preference shares in a subsidiary company of Rio Tinto Limited.
the purchase, in 2002, of US$304 million of treasury bonds as security for the deferred consideration on the acquisition of the North Jacobs Ranch reserves.

The net cash inflow from acquisitions and disposals of US$1,208 million in 2003 reflects deferred payment by Rio Tinto Limited for the buy back in 2000 of some of its shares from Rio Tinto plc. Net debt fell from US$2,625 million in 2002 to US$1,842 million in 2003.
     Shareholders funds increased to US$7,343 million at 31 December 2003 (31 December 2002: US$5,899 million), largely due to retained profit and exchange gains.

Rio Tinto Limited - part of Rio Tinto Group
2004 Compared with 2003
Rio Tinto Limited's net sales revenue (referred to as consolidated turnover in the financial statements) was US$6,524 million in 2004 (2003: US$5,476 million). The 19 per cent increase in revenue is largely due to increased volumes and prices at the Iron Ore and Coal operations,and increased prices and smelter output at Comalco. Stronger markets resulted in increased prices for most of the Group’s products. The disposal of Kaltim Prima Coal during 2003 had a negative impact on 2004 revenue.

Rio Tinto 2004 Form 20-F   35


Back to Contents

     In 2004 profit on ordinary activities before interest and tax was US$1,871 million (2003: US$1,391 million). The US dollar weakened further against the Australian and Canadian dollars, currencies in which the Group incurs a large proportion of its costs, reducing profit. Profit on disposal of interests in operations was US$139 million in 2004, similar to the US$126 million realised in 2003. Disposals in 2004 included Zinkgruvan AB and a 10% interest in Hail Creek.
     The effective tax rate in 2004 was 28 per cent, which compares with 28.7 per cent in 2003. However, excluding the effect of exceptional items, the effective tax rate in 2004 was 30.4 per cent (2003: 31.9 per cent) as a result of entry into the Australian consolidated tax regime.
     Net earnings increased to US$1,185 million (2003: US$884 million) and total cash flow from operations was US$2,622 million (2003: US$2,053 million) as a result of the factors above. The increase in dividends from joint ventures is largely attributable to Australian coal operations.
     Capital expenditure and financial investment increased from US$1,071 million in 2003 to US$1,522 million in 2004 as a result of continued expansion of iron ore capacity in Western Australia and the construction of the Comalco Alumina Refinery. Sales less purchases of other investments of US$110 million in 2004 is US$94 million higher than in 2003. Several investments were disposed of during the year, including the Sepon project in Laos.
     Equity dividends paid of US$330 million were US$135 million below 2003 payments despite an increase in the dividend on ordinary shares; in 2004 there was no dividend payment on the DLC dividend share held by Rio Tinto plc; in 2003 a payment of US$164 million was made.
     Rio Tinto Limited received US$1,423 million of funding from Rio Tinto plc which, combined with the factors mentioned above, resulted in a US$1,554 million decrease in net debt to US$2,250 million.
     Shareholders funds were US$5,515 million at 31 December 2004 (31 December 2003: US$4,324 million). Retained profit and exchange gains have contributed to the increase.

2003 Compared with 2002
Rio Tinto Limited's net sales revenue (referred to as consolidated turnover in the financial statements) was US$5,476 million in 2003 (2002: US$4,722 million). The 16 per cent increase in 2003 is largely due to increased volumes and prices at the Iron Ore operations and increased prices and smelter output at Comalco. The disposals of Kaltim Prima Coal and Alumbrera during the year resulted in a reduction in share of joint ventures' and associates' turnover.
     In 2003 profit on ordinary activities before interest and tax was US$1,391 million (2002: US$1,180 million after exceptional asset write downs of US$433 million). The weakening of the US dollar against the Australian dollar and Canadian dollar, in which a large proportion of the Group's costs are denominated reduced profit. However, 2003 profits benefited from exceptional gains on disposal of subsidiary, joint venture and associate, of US$126 million: whereas, 2002 profits were reduced by exceptional net write downs.
     In 2003, net interest payable decreased to US$100 million (2002: US$124 million), due largely to lower interest rates.
     The effective tax rate in 2003 was 28.7 per cent, which compares with 40.9 per cent in 2002. However, excluding the effect of exceptional items, the tax rate was 31.7 per cent in both years.
     Profits attributable to outside interests increased in 2003, primarily because 2002 was impacted by the exceptional asset write downs at IOC.
     Net earnings increased to US$884 million (2002: US$736 million) as a result of the factors above. Total cash flow from operations (including dividends from joint ventures and associates) was similar to 2002 at US$2,053 million (2002: US$ 2,043 million). The increase in cash flow from operating activities was offset by a reduction in dividends received from the coal joint ventures in 2003.
     Capital expenditure and financial investment increased as a result of continued expansion at Hamersley; and construction of the Comalco Alumina Refinery. During 2003 Rio Tinto Limited remitted US$1,208 million to Rio Tinto plc in respect of shares that were repurchased in 2000. In addition, a subsidiary of Rio Tinto Limited, issued US$500 million of redeemable preference shares to a subsidiary of Rio Tinto plc. The factors mentioned above combined to reduce cash flow and increase the level of net debt in 2003.

Liquidity and capital resources
Rio Tinto plc and Rio Tinto Limited enjoy strong long and short term credit ratings from Moody’s and Standard and Poor’s shown below.

    Long term   Short term   Outlook  






 
Standard & Poor’s A+   A-1   Stable  
Moody’s Aa3   P-1   Stable  






 

Investors should be aware that a security rating is not a recommendation to buy, sell or hold securities, that it may be subject to revision or withdrawal at any time by the assigning rating organisation, and that each rating should be evaluated independently of the other.
     The unified credit status of the Group is maintained through cross guarantees whereby contractual obligations of Rio Tinto plc and Rio Tinto Limited are automatically guaranteed by the other. These ratings continue to provide financial flexibility and consistent access to debt via money or capital markets and enable very competitive terms to be obtained.

Rio Tinto 2004 Form 20-F   36


Back to Contents

     The Group’s commercial paper programmes are fully backed by bank standby facilities which totalled US$1.45 billion at 31 December 2004, of which US$0.85 billion was on terms exceeding one year. These facilities can be drawn upon at any time.
     As at 31 December 2004, the Group had contractual obligations other than bank borrowings repayable on demand arising in the ordinary course of business as follows:

      Less   Between   Between    
  than 1 1 and 3 3 and 5 After 5
US$ m Total year years years years










Contractual cash obligations                  
Debt (a) 4,143   806   2,043   813   481
Operating leases 114   36   37   10   31
Unconditional purchase obligations 3,232   386   747   611   1,488
Deferred consideration 250   96   126   28  
Other (b) 700   564   48   88  










Total 8,439   1,888   3,001   1,550   2,000










   
(a) Debt obligations include commercial paper backed by bank standby facilities.
(b) Other relates to long term obligations including capital commitments.
(c) Other long term liabilities of the Group not shown here include employee benefit obligations for which we expect cash funding to be US$1.4 billion within the next five years and US$1.6 billion between 2010 and 2014.

On the basis of the levels of obligations described above, the unused capacity under the Group’s commercial paper programmes, the Group’s anticipated ability to access debt and equity capital markets in the future and the level of anticipated internal cash generation, the directors believe that the Group has sufficient short and long term sources of funding available to meet its liquidity requirements.
     The Group’s committed bank standby facilities contain a financial undertaking that the Group’s consolidated income before interest and taxes for any annual accounting period shall not be less than three times consolidated interest payable for such period. The ratio for 2004 was 29.6 (2003: 15.2). The Group does not have any financial agreements that would be affected to any material extent by a reduction in the Group’s credit rating.
     The Group’s policy is to centralise surplus cash balances whenever possible.
     As at 31 December 2004 the Group had current assets amounting to US$874 million which are not expected to be used or converted into cash during the next 12 months, comprising US$836 million relating to accounts receivable and prepayments and US$38 million relating to inventories. Note 16 to the consolidated financial statements provides an analysis of the accounts receivable and prepayments falling due after more than one year. It includes a pension prepayment of US$581 million, representing the cumulative excess of the employer contributions paid to the Group’s deferred benefit pension schemes over the pension charges recognised in respect of those schemes under SSAP 24.

Off-balance sheet arrangements
In the ordinary course of business, to manage the Group’s operations and financing, Rio Tinto enters into certain arrangements, which for the purposes of Item 5 would be considered off-balance sheet arrangements.
     The Rio Tinto Group’s off-balance sheet arrangements are comprised principally of performance guarantees, commitments for capital and other expenditure, and certain derivative financial instruments.
     The aggregate amount of indemnities and other performance guarantees, on which no material loss is expected, is US$435 million.
     The Group has a partnership interest in the Colowyo Coal Company and has undertaken, via a subsidiary company which entered into a management agreement, to cause the partnership to perform its obligations under certain coal supply contracts. The debt owed by the Colowyo Coal Company, which has a book value of US$156 million, is to be serviced and repaid out of the proceeds of these contracts. During 2004, a provision of US$149 million has been recognised in respect of the Group’s obligations under the above management agreement. The debt held by other joint ventures and associates is without recourse to the Rio Tinto Group.
     Other commitments include contracted capital expenditure, operating leases and unconditional purchase obligations as set forth in the table of contractual obligations, included in the liquidity and capital resources section above.
     The Group holds certain derivative financial instruments for which the initial fair value and/or subsequent changes to fair value are not recorded under UK GAAP until the underlying contracts are settled or the hedged items to which they relate are recognised. For information on these derivative financial instruments, see Note 28 to the consolidated financial statements.

Exchange rates, reporting currencies and currency exposure
     Rio Tinto’s assets, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the Group’s sales and the countries in which it operates. The US dollar, however, is the currency in which the great majority of the Group’s sales are denominated. Operating costs are influenced by the currencies of those countries where the Group’s mines and processing plants are located and also by those currencies in which the costs of imported equipment and services are determined. The Australian and US dollars are the most important currencies influencing costs.

Rio Tinto 2004 Form 20-F   37


Back to Contents

     In any particular year, currency fluctuations may have a significant impact on Rio Tinto’s financial results. A weakening of the US dollar against the currencies in which the Group’s costs are determined has an adverse effect on Rio Tinto’s net earnings. The approximate effects on the Group’s UK GAAP net earnings of ten per cent movements from the 2004 full year average exchange rates are as follows:

      2003       2004
Average Effect of Average Effect of
exchange 10% change in exchange 10% change in
rate full year average rate full year average
US cents US$ m US cents US$m








Australian dollar 65   141 ±   73   190 ±
Canadian dollar 71   26 ±   77   45 ±
Chilean peso 692   6 ±   611   6 ±
Indonesian rupiah 0.012   6 ±   0.011   3 ±
New Zealand dollar 58   6 ±   66   7 ±
South African rand 13   22 ±   16   20 ±
UK sterling 163   7 ±   183   7 ±
Other n/a   10 ±   n/a   10 ±








These sensitivities are based on 2004 prices, costs and volumes and assume that all other variables remain constant. They take into account the effect of hedges as disclosed in Note 28 to the consolidated financial statements. These exchange rate sensitivities include the effect on operating costs of movements in exchange rates but exclude the impact through revaluation of foreign currency working capital. They should, therefore, be used with care.
     After taking into account the effect of relevant derivative instruments, almost all of the Group’s net debt is either denominated in US dollars or in the functional currency of the entity holding the debt. The table below sets out the currency exposures arising from net monetary assets / (liabilities), other than net debt, which are not denominated in the functional currency of the relevant business unit. Gains and losses resulting from such exposures are recorded in the profit and loss account. The table below reflects the Group’s currency exposure after tax and outside interests:

          2003           2004  
Currency of exposure   Currency of exposure  
US$m US dollar   Other Total US dollar   Other Total













Functional currency of business unit:                        
Australian dollar 251   (11 ) 240   222   7   229  
Canadian dollar 19   (1 ) 18   21   -   21  
South African rand 16   2   18   8   3   11  
United States dollar -   20   20   -   24   24  
Other currencies 14   9   23   5   (16 ) (11 )













Total 300   19   319   256   18   274  













In the case of the Australian dollar, for example, there is a significant degree of natural protection against cyclical fluctuations, in that the currency tends to be weak, reducing costs in US dollar terms, when commodity prices are low, and vice versa.
     Given the dominant role of the US currency in the Group’s affairs, the US dollar is the currency in which financial results are presented both internally and externally. It is also the natural currency for borrowing and holding surplus cash. Modest amounts of cash are held in other currencies for short term operational reasons.
     The Group finances its operations primarily in US dollars, either directly or using currency swaps, and a significant proportion of the Group’s US dollar debt is located in subsidiaries having functional currencies other than the US dollar. Exchange gains and losses relating to US dollar debt impact on the profit and loss accounts of such subsidiaries. Under UK GAAP however, such exchange gains and losses are excluded from the Group’s profit and loss account on consolidation with a corresponding adjustment directly to reserves. This means that financing in US dollars impacts in a consistent manner on the Group’s consolidated accounts irrespective of the functional currency of the particular subsidiary where the debt is located.
     The Group does not generally believe that active currency hedging would provide long term benefits to shareholders. Currency protection measures may be deemed appropriate in specific commercial circumstances and are subject to strict limits laid down by the Rio Tinto board. As set out in Note 28 to the consolidated financial statements, as at 31 December 2004 there were forward contracts, including synthetic forwards, to purchase A$1,113 million in respect of future trading transactions. From the Group’s perspective, these contracts offset the impact of exchange rate variations on a portion of the local currency costs incurred by various subsidiaries. A significant part of the above hedge book was acquired with North Ltd. North held a substantial hedge book on acquisition which has been retained but is not being renewed as maturities occur.

Rio Tinto 2004 Form 20-F   38


Back to Contents

     The functional currency of most operations within the Rio Tinto Group is the local currency in the country of operation. Foreign currency gains or losses arising on translation of the net assets of these operations are shown as a movement in reserves. The approximate translation effects on the Group’s net assets of ten per cent movements from the year end exchange rates are as follows:

      2003       2004
Closing Effect of Closing Effect of
exchange 10% change in exchange 10% change in
rate closing rate rate closing rate
US cents US$m US cents US$m








Australian dollar 75   640 ±   78   650 ±
Canadian dollar 77   85 ±   83   115 ±
South African rand 15   21 ±   18   5 ±
UK sterling 178   11 ±   193   14 ±
Other n/a   6 ±   n/a   7 ±








Interest rates
Rio Tinto’s interest rate management policy is generally to borrow and invest cash at floating rates. Short term US dollar rates are normally lower than long term rates, resulting in lower interest costs to the Group. Furthermore, cyclical movements of interest rates tend to compensate, to an extent, for those of commodity prices. In some circumstances, an element of fixed rate funding may be considered appropriate. At the end of 2004, only 20 per cent of the Group’s net debt was fixed rate. Based on the Group’s net debt at 31 December 2004, and with other variables unchanged, the approximate effect on the Group’s net earnings of a one percentage point increase in US dollar LIBOR interest rates would be a reduction of US$21 million.

Commodity prices
The Group’s normal policy is to sell its products at prevailing market prices. Exceptions to this rule are subject to strict limits laid down by the Rio Tinto board and to rigid internal controls. Rio Tinto’s exposure to commodity prices is diversified by virtue of its broad commodity spread and the Group does not generally believe commodity price hedging would provide long term benefit to shareholders.
     Metals such as copper and aluminium are generally sold under contract, often long term, at prices determined by reference to prevailing market prices on terminal markets, such as the London Metal Exchange and COMEX in New York, usually at the time of delivery. Prices fluctuate widely in response to changing levels of supply and demand but, in the long run, prices are related to the marginal cost of supply. Gold is also priced in an active market in which prices respond to daily changes in quantities offered and sought. Newly mined gold is only one source of supply; investment and disinvestment can be important elements of supply and demand. Contract prices for many other natural resource products are generally agreed annually or for longer periods with customers, although volume commitments vary by product.
     Approximately 40 per cent of Rio Tinto’s 2004 net earnings from operating businesses came from products whose prices were terminal market related and the remainder came from products priced by direct negotiation.
     The approximate effect on the Group’s net earnings of a ten per cent change from the full year average market price in 2004 for the following metals would be:

         2003       2004
       
       Average Effect of Average Effect of
          market 10% change in market 10% change in
             price full year average price full year average
  US$m   US$m









Copper   80 c/lb   109 ±   130 c/lb   160 ±
Aluminium (3 month forward)     65 c/lb   95 ±   78 c/lb   110 ±
Gold     US$ 363 oz   52 ±   US$ 409 oz   40 ±









The above sensitivities are based on 2004 volumes and give the estimated impact on net earnings of changes in prices, assuming that all other variables remain constant. These should be used with care. The relationships between currencies and commodity prices is a complex one and movements in exchange rates can cause movements in commodity prices and vice versa. The sensitivities allow for the effect of the commodity hedges maturing in 2005, as disclosed in Note 28 to the consolidated financial statements.

Treasury management and financial instruments
Treasury activities operate as a service to the business of the Rio Tinto Group and not as a profit centre. Strict limits on the size and type of transaction permitted are laid down by the Rio Tinto board and are subject to rigorous internal controls. Corporate funding and overall strategic management of Rio Tinto’s balance sheet is handled by the London based Group Treasury.

Rio Tinto 2004 Form 20-F   39


Back to Contents

     Rio Tinto does not acquire or issue derivative financial instruments for trading or speculative purposes; nor does it believe that it has exposure to such trading or speculative holdings through its investments in joint ventures and associates. Derivatives are used to separate funding and cash management decisions from currency exposure and interest rate management. The Group uses interest rate swaps in conjunction with longer term funds raised in the capital markets to achieve a floating rate obligation which is consistent with the Group’s interest rate policy. Currency swaps are used to convert debt or investments into currencies, primarily the US dollar, which are consistent with the Group’s policy on currency exposure management. No material exposure is considered to exist by virtue of the possible non performance of the counterparties to financial instruments held by the Group.
     The derivative contracts in which the Group is involved are valued for the purposes of the Financial instrument disclosures in the Financial statements by reference to quoted market prices, quotations from independent financial institutions or by discounting expected cash flows.

Dividends
Dividends paid on Rio Tinto plc and Rio Tinto Limited shares are equalised on a net cash basis; that is without taking into account any associated tax credits. Dividends are determined in US dollars.
     Rio Tinto’s progressive dividend policy aims to increase the US dollar value of dividends over time, without cutting them in economic downturns. Rio Tinto plc shareholders receive dividends in pounds sterling and Rio Tinto Limited shareholders receive dividends in Australian dollars, which are determined by reference to the exchange rates applicable to the US dollar two days prior to the announcement of dividends. Changes in exchange rates could result in a reduced sterling or Australian dollar dividend in a year in which the US dollar value is maintained or increased. The interim dividend for each year in US dollar terms will be equivalent to 50 per cent of the previous year’s total US dollar dividends.

Critical accounting policies and estimates
Dual listed company reporting
As explained in detail in Outline of dual listed companies’ structure and basis of financial statements, the consolidated financial statements of the Rio Tinto Group on pages A-2.2004 to A-84 deal with the results and assets and liabilities of both of the dual listed companies, Rio Tinto plc and Rio Tinto Limited, and their subsidiaries. They are prepared under UK GAAP and satisfy the obligations of Rio Tinto Limited, as laid down by the Australian Securities and Investments Commission. The consolidated financial statements also includes a statement setting out the effect of the adjustments to net earnings and to shareholders’ funds for the Group that would be required under Australian GAAP. The US dollar is the presentation currency used in these financial statements, as it most reliably reflects the Group’s global business performance.
     The treatment of gains and losses on US dollar debt is described above in the section dealing with Exchange rates, reporting currencies and currency exposure.
     For US reporting purposes separate financial statements are presented for Rio Tinto plc and the companies legally owned by it (‘the Rio Tinto plc part of the Group’); and for Rio Tinto Limited and the companies legally owned by it (‘the Rio Tinto Limited part of the Group’). In these separate financial statements, the consolidated figures for the Rio Tinto plc part of the Group include Rio Tinto plc’s 37.54% share of Rio Tinto Limited accounted for by the equity method.

Ore reserve estimates
The amounts presented under UK GAAP and Australian GAAP are based on the reserves and in some cases resources determined in accordance with the JORC Code.
     For the purposes of preparing financial information under US GAAP, estimates of ore reserves are made in accordance with the SEC’s Industry Guide 7.

Asset carrying values
Charges for impairment of the carrying values of certain of the Group’s businesses and related contract obligations, net of tax and outside shareholder interests, amounted to US$321 million in 2004 and US$763 million in 2002. No significant impairment charges occurred in 2003.
     The carrying values are assessed by reference to the higher of disposal value and the net present value of forecast future cash flows. The cash flows are particularly sensitive to the change in two particular parameters: exchange rates and commodity selling prices. Management considers, that over the long term, there is a tendency for movements in commodity prices to compensate to some extent for movements in the value of the US dollar (and vice versa). But such compensating changes are not synchronised and do not fully offset each other. The great majority of the Group’s sales are based on prices denominated in US dollars. To the extent that the currencies of countries in which the Group produces commodities strengthen against the US dollar without commodity price offset, cash flows and, therefore, net present values are reduced.
     In the three years to 31 December 2004, the Australian dollar strengthened by 53% against the US dollar, the Canadian dollar strengthened by 32% and the South African rand by 121%. Taking these three years together, commodity prices rose substantially: for example, copper prices increased by 124%, aluminium by 47% and gold by 58%.
     Rio Tinto’s cash flow forecasts are based on assessments of expected long term commodity prices, which for most commodities are derived from an analysis of the marginal costs of the producers of these commodities. These assessments often differ from current price levels and are updated periodically.

Rio Tinto 2004 Form 20-F   40


Back to Contents

     In some cases, prices applying to some part of the future sales volumes of an Income Generating Unit are predetermined by existing sales contracts. The effects of such contracts are taken into account in forecasting future cash flows.
     The cash flows used in impairment reviews include the effects of derivatives and non-derivative financial instruments designated as hedges of the cash flows of the relevant Income Generating Unit. However, the impact of such instruments on valuations used in measuring impairment is not significant.
     For the majority of Rio Tinto’s businesses, by both number and by value, the net present value of the expected cash flows is substantially in excess of the carrying value in the balance sheet. For a minority of the businesses the carrying value is close to the net present value of the cash flows, and these are reviewed for impairment where appropriate. The effects of exchange rate and commodity price changes on the values of these units relative to their book values are monitored closely.
     Reviews of carrying values relate to Income Generating Units which, in accordance with FRS 11, are identified by dividing the entity into as many largely independent income streams as is reasonably practicable. In some cases the Business Units within the Product groups consist of several operations with independent income streams, which therefore constitute separate Income Generating Units.
     The expected future cash flows of Income Generating Units reflect long term mine plans which are based on detailed research, analysis and iterative modelling to optimise the level of investment and output and sequence of extraction. The plan takes account of all relevant characteristics of the ore body, including waste to ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore impacting on process recoveries and capacities of processing equipment that can be used. The mine plan is therefore the basis for forecasting production output in each future year and production costs.
     The useful lives of the major assets of an Income Generating Unit are usually dependent on the life of the ore body to which they relate. Thus the lives of mining properties, smelters, concentrators and other long-lived processing equipment generally relate to the expected life of the ore body. The life of the ore body, in turn, is estimated on the basis of the long term mine plan.
     The cash flow forecasts are based on best estimates of expected future revenues and costs. These may include net cash flows expected to be realised from extraction, processing and sale of mineral resources that do not currently qualify for inclusion in proven or probable ore reserves. Such non-reserve material is included where there is a high degree of confidence in its economic extraction. This expectation is usually based on preliminary drilling and sampling of areas of mineralisation that are contiguous with existing reserves. Typically, the additional evaluation to achieve reserve status for such material has not yet been done because this would involve incurring costs earlier than is required for the efficient planning and operation of the mine.
     In the case of undeveloped properties, there may be no proven and probable reserves to form a basis for the impairment review. The carrying values of these assets are reviewed twice per annum by the Audit committee. The review is based on a status report regarding the Group’s intentions for development of the undeveloped property. In some cases, the undeveloped properties are regarded as successors to ore bodies currently in production. It is intended that these will be developed and go into production when the current source of ore is exhausted.
     Cost levels incorporated in the cash flow forecasts are based on the current long term mine plan for the Income Generating Unit. Recent cost levels are considered, together with expected changes in costs that are compatible with the current condition of the business and meet the requirements of FRS 11 “Impairment of fixed assets and goodwill”.
     Under US GAAP, assumptions used in cash flow forecasts are principally the same as those used under UK GAAP, except that the estimated cash flows related to the liability for asset retirement obligations are excluded under US GAAP. Impairment is only recognised, under US GAAP, when the anticipated undiscounted cash flows are insufficient to recover the carrying value of the asset group. Once impairment is determined, an asset is written down to its fair value, which is normally calculated using discounted cash flows, similar to those under UK GAAP.
     Forecast cash flows are discounted to present values using Rio Tinto’s weighted average cost of capital with appropriate adjustment for the risks associated with the relevant unit, to the extent that such risks are not reflected in the forecast cash flows. For final feasibility studies and ore reserve estimation, internal hurdle rates are used which are generally higher than the weighted average cost of capital.
     The above rates are applied to net of tax cash flows expressed in real terms. However, where an asset is impaired, the amount of the impairment is determined by discounting the pre-tax cash flows at a pre-tax discount rate derived from the post tax discount rate, having regard to the tax characteristics of the Income Generating Unit.
     Final feasibility studies and ore reserve estimation are based on the exchange rates current at the time of the evaluation. For impairment reviews, a forecast of the long term exchange rate is made by reference to historical data.
     Forecast cash flows for ore reserve estimation and impairment testing are based on Rio Tinto’s long term price forecasts. For final feasibility studies these prices, and projected costs, are assumed to decline systematically in real terms.

Close down, restoration and environmental obligations
Provision is made for environmental remediation costs when the related environmental disturbance occurs, based on the net present value of estimated future costs. Where the ultimate cost of environmental disturbance is uncertain, there may be variances from these cost estimates which could affect future financial results.

Rio Tinto 2004 Form 20-F   41


Back to Contents

     Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure is incurred at the end of the life of the mine. Although the ultimate cost to be incurred is uncertain, subsidiary companies have estimated their respective costs based on feasibility and engineering studies using current restoration standards and techniques.

Post retirement benefits
     UK GAAP post retirement benefits are accounted for in accordance with Statement of Standard Accounting Practice 24, which requires gradual recognition of the surpluses and deficits that emerge as a result of variances from actuarial assumptions.
     The most significant assumptions used in accounting for pension plans are the long term rate of return on plan assets and the discount rate. The long term rate of return on plan assets is used to calculate interest income on pension assets, which is credited to the Group’s profit and loss account. The discount rate is used to determine the net present value of future liabilities and each year the unwinding of the discount on those liabilities is charged to the Group’s profit and loss account.
     The expected rate of return on pension plan assets is determined as management’s best estimate of the long term return on the major asset classes i.e. equity, debt, real estate and other, weighted by the actual allocation of assets among the categories at the measurement date. The expected rate of return is calculated using geometric averaging.
     The sources used to determine management’s best estimate of long term returns are numerous and include country specific bond yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country specific inflation and investment market expectations derived from market data and analysts’ or governments’ expectations as applicable.
     In particular, the Group estimates long term expected real returns on equity i.e. returns in excess of inflation, based on the economic outlook, analysts’ views and those of other market commentators. This is the most subjective of the assumptions used and it is reviewed regularly to ensure that it remains consistent with best practice.
     The expected rate of return on pension plan assets is also used as the discount rate for UK GAAP.
     Valuations are carried out using the projected unit method.
     For 2004 the cost in relation to pensions included in the Group’s net earnings was US$82 million under US GAAP. Under UK GAAP, the net pensions cost was US$88 million. Within these costs the expected return on assets was US$163 million under US GAAP and US$166 million under UK GAAP.
      The impact on cash flow in 2004 of the Group’s pension plans, being the employer contributions to defined benefit and defined contribution pension plans, was US$143 million. In addition there were contributions of US$26 million in respect of unfunded healthcare schemes.
     In relation to pensions, it is currently expected that there will be no significant regular employer or employee contributions to the UK plan in 2005. Contributions are made to the main Australian plan according to the recommendation of the plan actuary and are primarily to a mixed defined benefit/defined contribution type arrangement. In North America, contributions are agreed annually in nominal terms. Whilst contributions for 2005 will not be determined until later in the year for some Group plans, the currently expected level of contributions by the Group to the plans in Australia, Canada and the US is expected to be similar in aggregate to that made in 2004. Since the Group’s healthcare schemes are unfunded, contributions for future years will be equal to benefit payments and therefore cannot be predetermined.
     Under US GAAP post retirement benefits are accounted for in accordance with Financial Accounting Standard No. 87 under which only those surpluses or deficits outside a ten per cent fluctuation corridor are spread.
     The discount rate under US GAAP is the implied yield available on AA rated corporate debt at the measurement date.
     For US GAAP, the average expected long term rate of return on assets used to determine 2004 pension cost was 6.6%. This will increase to 6.7% in 2005 primarily because of an increase in expected long term nominal equity returns. For 2004, the average future increase in compensation levels was assumed to be 4.2% and this will increase in 2005 to 4.6%; this increase reflects higher anticipated general inflation in the UK and North America. For US GAAP, the average discount rate used for the Group’s plans in 2004 was 5.9% and the average discount rate used in 2005 will be 5.6%. The decrease is attributable to lower corporate bond yields. As noted above, the expected long term rate of return on assets is also used as the discount rate under UK GAAP. The other UK GAAP assumptions vary slightly from those under US GAAP because of the differing measurement dates.
     Based on the known changes in assumptions noted above and other known factors such as increasing service cost and amortisation charges, and including the one time curtailment and settlement credit in 2004, the impact of pension costs on the Group’s net earnings in 2005 would be expected to increase by some US$36 million under US GAAP to US$118 million.
     Under US GAAP, there are net unrecognised losses in relation to the Group’s pension plans of US$532 million at 31 December 2004 net of tax and minorities. This will be written off to earnings over the average remaining service life of employees in the plans to the extent the losses exceed the 10% corridor on a plan by plan basis. The 2005 impact on the Group’s US GAAP net earnings will be a cost of US$26 million compared to a cost of US$22 million in 2004.

     The table below sets out the potential change in the Group’s 2004 UK GAAP and US GAAP net earnings (after tax and outside interests) that would result from hypothetical changes to post retirement assumptions and estimates. The sensitivities are viewed for each assumption in isolation although, under UK GAAP in particular, a change in one assumption is likely to result in a corresponding offset elsewhere.

Rio Tinto 2004 Form 20-F   42


Back to Contents

US$m UK
GAAP
  US
GAAP
 




 
Sensitivity of Group’s 2004 net earnings to changes in:        
Expected return on assets        
- increase of 1% 43   20  
- decrease of 1% (45 ) (20 )
Discount rate        
- increase of 0.5% 20   6  
- decrease of 0.5% (22 ) (6 )
Salary increases        
- increase of 0.5% (6 ) (5 )
- decrease of 0.5% 6   5  
Demographic - allowance for additional future mortality improvements        
- overall increase of 5% in liability (23 ) (16 )
- overall decrease of 5% in liability 20   15  




 

Further information on UK GAAP and US GAAP for pensions is given on pages A-58 to A-59 and A-73 respectively. In addition, information under the UK post retirement accounting standard, FRS 17, is given on pages A-59 to A-62.

Overburden removal costs
In open pit mining operations, it is necessary to remove overburden and other waste materials to access ore from which minerals can economically be extracted. The process of mining overburden and waste materials is referred to as stripping. During the development of a mine, before production commences, it is generally accepted that stripping costs are capitalised as part of the investment in construction of the mine.
     Stripping of waste materials continues during the production stage of the mine. Some mining companies expense these production stage stripping costs as incurred, while others defer such stripping costs. Those mining companies that expense stripping costs as incurred will report greater volatility in the results of their operations from period to period.
     Rio Tinto defers production stage stripping costs for those operations where this is the most appropriate basis for matching costs with the related economic benefits and the effect is material.
     The amount of stripping costs deferred is based on the ratio obtained by dividing the tonnage of waste mined either by the quantity of ore mined or by the quantity of minerals contained in the ore. In some operations, the quantity of ore is used, being a more practical basis for matching costs with the related economic benefits where there are important by products or where the grade of the ore is relatively stable from year to year.
     Information about the stripping ratios of the Business Units that account for the majority of the deferred stripping balance at 31 December 2004, and year in which deferred stripping is expected to be fully amortised, is set out in the following table:

  Actual stripping ratio for year   Life of mine stripping ratio  
  2002   2003   2004   2002   2003   2004  












 
Kennecott Utah Copper (2017) 2.05   1.86   1.83   1.19   1.24   1.24  
Borax (2034) 25.00   23.00   20.50   16.00   16.00   18.70  
Argyle Diamonds (2008) 7.29   6.10   6.70   4.40   4.10   4.91  
Freeport Joint Venture (2014) 2.35   2.84   3.39   1.77   1.93   2.43  
Diavik (2009) 24.93   20.31   14.52   8.87   8.54   4.69  












 

     In addition, Escondida, Rio Tinto's 30 per cent owned joint venture, defers stripping costs based on the ratio of waste tonnes to pounds of copper mined. The actual stripping ratio for 2004 was 0.1145 (2003: 0.1024, 2002: 0.1458). The life of mine stripping ratio for 2004 was 0.1129 (2003: 0.1110, 2002: 0.1094). The deferred stripping balance is expected to be fully amortised in 2040.
     The life of mine waste-to-ore ratio is a function of an individual mine’s pit design and therefore changes to that design will generally result in changes to the ratio. Changes in other technical or economic parameters that impact on reserves will also have an impact on the life of mine ratio even if they do not affect the mine’s pit design. Changes to the life of mine ratio are accounted for prospectively.
     The reduction in the life of mine waste-to-ore ratio at Diavik resulted from the removal from the mine plan of a section of ore which would have required a high level of waste stripping. The increase in the life of mine ratio in 2003 at Utah Copper was caused by the discontinuation of the North concentrator operation. This resulted in certain lower grade material that would have been processed through the concentrator being reclassified as waste. Increases in the ratio for the Grasberg (Freeport Joint Venture) mine primarily relate to changes in the cut off grade at the open pit, caused by a reassessment of the optimal milling rate at the mill facility including a greater proportional contribution of total ore processed from the Deep Ore Zone underground mine.

     In operations that experience material fluctuations in the ratio on a year to year basis over the life of the mine, deferral of stripping costs reduces the volatility of the cost of stripping expensed in individual reporting periods, in relation to production of ore or contained minerals, as applicable. Stripping costs incurred in the period are deferred to the extent that the current period ratio exceeds the life of mine ratio. Such deferred costs are then charged against reported profits to the extent that, in subsequent periods, the ratio falls short of the life of mine ratio. The life of mine ratio is based on the proven and probable reserves of the operation.

Rio Tinto 2004 Form 20-F   43


Back to Contents

     In some operations, there are distinct periods of new development during the production stage of the mine. These may, for example, relate to a discrete section of the orebody. The new development will be characterised by a major departure from the life of mine stripping ratio. Excess stripping costs during such periods are deferred and subsequently amortised on a unit of production basis.
     Deferred stripping costs form part of the total investment in the relevant income generating unit, which is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
     During 2004, production stage stripping costs incurred by subsidiaries and equity accounted operations exceeded the amounts charged against pre tax profit by US$135 million. The net book value carried forward in property, plant and equipment and in investments in joint ventures and associated companies at 31 December 2004 was US$784 million.
     Amortisation of deferred stripping costs is included in depreciation of property, plant and equipment or in the Group’s share of the results of its equity accounted operations, as appropriate.

Contingencies
Disclosure is made of material contingent liabilities unless the possibility of any loss arising is considered remote. Contingencies are disclosed in Note 29 on page A-49. These include tax assessments of approximately A$500 million which, based on Counsels’ opinion, the Group expects to be successful in challenging.

New US accounting standards
Information on upcoming US accounting standards is provided in Note 42 on page A-71 to the consolidated financial statements.

International financial reporting standards
In 2005 Rio Tinto will be reporting its financial performance in accordance with International Financial Reporting Standards (IFRS) starting with the interim 2005 results. Restatements of full year and half year 2004 financial information under IFRS were included in a media release issued on 5 May 2005 and the differences from the amounts reported under UK GAAP were explained. This media release was filed with the SEC on Form 6-K for the month of May 2005. Restatement of 2004 financial information under IFRS resulted in an increase in net earnings of US$405 million compared to UK GAAP but underlying earnings increased by US$51 million. Shareholders’ equity at
31 December 2004 reduced by US$707 million.

Trend information
The Group’s worldwide operations supply essential minerals and metals that help to meet global needs and contribute to improvements in living standards, so changes in the demand for its products are closely aligned with changes in global GDP. Changes in the GDP of developing countries will have a greater impact on materials such as iron ore and coal that can be used to improve infrastructure whereas changes in the GDP of developed countries will have a greater impact on industrial minerals that have many applications in consumer products. Trends in production of the Group’s minerals and metals, consolidated turnover, earnings, total assets and shareholders’ funds are set out in the operational review on pages 27 to 67.

Forward looking statements
Forward looking statements are contained in this financial review and attention is drawn to the Cautionary statement on page 10.

Rio Tinto 2004 Form 20-F   44


Back to Contents

Rio Tinto’s Iron Ore group (RTIO) wholly owns Hamersley Iron in Western Australia. Hamersley wholly owns five mines and also operates the 60 per cent owned Channar mine and the 54 per cent owned Eastern Range mine on behalf of joint venture partners. The Channar mine is a joint venture with an Australian subsidiary of the China Iron & Steel Industry & Trade Group Corporation. The Eastern Range mine is owned in joint venture with the Shanghai Baosteel Group Corporation and was commissioned in April 2004.
     RTIO also includes Rio Tinto’s effective 53 per cent interest in Robe River Iron Associates’ two mines in Western Australia and Rio Tinto’s 59 per cent interest in Iron Ore Company of Canada. The Iron Ore group operates both enterprises, which were acquired in 2000. From 2005, RTIO also manages Rio Tinto Brasil which owns a 100 per cent interest in Mineração Corumbaense Reunida, known as Corumbá.
     In addition, RTIO includes the HIsmelt® direct smelting technology developed in Western Australia and resources held globally, including Orissa (India) and the Simandou (Guinea) deposits.
     At 31 December 2004, the group accounted for 28 per cent of Rio Tinto’s operating assets, an increase of three per cent over the year. In 2004, the group contributed approximately 20 per cent of the Group’s turnover and 26 per cent of adjusted earnings.
     In 2003, Rio Tinto reached agreement with its joint venture partners in Robe River to allow closer cooperation between the Pilbara operations of Hamersley and Robe. In 2004, a new company, Pilbara Iron, was formed to enable the sharing of rail, port and power infrastructure as well as management of non infrastructure assets, including mobile and other mining equipment, and site and corporate services. Coordination was progressively implemented during 2004. Together with Pilbara Rail Company, which runs the combined rail assets of Hamersley and Robe, the two entities manage RTIO’s iron ore assets in the Pilbara as an optimised and integrated operation. Pilbara Iron, including employees seconded to Pilbara Rail Company, employs 2,880 people.
     RTIO Expansion Projects was created in September 2003 to manage the growing portfolio of projects and studies in the Pilbara. The Expansion Projects team operates closely with Pilbara Iron, but is managed independently in order to minimise the impact on operations through project study and implementation phases.
     For the contract year commencing April 2005 Hamersley Iron reached agreement with Nippon Steel on price increases of 71.5 per cent for lump, fine and Yandi ore.
     RTIO employs almost 6,000 people worldwide. Chris Renwick retired as chief executive Iron Ore in December 2004, and was succeeded by Sam Walsh, who is based in Perth, Western Australia.

Financial performance
2004 compared with 2003
RTIO’s contribution to 2004 earnings was US$569 million, US$70 million higher than in 2003.
     Demand for iron ore continued to be extremely strong across the product range throughout 2004. In addition to strong demand from China where iron ore imports rose 40 per cent compared to 2003, the Japanese steel industry operated near capacity and crude steel production in Korea and Taiwan was at record levels. Reflecting the strength of the market, 18.6 per cent price increases were achieved for fiscal year 2004 for both lump and fines following the nine per cent increases agreed to in 2003.
     In June, new long term agreements with leading Chinese steel mills for the sale of an incremental 40 million tonnes per annum of iron ore were announced. These agreements, together with supply arrangements reached with Nippon Steel and the Shanghai Baosteel Group earlier in the year, underpin the current phase of Rio Tinto’s expansion of port, rail and mine capacity that is on schedule for completion at the end of 2005.

2003 compared with 2002
RTIO’s contribution to 2003 earnings was US$499 million, US$47 million higher than in 2002.
     Demand for iron ore continued to be extremely strong throughout 2003, particularly from China, where imports of iron ore were 30 per cent higher than 2002. Strong demand for iron and steel in China bolstered demand for iron ore in other markets, with Japan, Korea and Taiwan all at record levels.
     Price increases reflected the strong market, with a nine per cent increase for 2003 achieved in May.

Hamersley Iron (Rio Tinto: 100 per cent)
Hamersley Iron operates seven mines in Western Australia, including two mines in joint venture, 630 kilometres of dedicated railway, and port and infrastructure facilities located at Dampier. These assets are run as a single operation managed and maintained by Pilbara Iron. Hamersley employs approximately 70 people who work in Sales and Marketing. Hamersley has fewer employees than in 2003 as the majority of employees have been transferred to Pilbara Iron.
     In 2003, Hamersley completed option analysis studies to increase its system capacity to ensure its ability to meet the needs of customers and the strong growth in demand for iron ore, particularly in China.
     As a consequence, in December 2003, Rio Tinto approved a US$920 million expansion of the Dampier port, Yandicoogina mine, additional rail assets and feasibility study costs.
     The port expansion will increase Dampier’s export capacity from 74 million tonnes per annum to 116 million tonnes per annum. The Yandicoogina mine expansion will increase its output to 36 million tonnes per annum; capacity was increased to 24 million tonnes per annum in 2004.
     Commissioning of the Yandicoogina expansion will take place in the second half of 2005. Completion of the port expansion is scheduled for late 2005, with progressive commissioning from mid-2005.

Rio Tinto 2004 Form 20-F   45


Back to Contents

     Expansion work is continuing to provide additional rail, power and other infrastructure to complement the new port and mine requirements. Construction is well advanced to interconnect the power systems of Hamersley and Robe. Plans are at an advanced stage to expand and convert Paraburdoo power generation to being gas fired. Pre-development studies to further increase the capacity of existing mines and develop new mines are being progressed.
     Construction of the US$67 million Eastern Range mine was completed in mid-April and its first product was shipped in the second quarter. Located ten kilometres east of Paraburdoo, the mine services an unincorporated joint venture between Hamersley Iron and Shanghai Baosteel Group Corporation, China’s largest iron and steelmaker. The joint venture, in which Hamersley holds a 54 per cent equity share, will supply ten million tonnes of standard Hamersley iron ore products per year over 20 years.

2004 operating performance
Hamersley Iron’s total production in 2004 was 78.1 million tonnes, 4.7 million tonnes more than in 2003. Rio Tinto’s share of this production was 74.2 million tonnes. Production was severely disrupted in early March by tropical cyclone Monty that required port facilities to be closed, and resulted in significant flood damage to the operations. Most operations returned to normal by the end of April, though the Tom Price mine continued to be affected into July, adversely affecting volumes, product mix and costs.
     Shipments by Hamersley totalled 76.5 million tonnes, including sales through joint ventures. Hamersley’s shipments to China also reached a record level at 39.5 million tonnes, making China by far the single largest destination for Hamersley Iron ore.
     Production from all mines was stretched to achieve these levels, placing cost and other operating stresses on the Hamersley system.
     Costs increased in preparation for volume growth, with increased material movement, pre-stripping and higher maintenance activity. Costs of key mining inputs were inflated as a result of the high level of activity across the mining industry. Drilling and exploration programmes and pre-development studies all added significantly to 2004 costs.
     The Pilbara Rail Company, formed in 2002, which effectively integrates the rail networks of Hamersley and Robe River into a single operation, continued to deliver operational efficiencies. Additional locomotives and ore cars were commissioned to enhance the overall system capacity.
     In the spirit of closer cooperation with Robe, Hamersley shipped four million tonnes of product from its Yandicoogina mine through Robe’s Cape Lambert port facilities, now operated by Pilbara Iron. This has resulted in increased operational flexibility and relieves congestion at Dampier.
     Hamersley Iron is currently undertaking an extensive drilling programme that is expected to accelerate conversion of its resource base into reserves. Focused on supporting strategic mine development options, it is one of the largest drilling efforts in Hamersley’s history.
     In 2004, the Australian Industrial Relations Commission ratified the Rio Tinto Iron Ore Federal Award agreed between Hamersley Iron, Robe River, Pilbara Iron and the Australian Workers Union.
     Hamersley continued to work sustainable development principles into its daily operations throughout the year. The Environmental Management System, certified to ISO 14001, passed the second audit conducted by an external accreditation body. The IronSafe system was launched in 2004, which aligns internal and external health and safety policies, procedures and documentation, throughout Rio Tinto’s Western Australian based iron ore operations.

  Million tonnes


Hamersley’s total sales of iron ore to major markets in 2004  
China 39.5
Japan 19.0
Other Asia 14.5
Europe 3.5


Total 76.5


NOTE: This table includes 100 per cent of all sales through joint ventures.

Robe River Iron Associates (Rio Tinto: 53 per cent)
Robe River Iron Associates (Robe) is an unincorporated joint venture in which Mitsui (33 per cent), Nippon Steel (10.5 per cent) and Sumitomo Metal Industries (3.5 per cent) also have interests. Robe is the world’s fourth largest seaborne trader in iron ore, employing approximately 570 people, which is fewer than in 2003 as many employees have been transferred to Pilbara Iron.
     Robe operates two open pit mining operations in Western Australia. Mesa J is located in the Robe Valley, north of the town of Pannawonica. The mine produces Robe River fines and lump, which are pisolitic iron ore products. The West Angelas mine, opened in 2002, is located approximately 100 kilometres west of the town of Newman. The mine produces West Angelas fines and lump, which are Marra Mamba iron ore products.
     West Angelas mine production reached its original design rate of 20 million tonnes per year in the first quarter of 2004, two years earlier than planned. This increased Robe’s production capacity to a nominal 50 million tonnes per year. In 2003, Robe obtained approval to expand West Angelas to 25 million tonnes per year. Work started on the US$105 million expansion in early 2004 and completion is expected by mid 2005.

Rio Tinto 2004 Form 20-F   46


Back to Contents

     The rail expansion project to duplicate almost 145 kilometres of track and associated interconnection and infrastructure to increase the capacity of the Pilbara Rail main line is progressing. Robe uses a dedicated rail system, operated by Pilbara Rail, to transport ore from its mines to the company’s deepwater port facilities at Cape Lambert.
     Robe exports under medium and long term supply contracts with major integrated steel mill customers in Japan, Europe, South Korea and China.

2004 operating performance
Robe’s total production in 2004 was a record 48.5 million tonnes, comprising 30 million tonnes from Mesa J, and 18.5 million tonnes from West Angelas. Production of Mesa J ore was affected in the first quarter by flooding caused by tropical cyclone Monty although production levels returned to normal by the end of April. Product quality was affected for a prolonged period. Robe’s total sales were 50.4 million tonnes, with strong demand in all major markets.
     Sales were 31.2 million tonnes of Mesa J and 19.2 million tonnes of West Angelas products. Sales growth was based on increased West Angelas tonnage availability and focused primarily on Japan, where all customers exercised their tonnage options. Further penetration of the Chinese market was also achieved, with sales to China now accounting for one quarter of Robe’s sales. Increased marketing effort in China resulted in the signing of long term agreements with large steel mill customers.
     Further studies are under way to improve understanding of the orebody at West Angelas and to determine appropriate mining strategies. In pit stockpiles were introduced in 2004 which has successfully reduced grade variation.
     As part of a commitment to sustainable development, Robe updated its long term closure plans for each operation in consultation with community stakeholders.

  Million tonnes


Robe’s total sales of iron ore to major markets in 2004  
Japan 26.6
China 13.0
Europe 8.2
Other Asia 2.6


Total 50.4


Iron Ore Company of Canada (Rio Tinto: 58.7 per cent)
Rio Tinto’s interest in Iron Ore Company of Canada (IOC) is 58.7 per cent. Mitsubishi (26.2 per cent) and the Labrador Iron Ore Royalty Income Fund (15.1 per cent) are also shareholders in IOC, Canada’s largest iron ore pellet producer. IOC operates an open pit mine, concentrator and pellet plant at Labrador City, Newfoundland, together with a 420 kilometre railway to port facilities and the partially refurbished pellet plant at Sept-Iles, Quebec.
     Products are transported on IOC’s railway to Sept-Iles. The port is ice free all year and handles ore carriers of up to 255,000 tonnes. IOC exports its concentrate and pellet products to major North American, European and Asia Pacific steel makers.
     The Sept-Iles pellet plant remains closed, following the suspension in September 2001 of the US$240 million refurbishment project.
     A five year labour contract expired at the end of February 2004. As part of the change programme at IOC, a new contract was sought which would include more flexible working arrangements. Negotiations for the new contract started in January but despite protracted negotiations the workforce went on strike on 19 July, finally returning to work on 28 September. Mine operations were halted for ten weeks though ship loading from stockpiles continued for part of this period. IOC employs approximately 1,800 people.

2004 operating performance
Net earnings were US$3 million compared with US$7 million in 2003. The reduction in earnings was attributable to the lost production caused by a ten week strike.
     Pellet production in the first half of 2004 showed a six per cent improvement over the corresponding period in 2003. Although operations recovered well from the shutdown, second half results were significantly affected and, as a result, full year total production was down 22 per cent on the 2003 level.
     During 2004, IOC maintained its focus on the cost reduction programme that commenced in 2002. While progress has been slower than originally anticipated, the new labour agreement provides a further key element in improving the efficiency of the operation. The new agreement, taken together with the further gains made in 2004 in improving the reliability of key production systems, leaves IOC well placed to benefit in 2005. Emphasis remains on improving safety performance.

  Million tonnes


IOC’s total sales of iron ore to major markets in 2004  
Europe 5.7
North America 3.7
Asia Pacific 2.1


Total 11.5


Rio Tinto 2004 Form 20-F   47


Back to Contents

Mineração Corumbaense Reunida (Corumbá) (Rio Tinto: 100 per cent)
Corumbá has been transferred to the Iron Ore group in 2005 to accommodate plans to expand production at the mine to 15 million tonnes per year from one million tonnes. In 2004, Corumbá produced 1.3 million tonnes of iron ore which was barged along the Paraguay River to South American and European customers. Logistic options are being considered for expanded export sales, including supplies to a proposed steel making project at Corumbá. Total resources at Corumbá are over 400 million tonnes of lump ore grading 62.7 per cent iron. There are 420 employees.

Iron ore group projects
HIsmelt®(Rio Tinto: 60 per cent)
The HIsmelt® project is a joint venture between Rio Tinto (60 per cent interest through its subsidiary, HIsmelt® Corporation), US steelmaker Nucor Corporation (25 per cent), Mitsubishi Corporation (10 per cent), and Chinese steelmaker Shougang Corporation (5 per cent). The project has received approval for Australian federal government support of A$125 million.
     The HIsmelt® process is a direct iron smelting technology developed largely by Rio Tinto that will convert iron ore fines into high quality pig iron (96 per cent iron content) without the use of coke ovens and sinter plants. Notably, the technology allows efficient processing of ore fines with higher levels of impurities.
     A pilot plant to demonstrate the technology is being expanded to commercial scale at Kwinana in Western Australia. Construction began in January 2003. The plant will have a production capability of 800,000 tonnes of pig iron per year. Cold commissioning commenced in late 2004 and the first hot metal was produced in the hot commissioning process during the second quarter of 2005 after which it is planned the plant will ramp up to 60 per cent of capacity in the first year, 90 per cent in the second, to reach full capacity in the third. Significant industrial relations issues occurred in the latter half of 2004, resulting in 170,000 lost hours of construction.
     In 2003, HIsmelt® signed a process licence agreement with the Laiwu Steel Group Ltd of China to allow for the development of an ironmaking facility using HIsmelt® technology. HIsmelt® has 100 employees.

Orissa, India (Rio Tinto: 51 per cent)
RTIO has a 51 per cent interest in Rio Tinto Orissa Mining, a joint venture with the state owned Orissa Mining Company. The joint venture holds rights to iron ore leases in Orissa, which it is seeking to develop. RTIO has recently appointed a project director to expedite the development of operations in India.

Simandou (Rio Tinto: 100 per cent)
The Simandou deposit in Guinea, west Africa, moved from Rio Tinto Exploration to full project status as part of RTIO in October 2004. Simandou is a greenfields discovery with potential to host significant resources of high grade iron ore. A prefeasibility study, started in fourth quarter 2004, will assess mining and transport options necessary to bring Simandou into production as quickly as possible. The Government of Guinea has an option to take a 20 per cent interest on a commercial basis.

   

Rio Tinto Energy group’s coal interests are in Australia and the US. They supply internationally traded and domestic US and Australian markets. It also includes Rössing Uranium in Namibia and Energy Resources of Australia which supply uranium oxide for electricity generation.
     In 2003, Rio Tinto formed a single management organisation for the Energy group’s coal assets in Australia. Rio Tinto and Coal & Allied (Rio Tinto: 75.7 per cent) agreed to combine Coal & Allied corporate and service functions with those of Pacific Coal to increase efficiencies and lower costs. Pacific Coal (Rio Tinto: 100 per cent) was renamed Rio Tinto Coal Australia (RTCA). Effective 1 February 2004, RTCA manages both Pacific Coal’s existing assets and Coal & Allied’s assets in the Hunter Valley in a centralised management structure which provides for shared costs.
     At 31 December 2004, the Energy group accounted for 13 per cent of Group operating assets and, in 2004, contributed 20 per cent of Rio Tinto’s turnover and 16 per cent of adjusted earnings.
Preston Chiaro, chief executive Energy, is based in London.

Rio Tinto 2004 Form 20-F   48


Back to Contents

Financial performance
2004 compared with 2003
The Energy group’s 2004 contribution to adjusted earnings was US$365 million, US$208 million higher than in 2003.
     Results benefited from a strengthening market for thermal coal and the entry of the new Hail Creek mine into a rising market for coking coal.

2003 compared with 2002
The Energy group’s 2003 contribution to adjusted earnings was US$157 million, US$196 million lower than in 2002. A lower export thermal coal price and a stronger Australian dollar were the principal components of the reduced result.

Kennecott Energy (Rio Tinto: 100 per cent)
Kennecott Energy (KEC) wholly owns and operates four open cut coal mines in the Powder River Basin of Montana and Wyoming, US and has a 50 per cent interest in, but does not operate, the Decker mine in Montana. KEC also manages the Group’s interest in Colowyo Coal in Colorado, US. In total it employs some 1,770 people.
     One of the largest US producers, KEC sells to electricity generators predominantly in mid western and southern states. Sales are made under multiple year contracts and on a spot basis for one year or less.
     The domestic US market for low sulphur coal continues to grow due to its competitive cost per delivered energy unit and restrictions on sulphur emissions by utilities. Continued strong demand for low cost and low sulphur western coal is expected to increase with the announcement of numerous new coal fired generation projects and increased utilisation of existing coal generation capacity in the US.

2004 operating performance
KEC’s attributable production of 118 million tonnes of coal was nine per cent higher than in 2003 as a result of higher demand for low sulphur coal. Earnings of US$119 million were 35 per cent higher than 2003 earnings of US$88 million. This increase represents higher realised prices and sales volumes and a lower tax charge. KEC also made progress in implementing value delivery initiatives that led to cost reductions, productivity improvements, reduced capital requirements and value adding marketing benefits. These benefits were partially offset by higher fuel prices.
     A detailed review of the mine plan and projected cash flows of the Colowyo coal business was completed in June 2004. This indicated that future operating and development costs are substantially higher than previously estimated. As a consequence of this, an exceptional charge of US$160 million was recorded in the first half of 2004 for the writedown of Colowyo’s fixed assets and recognition of related contract obligations. This is excluded from adjusted earnings.
     Modified mining practices lowered the high wall and waste piles at Cordero Rojo and were successful in alleviating the instability issues that had affected production in 2003.
     KEC successfully bid for an additional 177 million tonnes of in-situ coal reserves at West Antelope at a cost of US$146 million.
     The improved safety performance of 2003 was sustained into 2004.

Rio Tinto Coal Australia (Rio Tinto: 100 per cent)
Rio Tinto Coal Australia (RTCA), formerly Pacific Coal, manages the Group’s Australian coal interests. These comprise the Blair Athol (Rio Tinto: 71 per cent), Kestrel (Rio Tinto: 80 per cent), Tarong (Rio Tinto: 100 per cent) and Hail Creek (Rio Tinto: 82 per cent) coal mines and the Clermont deposit (Rio Tinto: 50 per cent). RTCA also provides management services to Coal & Allied Industries for day to day operation of its four mines.
     About 60 per cent of Blair Athol thermal coal is sold to its two Japanese joint venture partners under contracts extending to 2008 and 2010. The rest is sold by long term and annual agreements to European and southeast Asian customers.
     Production from the wholly owned Tarong mine is sold to Tarong Energy Corporation, an adjacent state owned power utility. A ten year contract for up to 7.5 million tonnes annually expires in 2010.
     Kestrel, the only underground mine, sells mainly metallurgical coal to customers in Japan, south east Asia, Europe and Central America generally on annual agreements.
     After the first commercial shipments in October 2003, the new coking coal mine at Hail Creek ramped up to its production capacity of 5.5 million tonnes per annum during 2004. Acceptance has been strong in all markets, resulting in a decision in mid 2004 to expand production to eight million tonnes per year at a total cost of US$157 million. During 2004, a further two per cent of the asset was sold to existing joint venture partners and eight per cent to Nippon Steel Corporation which entered a 15 year coal purchase contract.
     RTCA employs some 904 people.

2004 operating performance
RTCA’s earnings of US$180 million were 157 per cent higher than in 2003 due to new production from Hail Creek, stronger demand and improved prices. Export thermal coal prices increased by 40 per cent, export coking coal prices increased by 20 per cent and domestic prices by 28 per cent.
     Blair Athol shipments were constrained during the year by infrastructure: early in the year by failure of loading equipment at the Dalrymple Bay Coal Terminal and late in the year by port congestion.

Rio Tinto 2004 Form 20-F   49


Back to Contents

     Production decreased from 12.5 million tonnes to 12.2 million tonnes while sales were 11.8 million. Kestrel’s production of 3.3 million tonnes matched 2003 while shipments of 3.2 million tonnes of coking and thermal coal were 13 per cent lower than in 2003. The production sequence in 2004 involved two longwall changes. At Tarong, production increased by seven per cent to seven million tonnes in line with increased demand from Tarong Energy Corporation. Hail Creek production was 5.1 million tonnes of which 4.7 million tonnes were shipped.
     Rio Tinto’s share of coal production was 23 million tonnes, an increase of 22 per cent on 2003, principally resulting from production ramp up at Hail Creek.
     Although Blair Athol achieved a 75 per cent reduction over 2003 in lost time injury frequency rate, the business overall improved safety performance by only 15 per cent and fell well short of the best ever recorded in 2002.

Coal & Allied Industries (Rio Tinto: 75.7 per cent)
Coal & Allied Industries (Coal & Allied) is publicly listed on the Australian Stock Exchange and had a market capitalisation of A$2.9 billion (US$2.2 billion) at 31 December 2004. In 2003, a committee of independent Coal & Allied directors, negotiated an agreement with Rio Tinto to combine Coal & Allied’s corporate and management functions with those of Rio Tinto Coal Australia. The combined management organisation lowers costs, achieves economies of scale and removes duplicated functions for both Coal & Allied and Rio Tinto.
     Coal & Allied’s assets are all located within the Hunter Valley in New South Wales, Australia. It wholly owns Hunter Valley Operations, has an 80 per cent interest in Mount Thorley Operations and a 55.57 per cent interest in the contiguous Warkworth mine, and a 40 per cent interest in the Bengalla mine which abuts its wholly owned Mount Pleasant development project. Coal & Allied also has a 37 per cent interest in Port Waratah Coal Services.
     Coal & Allied produces thermal and semi soft coal. Most of its thermal coal is sold under contracts to electrical or industrial customers in Japan, Korea and elsewhere in Asia. The balance is sold in Europe and in Australia. Coal & Allied’s semi soft coal is exported to steel producing customers in Asia and Europe under a combination of long term contracts and spot business.
     Coal & Allied employs some 1,095 people.

2004 operating performance
Earnings of US$51 million were achieved compared with a loss of US$24 million in 2003. Export coal prices increased by 37 per cent. Good progress was made in implementing operational cost reductions including the agreement to combine corporate and management functions with those of RTCA, formerly Pacific Coal, and operational integration of the Mount Thorley and Warkworth operations, in order to improve performance in 2004 and beyond.
     At all operations, sales were constrained by insufficient rail infrastructure to meet producer demand. The Port Waratah Coal Services Port Allocation System was introduced in April 2004 to limit ship queues and reduce demurrage and will continue at least through 2005.
     At Hunter Valley Operations production increased from 12 million tonnes to 13.3 million tonnes while sales were 12.8 million tonnes. The integrated Mount Thorley Warkworth operations increased production from nine million tonnes to 10.5 million tonnes while sales were 10.1 million tonnes. At Bengalla, production decreased from 6.2 million tonnes to 5.3 million tonnes due to mine sequencing issues while sales were 5.8 million tonnes.
     Rio Tinto’s share of coal production was 16.7 million tonnes, an increase of nine per cent on 2003, principally resulting from expanded use of seven day rosters, improved productivity and use of contractors to meet strong market demand within the constraints of the Port Allocation System.
     Although the lost time injury frequency rate was reduced by 45 per cent from 2003, the result was overshadowed by a fatal injury to an employee of a contractor at Mount Thorley operations in May.

Rössing Uranium (Rio Tinto: 68.6 per cent)
Rössing produces and exports uranium oxide from Namibia to European, US and Asia Pacific electricity producers. Production has been lower than the 4,500 tonnes per year capacity for some years due to market conditions. Rössing employs approximately 830 people.

2004 operating performance
Total production of 3,582 tonnes of uranium oxide was 49 per cent higher than 2003 as a result of higher plant availability and improved market conditions. Expiring long term higher priced sales contracts have been replaced by contracts in line with 2004 market prices. Higher realised prices were more than offset by the strengthening of the Namibian dollar against the US dollar resulting in a loss of US$4 million compared with a loss of US$19 million in 2003. Initiatives to deliver cost savings continued, as did studies on opportunities to extend the mine beyond the life of the existing pit.
     In 2004, Rössing’s safety performance continued to improve with a 66 per cent reduction in the lost time injury frequency rate.

Energy Resources of Australia (Rio Tinto: 68.4 per cent)
Energy Resources of Australia Ltd (ERA) is publicly listed and had a market capitalisation of A$1.3 billion (US$1.0 billion) at 31 December 2004. ERA employs approximately 260 people with 13 per cent of the operational workforce represented by Aboriginal people.

Rio Tinto 2004 Form 20-F   50


Back to Contents

     ERA produces uranium oxide at the Ranger open pit mine, 260 kilometres east of Darwin in the Northern Territory. ERA also has title to the nearby Jabiluka mineral lease, which in 2003 was put on long term care and maintenance. Ranger has a 5,500 tonnes per year capacity and began production in 1981. Estimated ore reserves are sufficient to maintain uranium oxide production for approximately eight years at current rates. ERA’s operations including Jabiluka are surrounded by, but remain separate from, the World Heritage listed Kakadu National Park and especially stringent environmental requirements and governmental oversight apply. Uranium oxide from Ranger is sold to electricity utilities in Japan, Korea, Europe and North America.

2004 operating performance
Uranium oxide production of 5,143 tonnes was above the previous year in response to greater sales commitments. Stronger prices were offset by the strengthening Australian dollar and resulted in earnings of US$19 million, an increase of US$8 million from 2003.
     In response to a water contamination incident and a series of equipment radiation clearance breaches that occurred in late 2003 and early 2004, mining and processing operations were suspended for a total of 10 days to ensure that all work necessary to rectify the deficiencies was either complete or under way. In both cases, the government Supervising Scientist's report concluded that it is most unlikely that anyone suffered any long term health effects. ERA has since successfully passed three government audits and has committed to implementing the Australian Health and Safety Standard AS4801 in addition to ISO 14001. On 1 June 2005 ERA was fined A$150,000 in the Darwin Magistrate’s Court after having pleaded guilty to two charges related to these incidents.
     Safety performance for 2004 deteriorated against 2003 in terms of lost time injuries.

Energy group projects
Clermont Coal
(Rio Tinto: 50.1 per cent)
The Clermont deposit is near RTCA’s Blair Athol mine. It is suited to open cut development. A feasibility study commenced in 2004. Integration options with Blair Athol are available following the signing of a strategic alliance agreement by the Blair Athol and Clermont Joint Ventures. JPower joined the Clermont Joint Venture after acquiring a 15 per cent interest from Rio Tinto and Mitsubishi in 2003.

Mount Pleasant (Rio Tinto: 75.7 per cent)
Development of the Mount Pleasant project continued with further optimisation work in 2004 on the pre-feasibility study undertaken in 2002.

INDUSTRIAL MINERALS GROUP

 
     
   

Rio Tinto’s Industrial Minerals group produces borates, industrial salt, talc and titanium dioxide feedstock. Rio Tinto Borax, Rio Tinto Iron & Titanium, Luzenac and Dampier Salt, its principal businesses, are leading suppliers of their respective products.
     The Industrial Minerals group employed approximately 7,000 people in 2004.

Rio Tinto 2004 Form 20-F   51


Back to Contents

     At 31 December 2004, the Industrial Minerals group accounted for 13 per cent of the Group’s operating assets and contributed approximately 15 per cent of Rio Tinto’s turnover and 10 per cent of adjusted earnings in 2004.
     Andrew Mackenzie replaced Tom Albanese as chief executive Industrial Minerals, and is based in London.

Financial performance
2004 compared with 2003
Industrial Minerals’ contribution to 2004 earnings was US$223 million, 45 per cent higher than in 2003, reflecting higher volumes and prices at Borax, increased prices at Rio Tinto Iron & Titanium and the partial reversal of a writedown taken in 2003 relating to a customer receivable. There was also a steady improvement in trading conditions for both the talc and salt businesses in 2004. These factors were partially offset by the strength of the Canadian dollar and South African rand against the US dollar.
      Rio Tinto Borax’s earnings were 18 per cent higher at US$94 million. The borates business benefited from continued strength in the US housing market and increasing demand from China.
      Rio Tinto Iron & Titanium earnings at US$95 million were 102 per cent higher than in 2003. Although the conventional feedstock market remained in oversupply, earnings benefited from stronger demand for iron, steel, rutile and zircon co-products. Production of conventional slags reflected market conditions, while production of upgraded slag (UGS) continued to run at capacity.

2003 compared with 2002
Industrial Minerals’ contribution to 2003 earnings was US$154 million, 46 per cent lower than in 2002, reflecting the significant weakening of the US dollar against both the Canadian dollar and South African rand and continued weakness across North American and European markets.
      Rio Tinto Borax’s earnings were eight per cent lower at US$80 million. The cost base was negatively impacted by higher natural gas and diesel prices, rising employee benefit costs in California and net one off charges.
      Rio Tinto Iron & Titanium earnings at US$47 million were 71 per cent lower than in 2002 due to the effect of the weak US dollar, soft market conditions and a charge associated with the writedown of a customer receivable in 2003.

Rio Tinto Borax (Rio Tinto: 100 per cent)
Rio Tinto Borax’s Boron mine in California’s Mojave Desert is the world’s largest borate mine. Borates are used in the US for vitreous applications, such as fibreglass, glass wool, high temperature glasses and enamels. The perborate industry, a major market in Europe, uses borates as bleach in detergents. Other uses include ceramics, fertilisers, flame retardants, wood preservatives and corrosion inhibitors.
      Rio Tinto Borax’s US and UK research laboratories provide technical support and participate in collaborative projects with customers.

2004 operating performance
Production volumes were steady at 565,000 tonnes. Sales were nine per cent higher than 2003, due to good trading conditions driven by the US construction sector, growth from newer applications and Chinese demand.
      The first phase of an expansion of boric acid capacity, announced in 2003, is scheduled to come on stream in 2005. Approval to commence a second phase expansion has been received, with construction to be completed by 2006.

Rio Tinto Iron & Titanium (Rio Tinto: 100 per cent)
Rio Tinto Iron & Titanium (RIT) comprises the wholly owned QIT-Fer et Titane (QIT) in Quebec, Canada and the 50 per cent interest in Richards Bay Minerals (RBM) in KwaZulu-Natal, South Africa. Both produce titanium dioxide feedstock used by customers to manufacture pigments for paints and surface coatings, plastics and paper, as well as iron and zircon co-products.
      QIT’s proprietary process technology enables it to supply both the sulphate and chloride pigment manufacturing methods. Its upgraded slag (UGS) plant supplies the growing chloride sector and is designed for expansion in line with demand up to a capacity of 600,000 tonnes per year from its current level of 250,000 tonnes. During 2003 RIT announced an expansion of its UGS plant to 325,000 tonnes per annum, with new production on schedule to commence in 2005.
      RBM’s ilmenite has a low alkali content which makes its feedstock suitable for the chloride pigment process. RBM has the capacity to produce one million tonnes of feedstock annually.

2004 operating performance
Demand for titanium dioxide pigment improved strongly throughout 2004. However, the feedstock side of the industry continued to be affected by the general oversupply of conventional chloride and sulphate slag feedstocks and feedstock inventory levels at some pigment producers. In contrast, demand for very high grade chloride feedstock products, such as UGS, remains strong. Overall, RIT production of titanium dioxide feedstocks was the same as 2003, reflecting both market conditions and the effect of the introduction of new capacity.
      Demand for iron and steel coproducts was exceptionally strong during 2004, with prices reaching historic highs. Zircon markets continued to be very tight.

Rio Tinto 2004 Form 20-F   52


Back to Contents

Dampier Salt (Rio Tinto: 64.9 per cent)
Dampier Salt (DSL) is now the world’s largest salt exporter. It produces industrial salt by solar evaporation at Dampier, Port Hedland and Lake MacLeod, where it also mines gypsum, in Western Australia.
      The chemical industry in Asia is the principal customer for DSL’s salt whilst gypsum’s main use is in wallboard and cement manufacture.

2004 operating performance
Dampier Salt’s earnings in 2004 were unchanged, at US$10 million. While trading conditions were improved through higher volumes, earnings were impacted by the weakness of the US dollar and escalating costs in north western Australia. Salt production was three per cent higher than 2003, at 7.4 million tonnes (Rio Tinto share: 4.8 million tonnes).
     Commissioning of a new process plant at Dampier began in December 2004.

Luzenac Group (Rio Tinto: 99.9 per cent)
The Luzenac Group operates talc mines, including the world’s largest, in south west France, and processing facilities in Australia, Austria, Belgium, Canada, France, Italy, Japan, Mexico, Spain, the UK and the US.
      Luzenac products are used internationally. Principal uses are in paper, paints, cosmetics, ceramics, agricultural and plastics industries.

2004 operating performance
Earnings in 2004, at US$24 million, were 41 per cent higher than the previous year reflecting recovery in the US paper industry and new product developments. Luzenac’s production in 2004 was six per cent higher than 2003 at 1.44 million tonnes.
     Sales volumes were slightly higher than from 2003, while prices showed gradual improvement.

Industrial minerals group projects
QIT Madagascar Minerals (Rio Tinto: 80 per cent)
RIT manages QIT Madagascar Minerals (QMM), in which an agency of the Government of Madagascar has a 20 per cent interest. QMM was formed to evaluate and, if appropriate, develop large mineral sand deposits in the south east of Madagascar.
      In November 2001, QMM was granted an environmental permit by the Government for the proposed minerals sands project. The permit requires QMM to comply with a full range of social and environmental obligations throughout the life of the project.
      A feasibility study is progressing and RIT is working with the Government, as well as all other interested and affected parties, with a view to making a decision on development in 2005.

Rio Colorado Potash (Rio Tinto: option to acquire 100 per cent)
Rio Tinto entered into an option agreement in 2003 to acquire 100 per cent of Potasio Rio Colorado SA, an Argentine company holding the mineral rights and other assets of the Rio Colorado potash project. The project is located 1,000 kilometres south west of Buenos Aires, in the provinces of Mendoza and Neuquen. The option runs until late 2005, during which time Rio Tinto will evaluate the commercial potential for developing the project. A pilot plant was commissioned in 2004 as part of this evaluation.

Rio Tinto 2004 Form 20-F   53


Back to Contents

Rio Tinto’s Aluminium group encompasses its wholly owned, integrated aluminium subsidiary, Comalco, and its 51 per cent share in Anglesey Aluminium.
      At 31 December 2004, the Aluminium group accounted for 23 per cent of Rio Tinto’s operating assets and in 2004 contributed 17 per cent of Group turnover and 15 per cent of adjusted earnings.
      Oscar Groeneveld succeeded Sam Walsh as chief executive Aluminium, and is based in Brisbane, Australia.

Financial performance
2004 compared with 2003
Rio Tinto Aluminium’s contribution to 2004 earnings was US$334 million, an increase of 67 per cent.
      Stronger aluminium prices increased earnings by US$162 million with the average three months aluminium price in 2004 at 78 US cents per pound compared with 65 US cents per pound in 2003. The effect of the weakening US currency reduced Aluminium’s earnings by US$55 million.

2003 compared with 2002
Aluminium’s contribution to 2003 earnings was US$200 million, a decrease of 22 per cent from 2002.
      Stronger aluminium prices increased earning by US$51 million with the average three month aluminium price in 2003 at 65 US cents per pound compared with 61 US cents per pound in 2002. The effect of the weakening US currency reduced Aluminium’s earnings by US$111 million.

Rio Tinto Aluminium
Rio Tinto Aluminium is a major supplier of bauxite, alumina and primary aluminium to world markets. It employs about 3,850 people.
      Rio Tinto Aluminium has a large, wholly owned bauxite mine on Cape York Peninsula, Queensland. A US$150 million mine expansion was completed on time to supply the bauxite requirements of the Comalco Alumina Refinery. Approximately 90 per cent of the bauxite from Weipa is shipped to alumina refineries at Gladstone, Queensland and Sardinia, Italy.
      Construction of the first stage of the wholly owned Comalco Alumina Refinery at Gladstone in Queensland was completed in late 2004, ahead of schedule and close to the budget of US$750 million. Operations have commenced and first shipments were made in November 2004, three months ahead of schedule. The refinery is expected to produce 1.4 million tonnes of alumina annually, with full capacity due to be reached by the end of 2006. There is potential for capacity to be increased to over four million tonnes per year in two additional stages and a small team is working on a feasibility study for Stage Two. The majority of the refinery’s Stage One output will go into Rio Tinto Aluminium smelters. The balance will be placed in the traded alumina market. The refinery enables Rio Tinto Aluminium to add further value to the Weipa bauxite deposit and strengthen both Rio Tinto Aluminium’s and Australia’s positions in the world alumina market.
      In 2004, Comalco sold its four per cent interest in the Boké bauxite deposit in West Africa to other shareholders in the joint venture for US$12 million. The gain of US$4 million has been excluded from adjusted earnings.
      In 2003, Comalco signed a long term alumina supply agreement with Norsk Hydro, to supply 300,000 tonnes of alumina in 2005 and then 500,000 tonnes of alumina per year for more than 20 years. This agreement underpins the investment in the Comalco Alumina Refinery.
      Rio Tinto Aluminium’s primary aluminium is produced by smelters at Boyne Island at Gladstone (59.4 per cent), Bell Bay (100 per cent) in Tasmania, Tiwai Point (79.4 per cent) in New Zealand and Anglesey Aluminium (51 per cent) in Wales, UK.

2004 operating performance
Overall, Rio Tinto’s share of bauxite production in 2004 increased by four per cent above 2003, despite a first quarter affected by wet weather and the sale of Boké in June 2004.
      Bauxite production at Weipa was 12.6 million tonnes, six per cent higher than in 2003. Weipa bauxite shipments increased eight per cent, to 12.3 million tonnes, compared with 2003 levels.

Rio Tinto 2004 Form 20-F   54


Back to Contents

     QAL production increased by one per cent compared to 2003, despite an interruption to the refinery’s power supply. This interruption reduced production by approximately 85,000 tonnes (33,000 tonnes Rio Tinto share) but otherwise QAL enjoyed strong production for the balance of the year. Eurallumina production increased four per cent over 2003 levels.
     Rio Tinto Aluminium’s share of aluminium production from its four smelters at 837,000 tonnes was 20,000 tonnes above 2003 production. Attributable metal shipments for 2004 were 841,000 tonnes, an increase of 21,000 tonnes, and went to similar destinations as in 2003, primarily Japan, Australia, Europe and Korea.
     Production at Anglesey increased by two per cent, Boyne Island increased by four per cent, Tiwai Point increased by five per cent. The Bell Bay smelter suffered equipment failure in June in the electrical switchyard, resulting in a three per cent decrease in production. The equipment has been replaced and production returned to normal levels.

Aluminium group projects
Weipa mine expansion
(Rio Tinto: 100 per cent)
The US$150 million mine expansion at Weipa in 2004 is expected to increase capacity to 16.5 million tonnes of bauxite per year. The mining upgrade relates to a move to simultaneous mining at Weipa’s Andoom and East Weipa mines and involves a change in ore characteristic (fine ore) to that previously being mined. The majority of the expenditure for the project was on a 9.5 million tonne beneficiation plant to allow mining of lower grade fine ores. The next activity will be the construction of a new US$42 million power station for the Weipa mining operations and surrounding communities.

Rio Tinto’s Copper group comprises Kennecott Utah Copper in the US and interests in the copper mines of Escondida in Chile, Grasberg in Indonesia, Northparkes in Australia, Palabora in South Africa, and the Resolution Copper project in the US. The group also has management responsibility for Kennecott Minerals Company and Kennecott Land in the US.
     In March 2004, Rio Tinto sold its holding in Freeport-McMoRan Copper and Gold Inc. (FCX) to FCX for net consideration of US$882 million. Later in the year, it divested its interests in the Zinkgruvan and Neves Corvo mines for a net consideration of US$193 million which included a profit sharing adjustment and the sale of the rights to future price participation on the Neves Corvo sale. Sale of the Fortaleza nickel complex in Brazil was completed in early 2004 for total cash consideration of about US$80 million. The sale of Rio Tinto’s 51 per cent interest in Rio Paracatu Mineração for US$250 million was completed at the end of the year. Responsibility for Rio Tinto Brasil, owner of the Corumbá iron ore mine, was transferred to the Iron Ore group. The gains arising from business disposals by the Copper group have been excluded from adjusted earnings.
     At 31 December 2004, the Copper group, which also produces gold as a significant co-product, accounted for 19 per cent of the Group’s operating assets and, in 2004, contributed approximately 22 per cent of Rio Tinto’s turnover, of which 70 per cent was from copper and the remainder mostly from gold. It accounted for 39 per cent of adjusted earnings in 2004.
     Tom Albanese, who took over from Oscar Groeneveld as chief executive Copper, is based in London.

Financial performance
2004 compared with 2003
The Copper group’s contribution to earnings was US$856 million, US$416 million higher than in 2003. The average price of copper was 130 US cents per pound compared to 80 US cents in 2003. The average gold price of US$409 per ounce increased by 13 per cent.
     Kennecott Utah Copper’s contribution to earnings of US$293 million compared with US$88 million in 2003.
     Rio Tinto’s share of earnings from Escondida increased by US$294 million to US$416 million. Mined production of copper was up 22 per cent due to the resumption of full production at the beginning of 2004.

Rio Tinto 2004 Form 20-F   55


Back to Contents

     The earnings contribution from the Grasberg joint venture decreased by US$66 million to US$38 million chiefly as a result of the material slippage in October 2003. Early in 2004 efforts were directed at accelerating the removal of waste material to restore safe access to the higher grade area of the open pit. Production activities in this area resumed in the second quarter and grades improved during the second half.
     Palabora recorded a loss of US$21 million in 2004 due to the negative effect of the stronger rand in relation to the US dollar combined with lower volumes and higher costs due to continued delays in reaching production capacity in the underground mine.

2003 compared with 2002
The Copper group’s contribution to earnings was US$440 million in 2003, US$99 million higher than in 2002. The average price of copper was 80 US cents per pound compared to 71 US cents in 2002. The average gold price of US$363 per ounce increased by 17 per cent.
     Kennecott Utah Copper’s 2003 contribution to earnings of US$88 million was broadly in line with 2002.
     Rio Tinto’s earnings from Escondida increased to US$122 million despite constrained output in response to weak market demand. Mined production of copper was up 32 per cent (Rio Tinto’s share) due to the commissioning of the new Laguna Seca concentrator.
     The Grasberg joint venture’s earnings contribution decreased by US$5 million to US$127 million chiefly as a result of the material slippage in October. This had an adverse effect on both volumes and costs. In the fourth quarter, only lower grade material was mined from the open pit and near term mine sequencing operations were directed to restoration of safe access to the higher grade areas. Despite full production from the underground mine, mill throughput was still significantly below capacity.
     Earnings at Palabora decreased to US$1 million in 2003 due to the negative effect of the stronger rand in relation to the US dollar combined with lower volumes and higher costs due to delays in reaching production capacity in the underground mine.

Kennecott Utah Copper (Rio Tinto: 100 per cent)
Kennecott Utah Copper (KUC) operates the Bingham Canyon mine, Copperton concentrator and Garfield smelter complex, near Salt Lake City, US.
     KUC supplies more than ten per cent of annual US refined copper requirements and employs approximately 1,500 people. Negotiation of a new labour agreement, to last until September 2009, was concluded in June 2003. The agreement provided for greater flexibility in deployment of personnel and assignment of work.
     KUC provides some management services to the wholly owned Barneys Canyon gold mine due to its proximity to Bingham Canyon. Mining and milling at Barneys Canyon ended in 2001 but gold production continues until 2005. The operation employs about 20 people.
     KUC, as the owner of 53 per cent of undeveloped land in the Salt Lake Valley of Utah, formed Kennecott Land to develop about 16,000 hectares of the 37,200 hectares owned. The initial 1,800 hectare Daybreak project site lies in the path of expanding residential areas. Kennecott Land has the right to build roads, make utility connections and prepare the land for sale to builders who will construct houses for 30,000 people. Rio Tinto initially invested US$50 million. The first revenues were received in 2004.

2004 operating performance
Net earnings of US$293 million were US$205 million above 2003 assisted by higher metal prices. Byproduct grades, particularly gold and silver, remained at 2003 levels but are anticipated to return to life of mine averages in 2005. Molybdenum production was 48 per cent higher than in 2003 due to higher head grades and recoveries.
     Refined copper production was seven per cent higher than in 2003. A project to enlarge the Bingham Canyon open pit was approved in February 2005. The East 1 pushback is expected to extend the life of the open pit to 2017. Capital expenditure on the project is budgeted to be US$100 million for mine facilities, a concentrator upgrade and mobile equipment, and US$70 million after 2008 for the relocation of the in pit crusher and dewatering facilities. The East 1 pushback is a higher value, lower capital intensive option than the previous mine plan which was predicated on development of an underground mine from 2013. Mine development options from 2017 will be reviewed in the context of the decision to proceed with the East 1 pushback, and include various open pit and underground alternatives. A one off non cash charge of US$36 million has been recorded in 2004 to reflect an increase in the present value of provisions for environmental remediation costs, based on the assumption that mining operations cease in 2017. Pending any extension of the assumed mine life beyond 2017, there will be an increase in the annual depreciation charge and amortisation of discount from 2005 of around US$45 million.

Rio Tinto 2004 Form 20-F   56


Back to Contents

  2002   2003   2004  






 
Principal operating statistics at KUC 2002 – 2004            
Rock mined (’000 tonnes) 150,331   135,204   129,196  
Ore milled (’000 tonnes) 40,720   46,105   45,712  
Head grades:            
Copper (%) 0.69   0.67   0.63  
Gold (g/t) 0.44   0.29   0.29  
Silver (g/t) 3.42   3.02   3.04  
Molybdenum (%) 0.034   0.027   0.033  
Copper concentrates produced (’000 tonnes) 992   1,147   1,106  
Production of metals in copper concentrates            
Copper (’000 tonnes) 260.2   281.8   263.7  
Gold (’000 ounces) 412   305   308  
Silver (’000 ounces) 3,663   3,548   3,584  
Molybdenum concentrates produced (’000 tonnes) 11.2   8.8   12.9  
Contained molybdenum (’000 tonnes) 6.1   4.6   6.8  
Concentrate smelted on site (’000 tonnes) 1,096   1,060   1,098  
Production of refined metals            
Copper (’000 tonnes) 293.7   230.6   246.7  
Gold (’000 ounces) 488   308   300  
Silver (’000 ounces) 4,037   2,963   3,344  






 

Grasberg (Rio Tinto: 40 per cent joint venture)
Grasberg, in Papua, Indonesia, is one of the world’s largest copper and gold mines in terms of reserves and production. It is owned and operated by Freeport Indonesia (PTFI), the principal and 91 per cent owned subsidiary of the US based Freeport-McMoRan Copper & Gold Inc. (FCX).
     To meet the mine’s social obligations to local communities, at least one per cent of Grasberg’s net sales revenues are committed to support village based programmes. In addition, two new trust funds were established in 2001 in recognition of the traditional land rights of the local Amungme and Komoro tribes. In 2004, PTFI contributed US$17.8 million (net of Rio Tinto portion) and Rio Tinto US$1.6 million in total to the funds.
     As a result of training and educational programmes, Papuans represented more than a quarter of PTFI’s approximately 9,000 workforce by the end of 2004.

2004 operating performance
Grasberg open pit production was affected by two rock slippages in the last quarter of 2003. Consequently, a large part of 2004 was focused on ensuring a safe production environment into the future. This resulted in lower than predicted open pit copper and gold production due to a combination of lower tonnages and grades of ore exacerbated by using low grade ore from the pit to supplement mill production during the first four months of the year. Pit production stabilised during the second half of the year. In December 2004, Rio Tinto and FCX agreed the adjustment to the Participation Agreement and sharing of insurance proceeds attributable to the Grasberg pit slippage incidents. Rio Tinto’s share of insurance proceeds contributed US$20 million to net earnings.

  2002   2003   2004  






 
Principal operating statistics for PTFI 2002-2004            
Ore milled (’000 tonnes) 86,001   74,103   67,750  
Head grades:            
Copper (%) 1.14   1.09   0.87  
Gold (g/t) 1.24   1.54   0.88  
Silver (g/t) 3.60   4.03   3.85  
Production of metals in concentrates            
Copper (’000 tonnes) 864.4   715.8   516.4  
Gold (’000 ounces) 3,030   3,262   1,584  
Silver (’000 ounces) 6,402   6,474   5,037  






 

Escondida (Rio Tinto: 30 per cent)
The low cost Escondida copper mine in Chile is one of the largest copper mines in the world, with a mine life expected to exceed 30 years at current rates of production. The mine is 57.5 per cent owned and managed by BHP Billiton.
     Approval was given in 2003 for the US$400 million Escondida Norte project. The satellite deposit will provide mill feed to maintain capacity at Escondida above 1.2 million tonnes per annum of copper in concentrate and cathode to the end of 2008 as existing Escondida mine grades decline. First production from Norte is expected in the fourth quarter of 2005. Rio Tinto’s share of the project cost is US$120 million.
     In 2004 a US$870 million sulphide leach project was approved involving the use of bacteria to leach copper from sulphide ores that would otherwise be discarded as waste. The project will produce 180,000 tonnes (Rio Tinto share 54,000 tonnes) of copper cathode metal per annum for more than 25 years. It is scheduled to start production during the second half of 2006.
     Escondida employs approximately 2,800 people directly, together with 2,400 contractor personnel.

Rio Tinto 2004 Form 20-F   57


Back to Contents

2004 operating performance
Escondida’s mined copper production was 22 per cent higher than in 2003. In late 2003 high clay content in the ore caused problems in recovering water from tailings that inhibited production from the new Laguna Seca concentrator. These problems were resolved in early 2004 and the concentrator achieved an average throughput of 105,216 tonnes per day during the year compared to the design capacity of 110,000 tonnes per day. Overall, Escondida ore tonnes milled were 17 per cent higher and copper grades six per cent higher than in 2003.

  2002   2003   2004  






 
Principal operating statistics at Escondida 2002-2004            
Rock mined (’000 tonnes) 306,620   300,386   377,356  
Ore milled (’000 tonnes) 46,536   70,347   82,378  
Head grade:            
Copper (%) 1.58   1.43   1.51  
Production of metals in concentrates            
Copper (’000 tonnes) 622.6   847.0   1,045.6  
Gold (’000 ounces) 126   184   217  
Silver (’000 ounces) 2,981   4,728   5,747  
Copper cathode (’000 tonnes) 138.7   147.6   152.1  






 

Palabora (Rio Tinto: 49.2 per cent)
Palabora Mining Company (Palabora) is a publicly listed company on the Johannesburg Stock Exchange and operates a mine and smelter complex in South Africa.
     Palabora has developed a US$465 million underground mine with a planned production rate of 30,000 tonnes per day of ore. Approximately 1.6 million tonnes of copper are expected to be produced over its 20 year life.
     Palabora supplies most of South Africa’s copper needs and exports the balance. It employs approximately 1,700 people and labour agreements are negotiated annually.

2004 operating performance
Palabora recorded a net loss of US$21 million compared with earnings of US$1 million in 2003. With closure of the open pit mine in 2002 after 40 years of production, a start was made on commissioning of the underground block cave mining project. During 2003 and 2004 the ramp up to full production of 30,000 tonnes per day was hindered by fragmentation problems and poor performance of remote rock breaking equipment. The average production rate of underground ore mined during the last quarter of 2004 was 26,500 tonnes per day, with 27,250 tonnes per day in December, compared to the target of 30,000 tonnes per day.
     The aggregate impact of the limited production from the underground mine, and the strength of the rand against the US dollar, partly offset by cost saving actions, adversely affected earnings, and led to additional borrowing requirements. In addition, this triggered an evaluation of the recoverable amount of Palabora’s copper business which resulted in a provision for asset impairment of US$161 million after tax and outside shareholders’ interests. This is excluded from adjusted earnings.
     Palabora is selling its magnetite iron ore stockpile with completion expected in 2005, a by-product of previous and current copper mining, that is stored on site. The stockpile is estimated to contain over 235 million tonnes of material grading more than 55 per cent iron.

  2002   2003   2004  






 
Principal operating statistics at Palabora 2002-2004            
Ore milled (’000 tonnes) 9,933   11,415   8,657  
Head grade:            
Copper (%) 0.63   0.59   0.74  
Copper concentrates produced (’000 tonnes) 167.9   163.3   187.7  
Contained copper (’000 tonnes) 52.2   52.4   54.4  
New concentrates smelted on site (’000 tonnes) 258.6   267.6   253.4  
Refined copper produced (’000 tonnes) 81.6   73.4   67.5  






 

Northparkes (Rio Tinto: 80 per cent)
Rio Tinto’s interest in the Northparkes copper-gold mine resulted from the acquisition of North Limited. Northparkes is a joint venture with the Sumitomo Group (20 per cent).
     Following an initial open pit operation at Northparkes in central New South Wales, Australia, underground block cave mining has been undertaken since 1997. With present and future developments, the operation has an expected life of 13 years at current production rates.
     The copper concentrate produced is shipped under long term contracts that provide for periodic negotiation of certain charges, as well as spot sales, to smelters in Japan (67 per cent), Australia (14 per cent) and other countries (19 per cent).
     Northparkes employs approximately 160 people together with 140 permanent contractors.

Rio Tinto 2004 Form 20-F   58


Back to Contents

2004 operating performance
Production from the first underground block cave ceased in early 2003 and is being replaced by the Lift 2 block cave which commenced production in 2004. Progress with mine development for Lift 2 was hampered by high rock stresses which adversely affected mine development but assists in the caving of the orebody with good fragmentation. The transition to Lift 2 was completed in 2004.

  2002   2003   2004  






 
Principal operating statistics at Northparkes 2002-2004            
Ore milled (’000 tonnes) 5,364   5,168   5,008  
Head grade:            
Copper (%) 0.86   0.67   0.79  
Gold (g/t) 0.35   0.44   0.66  
Production of contained metals            
Copper (’000 tonnes) 38.4   27.1   30.0  
Gold (’000 ounces) 40.8   48.6   79.4  






 

Kennecott Minerals (Rio Tinto: 100 per cent)
Kennecott Minerals in the US manages the Greens Creek mine (Rio Tinto: 70 per cent) in Alaska and the Rawhide mine (Rio Tinto: 51 per cent) in Nevada. It also owns the Group’s interest in the Cortez gold mine (Rio Tinto: 40 per cent), also in Nevada. Ore extraction from Rawhide was completed in October 2002 and reclamation work is well advanced.
     Kennecott Minerals employs approximately 300 people, excluding employees of non managed operations.

2004 operating performance
Net earnings of US$79 million were US$19 million above 2003, benefiting from higher gold prices. Gold production decreased by three per cent at the Cortez gold mine.

Greens Creek (Rio Tinto: 70.3 per cent)
In addition to gold, the Kennecott Greens Creek mine on Admiralty Island in Alaska produces silver, zinc and lead.

2004 operating performance
Mill throughput was three per cent higher than in 2003, but due to lower grades, silver and zinc production from Green’s Creek were 17 per cent and nine per cent lower, respectively, than in 2003.

Copper group projects
Resolution (Rio Tinto: 55 per cent)
The Resolution project is situated in Arizona, US, in the area of the depleted Magma (Superior) copper mine. In 2001, an agreement was signed with BHP Billiton Base Metals which allowed Rio Tinto to earn a 55 per cent interest in the project by spending US$25 million over six years. In 2003, five deep exploration drillholes intersected significant copper mineralisation, indicating a large deposit at depth. Rio Tinto completed earning its 55 per cent interest in the project in early 2004. The project is currently in the preliminary stages of a prefeasibility study. It is anticipated that studies will take some considerable time.

Cortez Hills (Rio Tinto: 40 per cent)
Rio Tinto holds a 40 per cent interest in the Cortez gold mine, a joint venture with Placer Dome. The mine is located in northeastern Nevada, US, and the associated area of interest includes the Cortez Hills deposit, discovered in 2003 which contains proven and probable reserves of 7.5 million ounces of gold. A feasibility study is in progress to determine the optimum sequencing for development of the deposits within the Cortez area of interest. It is anticipated that operating permits for Cortez Hills will be obtained in 2006, with initial gold production occurring in mid 2007.

Eagle (Rio Tinto: 100 per cent)
The Eagle project is a small tonnage, high grade nickel deposit located in Michigan, US, for which Kennecott Minerals has commissioned a prefeasibility study.

Rio Tinto 2004 Form 20-F   59


Back to Contents


With diamonds becoming a significant earner for Rio Tinto, the Diamonds product group was formed in 2003 from the former Diamonds & Gold group. The group comprises Rio Tinto’s 60 per cent interest in the Diavik Diamonds mine in Canada, the wholly owned Argyle mine in Australia, Rio Tinto’s 78 per cent interest in the Murowa mine in Zimbabwe which started production in 2004 and diamond sales and representative offices in Belgium and India.
      Rio Tinto is a leading proponent of the Kimberley Process which seeks to ensure that only legitimately mined and traded rough diamonds are introduced into the world market. Programmes are in place to ensure that firms operating to acceptable standards of social responsibility process diamonds mined by Rio Tinto. Rio Tinto sells its diamonds through its marketing arm, Rio Tinto Diamonds, according to their mine source in order to gain the benefits of origin.
     At 31 December 2004, Diamonds accounted for eight per cent of the Group’s operating assets and, in 2004, contributed five per cent of Rio Tinto’s turnover and eight per cent of adjusted earnings.
     Keith Johnson, chief executive, Diamonds, is based in London.

Financial performance
2004 compared with 2003
Diamonds contributed US$169 million to adjusted earnings, an increase of US$56 million from 2003, assisted by the continuing operating success of the Diavik Diamonds mine.
     The diamond market continued to be strong. There was robust growth in retail jewellery sales in the US and the Japanese market grew for the first time in a number of years. Industry rough prices improved, particularly for large, clean, white rough diamonds for which demand has been consistently in excess of supply. Prices also increased for polished diamonds.

2003 compared with 2002
Diamonds in 2003 contributed US$113 million to adjusted earnings, up US$50 million from 2002, reflecting the startup of the Diavik Diamonds mine.
     Demand for rough diamonds was strong throughout 2003 with the rough market outperforming the market for polished stones.

Diavik Diamonds (Rio Tinto: 60 per cent)
Diavik Diamond Mines (DDMI) owns Rio Tinto’s interest in and manages the unincorporated Diavik Diamonds joint venture in the Northwest Territories of Canada.
     The project was completed in 2003 well ahead of schedule and within budget. Initial production of gem quality diamonds commenced in January 2003 with commissioning of the process plant. Production will build up over the next two years.
     DDMI’s commitment to work with Aboriginal communities was formally concluded in five participation agreements, providing training, employment and business opportunities. Procurement contracts for the operating phase were negotiated with Aboriginal businesses.

2004 operating performance
Net earnings were US$145 million, US$104 million more than in 2003. Sales of diamonds continued to attract a high level of interest with prices being achieved at a significantly higher level than originally projected.
     Production continued to ramp up during 2004 and exceeded expectations in nearly all respects. Record volumes were produced as the process plant comfortably exceeded design throughput on a consistent basis. Improving grades continued to reflect the processing of mud rich material that surrounds the kimberlite proper.
     A strategic planning team, separate from mine operations, is studying how best to capture the upside of a stronger market and new geological information for both the A154South and A154North kimberlites. After 12 months of study, Rio Tinto approved the construction of the A418 dike at an expected cost of US$190 million. Construction is planned to commence in mid 2005. Rio Tinto also approved studies to investigate the feasibility of underground mining of three of the four kimberlite bodies. The studies will include the construction of an exploratory decline. The project is expected to cost US$75 million. Diavik includes some of the most valuable kimberlites in the world.

Rio Tinto 2004 Form 20-F   60


Back to Contents

Argyle (Rio Tinto: 100 per cent)
Rio Tinto owns and operates the Argyle diamond mine in Western Australia.
     Production from Argyle’s major resource, the AK1 open pit mine, is expected to continue until 2007 with processing continuing for a short while thereafter. A feasibility study is under way into underground mining by the block caving method beneath the open pit. A decision is expected in 2005 relating to mine closure or further mine development. Development of an exploration decline commenced in 2003 to assist in confirming design criteria. The range of statutory approvals required for underground operation includes environmental and social impact assessments. Argyle employs approximately 780 people.

2004 operating performance
Net earnings of US$23 million were US$49 million lower than in 2003. Diamond production for 2004 was 33 per cent lower with 21 million carats produced. Tight mining conditions prevailed as a result of the deepening open pit which, together with abnormally wet weather, limited mine production. Lower grade ore from stockpiles supplemented ore from the mine.
     Reserves decreased following the development of a new resource model and revised mine plan which resulted in some material being transferred to resources.

Murowa (Rio Tinto: 78 per cent)
Early in 2004, Rio Tinto and Rio Tinto Zimbabwe approved expenditure of US$11 million on a small scale plant to start diamond production at Murowa near Zvishavane in southern Zimbabwe.
     An updated feasibility study confirmed the existence of three kimberlite pipes representing a mining reserve of 18.7 million tonnes of ore at a grade of 0.9 carats per tonne.
     Commercial production commenced in the third quarter. Initial operations are focused on 1.3 million tonnes of weathered material containing 140,000 tonnes of enriched ore. A phased approach reduces the initial investment required and allows confirmation of marketing and regulatory arrangements prior to expansion, which could be considered within three years. Diamonds from Murowa are marketed through Rio Tinto Diamonds in Antwerp. Safeguards are in place regarding the chain of custody of the product. Zimbabwe is a signatory of the Kimberley Process.
     Following the decision to proceed with Murowa, the directors of Rio Tinto Zimbabwe (RioZim) agreed to a restructuring of Rio Tinto’s 56 per cent shareholding in RioZim. As a result of the restructure, Rio Tinto owns a direct 78 per cent interest in Murowa and has a residual economic interest in RioZim. RioZim became an independent, Zimbabwean controlled, listed company owning the remaining 22 per cent of Murowa.

2004 operating performance
Net earnings were US$1 million. The construction and commissioning of facilities and infrastructure was the main objective in 2004. While commissioning problems in the process plant delayed full capacity being reached, the fourth quarter saw the first parcel of diamonds successfully mined, processed and sold.

OTHER OPERATIONS
Other operations comprise the Lihir gold mine in Papua New Guinea, the Kelian gold mine in Indonesia and the Sari Gunay gold project in Iran.

Lihir (Rio Tinto: 14.5 per cent)
Lihir Gold is a publicly quoted company formed to finance and develop the Lihir mine in Papua New Guinea. Lihir Gold had a market capitalisation of A$1.49 billion (US$1.16 billion) at 31 December 2004.
     Lihir directly employs approximately 1,070 people, of whom 91 per cent are Papua New Guinea nationals, including 36 per cent Lihirians. Some 1,600 contractors are also employed.

2004 operating performance
Lihir’s contribution to Rio Tinto’s earnings for 2004 included US$12 million resulting from the revaluation of ore stockpiles to restore these to the lower of cost and net realisable value taking account of changes in circumstances including higher gold prices.
     Gold production at Lihir was 8.9 per cent higher than in 2003 due to higher throughput and higher head grades.

Kelian (Rio Tinto: 90 per cent)
Kelian Equatorial Mining (Kelian) operated an open pit gold mine in East Kalimantan, Indonesia.
     Mining ceased in 2003 with production from stockpiled ore completed in February 2005. A mine closure consultative process was completed in 2003 with stakeholders agreeing on the key mine closure directions. Work is continuing on mine closure activities including establishment of post closure institutions, the upgrade of the Namuk tailings dam, and rehabilitation and revegetation. Work is planned for removal of camp and operating facilities and the camp site area prepared for future wetlands development.

Rio Tinto 2004 Form 20-F   61


Back to Contents

     Kelian has been reducing employee and contractor numbers as it winds down its operations and focuses on mine closure activities. Settlement of compensation claims is continuing under a 2001 agreement and a number of programmes are in place to provide sustainable solutions for local communities and former employees after closure.

2004 operating performance
Rio Tinto’s share of Kelian’s production was 295,000 ounces in 2004, 30 per cent below the previous year, as a result of the processing of low grade stockpiles.

Project
Sari Gunay (Rio Tinto: 70 per cent)
The Sari Gunay (formerly Dashkasan) project in Iran entered the prefeasibility stage during the year. Work continued on the delineation of the sizeable body of gold mineralisation discovered in Kordestan province in western Iran. Drilling continued to outline additional mineralisation and to increase confidence in existing estimates.
     Metallurgical test work and community and environmental baseline studies continued.

EXPLORATION GROUP
Rio Tinto Exploration seeks to discover or identify mineral resources that will contribute to the growth of the Rio Tinto Group. The discovery of new resources is essential to replace deposits as they are mined and to help meet the increasing global demand for minerals and metals.
     The Exploration group is opportunistic in approach and its resources are deployed on projects that show the best chance of delivering a world class deposit to Rio Tinto. Mineral exploration is a high risk activity. Rio Tinto’s statistics show that an average of only one in 350 mineral prospects that are drill tested result in a mine for the Group. Rio Tinto believes in having a critical mass of projects, selected through a rigorous process of prioritisation.
     The Exploration group is organised into four geographically based teams and a fifth team that looks for industrial minerals on a global basis. Additionally, a small focused project generation team covers the world for new opportunities.
     At the end of 2004, Rio Tinto was exploring in 30 countries for a broad range of commodities including copper, diamonds, nickel, industrial minerals, gold, bauxite, iron ore and coal. Exploration employs 191 geologists and geophysicists around the world and has a total complement of 880 people.
      Tom Albanese succeeded David Klingner as head of Exploration, and is based in London.

2004 operating performance
Exploration in 2004 focused on advancing the most promising targets across the spectrum of grassroots, generative, drill test stage, and near mine programmes. Encouraging results were obtained from a number of locations.
     Order of magnitude studies were completed on the Simandou (iron ore, Guinea) and Eagle (nickel-copper, Michigan, US) projects. Both projects have been transferred to relevant product group teams for pre-feasibility assessment. Since 2001 five projects have moved from exploration to the next stage of project evaluation including Resolution (copper, Arizona, US) and Potasio Rio Colorado (potash, Argentina). In addition to these projects, near mine exploration has also been undertaken. Where resources have been supplemented or additional resource discovered this has been has reported by the respective product group.
     Several projects are in the process of, or about to initiate, order of magnitude studies to assess their economic potential for advancement to pre-feasibility assessment. An order of magnitude study was commenced at the La Sampala nickel laterite resource in Indonesia, and is nearing completion.
     The çöpler and Marcona deposits discovered previously were divested in 2003 and 2004 respectively. In 2004, the Group’s interest in the Sepon project in Laos was sold.
     Diamond exploration continued in Canada, southern Africa, Mauritania, Brazil and India. A number of diamond bearing kimberlite pipes were discovered and follow up test work is in progress to gauge economic potential.
     Copper exploration continued in Turkey, Peru, Chile, Argentina and the US. Copper mineralisation was encountered in drilling in projects in Turkey and Peru, which warrant further follow up drill testing.
     Exploration focus on the bulk commodities iron ore, coal and bauxite has been increasing each year for the last several years and evaluation of several projects is continuing with the intention to progress two projects to product group handover in 2005.
     The Exploration group was active in the search for industrial mineral deposits in a number of parts of the world including North and South America, Europe, south east Asia and Turkey.
     The Exploration group continued to support brownfield work at a number of Rio Tinto operations. Additional work to develop the Argyle diamond mine continued. In the US and Argentina, active programmes were conducted in the vicinity of the Boron and Tincalayu mines. In Indonesia, exploration in and around the Grasberg mine led to the addition of further copper reserves.

Rio Tinto 2004 Form 20-F   62


Back to Contents

Financial performance
2004 compared with 2003
Cash expenditure on exploration in 2004 was US$193 million and the pre-tax charge to earnings was US$187 million, a US$60 million increase over 2003, reflecting increased iron ore exploration in Western Australia and acceleration of evaluation on significant projects by product groups during the year.

2003 compared with 2002
Cash expenditure on exploration in 2003 was US$130 million and the pre-tax charge to earnings was US$127 million, similar to 2002.

TECHNOLOGY GROUP
The Technology group provides technical assistance to Rio Tinto’s product groups and their businesses, and advises executive management. In support of the drive towards operational excellence, a key focus is to identify and implement best practices, to improve safety and environmental performance, maximise operating efficiency and add value across Rio Tinto.
     Technology staff include experienced professionals covering all the main industry related disciplines, while the Office of the Chief Technologist manages the Group’s involvement in external and collaborative research.
     The total staff in the Technology group at year end was 362 compared with 333 in 2003.
     Ian Smith, head of Technology, is based in London. He was formerly managing director, Aluminium Smelting, Comalco and succeeded John O’Reilly who moved to a part time role on 1 May 2005.

2004 operating performance
Technical Services
Technical Services continued to increase its involvement with Rio Tinto operations and also provided significant contributions at non managed operations. Activity over the year was again at record levels, with a strong focus on the enhancement of initiatives to improve performance and implement best practice such as in water management and metallurgical margin improvement. New initiatives recently commenced include Excellence in Mine Planning and Resource Management.
     A number of current development projects are linked with external research programmes in order to leverage value for Rio Tinto. Others are focussed on innovation and best practice in key areas to add value in a shorter time frame.

Office of the Chief Technologist
The Office of the Chief Technologist is responsible for the identification and the transfer of technology based opportunities for the Group.
     The external research portfolio covers a broad range of industry related initiatives. Some of these link directly with internal development projects. Work on improving efficiency and reducing costs is continuing in areas such as comminution, water usage and materials handling. A number of breakthrough projects are also being pursued.
     The Rio Tinto Foundation for a Sustainable Minerals Industry approved a further 14 projects for funding.

Technical Evaluation and Project Management
Technical Evaluation continued in its principal role of providing independent review of all major investment proposals being considered by the Group. Risk assessment and management is an important and integral component of the project review process. The unit also continued with the programme of post investment reviews. It has established a database to consolidate the findings so that lessons learned from completed projects can be shared within the Group.
     The Project Management Unit provides ongoing support to major project teams across Rio Tinto, both for projects in execution and those still in the feasibility stage. There was also continued involvement with some major projects at non managed operations. Two project management forums were held during the year focussing on collaboration between projects and lessons learned.

Asset Utilisation
This unit is now well established across the Group and its workload continued to expand. There has been particularly heavy involvement with the iron ore operations in Western Australia which is expected to continue through 2005. The process control group is now well established. The development of tools to improve performance continues, including on asset integrity and remote monitoring.
     There is continuing emphasis on ensuring that safety, operability and maintainability issues are fully addressed and incorporated in all the unit’s work.

Financial performance
The charge for the Technology group against net earnings was US$25 million, compared with US$16 million in 2003. The increase was mainly due to the weaker US dollar and the greater level of activity in all Technology group units.

Rio Tinto 2004 Form 20-F   63


Back to Contents

GROUP SOCIETY AND ENVIRONMENT



The way we work
Rio Tinto is in business to create value by finding and developing world class mineral deposits and operating and eventually closing operations safely, responsibly and efficiently. To do so, the Group takes a disciplined and integrated approach to the economic, social and environmental aspects of all its activities.
      The approach to achieving this is through implementation of the policies described in The way we work, Rio Tinto’s statement of business practice, at all levels of the business.
      The statement, redistributed in 2003 in 19 languages, is the result of many months of wide internal consultation and discussion and represents shared values from around the Group. The document was published initially in January 1998. It was revised in 2002 in the light of experience, following further Group wide review and consultation, external benchmarking of policies against the best practice of other organisations and approval by the Rio Tinto board.
      The way we work commits the Group to transparency consistent with normal commercial confidentiality, corporate accountability and the application of appropriate standards and internal controls. It sets the basis for how Group companies' employees work and also provides guidance for joint venture partners and others. Every employee is responsible for implementing the policies in the document.
      Rio Tinto has adopted the Association of British Insurers’ 2003 disclosure guidelines on social responsibility in preparing this report. Details of the Group’s overall and individual businesses’ social and environmental performance continue to be published on the Rio Tinto website: www.riotinto.com/se and in the Sustainable development review.

Board responsibilities
The directors of Rio Tinto, and of Group companies, are responsible for monitoring adherence to the Group policies outlined in The way we work. Assurance for performance in these areas involves checking, reviewing and reporting each business’s implementation of the policies, their compliance with regulations and voluntary commitments, and the effectiveness of management and control systems, while also providing mechanisms for improvement.
      As discussed in the section on Corporate governance on pages 82 to 89, the boards established a process for identifying, evaluating and managing the significant risks faced by the Group. Directors meet regularly, have regular scheduled discussions on aspects of the Group’s strategy and full and timely access to the information required to discharge their responsibilities fully and effectively.
      Rio Tinto’s Compliance guidance requires that the identification of risk be systematic and ongoing. It recommends that each Group company undertakes a structured risk profiling exercise to identify, categorise and weigh the risks it faces in the conduct of its business. Each Group company puts systems in place to ensure that risks are reviewed at an appropriate frequency.
      Total remuneration is related to performance through the use of annual bonuses, long term incentives and stretching targets for personal, financial and safety performance.
      The board’s Committee on social and environmental accountability reviews the effectiveness of policies and procedures. The committee comprises four non executive directors and is chaired by the chairman of the main board. It meets three times annually with the chief executive and heads of Technology, Health, Safety and Environment and Communication and Sustainable Development.
      Reports for the committee summarise significant matters identified through Rio Tinto’s assurance activities. These include reviews every four years of each business to identify and manage strategic risks in relation to health, safety, and the environment; audits against Rio Tinto standards; annual risk management audits; risk reviews for specific concerns, such as cyanide management and smelter operations; procedures and systems for reporting critical and significant issues and incidents; completion of annual internal control questionnaires by all Group business leaders covering the full spectrum of business and operational risk; and findings and recommendations of the independent external assurance and data verification programme.

Rio Tinto 2004 Form 20-F   64


Back to Contents

Policies, programmes and results
Implementation of the policies in The way we work is discussed in the following sections named according to each policy area. Known risks arising from social and environmental matters and their management in Group businesses are described in the relevant Group operations section.

Safety
Safety is a core value and a major priority. Rio Tinto believes that all injuries are preventable and its goal is zero injuries. To achieve this, full and consistent implementation of and accountability for Rio Tinto’s comprehensive standards, guidelines, systems and procedures is required across the world. The Group is also building a supportive safety culture that requires visible leadership, ongoing education and training and a high level of participation by everyone in the workplace.
      However, there is still some way to go in achieving the goal of zero. In 2004, very regrettably one contractor lost his life at a managed operation. The Group has demonstrated strong improvements in the lost time injury frequency rate (LTIFR) and all injury frequency rate (AIFR) from 2003, with reductions of 21 per cent and 15 per cent respectively. The LTIFR for 2004 was 0.65 per 200,000 hours worked by employees and contractors (2003: 0.82).
     Fines for infringement of safety regulations totalled US$19,200 (2003: US$162,000).

Occupational health
Rio Tinto strives to protect physical health and well being in the workplace. This requires clear standards, consistent implementation, transfer of best practice and improvement through Group wide reporting and tracking of remedial actions.
      During 2004, Group businesses worked to implement the occupational health standards and 81 per cent of employees now work at an operation where the occupational health standards have been implemented. In 2004, there were 72 new cases of occupational disease per 10,000 employees, (2003: 107).
      Operations were temporarily suspended at Energy Resources of Australia’s (ERA) Ranger uranium mine in Australia during March 2004 following an incident of drinking water contamination. The government Office of the Supervising Scientist appointed independent health experts to investigate and advise on the potential for long term harm to workers as a result of the water contamination. They concluded that longer term health effects were most unlikely.
      Operations were again temporarily suspended at the end of August 2004 to review safety and health systems following the issue of two reports from the Office of the Supervising Scientist. One report concerned the incident of drinking water contamination and the other concerned radiation clearance procedures for equipment leaving site. Three Australian Government audits arising from the incidents have been satisfactorily completed. On 1 June 2005 ERA was fined A$150,000 in the Darwin Magistrate’s Court after having pleaded guilty to two charges related to these incidents Rio Tinto’s southern African operations are nearing full implementation of the Group HIV/AIDS strategy. This provides access to antiretroviral therapy that is affordable for employees and a partner. Operations in Asia and west Africa are in the process of refining their local strategies to meet Group requirements.
      In 2004, Rio Tinto set targets to focus attention on reducing noise induced hearing loss across the Group. The target of zero exposure of employees to a noise dose of more than 82 decibels (averaged over eight hours), after allowing for the use of hearing protection was not met, with 0.5 per cent of employees still exposed to noise greater than this limit.
      Fines for infringement of occupational health regulations in 2004 involved four operations, totalling US$257,000 (2003: US$900).

Environment
Wherever possible Rio Tinto prevents, or otherwise minimises, mitigates and remediates, harmful effects of the Group’s operations on the environment.
      To do this, the Group seeks to understand the environmental aspects and impacts of what it does, build what is learned into systems to manage and minimise those impacts, and set targets for improvement.
      After significant Groupwide consultation, Rio Tinto’s environment standards were finalised and approved in 2003 for implementation by June 2005. During 2004, significant work continued on ways to improve efficiency of greenhouse gas emissions, energy use and water withdrawn from the environment.
      By the end of 2004, 84 per cent of operations had implemented ISO 14001 or an equivalent environmental management system (EMS). All Rio Tinto operations are required to have a certified EMS by the end of June 2005: by the end of 2004, 72 per cent of operations had achieved this. There was no change in the number of significant environmental incidents (16) compared to 2003. There was a decrease in the number of significant spills from eight to four. Fines for infringements of environmental regulations involved three operations and totalled US$53,800 (2003: US$126,000).

Land access
Rio Tinto seeks to ensure the widest possible support for its proposals throughout the life cycle of the Group’s activities by coordinating economic, technical, environmental and social factors in an integrated process.
      This involves negotiation of mining access agreements with indigenous landowners; responsible land management and rehabilitation; planning for closure; developing and implementing a biodiversity strategy; and forming strategic partnerships with external organisations.

Rio Tinto 2004 Form 20-F   65


Back to Contents

Political involvement
Rio Tinto does not directly or indirectly participate in party politics nor make payments to political parties or individual politicians.
     A Business integrity guidance, addressing bribery, corruption and political involvement, was issued in 2003 to assist managers in implementing this policy. The guidance covers questions relating to compliance and implementation; gifts and entertainment; the use of agents and intermediaries; and “facilitation” payments.
     Rio Tinto avoids making facilitation payments anywhere in the world. Bribery in any form is prohibited. Gifts and entertainment are only offered or accepted for conventional social and business purposes and then only at a level appropriate to the circumstances.

Communities
Rio Tinto sets out to build enduring relationships with its neighbours that are characterised by mutual respect, active partnership, and long term commitment.
     Every business unit is required to have rolling five year community plans which are updated annually. In 2004, a series of pilot studies were completed aimed at achieving a deeper level of understanding of the linkages between mining activities and the economies in which they take place.
     All Group businesses produce their own reports for their local communities and other audiences. Community assurance of the quality and content of these reports is increasing. This provides an opportunity for engagement with the community on their views of programmes sponsored by the operations.
     Businesses managed by Rio Tinto contributed US$87.8 million to community programmes in 2004 (2003: US$70 million). Of the total contributions, US$34.2 million was community investment and US$24.1 million in direct payments made under legislation or an agreement with a local community.

Human rights
Rio Tinto supports human rights consistent with the Universal Declaration of Human Rights and Rio Tinto respects those rights in conducting the Group’s operations throughout the world.
     Rio Tinto also supports the UN Secretary General’s Global Compact, the US/UK Voluntary Principles on Security and Human Rights and the Global Sullivan Principles.
     Rio Tinto’s Human rights guidance is designed to assist managers in implementing the Group’s human rights policy in complex local situations. It was revised and republished in 2003. In 2004, a web based training module was developed to instruct managers on what the policy means in practice and how to respond to difficult situations.

Employment
Rio Tinto recognises that business performance is closely linked to effective people development. It has a long term plan to strengthen approaches to the training and development of leaders in the Group.
     In 2004, a suite of formal leadership programmes was developed and implemented for both strategic and Group business leaders. In total, ten customised leadership development programmes, involving 225 participants, were successfully run in 2004 in partnership with leading business schools in Europe, North America and Australia. All product groups and businesses were represented. It is planned to run a further ten strategic and business leadership development programmes in 2005 involving about 250 participants.
     As well as using the open programmes run by the London Business School and International Institute for Management Development for future leaders, Rio Tinto commissioned the design of a customised, operational leadership programme to be launched in 2005 with eight programmes involving about 240 further participants from across the Group at manager and superintendent level.
     These programmes are all focused on ensuring that leaders, at all levels, are well prepared for the wide range of current and future challenges they will face in taking forward a complex and commercially successful organisation. All of these programmes are closely integrated with the core leadership competencies Rio Tinto has identified as necessary for effective leaders wherever they work in the organisation.
     Pilot programmes were undertaken in 2004 on the use of career development tools and their application to new and better approaches to coaching and mentoring employees. In 2005, Group wide workshops to improve the capability of all involved in managing careers are being organised.
     People development in Rio Tinto is focused on ensuring technical and professional competence. In 2004, five projects were undertaken to define these competencies in Marketing, Finance, Human Resources, Community Relations and Health, Safety and Environment teams. This led to a pilot development programme being successfully designed and delivered for early career Human Resources professionals.
     In 2005, all five streams will focus on implementing across the Group common professional development tools, programmes and systems. Competency in these functions will be extended to cover all other disciplines to ensure that the Group builds and strengthens its skills capability at all levels and to facilitate more effective collaboration on areas of common interest in different businesses.
     In the past few years, Rio Tinto has focused on strengthening and developing leaders; in 2005 the focus will be on developing talent and potential at all levels and building a stronger alignment between individual and business performance.

Rio Tinto 2004 Form 20-F   66


Back to Contents

     Rio Tinto requires safe and effective working relationships in all its operations. Whilst respecting different cultures, traditions and employment practices, common goals are shared, in particular the elimination of workplace injuries, and commitment to good corporate values and ethical behaviour.
      In 2004, Group companies employed 28,000 people (2003: 29,000) and, together with Rio Tinto’s proportionate share of those employed by joint ventures and associates, the total was 33,000 (2003: 36,000) mainly concentrated in Australia and North America. Wages and salaries paid in 2004 excluding Rio Tinto’s proportionate share of joint ventures and associates totalled US$1.7 billion (2003: US$1.5 billion).
      Retirement payments and benefits to dependants are provided in accordance with local conditions and good practice.
      Rio Tinto encourages the involvement of its employees in the Group’s performance through their participation in an employee share scheme. As stated in The way we work, the Group recognises the right of employees to choose whether or not they wish to be represented collectively.

Sustainable development
Rio Tinto believes that its businesses, projects, operations and products should contribute constructively to the global transition to sustainable development.
      All businesses are required to assess the sustainable development case for their activities. Rio Tinto has committed itself to integrating the results of the Mining, Minerals and Sustainable Development (MMSD) analysis of 2002 into the Group’s policy and objectives, and developing measures to assess their implementation. As a founding member of the International Council on Mining and Metals, Rio Tinto is participating in dialogue and programmes to advance industry wide progress on key sustainable development priorities.
      A Sustainable Development Leadership Panel (SDLP) was formed in 2004 to provide Group leadership and encourage businesses to make sustainable development considerations an integral part of business plans and decision making processes.

Openness and accountability
Rio Tinto conducts the Group’s affairs in an accountable and transparent manner, reflecting the interests of Rio Tinto shareholders, employees, host communities and customers as well as others affected by the Group’s activities.
      Policies on transparency, business integrity, corporate governance and internal controls and reporting procedures are outlined in The way we work. In 2003, a Compliance guidance was issued to provide a framework to enable each Group business to implement and maintain a best practice compliance programme which should identify and manage risks associated with non compliance with laws, regulations, codes, standards and Rio Tinto policies.

Assurance and verification
To be accountable and transparent, assurance is provided to the Group and others that Rio Tinto policies are being implemented fully and consistently across the Group’s businesses and operations.
      The overall objective of the external assurance and data verification programme is to provide assurance that the material in the Sustainable development review is relevant, complete, accurate and responsive, and, in particular, that Rio Tinto’s policies and programmes are reflected in implementation activities at operations. In 2004, Environmental Resources Management (ERM) undertook the external assurance and data verification programme and the results are available in Rio Tinto’s Sustainable development review (previously the Social and environment review).

Competition
Rio Tinto has adopted a specific antitrust policy requiring all employees to compete fairly and to comply with relevant laws and regulations. Under the policy, guidance is provided on contacts with competitors and benchmarking as well as implementation of the policy in individual businesses. As integral parts of the policy, all relevant employees will receive regular training and will be required to certify annually that they are not aware of any antitrust violations.

Item 6.        Directors, Senior Management and Employees

CHAIRMAN
1. Paul Skinner (age 60)
Paul Skinner was appointed chairman in November 2003. He graduated in law from Cambridge University and in business administration from Manchester Business School. A director of Rio Tinto since 2001and chairman of the Nominations committee. He was previously a managing director of The “Shell” Transport and Trading Company plc and group managing director of The Royal Dutch/Shell Group of Companies, for whom he had worked since 1966. He is a director of Standard Chartered PLC and the Tetra Laval Group. He is also a member of the board of INSEAD business school. (notes b and d)

Rio Tinto 2004 Form 20-F   67


Back to Contents

EXECUTIVE DIRECTORS
2. Leigh Clifford (age 57)
Leigh Clifford became chief executive in 2000, having been a director of Rio Tinto plc since 1994 and Rio Tinto Limited since 1995. A mining engineer he is a bachelor of engineering and a master of engineering science. He has held various roles in the Group’s coal and metalliferous operations since joining in 1970, including managing director of Rio Tinto Limited and chief executive of the Energy group. He is a former director of Freeport-McMoRan Copper & Gold Inc and a non executive director of Barclays Bank plc.

3. Guy Elliott (age 49)
Guy Elliott became finance director of Rio Tinto in 2002. He holds an MA from Oxford and joined the Group in 1980 after gaining an MBA from INSEAD business school. He has subsequently held a variety of management positions, including being president of Rio Tinto Brasil from 1996 to 1999.

NON EXECUTIVE DIRECTORS
4. Ashton Calvert (age 59)
Ashton Calvert was appointed a director of Rio Tinto with effect from 1 February 2005. He recently retired as secretary of the Department of Foreign Affairs and Trade of the Government of Australia. He was educated at the University of Tasmania and, as a Rhodes scholar, also gained a doctorate in mathematics from Oxford University. During his career in the Australian foreign service he held appointments in Washington and, on four occasions, in Tokyo, where he was ambassador between 1993 and 1998 prior to his appointment as secretary. In these and other roles he developed extensive experience of the Asian countries which represent key markets for Rio Tinto. (notes b, d and e)

5. Sir David Clementi (age 56)
Sir David was appointed a director of Rio Tinto in January 2003. He is chairman of Prudential plc, prior to which he was Deputy Governor of the Bank of England. Sir David’s earlier career was with Kleinwort Benson where he spent 22 years, holding various positions including chief executive and vice chairman. A graduate of Oxford University and a qualified chartered accountant, Sir David also holds an MBA from Harvard Business School. (notes a, c and e)

6. Vivienne Cox (age 46)
Vivienne Cox was appointed a director of Rio Tinto with effect from 1 February 2005. She is currently executive vice president of BP p.l.c. for Integrated Supply and Trading and also for Gas Power and Renewables. She is a member of the BP group chief executive’s committee. She holds degrees in chemistry from Oxford University and in business administration from INSEAD. During her career in BP she has worked in chemicals, exploration, finance, and refining and marketing. (notes a and e)

7. Richard Goodmanson (age 57)
Richard Goodmanson was appointed a director of Rio Tinto on 1 December 2004 and is chairman of the
Committee on social and environmental accountability. He is executive vice president and chief operating officer of DuPont and holds degrees in civil engineering, economics, commerce and business administration. During his career he has worked at senior levels for McKinsey & Co, PepsiCo and American West Airlines, where he was president and CEO. He joined DuPont in early 1999 and in his current position has responsibility for the non US operations of DuPont with particular focus on growth in emerging markets. (notes c, d and e)

8. Andrew Gould (age 58)
Andrew Gould was appointed a director of Rio Tinto in 2002 and is chairman of the Audit committee. He holds a degree in economic history and is chairman and chief executive officer of Schlumberger Limited, where he has held a succession of financial and operational management positions, including that of executive vice president of Schlumberger Oilfield Services and president and chief operating officer of Schlumberger Limited. He joined Schlumberger in 1975 from Ernst & Young. (notes a, c and e)

9. Lord Kerr (age 63)
Lord Kerr was appointed a director of Rio Tinto in 2003. He has an MA from Oxford University and was a member of the UK Diplomatic Service for 36 years, heading the service from 1997 to 2002. On a secondment to the UK Treasury he was principal private secretary to two Chancellors of the Exchequer. His service abroad included spells as Ambassador to the European Union from 1990 to 1995, and to the US from 1995 to 1997. He is chairman of the Court and Council of Imperial College, London; a director of The “Shell” Transport and Trading Company plc and The Scottish American Investment Trust plc. Lord Kerr is also a Trustee of the Rhodes Trust. (notes a, d and e)

10. David Mayhew (age 65)
David Mayhew was appointed a director of Rio Tinto in 2000. He is chairman of Cazenove Group plc, which he joined in 1969. Cazenove is a stockbroker to Rio Tinto plc. (notes a and b)

Rio Tinto 2004 Form 20-F   68


Back to Contents

11. Sir Richard Sykes (age 62)
Sir Richard was appointed a director of Rio Tinto in 1997. Following Sir Richard Giordano’s retirement, he will become Rio Tinto’s senior independent director. He is chairman of the Remuneration committee. After reading microbiology, he obtained doctorates in microbial chemistry and in science. A former chairman of GlaxoSmithKline plc, Sir Richard is a director of Lonza Group Limited and is rector of Imperial College, London. He is a fellow of the Royal Society and a trustee of the Natural History Museum in London and of the Royal Botanic Gardens, Kew. (notes b, c and e)

Robert Adams died at his home on 27 January 2005. Robert Adams joined the Group in 1970 after reading natural sciences and economics and subsequently gaining an MSc from the London Business School. He had a long distinguished career with Rio Tinto and becoming a director of Rio Tinto plc in 1991 and of Rio Tinto Limited in 1995 with responsibility for planning and development. He was also a non executive director of Foreign & Colonial Investment Trust plc.

Sir Richard Giordano retired from the boards at the conclusion of the 2005 annual general meetings. He was previously the senior non executive director and a deputy chairman. He was also chairman of the Audit committee. He had been a director of Rio Tinto plc since 1992 and of Rio Tinto Limited since 1995. A lawyer by training, he spent 12 years at BOC Group, first as chief executive, then chairman. In 1993, Sir Richard became a director of British Gas, assuming the role of chairman in 1994. A former chairman of BG Group plc, he is a director of Georgia Pacific Corporation in the US and a trustee of Carnegie Endowment for International Peace.

Leon Davis also retired from the boards at the conclusion of the 2005 annual general meetings. He was previously the Group’s Australia based non executive deputy chairman. He became a director of Rio Tinto Limited in 1994 and of Rio Tinto plc in 1995. He is a metallurgist and holds a diploma in primary metallurgy and a DSc from Curtin University and the University of Queensland. During nearly 50 years with the Group he has held a number of managerial posts around the world, ultimately as chief executive from 1997 to 2000. A former director of Codan Pty. Limited, he is chairman of Westpac Banking Corporation and a director of Huysmans Pty Limited and Trouin Pty Limited, and is also president of the board of The Walter and Eliza Hall Institute of Medical Research.

Oscar Groeneveld served as a director until 1 October 2004 when he was appointed chief executive of the Aluminium group. See Senior management on page 70 for his full biography.

John Morschel also retired from the boards at the conclusion of the 2005 annual general meetings. He was appointed to the boards of Rio Tinto in 1998. Educated in Australia and the US, he spent most of his career with Lend Lease Corporation Limited in Australia, culminating as managing director, followed by two years as an executive director of the Westpac Banking Corporation. A former chairman of CSR Limited and Leighton Holdings Limited, he is chairman of Rinker Group Limited and is a director of ANZ Banking Group Limited, Tenix Pty Limited, Gifford Communications Pty Limited and Singapore Telecommunications Limited. He is also a patron of the Property Industry Foundation.

Lord Tugendhat served as director until 22 April 2004 when he retired by rotation following the 2004 annual general meetings. He holds a BA and MA in history from Cambridge University, and became a director of Rio Tinto in 1997. A former vice president of the Commission of the European Communities, and chairman of the Civil Aviation Authority, he was chairman of Abbey National plc from 1991 until 2002 when he was appointed chairman of Lehman Brothers Europe Limited.

Notes
a) Audit committee
b) Nominations committee
c) Remuneration committee
d) Committee on social and environmental accountability
e) Independent (as defined on pages 82 and 83)

SENIOR MANAGEMENT

1. Tom Albanese (age 47)
Tom Albanese was appointed chief executive of the Copper group and head of Exploration in 2004. He joined Rio Tinto in 1993 on Rio Tinto’s acquisition of Nerco. He holds a BS in mineral economics and an MS in mining engineering. He held a series of management positions before being appointed chief executive of the Industrial Minerals group in 2000.

Rio Tinto 2004 Form 20-F   69


Back to Contents

2. Preston Chiaro (age 51)
Preston Chiaro was appointed chief executive of the Energy group in 2003. He holds degrees in environmental engineering. He joined the Group in 1991 at Kennecott Utah Copper’s Bingham Canyon mine as vice president, technical services. In 1995 he became vice president and general manager of Boron operations in California. He was chief executive of Rio Tinto Borax from 1999 to 2003.

3. Oscar Groeneveld (age 51)
Oscar Groeneveld has been with the Group for 29 years and was appointed chief executive of the Aluminium group in October 2004. He has qualifications in engineering, science and management. He has occupied senior roles in coal, aluminium and technology and was Copper group chief executive from 1999 to 2004. Mr Groeneveld was also an executive director of the Group from 1998 to 2004.

4. Keith Johnson (age 44)
Keith Johnson was appointed chief executive, Diamonds in 2003. He holds degrees in mathematics and management and is a Fellow of the Royal Statistical Society. He joined Rio Tinto in 1991 and has held a series of management positions, most recently as managing director of Comalco Mining and Refining.

5. Andrew Mackenzie (age 48)
Andrew Mackenzie joined Rio Tinto in 2004 as chief executive Industrial Minerals. He has a BSc (geology) and a PhD (chemistry) and was previously group vice president, BP Petrochemicals. He spent 22 years with BP primarily in the UK and North America in senior positions including head of Capital Markets in BP Finance, chief reservoir engineer with oversight of oil and gas reserves and production, head of Government and Public Affairs worldwide and group vice president Technology which included responsibility for research and development and engineering.

6. Karen McLeod (age 58)
Karen McLeod was appointed head of Human Resources in 1999. She joined the Group in 1974 at Comalco, working in Aboriginal affairs. She holds a bachelor of social work and a masters in business administration and has held senior positions in human resources, business analysis, marketing and organisation development.

7. Ian Smith (age 47)
Ian Smith joined Rio Tinto in 2002 after more than 20 years in the resource industry which commenced with CRA, a Rio Tinto predecessor company. A mining engineer by profession, Ian also has qualifications in financial administration. He was appointed Head of Technology in May 2005 having previously been managing director, aluminium smelting, with Comalco in Australia.

8. Andrew Vickerman (age 50)
Andrew Vickerman is head of Communication and Sustainable Development. His responsibilities include media, public affairs, internal and external communications, as well as oversight of Rio Tinto’s work on sustainable development and with communities. He has BA (Hons), MA and PhD degrees in economics and, prior to joining Rio Tinto in 1991, worked as a development economist and as a consultant for the World Bank and United Nations agencies. Previous roles with Rio Tinto include finance director of Lihir Gold.

9. Sam Walsh (age 55)
Sam Walsh was appointed chief executive of the Iron Ore group in 2004. He holds a bachelor of commerce degree and joined Rio Tinto in 1991, following 20 years in the automotive industry at General Motors and Nissan Australia. He has held a number of management positions within the Group, including managing director of Comalco Foundry Products, CRA Industrial Products, Hamersley Iron Sales and Marketing, Hamersley Iron Operations, vice president of Rio Tinto Iron Ore (with responsibility for Hamersley Iron and Robe River) and from 2001 chief executive of the Aluminium group.

10. Charles Lenegan (age 54)
Charles Lenegan joined the Group in 1981 and has worked in senior roles in diamonds, coal, salt and gold business units in Australia, Indonesia and Zimbabwe. He was appointed managing director, Rio Tinto Australia in March 2004. He has a BSc in economics and is a chartered accountant.

John O’Reilly joined Rio Tinto in 1987, following 20 years’ operations experience in Africa and the Middle East. A metallurgical engineer by profession, he has held a series of management positions within the Group, including director of Rio Tinto Technical Services, chief executive officer, Lihir Gold, and head of the former Gold and Other Minerals group, before being appointed head of Technology in 1999. He moved to a part time role at the end of April 2005 and was succeeded by Ian Smith.

Rio Tinto 2004 Form 20-F   70


Back to Contents

COMPANY SECRETARIES
11. Anette Lawless
(age 48)
Anette Lawless joined Rio Tinto in 1998 and became company secretary of Rio Tinto plc in 2000. Before joining Rio Tinto, she spent 11 years with Pearson plc, five of which as company secretary. She qualified as a chartered secretary in 1989 and became a fellow of the ICSA in 1992. She also holds an MA from the Copenhagen Business School.

12. Stephen Consedine (age 43)
Stephen Consedine joined Rio Tinto in 1983 and has held positions in Accounting, Treasury, and Employee Services before becoming company secretary of Rio Tinto Limited in 2002. He holds a bachelor of business and is a Certified Practising Accountant.

EMPLOYEES
Information on the Group’s employees including their costs, is on pages 66 to 67and in Note 3 to the consolidated financial statements on page A-17, in Note 30 on page A-51 and in Note 41 on page A-64.

REMUNERATION REPORT
Introduction
The boards of Rio Tinto (the board) have pleasure in presenting the Remuneration report to shareholders. The report covers the following information:

a description of the Remuneration committee and its duties;
a summary of the Group’s remuneration policy, including a description of the policy on directors’ and senior executive remuneration;
a résumé of the terms of directors’ service contracts and letters of appointment;
details of each director’s and certain senior executives’ remuneration and awards under long term incentive plans and the link to corporate performance;
details of directors’ interests in Rio Tinto shares; and
graphs illustrating the performance of the Group, including relative to the HSBC Global Mining Companies’ Index.

Remuneration committee
The following independent, non executive directors were members of the Remuneration committee during 200
Sir Richard Sykes (chairman);
Sir David Clementi;
Richard Goodmanson (from 1 December 2004);
Andrew Gould; and
John Morschel.

The committee met five times during 2004. Members’ attendance is set out on page 83.
     The committee’s responsibilities are set out in its Terms of Reference which can be viewed on Rio Tinto’s website. They include:

recommending any changes to the chairman’s fees;
recommending remuneration policy relating to executive directors and senior executives to the board;
reviewing and determining the remuneration of executive directors, product group chief executives and the company secretary of Rio Tinto plc;
reviewing and agreeing management’s strategy for remuneration and conditions of employment for executives; and
monitoring the effectiveness and appropriateness of executive remuneration policy and practice.

Advisors
Jeffery Kortum, Group advisor, remuneration, attends the committee’s meetings in an advisory capacity. The chairman, Paul Skinner, and the chief executive, Leigh Clifford, also participated in meetings of the committee, except where issues relating to their own remuneration were discussed. Anette Lawless, the company secretary of Rio Tinto plc, acts as secretary to the committee but is not present when issues relating to her own remuneration are discussed.
     The committee appointed Kepler Associates, an independent consultant with no other links to the Group, to provide advice on executive remuneration matters.
     To carry out its duties in accordance with its terms of reference, the committee monitors global remuneration trends and developments and draws on a range of external sources of data, including publications by remuneration consultants Towers Perrin, Hewitt Associates, Hay Group, Watson Wyatt and Monks Partnership.

Rio Tinto 2004 Form 20-F   71


Back to Contents

Corporate governance
The committee reviewed its terms of reference in 2004 and concluded that, in the course of its business, it had covered the main duties set out in the Combined Code as attached to the UKLA Listing Rules (the Code) and Principle 9 of the ASX Best Practice Corporate Governance Guidelines, and was constituted in accordance with the requirements of the Code and the ASX Best Practice Corporate Governance Guidelines.
     The board considered the performance of the committee and determined that the committee had satisfactorily performed the duties set out in its terms of reference.
     The 2004 Remuneration report was approved by shareholders at the 2005 annual general meetings.

Executive remuneration policy
Rio Tinto operates in a global market, where it competes for a limited resource of talented, internationally mobile executives. It recognises that to achieve its business objectives, the Group needs high quality, committed people.
     Rio Tinto has, therefore, designed an executive remuneration policy to support its business goals by enabling it to attract, retain and appropriately reward executives of the calibre necessary to produce very high levels of performance.
     The main principles of the Group’s executive remuneration policy are:

to provide total remuneration which is competitive in structure and quantum with comparator companies’ practices in the regions and markets within which the Group operates;
to achieve clear alignment between total remuneration and delivered personal and business performance, with particular emphasis on shareholder value creation;
to tie variable elements of remuneration to the achievement of challenging performance criteria that are consistent with the best interests of the Group and shareholders over the short, medium and long term;
to provide an appropriate balance of fixed and variable remuneration; and
to provide appropriate relativities between executives globally and to support executive placements to meet the needs of the Group.

Executive remuneration
Total remuneration is a combination of fixed and performance related elements, each of which is described below.
     The performance related, or variable, elements are the short and long term incentive plans, which are tied to the achievement of personal and business performance goals and are, therefore, at risk. The rest of the elements of the package are “fixed”, as they are not at risk, although some, such as base salary, are also related to performance.
     The composition of the total remuneration package is designed to provide an appropriate balance between the fixed and variable components, in line with Rio Tinto’s stated objective of aligning total remuneration with personal and business performance.
     Excluding allowances and pension/superannuation arrangements, the proportion of total direct remuneration provided by way of variable components comprising the Short Term Incentive Plan, the Share Option Plan and the Mining Companies Comparative Plan (STIP, SOP and MCCP) described below, assuming target levels of performance, is currently approximately 68 per cent for the chief executive, 62 per cent for the finance director and between 62 and 68 per cent for the product group heads.
     Full details of the directors’ annual remuneration before tax and excluding pension contributions are set out in Table 1 on pages 76 to 78.

Base salary
Base salaries for executive directors and product group chief executives are reviewed annually, taking into account the nature of the individual executive’s role, external market trends and personal and business performance. The Remuneration committee uses a range of international companies of a similar size, global reach and complexity to make this comparison.

Short term incentive plan (STIP)
STIP provides an annual cash bonus opportunity for participants and is designed to support overall remuneration policy by:

focusing participants on achieving goals which contribute to sustainable shareholder value; and
providing significant bonus differential based on performance against challenging personal, business, and other targets, including safety.

The Remuneration committee reviews and approves performance targets for executive directors and product group chief executives annually. The executive directors’ STIP payments are linked to three performance criteria: Group financial performance, Group safety performance and personal performance. The product group chief executives’ payments are linked to Group and product group financial performance, product group safety performance and personal performance. These criteria are partly measured on an actual basis and partly on a basis normalised for fluctuations of market prices and exchange rates. The target level of bonus for these participants for 2005 is 60 per cent of salary, the same as 2004. Executives may receive up to twice their target for exceptional performance against all criteria.
     STIP awards in respect of 2004, payable in 2005, are included as annual cash bonus in Table 1 on page 76.

Rio Tinto 2004 Form 20-F   72


Back to Contents

Long term incentives
Shareholders approved two new long term incentive plans at the annual general meetings in 2004, the Share Option Plan and the Mining Companies Comparative Plan.
     The new plans are intended to provide the Remuneration committee with a means of linking management’s rewards to Group performance. The committee regards total shareholder return (TSR) as the most appropriate measure of a company’s performance for the purpose of share based long term incentive plans and both plans therefore use TSR as a performance measure.
     The new plans maintained the expected value of total executive remuneration at approximately the same level as before, but modified the relative proportions in which share options and performance shares may be awarded. For 2004 and 2005, this has meant a shift towards performance shares being the primary long term incentive vehicle.
     Details of awards under the long term incentive plans are set out in Table 4 on page 80.

Share Option Plan (SOP)
Each year, the Remuneration committee considers whether a grant of options should be made under the SOP, and if so, at what level. In arriving at a decision, the committee takes into consideration the personal performance of each executive as well as local remuneration practice.
     No options will become exercisable unless the Group has met stretching performance conditions. For grants made prior to 2004:
two thirds of options vest when the Group’s adjusted earnings per share growth for a three year performance period is at least nine percentage points higher than US inflation over the same period, as measured by the US Consumer Price Index;
the balance of the grant vests when growth of at least 12 percentage points above US inflation has been achieved;
Rio Tinto performance is tested against the performance condition after three years; and
there is an annual retest on a three year rolling basis until options fully vest or lapse at the end of the option period.

Under the rules of the new plan, approved by shareholders at the 2004 annual general meetings, vesting will be subject to Rio Tinto’s TSR, measured over three years, equalling or outperforming the HSBC Global Mining Index. Rio Tinto’s TSR is calculated as a weighted average of the TSR of Rio Tinto plc and Rio Tinto Limited. If the TSR performance equals the index, the higher of one third of the original grant or 20,000 options will vest (subject to the actual grant level not being exceeded). The full grant vests if the TSR performance is equal to or greater than the HSBC Global Mining Index plus five per cent per annum. TSR performance at this level is equivalent to the upper quartile of the index. Between these points, options vest on a sliding scale, with no options becoming exercisable for a three year TSR performance below the index.
      In addition, the Remuneration committee retains discretion to satisfy itself before approving any vesting that the TSR performance is a genuine reflection of underlying financial performance.
     Options granted under the new plan before 31 December 2006 will be subject to a single fixed base retest five years after grant if they have not vested after the initial three year performance period, with options granted after 31 December 2006 not subject to any retest. These latter options will, therefore, lapse if they do not vest at the conclusion of the three year performance period.
     Prior to any options being released to participants for exercise, the Group’s performance against the criteria relevant to the SOP is examined and verified by the external auditors. If there were a change of control or a company restructuring, options would become exercisable subject to the satisfaction of the performance condition measured at the time of the takeover or restructuring.
     Where an option holder dies in service, qualifying options vest immediately, regardless of whether the performance conditions have been satisfied. The estate will have 12 months in which to exercise the options.
     The maximum grant under the SOP is three times salary, based on the average share price over the previous financial year. Under the SOP no options are granted at a discount. Executive directors may, however, be granted options at a discount under the Rio Tinto Share Savings Plan, described below.
     Share options granted to directors are included in Table 4 on page 80.

Mining Companies Comparative Plan (MCCP)
Rio Tinto’s performance share plan, the MCCP, provides participants with a conditional right to receive shares. The conditional awards will only vest if performance conditions approved by the committee are satisfied. Again, were there to be a change of control or a company restructuring, the awards would only vest subject to the satisfaction of the performance condition measured at the time of the takeover or restructuring. These conditional awards are not pensionable.
     The performance condition compares Rio Tinto’s TSR with the TSR of a comparator group of 15 other international mining companies over the same four year period. The composition of this comparator group is reviewed regularly by the committee to provide continued relevance in a consolidating industry. The current members of this group are listed at the bottom of the table of comparators on page 74.
     The maximum conditional award size under the current MCCP is two times salary (previously 70 per cent), calculated on the average share price over the previous financial year.

Rio Tinto 2004 Form 20-F   73


Back to Contents

     The following table shows the percentage of each conditional award which will be received by directors and product group chief executives based on Rio Tinto’s four year TSR performance relative to the comparator group for conditional awards made after 1 January 2004:

Ranking in comparator group

  1st-2nd   3rd   4th   5th   6th   7th   8th   9th-16th  
















 
% 150   125   100   83.75   67.5   51.25   35   -  
















 

The historical ranking of Rio Tinto in relation to the comparator group is shown in the following table:

Ranking of Rio Tinto versus comparator companies  
Period Ranking out of 16  


 
1993 – 97 4  
1994 – 98 4  
1995 – 99 2  
1996 – 00 2  
1997 – 01 2  
1998 – 02 3  
1999 – 03 7  
2000 – 04 11  


 

Current comparator companies:
Alcan, Alcoa, Anglo American, Barrick Gold, BHP Billiton, Freeport, Grupo Mexico, INCO, Newmont, Noranda, Phelps Dodge, Placer Dome, Teck Cominco, WMC and Xstrata

Before awards are released to participants, the external auditors and Kepler Associates independently review the Group’s performance compared to that of the comparator companies.
     Awards are released to participants as either Rio Tinto plc or Rio Tinto Limited shares or an equivalent amount in cash. In addition, a cash payment to participants equivalent to the dividends that would have accrued on the vested number of shares over the four year period will be made.
     Shares to satisfy the vesting may be acquired by purchase in the market, by subscription, or, in the case of Rio Tinto Limited, by procuring that Tinto Holdings Australia Pty Limited transfers existing shares to participants.

Performance of Rio Tinto
To illustrate the performance of the Companies relative to their markets, graphs showing the performance of Rio Tinto plc compared to the FTSE 100 Index and Rio Tinto Limited compared to the ASX All Ordinaries Index are reproduced in this report. A comparative graph showing Rio Tinto’s performance relative to the HSBC Global Mining Index is also included to illustrate the performance of the Companies relative to other mining companies.

Other share plans
UK executive directors can participate in:
the Rio Tinto plc Share Savings Plan, an Inland Revenue approved savings related plan which is open to all UK employees. Under the Plan directors can save up to £250 per month for a maximum of five years. At the end of the savings period the director may exercise an option over shares granted at a discount of up to 20 per cent to the market value at the time the savings contract is entered into. The number of options the director is entitled to is determined by the option price, the savings amount and the length of the savings contract; and
the Rio Tinto Share Ownership Plan, also an Inland Revenue approved share incentive plan which was approved by shareholders at the 2001 annual general meeting and introduced in 2002. Under this plan, eligible employees can save up to £125 per month, which the plan administrator invests in Rio Tinto plc shares. Rio Tinto matches these purchases on a one for one basis. In addition, eligible employees may receive an annual award of Rio Tinto shares up to a maximum of five per cent of salary, subject to a cap of £3,000.

Australian executive directors can participate in the Rio Tinto Limited Share Savings Plan, also introduced in 2001, which is similar to the Rio Tinto plc Share Savings Plan.

Shareholding policy
In 2002, the committee decided that it would be appropriate to encourage executive directors and product group chief executives to build up a substantial shareholding, aiming to reach a holding equal in value to two times salary over five years. Details of directors’ share interests in the Group are set out in Table 3 on page 79.

Pension and superannuation arrangementsUnited Kingdom
UK executive directors and senior management, like all UK staff, participate in the non contributory Rio Tinto Pension Fund, a funded, Inland Revenue approved, final salary occupational pension scheme.
     The Fund provides a pension from normal retirement age at 60 of two thirds final pensionable salary, subject to completion of 20 years’ service. Proportionally lower benefits are payable for shorter service or, having attained 20 years’ service, retirement is taken prior to the age of 60. Spouse and dependants’ pensions are also provided.

Rio Tinto 2004 Form 20-F   74


Back to Contents

     Members retiring early may draw a pension reduced by approximately four per cent a year for each year of early payment from age 50 onwards.
     Under the rules of the Rio Tinto Pension Fund, all pensions are guaranteed to increase annually in line with increases in the UK Retail Price Index subject to a maximum of ten per cent per annum. Increases above this level are discretionary.
     When pensionable salary is limited by the UK Inland Revenue earnings “cap”, benefits are provided from unfunded supplementary arrangements. The UK Government has made a number of pensions related announcements over the last two years and Rio Tinto continues to review developments in UK pensions legislation.
     In February 2005, the defined benefit section of the Rio Tinto pension fund was closed to new participants. Employees joining after that date will join the new defined contributions section of the Plan.
     No cash contributions were made in 2004 as the Rio Tinto Pension Fund remains fully funded.

Australia
The Australian executive director and senior management are members of the Rio Tinto Staff Superannuation Fund, a funded superannuation fund regulated by Australian legislation. The fund provides both defined benefit and defined contribution benefits. The executive director is a defined benefit member, accruing lump sums payable on retirement. Retirement benefits are limited to a lump sum multiple of seven times final basic salary at age 62. For retirement after 62, the benefit increases to 7.6 times average salary at age 65.
     Death in service and disablement benefits are provided as lump sums and are equal to the prospective age 65 retirement benefit. Proportionate benefits are also payable on termination of employment for ill health or resignation.
     Executive directors and senior management are not required to pay contributions. During 2004, Company cash contributions were paid into the Rio Tinto Staff Superannuation Fund to fund members’ defined benefit and defined contribution benefits.

Other pensionable benefits
As the increase in the percentage of total remuneration which is dependent on performance is substantial and has risen over recent years, the committee considers it appropriate that a proportion of this at risk pay should be pensionable. Annual STIP awards are pensionable up to a maximum value of 20 per cent of basic salary.
     Details of directors’ pension and superannuation entitlements are set out in Table 2 on page 78.

Service contracts and compensation payments
All executive directors have service contracts with a one year notice period. Rio Tinto has retained the right to pay directors in lieu of notice. Under current pension arrangements, executive directors are normally expected to retire at the age of 60. In 2004, Leigh Clifford’s contractual retirement age was reduced from 62 to 60, with a corresponding change to his retirement arrangements. In the event of early termination, the Group’s policy is to act fairly in all circumstances and the duty to mitigate would be taken into account. Compensation would not reward poor performance.
     Neither of the executive directors are proposed for election or re-election at the forthcoming annual general meetings.

Notice periods:          Remaining  
Name Date of   Notice period   service period  
  agreement       if less than  
          12 months  






 
Leigh Clifford 30 March 2004   12 months   N/A  
Guy Elliott 19 June 2002   12 months   N/A  






 

External appointments
Executive directors are likely to be invited to become non executive directors of other companies. Rio Tinto believes that such appointments can broaden their experience and knowledge, to the benefit of the Group. It is Group policy to limit executive directors’ external directorships to one FTSE 100 company or equivalent and they are not allowed to take on the chairmanship of another FTSE 100 company. Consequently, where there is no likelihood that such directorships will give rise to conflicts of interests, the board will normally give consent to the appointment, with the director permitted to retain the fees earned. Details of fees earned are set out in the notes to Table 1 on page 76.

Non executive directors’ remuneration Chairman’s fees and letter of appointment
It is Rio Tinto’s policy that the chairman should be remunerated on a competitive basis and at a level which reflects his contribution to the Group, as assessed by the board. He does not participate in the Group’s incentive plans or pension arrangements. Details of his fees can be found in Table 1 on page 76.
     Paul Skinner’s letter of appointment summarises his duties as chairman of the Group and was agreed by the Remuneration committee. It stipulates that he is expected to dedicate at least three days per week on average to carry out these duties. The letter envisages that Paul Skinner will continue in the role of chairman until he reaches the age of 65 in 2009, subject to re-election as a director by shareholders.

Rio Tinto 2004 Form 20-F   75


Back to Contents

Non executive directors’ fees and letters of appointment
The board as a whole determines non executive directors’ fees, although non executive directors do not vote on any increases of their own fees. Fees are set to reflect the responsibilities and time spent by the directors on the affairs of Rio Tinto. In the light of the increased volume of committee work following regulatory developments in the UK, US and Australia, it was decided in October 2004 to increase the fees for the chairmen of the Audit committee and Remuneration committee to £20,000 and £15,000 respectively. It was also agreed to increase the fees for Audit committee members to £10,000 and introduce a £5,000 fee for Remuneration committee members.
     Non executive directors do not participate in the Group’s incentive plans, pension or superannuation arrangements or any other elements of remuneration provided to executive directors.

     Non executive directors have a formal letter of appointment setting out their duties and responsibilities which is available for inspection at Rio Tinto plc’s registered office and annual general meeting.
     Details of non executive directors’ remuneration is set out in Table 1 on page 76.

Auditable information
Tables 1, 2, 4 and 5 comprise the auditable parts of the Remuneration report, except the information in Table 1 which is required by the Australian Corporations Act (see note 16 to Table 1).

Annual general meetings
Shareholders will be asked to vote on this Remuneration report at the Companies’ forthcoming annual general meetings.

By order of the board
Anette Lawless Secretary
Remuneration committee
24 February 2005

Table 1 – Total remuneration of directors and senior executives
Remuneration comprising salary, bonus and benefits

    Currency of Base salary1      Annual cash      Other benefits2          Subtotal  
actual payment   bonus1  
        2004   2003
Stated in US$’000   US$ US$ US$ US$   US$



 
                       
Chairman                      
Paul Skinner £ 931     32   963   282  
                       
Non executive directors                      
Sir David Clementi £ 110       110   80  
Leon Davis £ 275       275   245  
Sir Richard Giordano £ 191       191   156  
Richard Goodmanson3 £ 8       8    
Andrew Gould £ 110       110   91  
Lord Kerr £ 115       115   18  
David Mayhew5 £ 122       122   91  
John Morschel A$ 155       155   123  
Sir Richard Sykes4 £ 127       127   92  
Lord Tugendhat7 £ 34       34   91  
                       
Executive directors                      
Robert Adams9 £ 911   789   59   1,759   1,334  
Leigh Clifford9 £ 1,428   1,288   375   3,091   2,143  
Guy Elliott £ 850   855   42   1,747   1,146  
Oscar Groeneveld6, 16 A$ / £ 776   649   485   1,910   1,223  
                       
Five highest paid senior executives below board level16                    
Tom Albanese US$ 635   560   1,334   2,529   1,511  
Preston Chiaro US$ 492   400   963   1,855   870  
Keith Johnson £ 530   517   27   1,074   655  
Christopher Renwick A$ 1,000   672   1,447   3,119   1,385  
Sam Walsh A$ 709   693   659   2,061   1,108  











 
Remuneration, pension and share scheme fair values16  

Rio Tinto 2004 Form 20-F   76


Back to Contents

Table 1 – Total remuneration of directors and senior executives (continued)
Remuneration comprising salary, bonus and benefits

      Adjusted for      
the term of
the
    Pension   Value of long term incentive performance Total
Subtotal contrib’s10     schemes11 period15 remuneration
   
 
2004   MCCP12   SSP13   SOP14   2004   2003
US$ US$ US$   US$   US$ US$ US$   US$


                                 
Chairman                                
Paul Skinner 963             963   282  
                                 
Non executive directors                                
Sir David Clementi 110             110   80  
Leon Davis 275             275   245  
Sir Richard Giordano 191             191   156  
Richard Goodmanson3 8             8    
Andrew Gould 110             110   91  
Lord Kerr 115             115   18  
David Mayhew5 122             122   91  
John Morschel 155             155   123  
Sir Richard Sykes4 127             127   92  
Lord Tugendhat7 34             34   91  
                                 
Executive directors                                
Robert Adams9 1,759     1,451   2   2,770   (3,081 ) 2,901   2,204  
Leigh Clifford9 3,091   465   2,646   15   2,503   (2,733 ) 5,987   4,182  
Guy Elliott 1,747     1,118   12   1,575   (1,874 ) 2,578   1,591  
Oscar Groeneveld6, 16 1,910   249   1,212   8   2,203   (2,494 ) 3,088   2,077  
                                 
Five highest paid senior executives below board level16                          
Tom Albanese 2,529   48   1,249   3   3,171   (3,154 ) 3,846   2,379  
Preston Chiaro 1,855   37   816   4   1,247   (1,510 ) 2,449   1,178  
Keith Johnson 1,074     584   6   520   (807 ) 1,377   655  
Christopher Renwick 3,119   267   1,193   8   1,981   (2,287 ) 4,281   2,186  
Sam Walsh 2,061   228   989   6   1,620   (1,868 ) 3,036   1,722  
















 
Notes to Table 1                                
1. The total remuneration is reported in US dollars. The amounts, with the exception of the annual cash bonus, can be converted into sterling at the rate of 1US$ =£0.5463 or alternatively, into Australian dollars at the rate of 1US$ = A$1.3617, each being the average exchange rate for 2004. The annual cash bonus is payable under the STIP and this may be converted at the 2004 year end exchange rate of 1US$ = £0.519 to ascertain the sterling equivalent or alternatively, 1US$ = A$1.2847 to calculate the Australian dollar value.
2. Other emolument items include healthcare, 401k contributions in the US where appropriate, car and fuel benefits, travel allowances to attend overseas meetings, and professional advice. Housing, relocation payments, tax equalisation adjustments and children’s education assistance are also provided for executive directors and product group executives living outside their home country. UK executive directors are also beneficiaries under the Rio Tinto All Employee Share Ownership Plan up to a maximum value of £3,000 (US$5,492) and may also contribute to the Rio Tinto Share Ownership Plan where the Company will match their personal contributions to a maximum of £1,500 (US$2,746) per annum. A payment in respect of long service leave is paid to Australian executive directors and senior executives on retirement.
3. Richard Goodmanson was appointed a director on 1 December 2004.
4. Sir Richard Sykes’ fees were paid direct to him up until 30 April 2004 and thereafter paid to Imperial College London.
5. David Mayhew’s fees are paid to Cazenove Group plc.
6. Oscar Groeneveld resigned as a director on 1 October 2004. The figures shown above relate to his total remuneration with the Group for the year. His emoluments for the period when he was a director amounted to US$1,182,341 comprising salary US$552,811, bonus US$465,237 and other benefits US$164,293.
7. Lord Tugendhat retired on 22 April 2004 and received a gift to the value of US$3,661.
8. Emoluments of US$53,022 from subsidiary and associated companies were waived by two executive directors (2003: two directors waived US$98,872). Executive directors have agreed to waive any further fees receivable from subsidiary and associated companies.
9. In the course of the year, Robert Adams received US$45,763 and Leigh Clifford received US$22,881 in respect of non Rio Tinto related directorships.
10. Includes actual contributions payable to both defined contribution and defined benefit arrangements that are required to secure the pension benefits earned in the year.
11. The amount of long term share based compensation represents the estimated value of awards granted under the Rio Tinto Share Option Plan (the SOP), the Share Savings Plan (the SSP) and the Mining Companies Comparative Plan (the MCCP) which had not vested at 1 January 2004 or were granted during 2004. The fair value of the SOP and SSP awards have been calculated using an independent binomial model provided by external consultants, Lane Clark and Peacock LLP. The fair value of options granted to executive directors and product group chief executives under the SOP is 17 per cent of face value. The fair value of the MCCP awards has been calculated at the date of grant by external consultants, Kepler Associates based on the share price at that date and the percentage of the conditional awards expected to be paid out. The fair value of conditional awards made to executive directors and product group chief executives under the plan is 52.5 per cent of the face value. The value of long term share based compensation has been valued in accordance with the guidelines issued by the Australian Securities & Investments Commission dated 28 June 2004 (which replaced those of 30 June 2003). The non executive directors do not participate in the long term incentive share schemes.
12. The number of conditional shares awarded to executive directors under the MCCP for the twelve month period ending 31 December 2004 are shown under Table 4 of this report. The figures in respect of the five highest paid senior executives of the Group are as follows: Tom Albanese 56,015, Keith Johnson 30,387 and Preston Chiaro 46,995 over Rio Tinto plc ordinary shares and Chris Renwick 44,171 and Sam Walsh 38,023 over Rio Tinto Limited shares. The market price of the Rio Tinto plc and Rio Tinto Limited shares were 1,276p and A$33.17 respectively.

Rio Tinto 2004 Form 20-F   77


Back to Contents

13. The award of options to executive directors under the SSP during the 12 month period up to 31 December 2004 are shown in Table 5 of this report. During the same period, of the five highest paid executives, only Preston Chiaro subscribed for 490 Rio Tinto plc ordinary shares at an option price 1,277p. These options must be exercised in January 2006.
14. The award of options to executive directors under the SOP during the twelve month period up to 31 December 2004 are shown in Table 5 of this report. During the same period options awarded to the five highest paid executives of the Group were as follows; Tom Albanese 84,020, Preston Chiaro 70,490 and Keith Johnson 43,500 over Rio Tinto plc ordinary shares and Chris Renwick 42,223 and Sam Walsh 54,400 over Rio Tinto Limited shares. The options are subject to the performance criteria explained on page 73 and are exercisable between 22 April 2007 and 21 April 2014. The exercise price was set at 1,329p per ordinary Rio Tinto plc share and A$34.406 per ordinary Rio Tinto Limited share.
15. The fair value of unvested share grants is spread equally over the term of each plan’s performance period. This adjustment spreads the fair value of each grant of long term incentive shares over a three year period in respect of the SOP, a four year period in respect of the MCCP and the length of the relative contract period under the SSP.
16. The following additional information is provided to meet the requirements of the Australian Corporations Act 2001: details about pension contributions, the value of long term incentive plans and accounting adjustments required to spread the value of long term incentive plans over the performance period;
  the total remuneration of the five highest paid senior executives below board level;
  the inclusion of Oscar Groeneveld’s earnings following his resignation from the board on 1 October 2004.
  The bases for determining the figures presented in respect of pension contributions and long term incentive plans are described in notes 10, 11 and 17 respectively.
17. Christopher Renwick’s “Other benefits” included a statutory retirement payment of US$1,325,552 relating to his service with the Group.

Table 2 – Directors’ pension entitlements (as at 31 December 2004)

                  Accrued benefits       Transfer values3      
         




 


     
  Age   Years of   At 31 Dec   At 31 Dec   Change in   Change in   At 31 Dec   At 31 Dec   Change, net   Transfer  
      service   2003   2004   accrued   accrued   2003   2004   of personal   value of  
      completed           benefits   benefit net           contributions   change in  
                  during the   of inflation               accrued  
                  year ended                   benefit net  
                  31 Dec                   of inflation  
                  2004                      
UK directors         £’000 pa   £’000 pa   £’000pa   £’000 pa   £’000   £’000   £’000   £’000  
          pension   pension   pension   pension                  




















 
                                         
Robert Adams5 59   34   360   389   29   18   6,159   7,465   1,306   353  
Guy Elliott 49   24   212   256   44   37   2,066   2,915   849   429  




















 
                                         
Australian directors         A$’000   A$’000   A$’000   A$’000   A$’000   A$’000   A$’000   A$’000  
          Lump sum   Lump sum   Lump sum   Lump sum                  




















 
                                         
Leigh Clifford2, 3 57   34   12,099   12,026   (73 ) (1,881 ) 12,099   12,026   (73 ) (1,881 )
Oscar Groeneveld2, 6 51   29   4,661   5,079   418   21   4,661   5,079   418   21  




















 
                                         
Notes to Table 2                                        
1. A$76,659 and A$42,384 were credited to the respective accounts belonging to Leigh Clifford and Oscar Groeneveld in the Rio Tinto Staff Superannuation Fund in relation to the superannuable element of their 2004 performance bonus.
2. The changes in accrued lump sums for Australian directors are before contributions tax and exclude interest.
3. Transfer values are calculated in a manner consistent with “Retirement Benefit Schemes – Transfer Values (GN 11)” published by the Institute of Actuaries and the Faculty of Actuaries and dated 4 August 2003.
4. During the period, Leigh Clifford’s Australian superannuable salary was determined by conversion of his sterling pay to A$ through exchange rates. The reduction in his overall accrued benefits reflects the changes in the exchange rate. The Remuneration committee has resolved that in respect of 2005 Leigh Clifford’s Australian superannuable salary will be uplifted by the same percentage used to uplift his sterling pay.
5. Robert Adams died on 27 January 2005.
6. Oscar Groeneveld resigned as a director on 1 October 2004. The accrued entitlement shown above represents the value at this date.

Rio Tinto 2004 Form 20-F   78


Back to Contents

Table 3 – Directors’ beneficial interests in shares

  1 Jan   31 Dec   10 Jun
20042 20047 2005






Robert Adams3, 4 71,764   72,243   n/a
Ashton Calvert8    
Sir David Clementi    
Leigh Clifford 2,100   2,100   2,100
  76,428   90,296   91,255
Vivienne Cox8    
Leon Davis 6,100   6,100   n/a
  187,293   187,293   n/a
Guy Elliott3 40,847   42,888   43,558
Sir Richard Giordano 1,065   1,065   n/a
Richard Goodmanson    
Andrew Gould   1,000   1,000
Oscar Groeneveld4 19,010   19,010   n/a
  23,515   32,012   n/a
Lord Kerr   2,300   2,300
David Mayhew 2,500   2,500   2,500
John Morschel   2,000   n/a
Paul Skinner 5,140   5,277   5,349
Sir Richard Sykes 2,359   2,422   2,455
Lord Tugendhat4 1,135   1,135   n/a






           
Notes to Table 3          
1. Rio Tinto plc – ordinary shares of 10p each; Rio Tinto Limited shares stated in italics.
2. Or date of appointment if later.
3. These directors also have an interest in a trust fund containing 8,219 Rio Tinto plc shares at 31 December 2004 (1 January 2004: 21,849 Rio Tinto plc shares) as potential beneficiaries of The Rio Tinto Share Ownership Trust. At 10 June 2005 this trust fund contained 825 Rio Tinto plc shares.
4. Lord Tugendhat and Oscar Groeneveld retired and resigned as directors on 22 April 2004 and 1 October 2004 respectively. Robert Adams died on 27 January 2005. Leon Davis, Sir Richard Giordano and John Morschel resigned as directors on 29 April 2005.
5. The above includes the beneficial interests obtained through the Rio Tinto Share Ownership Plan, details of which are set out on page 73 under the heading “Other share plans”.
6. The total beneficial interest of the directors in the Group amounts to less than one per cent.
7. Or date of retirement or resignation if earlier.
8. Ashton Calvert and Vivienne Cox were appointed non executive directors on 1 February 2005.

Rio Tinto 2004 Form 20-F   79


Back to Contents

Table 4 – Awards to directors under long term incentive plans

                                      Plan terms and conditions

 
                          Condi-   Perform-                Monetary
                          tional   ance   Market   Date   Market   value of
                          award   period   price at   award   price at   vested
  Plan   1 Jan   Awarded2   Lapsed2   Vested2   31 Dec   granted   concludes   award   vests   vesting   award
      20042               20048                       US$’000

 
                                               
Leigh MCCP                       6 Mar   31 Dec   A$            
Clifford6 2001   37,474     37,474       2001   2004   34.406      
  MCCP                       13 Mar   31 Dec   A$            
  2002   34,435         34,435   2002   2005   39.600      
  MCCP                       7 Mar   31 Dec   A$            
  2003   36,341         36,341   2003   2006   30.690      
  MCCP                       22 Apr   31 Dec   A$            
  2004     119,581       119,581   2004   2007   33.170      
     








                     
      108,250   119,581   37,474     190,357                      
     








                     
                                               
Robert MCCP                       6 Mar   31 Dec                
Adams9 2001   27,330     27,330       2001   2004   1,310p      
  MCCP                       13 Mar   31 Dec       28 Jan        
  2002   25,064         25,064   2002   2005   1,424p   2005   1,651p   399
  MCCP                       7 Mar   31 Dec       28 Jan        
  2003   26,837         26,837   2003   2006   1,198p   2005   1,651p   427
  MCCP                       22 Apr   31 Dec       28 Jan        
  2004     54,372       54,372   2004   2007   1,276p   2005   1,651p   606
     








                     
      79,231   54,372   27,330     106,273                       1,431
     








                     
                                               
Guy MCCP                       6 Mar   31 Dec       21 Feb        
Elliott1&4 2001   7,845     6,865   980     2001   2004   1,310p   2005   1,759p   33
  MCCP                       13 Mar   31 Dec                
  2002   16,935         16,935   2002   2005   1,424p      
  MCCP                       7 Mar   31 Dec                
  2003   22,923         22,923   2003   2006   1,198p      
  MCCP                       22 Apr   31 Dec                
  2004     51,550       51,550   2004   2007   1,276p      
     








                     
      47,703   51,550   6,865   980   91,408                       33
     








                     
                                               
Oscar MCCP                       6 Mar   31 Dec   A$            
Groeneveld6 2001   20,934     20,934       2001   2004   34.406      
  MCCP                       13 Mar   31 Dec   A$            
  2002   20,322         20,322   2002   2005   39.600      
  MCCP                       7 Mar   31 Dec   A$            
  2003   21,469         21,469   2003   2006   30.690      
  MCCP                       22 Apr   31 Dec   A$            
  2004     43,785       43,785   2004   2007   33.170      
     








                     
      62,725   43,785   20,934     85,576                      
     








                     
                                               
Notes to Table 4
1. The Rio Tinto Group's 11th place ranking against the comparator group for the MCCP 2001 award will not generate any vesting of the conditional award to any participant who was an executive director at the time of the initial grant. Guy Elliott was not an executive director at that time and along with participating senior executives of the Group, he will qualify for a 12.5 per cent vesting based on the scales applied to conditional awards made prior to 2004.
2. Rio Tinto plc – ordinary shares of 10p each; Rio Tinto Limited shares stated in italics.
3. The shares awarded to Guy Elliott under the MCCP 2001 vested on 21 February 2005 but, as the performance cycle ended on 31 December 2004, they have been dealt with in this table as if they had vested on that date.
4. The value of the award to Guy Elliott has been based on a share price of 1,759p, being the average share price of Rio Tinto plc ordinary shares of 10p each on 21 February 2005, the day the award vested to the beneficiary. The amount in sterling has been translated into US dollars at the year end exchange rate £1.9268.
5. The shares awarded under the MCCP 2000 last year vested on 27 February 2004 but, as the performance cycle ended 31 December 2003, they were dealt with in the 2003 Annual report and financial statements as if they had vested on that date. The values of the awards in the 2003 Annual report and financial statements were based on share prices of 1,386p and A$35.24, being the closing share prices on 6 February 2004, the latest practicable date prior to the publication of the 2003 Annual report and financial statements. The actual share prices on 27 February 2004, when the awards vested were 1,440.5p and A$35.8327 with the result that the values of the awards had been understated in respect of Leigh Clifford by US$3,485, Robert Adams by US$17,335, Guy Elliott by US$2,663 and Oscar Groeneveld by US$1,975.
6. Leigh Clifford was given a conditional award over 119,581 Rio Tinto Limited shares and Oscar Groeneveld was given a conditional award over 43,785 Rio Tinto Limited shares during the year. These awards were approved by the shareholders under ASX Listing Rule 10.14 at the 2004 annual general meeting.
7. A full explanation of the MCCP can be found on pages 73 to 74.
8. Or as at date of resignation or retirement if earlier.
9. Robert Adams died on 27 January 2005 and the unvested conditional awards will now vest based on the assumption that Rio Tinto achieved median ranking on each of the outstanding performance cycles. This leads to a 50 per cent vesting in respect of the 2002 and 2003 awards and a 35 per cent vesting in respect of the 2004 award. The awards will be made to his estate at the earliest opportunity and, for the purpose of this report, have been valued using the closing price on 10 June 2005 (see also note 4).

Rio Tinto 2004 Form 20-F   80


Back to Contents

Table 5 – Directors’ options to acquire Rio Tinto plc and Rio Tinto Limited shares

  Option type   At 1 Jan   Granted   Exercised   At 31   Option price   Market price   Date from   Expiry date
      2004           Dec 2004       at date of   which first    
                          exercise   exercisable    


















Robert                                  
Adams6 RTPSSP   595       595   976p     1 Jan 2005   31 Dec 2005
      431       431   876p     28 Jan 2005   27 Jan 2006
  RTSOP   69,878     69,878     820p   1562p   27 May 2001  
      72,885     72,885     808.8p   1562p   12 Mar 2002  
      42,158     42,158     965.4p   1562p   7 Mar 2003  
      21,080       21,080   965.4p     28 Jan 2005   27 Jan 2006
      100,268       100,268   1,265.6p     28 Jan 2005   27 Jan 2006
      91,320       91,320   1,458.6p     28 Jan 2005   27 Jan 2006
      114,014       114,014   1,263p     28 Jan 2005   27 Jan 2006
        77,700     77,700   1,329p     28 Jan 2005   27 Jan 2006
                                   
Leigh                                  
Clifford RTLSSP   959       959   A$27.86  
  1 Jan 2005   30 Jun 2005
        1,486     1,486   A$29.04     1 Jan 2010   30 Jun 2010
  RTSOP   52,683       52,683   A$23.4382     28 May 2002   28 May 2009
      59,318       59,318   A$24.069     7 Mar 2003   7 Mar 2010
      29,660       29,660   A$24.069     7 Mar 2005   7 Mar 2010
      241,430       241,430   A$33.0106     6 Mar 2005   6 Mar 2011
      208,882       208,882   A$39.8708     13 Mar 2005   13 Mar 2012
      254,132       254,132   A$33.336     7 Mar 2006   7 Mar 2013
        179,370     179,370   A$34.406     22 Apr 2007   22 Apr 2014
                                   
Leon                                  
Davis RTSOP   93,978       93,978   A$23.4382     28 May 2002   28 May 2009
                                   
Guy                                  
Elliott RTPSSP   1,431       1,431   1,107 p
  1 Jan 2009   30 Jun 2009
  RTSOP   3,807       3,807   965.4 p   7 Mar 2005   7 Mar 2010
      13,432       13,432   1265.6     6 Mar 2005   6 Mar 2011
      61,703       61,703   1458.6     13 Mar 2005   13 Mar 2012
      97,387       97,387   1263     7 Mar 2006   7 Mar 2013
        73,700     73,700   1329     22 Apr 2007   22 Apr 2014
                                   
Director leaving the board in 2004                            
                                   
Oscar                                  
Groeneveld7 RTLSSP   1,431       1,431   A$27.48         30 Jun 2009
  RTSOP   43,851     43,851     A$23.4382   A$38.76   28 May 2002  
      33,542     33,542     A$24.069   A$38.76   7 Mar 2003  
      16,771       16,771   A$24.069     7 Mar 2005   7 Mar 2010
      80,920       80,920   A$33.0106     6 Mar 2005   6 Mar 2011
      73,965       73,965   A$39.8708     13 Mar 2005   13 Mar 2012
      90,080       90,080   A$33.336     7 Mar 2006   7 Mar 2013
        62,600     62,600   A$34.406     22 Apr 2007   22 Apr 2014


















                                   
Notes to Table 5                                
1. Rio Tinto plc ordinary shares of 10p each; Rio Tinto Limited – shares – stated in italics.
2. Options have been granted under the Rio Tinto Share Option Plan, (“RTSOP”) the Rio Tinto plc Share Savings Plans (“RTPSSP”) and the Rio Tinto Limited Share Savings Plan (“RTLSSP”).
3. The closing price of Rio Tinto plc ordinary shares at 31 December 2004 was 1,533p (2003: 1,543p) and the closing price of Rio Tinto Limited shares at 31 December 2004 was A$39.12 (2003: A$37.54). The highest and lowest prices during the year were 1,574p and 1,212p respectively for Rio Tinto plc and A$40.20 and A$31.98 for Rio Tinto Limited.
4. No directors’ options lapsed during the year.
5. Or at date of retirement or resignation if earlier.
6. In accordance with the Plan rules, Robert Adams’ outstanding options become exercisable with immediate effect following his death. His award of options under the 2004 grant has been reduced by 17,881 to 59,819 options.
7. Oscar Groeneveld exercised his options after his resignation as a director.

Rio Tinto’s register of directors’ interests, which is open to inspection, contains full details of directors’ shareholdings and options to subscribe for Rio Tinto shares.

Rio Tinto 2004 Form 20-F   81


Back to Contents

CORPORATE GOVERNANCE
The directors of Rio Tinto believe that high standards of corporate governance are critical to business integrity and performance. The following report describes how this philosophy is applied in practice.
     As Rio Tinto’s three main listings are in London, Melbourne and New York, the directors have referred to the Combined Code as attached to the United Kingdom Listing Authority Listing Rules (the Code), the Australian Stock Exchange (ASX) Best Practice Corporate Governance Guidelines and the New York Stock Exchange (NYSE) Corporate Governance Listing Standards, as well as the Sarbanes-Oxley Act of 2002, when formulating this statement.
     During 2004, Rio Tinto applied the principles contained in Part 1 of the Code. The detailed provisions of Section 1 of the Code have been complied with as described below. Rio Tinto also complied with the ASX Best Practice Corporate Governance Guidelines and has voluntarily adopted the recommendations of the US Blue Ribbon Committee in respect of disclosures to shareholders, as detailed in the Audit committee’s statement on page 87. A statement on compliance with the New York Stock Exchange’s Corporate Governance Listing Standards is contained below in this statement.

The board
The Companies have common boards of directors which are collectively responsible for the success of the Group and accountable to shareholders for the performance of the business. Throughout the rest of this report, they will be described as the board.
     The board currently consists of 11 directors: the chairman, two executive directors and eight non executive directors. The Nominations committee continually assesses the balance of executive and non executive directors and the composition of the board in terms of the skills and diversity required to ensure it remains relevant in the current environment.

The role and responsibilities of the board
The role of the board is to provide the Companies with good governance and strategic direction. The board also reviews the Group’s control and accountability framework. The directors have agreed to a formal schedule of matters specifically reserved for decision by the board, including strategy, major investments and acquisitions. The full list is available on Rio Tinto’s website.
     Responsibility for day to day management of the business lies with the executive team, with the board agreeing annual performance targets for management against the Group’s financial plan. The board is ultimately accountable to shareholders for the performance of the business.
     To ensure an efficient process, the board meets regularly and in 2004 had eight scheduled and one special meeting. Details of directors’ attendance at board and committee meetings are set out below.
     The board has regular scheduled discussions on various aspects of the Group’s strategy and, in line with best practice, a dedicated annual two day meeting at which in depth discussions of Group strategy take place.
     Directors receive timely, regular and necessary management and other information to enable them to fulfil their duties. The board has agreed a procedure for the directors to have access to independent professional advice at the Group’s expense and to the advice and services of both company secretaries.
     In addition to these formal processes, directors are in regular communication with senior executives from the different product groups, at formal and informal meetings, to ensure regular exchange of knowledge and experience between management and non executive directors. To continue building on the formal induction programmes, which all new non executive directors undertake, they are encouraged to take every opportunity to visit the Group’s operating locations.
     The chairman also holds regular meetings with non executive directors without the executive directors present.

Board performance
In 2004, the board conducted a further formal process to evaluate its effectiveness and that of the board committees and individual directors.
     Each director’s performance was appraised by the chairman and, in a meeting chaired by the senior non executive director, the non executive directors assessed the chairman’s performance, taking into consideration the views of executive colleagues. This evaluation process takes place annually and aims to cover board dynamics, board capability, board process, board structure, corporate governance, strategic clarity and alignment and the performance of individual directors. Following the evaluation, the directors believe they comply with the requirements of Clause A.6 of the Code and Principle 8 of the ASX Best Practice Corporate Governance Guidelines.

Independence
The board has adopted a policy on directors’ independence. The policy, which contains the materiality thresholds approved by the board, can be viewed on the Rio Tinto website.

Rio Tinto 2004 Form 20-F   82


Back to Contents

     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 directors, Ashton Calvert, Sir David Clementi, Vivienne Cox, Richard Goodmanson, Andrew Gould, Lord Kerr and Sir Richard Sykes are independent. John Morschel, who retired at the end of the 2005 annual general meetings, was also independent. Although Sir Richard Giordano, who also retired at the end of the 2005 annual general meetings, had served as a director since 1992, the strength, objectivity and nature of his contribution to board and committee discussions was fully consistent with those of an independent director. Leon Davis, a former chief executive of the Group, and David Mayhew, who is chairman of one of Rio Tinto plc’s stockbrokers, are not independent. Leon Davis also retired by rotation at the end of the 2005 annual general meetings.
     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.
     The directors’ biographies are set out on pages 67 to 69.

Election and re-election
Directors are elected by shareholders at the first annual general meetings after their appointment and, after that, offer themselves for reelection at least once every three years. Non executive directors are normally expected to serve at least two terms of three years and, except where special circumstances justify it, would not normally serve more than three such terms.

Chairman and chief executive
The roles of the chairman and chief executive are separate and the division of responsibilities has been formally approved by the board.

Directors’ attendance at board and committee meetings during 2004  
Name of Director Board   Audit   Remuneration   Committee on   Nominations
    committee committee social and committee
        environmental  
        accountability  
  A   B A   B A   B A   B A   B





















Robert Adams 9   8                                  
David Clementi 9   8   8   8   5   4                  
Leigh Clifford 9   9                                  
Leon Davis 9   9                   3   3          
Guy Elliott 9   9                                  
Sir Richard Giordano 9   8   8   7           3   3   2   2  
Richard Goodmanson1                                    
Andrew Gould 9   8   8   8   5   4                  
Oscar Groeneveld2 7   7                                  
Lord Kerr3 9   8   5   5           2   2          
David Mayhew 9   8   8   7                   2   2  
John Morschel 9   9           5   5   3   3   2   2  
Paul Skinner 9   9                   3   3   2   2  
Sir Richard Sykes 9   8           5   5                  
Lord Tugendhat4 3   2   3   3           1   1          





















A = Maximum number of meetings the director could have attended 
B = Number of meetings attended
   
1. Richard Goodmanson was appointed on 1 December 2004
2. Oscar Groeneveld resigned on 1 October 2004
3. Lord Kerr became a committee member on 1 June 2004 (Audit and CSEA)
4. Lord Tugendhat retired on 22 April 2004

Board committees
There are four board committees, the Nominations committee, Audit committee, Remuneration committee and the Committee on social and environmental accountability. Each committee plays a vital role in ensuring that good corporate governance is maintained throughout the Group. Committee terms of reference are reviewed annually by the board and the committees themselves to ensure they continue to be at the forefront of best practice and are posted on the Group’s website. Minutes of all committee meetings are circulated to the board, with oral reports at the next board meeting. All committee members are non executive directors.

Rio Tinto 2004 Form 20-F   83


Back to Contents

     The Audit committee’s main responsibilities include the review of accounting principles, policies and practices adopted in the preparation of public financial information; review with management of procedures relating to financial and capital expenditure controls, including internal audit plans and reports; review with external auditors of the scope and results of their audit; the nomination of auditors for appointment by shareholders; and the review of and recommendation to the board for approval of Rio Tinto’s risk management policy. Its responsibilities also include the review of corporate governance practices of Group sponsored pension funds. The committee has a number of training sessions which may cover new legislation and other relevant information. The external auditors, the finance director, the Group controller and Group internal auditor attend meetings. A copy of the Audit committee charter is reproduced on pages 88 to 89 and can be found on the Rio Tinto website.
     The Audit committee is chaired by Andrew Gould who succeeded Sir Richard Giordano on his retirement at the end of the 2005 annual general meetings. Its other members are Sir David Clementi, Vivienne Cox, Lord Kerr and David Mayhew. To comply with the NYSE’s rules on independence David Mayhew will cease to be a member of the committee with effect from 31 July 2005.
     The Remuneration committee is responsible for determining the policy for executive remuneration and for the remuneration and benefits of individual executive directors and senior executives. Full disclosure of all elements of directors’ and relevant senior executives’ remuneration can be found in the Remuneration report on pages 71 to 81, together with details of the Group’s remuneration policies. The committee is chaired by Sir Richard Sykes and its other members are Sir David Clementi, Richard Goodmanson and Andrew Gould.
     The Nominations committee is chaired by the chairman of Rio Tinto, Paul Skinner. It is the committee’s responsibility to ensure that there is a clear, appropriate and transparent process in place to source and appoint new directors. Its responsibilities also include evaluating the balance of skills, knowledge and experience on the board and identifying and nominating, for the approval by the board, candidates to fill board vacancies as and when they arise. The committee reviews the structure, size and composition of the board and makes recommendations with regard to any changes it considers appropriate. The committee also reviews the time required to be committed to Group business by non executive directors and assesses whether non executive directors are devoting sufficient time to carry out their duties. In addition to Paul Skinner, the committee consists of Ashton Calvert, Richard Goodmanson, David Mayhew and Sir Richard Sykes. Under the Code, two members of the committee are not considered independent: Paul Skinner, following his appointment as chairman, and David Mayhew. The committee composition is therefore not fully aligned with recommended practice in the UK. The board takes the view, however, that the skills and experience of the members of the committee, combined with the flexibility of a relatively small committee, makes the current composition both efficient and effective.
     The Committee on social and environmental accountability reviews the effectiveness of management policies and procedures in place to deliver those standards in The way we work, Rio Tinto’s statement of business practice, which are not covered by the other board committees and, in particular, those relating to health, safety, the environment and social issues. The overall objective of the committee is to promote the development of high quality business practices throughout the Group and to develop the necessary clear accountability on these practices. Members of the committee, which is chaired by Richard Goodmanson, are Ashton Calvert, Lord Kerr and Paul Skinner.

Executive directors’ other directorships
Executive directors are likely to be invited to become non executive directors of other companies. For full details of the Group policy and fees, see pages 71 to 81.

Directors’ dealings in shares
Rio Tinto has a Group policy in place to govern the dealing in Rio Tinto securities by directors and employees. The policy, which prohibits dealings when in possession of price sensitive information and shortly before a results announcement, can be viewed on the Rio Tinto website.

Communication
Rio Tinto recognises the importance of effective communication with shareholders and the general investment community. To ensure shareholders are kept informed in a timely manner, the Group has adopted an External disclosure guidance, which is posted on the website appended to the Corporate governance guidance.
     In addition to statutory documents, Rio Tinto has a comprehensive website featuring in depth information on health, safety and the environment, as well as general investor information and Group policies. Results presentations and other significant events are available as they happen and as an archive on the website.
     The Group also produces a range of informative publications, which are available on request. For further details, see the website.
     Full advantage is taken of the annual general meetings to inform shareholders of current developments and to give shareholders the opportunity to ask questions. As recommended by the ASX Best Practice Corporate Governance Guidelines, Rio Tinto Limited’s external auditor attends the AGM and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.
     The main channels of communication with the general investment community are through the chairman, chief executive and finance director, who conduct regular meetings with the Companies’ major shareholders. Non executive directors and the senior independent director are also available as appropriate.
     The Group also organises regular investor seminars which provide a two way communication with investors and analysts; the valuable feedback is communicated to the board. An annual survey of major shareholders’ opinion and perception of the Group is presented to the board by the Group’s investor relations advisors.

Rio Tinto 2004 Form 20-F   84


Back to Contents

Statement of business practice
The way we work provides the directors and all Group employees with a summary of the principal policies and procedures in place to help ensure that high governance and business standards are communicated and achieved throughout the Group.
      Main policies are adopted by the directors after wide consultation, externally and within the Group. Once adopted, they are communicated to business units worldwide, together with guidance and support on implementation. Business units are then required to devote the necessary effort by management to implement and report on these policies.
      The following policies are currently in place: health, safety and the environment; communities; human rights; access to land; employees; business integrity; bribery and corruption; corporate governance; compliance; external disclosures, including continuous disclosure, and code of ethics covering the preparation of financial statements and political involvement. These policies apply to all Rio Tinto managed businesses.
      There is also a Group wide “whistle blowing” programme called Speak-OUT. Employees are encouraged to report any concerns, including any suspicion of a violation of the Group’s financial reporting and environmental procedures, through an independent third party and without fear of recrimination. A process has been established for the investigation of any matters reported with clear lines of reporting and responsibility in each Group business.
      Where the Group does not have operating responsibility for a business, Rio Tinto’s policies are communicated to the business partners and they are encouraged to adopt similar policies of their own.
      Rio Tinto’s report on social and environmental matters follows the Association of British Insurers’ guidelines. This report can be found on pages 64 to 67. Details of the Group’s overall and individual businesses’ social and environmental performance continue to be published on Rio Tinto’s website and in the Sustainable development review.

Responsibilities of the directors
The directors are required by UK and Australian company law to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Group as at the end of the financial period and of the profit or loss and cash flows for that period. To ensure that this requirement is satisfied, the directors are responsible for establishing and maintaining adequate internal controls and procedures for financial reporting throughout the Group.
      The directors consider that the financial statements present a true and fair view and have been prepared in accordance with applicable accounting standards, using the most appropriate accounting policies for Rio Tinto's business and supported by reasonable and prudent judgments. The accounting policies have been consistently applied.
      The directors have received a written statement from the chief executive and the finance director to this effect. In accordance with ASX Best Practice Recommendation 7.2, this written statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board and confirms that the Group’s risk management and internal compliance and control systems are operating efficiently and effectively in all material respects.
      The directors, senior executives, senior financial managers and other members of staff who are required to exercise judgement in the course of the preparation of the financial statements are required to conduct themselves with integrity and honesty and in accordance with the ethical standards of their profession and/or business.
      The directors are responsible for maintaining proper accounting records, in accordance with the UK Companies Act 1985 and the Australian Corporations Act 2001. They have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of Group and to prevent and detect fraud and other irregularities.
      The directors are also responsible for the maintenance and integrity of the Group’s website. The work carried out by the auditors does not involve consideration of this and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially loaded on the website.

Going concern
The financial statements have been prepared on the going concern basis. The directors report that they have satisfied themselves that the Group is a going concern since it has adequate financial resources to continue in operational existence for the foreseeable future.

Boards’ statement on internal control
Rio Tinto’s overriding corporate objective is to maximise long term shareholder value through responsible and sustainable investment in mining and related assets. The directors recognise that creating shareholder value is the reward for taking and accepting risk.
      The directors are responsible for the Group’s system of internal control and for reviewing its effectiveness in providing shareholders with a return on their investments that is consistent with a responsible assessment and mitigation of risks. This includes reviewing financial, operational and compliance controls, and risk management procedures. Because of the limitations inherent in any such system this is designed to manage rather than eliminate risk. Accordingly, it provides reasonable but not absolute assurance against material misstatement or loss.
      The directors have established a process for identifying, evaluating and managing the significant risks faced by the Group. This process was in place during 2004 and up to and including the date of approval of the 2004 Annual report and financial statements. The process is reviewed annually by the directors and accords with the guidance set out in Internal Control: Guidance for Directors on the Combined Code.

Rio Tinto 2004 Form 20-F   85


Back to Contents

     The Group’s management committees review information on the Group’s significant risks, with relevant control and monitoring procedures, for completeness and accuracy. This information is presented to the directors to enable them to assess the effectiveness of the internal controls. In addition, the board and their committees monitor the Group’s significant risks on an ongoing basis.
      Assurance functions, including internal auditors and health, safety and environmental auditors, perform reviews of control activities and provide regular written and oral reports to directors and management committees. The directors receive and review minutes of the meetings of each board committee, in addition to oral reports from the respective chairmen at the first board meeting following the relevant committee meeting.
      Certain risks, for example natural disasters, cannot be mitigated to an acceptable degree using internal controls. Such major risks are transferred to third parties in the international insurance markets, to the extent considered appropriate.
      Each year, the leaders of the Group’s businesses and administrative offices complete an internal control questionnaire that seeks to confirm that adequate internal controls are in place and operating effectively. The results of this process are reviewed by the executive committee and it is then presented to the board as a further part of their review of the Group’s internal controls. This process is continually reviewed and strengthened as appropriate.
      In 2002, the Group also established a Disclosure and procedures committee, which was tasked with reviewing the adequacy and effectiveness of Group controls and procedures over the public disclosure of financial and related information. The committee has been presenting the results of this process to senior management and directors and will continue to do so.
      The Group has material investments in a number of joint ventures and associated companies. Where Rio Tinto does not have managerial control, it cannot guarantee that local management of mining assets will comply with Rio Tinto standards or objectives. Accordingly, the review of their internal controls is less comprehensive than that for the Group’s managed operations.

The New York Stock Exchange
In November 2003, the SEC approved the new corporate governance listing standards of the New York Stock Exchange (NYSE). The Company, as a foreign issuer with American Depositary Shares listed on the NYSE, is obliged to disclose any significant ways in which its corporate governance practices differ from these standards.
      The Company has reviewed the NYSE’s listing standards and believes that its corporate governance practices are consistent with them, with two exceptions where the Company does not meet the strict requirements set out in these standards.
      The standards state that companies must have a nominating / corporate governance committee composed entirely of independent directors and with written terms of reference which, in addition to identifying individuals qualified to become board members, develops and recommends to the board a set of corporate governance principles applicable to the Company. Rio Tinto has a Nominations committee, information about which is set out on page 84. This committee does not develop corporate governance principles for the board’s approval. The board itself performs this task and approves the Group’s overall system of governance and internal controls.
      Rio Tinto’s Audit committee is made up of a majority of independent non executive directors. However, one committee member, David Mayhew, is technically deemed not to be independent and to comply with the NYSE’s rules on independence will cease to be a member of the committee with effect from 31 July 2005. The board, the Audit committee and the Nominations committee are made up of a majority of independent, non executive directors as defined by the NYSE listing standards.

Principal auditors
The remuneration of the Group’s principal auditors for audit services and other services as well as remuneration payable to other accounting firms has been set out in Note 37 to the consolidated financial statements on page A-56.
      Rio Tinto has adopted policies designed to uphold the independence of the Group’s principal auditors by prohibiting their engagement to provide a range of accounting and other professional services that might compromise their appointment as independent auditors. The engagement of the Group’s principal auditors to provide statutory audit services, certain other assurance services, tax services and certain other specific services is pre-approved by the Audit committee. The engagement of the Group’s principal auditors to provide other permitted services are individually subject to the specific approval of the Audit committee or its chairman.
      Prior to the commencement of each financial year, the Group’s finance director and its principal auditors submit to the Audit committee a schedule of the types of services that are expected to be performed during the following year for its approval. The Audit committee may impose a US dollar limit on the total value of other permitted services that can be provided. Any non audit service provided by the Group’s principal auditors, where the expected fee exceeds a pre-determined level, must be subject to the Group’s normal tender procedures. However, in exceptional circumstances the finance director is authorised to engage the Group’s principal auditors to provide such services without going to tender, but if the fees are expected to exceed US$250,000 then the chairman of the Audit committee must approve the engagement.
      The Audit committee adopted policies for the pre-approval of permitted services provided by the Group’s principal auditors during January 2003 which were further refined and adopted during September 2003. Engagements for services provided by the Group's principal auditors since the adoption of these policies were either within the pre-approval policies or approved by the Audit committee.

Rio Tinto 2004 Form 20-F   86


Back to Contents

Audit committee
US Blue Ribbon Compliance statement
The Audit committee meets the membership requirements of the Code and the Blue Ribbon Report in the US. The Group also meets the disclosure requirements in respect of audit committees required by the Australian Stock Exchange. The Audit committee is governed by a written charter approved by the board, which the Audit committee reviews and reassesses each year for adequacy. A copy of this charter is reproduced on pages 88 to 89. With effect from 31 July 2005, the Group will become subject to the NYSE Rules on Audit Committees. The committee intends to comply with these rules when they come into force.
      The Audit committee comprised the five members set out below. The members, with the exception of David Mayhew, are independent and are free of any relationship that would interfere with impartial judgement in carrying out their responsibilities. David Mayhew is technically deemed not to be independent by virtue of his professional association with the Group in his capacity as chairman of Cazenove Group PLC, a stockbroker and financial adviser to Rio Tinto plc. However, the board has determined that the relationship does not interfere with David Mayhew’s exercise of independent judgement and believes that his appointment is in the best interests of the Group because of the substantial financial knowledge and expertise he brings to the committee.

Report of the Audit committee
The Audit committee met eight times in 2004. It monitors developments in corporate governance in the UK, Australia and the US, to ensure the Group continues to apply high and appropriate standards.
      Many of the new US requirements have long been best practice and are incorporated into the committee’s charter, reproduced on pages 88 to 89. The charter is subject to regular discussion and has been reviewed in the light of new requirements and emerging best practice.
      There is in place a set of procedures, including budgetary guidelines, for the appointment of the external auditor to undertake non audit work, which aims to provide the best possible services for the Group at the most advantageous price. The committee reviews the independence of the external auditors on an annual basis and a process is also in place to review their effectiveness to ensure that the Group continues to receive an efficient and unbiased service. The committee advised the directors that the Audit committee is satisfied that the provision of non audit services by the external auditors during 2004 is compatible with the general standard of independence for auditors imposed by the Australian Corporations Act 2001. Furthermore, as part of its responsibility to foster open communication, the committee meets with management, the external auditors and the internal auditor separately.

Financial expert
The Audit committee reviewed the SEC requirements for audit committees’ financial experts and the Combined Code requirement that at least one committee member should have recent and relevant financial experience. Following an in depth assessment, the committee recommended to the board that Sir Richard Giordano, Sir David Clementi and Andrew Gould be identified as the Audit committee’s financial experts in the 2004 Annual report and financial statements. The board has concluded that Sir Richard Giordano, Andrew Gould and Sir David Clementi possess the requisite skills, experience and background to qualify for the purpose of C.3.1. of the Code as well as fulfilling the SEC criteria.

2004 financial statements
The Audit committee has reviewed and discussed with management the Group’s audited financial statements for the year ended 31 December 2004.
      We have discussed with the external auditors the matters described in the American Institute of Certified Public Accountant Auditing Standard No. 90, Audit committee communications, and in the UK Statement of Auditing Standard No 610, Reporting to those charged with Governance (SAS 610), including their judgements regarding the quality of the Group’s accounting principles and underlying estimates.
      The committee has discussed with the external auditors their independence, and received and reviewed their written disclosures, as required by the US Independence Standards Board’s Standard No. 1, Independence Discussions with Audit Committees and SAS 610.
      Based on the reviews and discussions referred to above, the committee has recommended to the board of directors that the financial statements referred to above be included in this Annual report.

Sir Richard Giordano (Chairman)
Sir David Clementi
Andrew F J Gould
Lord Kerr
David L Mayhew

24 February 2005

Rio Tinto 2004 Form 20-F   87


Back to Contents

Report of the Nominations committee
The Nominations committee is pleased to present the report of its activities, which cover a period of considerable change in composition of the board. A number of long standing non executive directors will have retired over the period 2004/5, including Lord Tugendhat, Sir Richard Giordano, Leon Davis and John Morschel. The recruitment, with input from an external search agency, of replacements with appropriate skills and experience has been the main priority of the committee. Richard Goodmanson joined the board on 1 December 2004 and Ashton Calvert and Vivienne Cox on 1 February 2005. Each is an independent director who brings an experience profile which will ensure that the overall quality of the board is maintained. Apart from making a general overview of the composition of the board, the committee members have been directly involved in the assessment of all individuals considered for appointment. As part of his annual performance assessment of individual directors, Paul Skinner, who is chairman of the Nominations committee, has reviewed the time committed to Group business and confirmed this to be appropriate in each case.

Paul Skinner (Chairman)
Sir Richard Giordano
David L Mayhew
John Morschel

24 February 2005

Audit committee charter
Scope and authority
The Group is required by the UK Listing Authority (UKLA), the New York Stock Exchange (NYSE), and the
Australian Stock Exchange (ASX) to establish an Audit committee. Each of the UKLA, the NYSE and the ASX also lay down rules and guidelines for the composition of the committee and the work to be undertaken by it. These requirements, where not self evident, have been incorporated into this Charter.
     The primary function of the Audit committee is to assist the boards of directors in fulfilling their responsibilities by reviewing:
the financial information that will be provided to shareholders and the public;
the systems of internal controls that the boards and management have established;
the Group’s auditing, accounting and financial reporting processes.
In carrying out its responsibilities, the committee has full authority to investigate all matters that fall within the terms of reference of this Charter. Accordingly, the committee may:
obtain independent professional advice in the satisfaction of its duties at the cost of the Group;
have such direct access to the resources of the Group as it may reasonably require, including the external and internal auditors.

Composition
The Audit committee shall comprise three or more non executive directors, all of whom shall be independent. The boards will determine each director’s independence having regard to any past and present relationships with the Group which, in the opinion of the boards, could influence the director’s judgment.
     All members of the committee shall have a working knowledge of basic finance and accounting practices. At least one member of the committee will have accounting or related financial management expertise, as determined by the boards.
     A quorum will comprise any two independent directors.
     The committee may invite members of the management team to attend the meetings and to provide information as necessary.

Meetings
The committee shall meet not less than four times a year or more frequently as circumstances require. Audit committee minutes will be confirmed at the following meeting of the committee and tabled as soon as practicable at a meeting of the boards.
     The Group’s senior financial management, external auditors and internal auditor shall be available to attend all meetings.
     As part of its responsibility to foster open communication, the committee should meet with management, the external auditors and the internal auditor, at least annually, to discuss any matters that are best dealt with privately.

Responsibilities
The boards and the external auditors are accountable to shareholders. The Audit committee is accountable to the boards. The internal auditor is accountable to the Audit committee and the finance director. To fulfil its responsibilities the committee shall:

Charter
  Review and, if appropriate, update this Charter at least annually.

Rio Tinto 2004 Form 20-F   88


Back to Contents

Financial reporting and internal financial controls
Review with management and the external auditors the Group’s financial statements, Form 20-F, stock exchange and media releases in respect of each half year and full year.
Review with management and the external auditors the accounting policies and practices adopted by the Group and their compliance with accounting standards, stock exchange listing rules and relevant legislation.
Discuss with management and the external auditors management’s choice of accounting principles and material judgments, including whether they are aggressive or conservative and whether they are common or minority practices.
Recommend to the boards that the annual and interim financial statements, and Form 20-F reviewed by the committee (or the chairman representing the committee for this purpose) be included in the Group’s annual report.
Review the regular reports prepared by the internal auditor including the effectiveness of the Group’s internal financial controls.
   
External auditors
Review and recommend to the boards the external auditors to be proposed to shareholders.
Review with the external auditors the planned scope of their audit and subsequently their audit findings including any internal control recommendations.
Periodically consult with the external auditors out of the presence of management about the quality of the Group’s accounting principles, material judgments and any other matters that the committee deems appropriate.
Review the performance of the external auditors and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements.
Review and approve the fees and other compensation to be paid to the external auditors.
Review and approve any non audit work and related fees to be carried out by the external auditors.
Ensure that the external auditors submit a written statement outlining all of its professional relationships with the Group including the provision of services that may affect their objectivity or independence. Review and discuss with the external auditors all significant relationships they have with the company to determine their independence.
   
Internal auditor
Review the qualifications, organisation, strategic focus and resourcing of internal audit.
Review and approve the internal audit plans.
Review internal audit performance.
Periodically consult privately with the internal auditor about any significant difficulties encountered including restrictions on scope of work, access to required information or any other matters that the committee deems appropriate.
   
Risk management
Review and evaluate the internal processes for determining and managing key risk areas.
Ensure the Group has an effective risk management system and that macro risks are reported at least annually to the board.
Require periodic reports from nominated senior managers:
- confirming the operation of the risk management system including advice that accountable management have confirmed the proper operation of agreed risk mitigation strategies and controls, and
- detailing material risks.
Address the effectiveness of the Group’s internal control system with management and the internal and external auditors.
Evaluate the process the Group has in place for assessing and continuously improving internal controls, particularly those related to areas of material risk.
   
Other matters
The committee shall also perform any other activities consistent with this Charter that the committee or boards deem appropriate. This will include but not be limited to:
Review of the corporate governance practices of Group sponsored pension funds.
Review of the Group’s insurance cover.
Review the Group’s tax planning and compliance.
Review the Group’s whistle blowing procedures for financial reporting.

Rio Tinto 2004 Form 20-F   89


Back to Contents

Item 7.      Major Shareholders and Related Party Transactions

MAJOR SHAREHOLDERS
As far as is known, Rio Tinto plc is not directly or indirectly owned or controlled by another corporation or by any government. The Capital Group of Companies Inc. by way of a notice dated 6 April 2005 informed the Company of its interest in 52,882,175 ordinary shares representing 4.95 per cent of its shares as at the date of notice. Barclays PLC, by way of a notice dated 20 April 2005 informed the Company of its interest in 39,901,471 ordinary shares representing 3.74 per cent of its shares as the date of notice. Rio Tinto plc does not know of any arrangements which may result in a change in its control. As of 10 June 2005, the total amount of the voting securities owned by the directors of Rio Tinto plc as a group was 59,262 ordinary shares of 10p each representing less than one per cent of the number in issue.
     As far as is known, Rio Tinto Limited, with the exception of the arrangements for the dual listed companies merger described on pages 95 to 97, is not directly or indirectly owned or controlled by another corporation or by any government. As of 10 June 2005, the only person known to Rio Tinto Limited as owning more than five per cent of its shares was Tinto Holdings Australia Pty Limited, which is an indirect wholly owned subsidiary of Rio Tinto plc, with 171,072,520 shares, representing 37.48 per cent of its issued capital. Rio Tinto Limited does not know of any arrangements which may result in a change in its control. As of 10 June 2005 the total amount of the voting securities owned by the directors of Rio Tinto Limited as a group was 91,255 shares representing less than one per cent of the number in issue.
     Directors’ interests in Group voting securities are shown in Table 3 of the Remuneration report on page 79. Their total beneficial interest in the Group amounts to less than one per cent.
     Except as provided under the DLC Merger Sharing Agreement as explained on page 97, the Group’s major shareholders have the same voting and other rights as other shareholders.
     As at 10 June 2005 there were 247 US registered shareholders holding 140,175 shares in Rio Tinto plc, and 219 US registered shareholders holding 330,380 shares in Rio Tinto Limited.

Rio Tinto share ownership
Twenty largest shareholders
as at 14 February 2005

RIO TINTO PLC         RIO TINTO LIMITED      
    Number of   Percentage       Number of   Percentage
shares of issued shares of issued
  share   share
capital capital





 




                     
1 BNY (Nominees) Limited 128,983,028   12.07   1 Tinto Holdings Australia Pty 187,439,520   37.52
              Limited      
2 Chase Nominees Limited 47,554,868   4.45   2 National Nominees Limited 45,071,472   9.02
3 HSBC Global Custody 28,833,545   2.70   3 JP Morgan Nominees 44,527,685   8.91
  Nominee (UK) Limited           Australia Limited      
  <357206>                  
4 Credit Lyonnais SA 22,438,646   2.1   4 Westpac Custodian 42,274,410   8.46
              Nominees Limited      
5 Prudential Client HSBC GIS 21,436,365   2.00   5 Citicorp Nominees Pty 11,875,963   2.38
  Nominee (UK) Limited           Limited      
  <PAC>                  
6 State Street Nominees 19,457,648   1.82   6 ANZ Nominees Limited 11,019,930   2.21
  Limited <OM02>                  
7 The Bank of New York 17,435,234   1.63   7 Cogent Nominees Pty 7,203,002   1.44
  (Nominees) Limited           Limited      
8 Nortrust Nominees Limited 16,482,434   1.54   8 Queensland Investment 6,484,928   1.30
  <SLEND>           Corporation      
9 Nutraco Nominees Limited 14,215,117   1.33   9 RBC Global Services 3,595,894   0.72
              Australia Nominees Pty      
              Limited      
10 Chase Nominees Limited 13,423,782   1.26   10 HSBC Custody Nominees 3,585,137   0.72
  <LEND>           (Australia) Limited      
11 BNY (OCS) Nominees 11,998,130   1.12   11 AMP Life Limited 3,146,536   0.63
  Limited                  
12 Chase Nominees Limited 11,889,623   1.11   12 Citicorp Nominees Pty 3,094,846   0.62
  <BGILIFEL>           Limited <CFS WSLE      
              GEARED SHR FND A/C>      
13 Chase (GA Group) 11,659,302   1.09   13 Citicorp Nominees Pty 2,890,455   0.58
  Nominees Limited <GA>           Limited<CFS WSLE      
              IMPUTATION FND A/C>      
14 HSBC Global Custody 11,256,295   1.05   14 UBS Nominees Pty 2,636,088   0.53
  Nominees (UK) Limited           Ltd<PRIME BROKING      
  <899877>           A/C>      
15 Nortrust Nominees Limited 10,693,371   1.00   15 ANZ Nominees Limited 2,301,363   0.46

Rio Tinto 2004 Form 20-F 90


Back to Contents

16 State Street Nominees Limited <HG18> 10,350,000   0.97   16 RBC Global Services Australia Nominees Pty 2,190,759   0.44
              Limited <PIPOOLED A/C>      
17 State Street Nominees Limited <E802> 9,373,275   0.88   17 IAG Nominees Pty Limited 2,154,975   0.43
18 BNP Paribas Arbitrage SNC <2890000> 9,179,784   0.86   18 Westpac Financial Services Limited 2,060,695   0.41
19 Chase Nominees Limited <USRESLD> 8,748,512   0.82   19 RBC Global Services Australia Nominees Pty Limited 1,946,255   0.39
20 Mellon Nominees (UK) Limited <BSDTGUSD> 8,492,230   0.79   20 Citicorp Nominees Pty Limited <CFS 1,881,535   0.38
              IMPUTATION FUND A/C>      





 




    433,901,189   40.59       387,381,448   77.55





 




(a) As far as is known, Rio Tinto is not directly or indirectly owned or controlled by another corporation or by any government.
(b) Rio Tinto is not aware of any arrangement which may result in a change in its control.
(c) Tinto Holdings Australia Pty Limited is a wholly owned subsidiary of Rio Tinto plc.
(d) Other large shareholders are nominees who hold securities on behalf of beneficial shareholders, for example BNY (Nominees) Limited holds Rio Tinto plc shares on behalf of the holders of American Depository Receipts that are traded on the New York Stock Exchange.
(e) Under the listing rules, any shareholder of Rio Tinto plc with a beneficial interest of more than three per cent, or of Rio Tinto Limited with a beneficial interest of more than five per cent, is required to provide the Companies with notice. The only shareholder to have provided such notice is The Capital Group of Companies Inc by way of a notice dated 31 January 2005 which confirmed an interest in 64,021,998 ordinary shares issued by Rio Tinto plc, representing 5.99 per cent of its shares as at the date of notice.

Analysis of ordinary shareholders As at 14 February 2005

          Rio Tinto plc           Rio Tinto Limited  
No of % Shares   % No of % Shares   %
accounts         accounts        
















 
1 to 1,000 shares 42,642   67.67   18,272,340   1.71   55,684   76.35   22,327,099   4.47  
1,001 to 5,000 shares 16,977   26.94   34,351,886   3.22   15,093   20.69   29,784,565   5.96  
5,001 to 10,000 shares 1,472   2.34   10,232,719   0.96   1,315   1.80   9,157,549   1.83  
10,001 to 25,000 shares 698   1.11   10,938,289   1.02   551   0.76   8,070,612   1.62  
25,001 to 125,000 shares 640   1.01   36,140,355   3.38   197   0.27   9,783,825   1.96  
125,001 to 250,000 shares 177   0.28   32,558,472   3.05   33   0.05   6,074,624   1.22  
250,001 to 1,250,000 shares 271   0.43   150,765,734   14.11   32   0.04   16,310,955   3.27  
1,250,001 to 2,500,000 70   0.11   120,880,971   11.31   13   0.02   22,268,625   4.46  
2,500,001 and over 69   0.11   525,327,145   49.17   14   0.02   374,845,866   75.04  
ADRs         128,983,028   12.07           882,604   0.17  
















 
  63,016   100   1,068,450,939   100   72,932   100   499,506,324   100  
















 
                                 
Number of holdings less than marketable parcel of A$500.           1,566              

RELATED PARTY TRANSACTIONS
Details of the Group’s material related party transactions are set out in Note 38 on page A-57 of the consolidated financial statements.
      Except as explained on page 37, the Group’s financial statements show the full extent of the Group’s financial commitments including debt and similar exposures. It has never been the Group’s practice to engineer financial structures as a way of avoiding disclosure. Substance rather than form is a fundamental principle of Rio Tinto’s reporting.

Item 8.       Financial Information

LEGAL PROCEEDINGS
Neither Rio Tinto plc nor Rio Tinto Limited nor any of their subsidiaries is a defendant in any proceedings which the directors believe will have a material effect on either Company’s financial position and results of operations.

DIVIDENDS
Both Companies have paid dividends on their shares every year since incorporation in 1962. The rights of Rio Tinto shareholders to receive dividends are explained under the description of the Dual Listed Companies’ Structure on pages 95 to 96.

Dividend policy
The aim of Rio Tinto’s progressive dividend policy is to increase the US dollar value of dividends over time, without cutting them in economic downturns.

Rio Tinto 2004 Form 20-F   91


Back to Contents

     The rate of the total annual dividend, in US dollars, is determined taking into account the results for the past year and the outlook for the current year. The interim dividend is set at one half of the total dividend for the previous year. Under Rio Tinto’s dividend policy the final dividend for each year is expected to be at least equal to the interim dividend.

Dividend determination
As the majority of the Group’s sales are transacted in US dollars it is the most reliable currency in which to measure the Group’s financial performance and is its main reporting currency. So the US dollar is the natural currency for dividend determination. Dividends determined in US dollars are translated at exchange rates prevailing two days prior to announcement and are then declared payable in sterling by Rio Tinto plc and in Australian dollars by Rio Tinto Limited.
      Australian shareholders of Rio Tinto plc can elect to receive dividends in Australian dollars and UK shareholders of Rio Tinto Limited can elect to receive dividends in sterling. If you would like further information contact Computershare.

2004 dividends
The 2004 interim and final dividends were determined at 32 US cents and at 45 US cents per share respectively and the applicable translation rates were US$1.8245 and US$1.8796 to the pound sterling and US$0.7029 and US$0.7720 to the Australian dollar.
      Final dividends of 23.94 pence per share and 58.29 Australian cents per share were paid on 8 April 2005. A final dividend of 180 US cents per ADR (each representing four shares) was paid by JP Morgan Chase Bank NA to Rio Tinto plc ADR holders and by The Bank of New York to Rio Tinto Limited ADR holders on 11 April 2005.
      The tables below set out the amounts of interim, final and total cash dividends paid on each share or ADS in respect of each financial year, but before deduction of any withholding tax.

Rio Tinto Group – US cents per share 2000   2001   2002   2003   2004  










 
Interim 19.0   20.0   29.5   30.0   32.0  
Final 38.5   39.0   30.5   34.0   45.0  
Total 57.5   59.0   60.0   64.0   77.0  










 
Rio Tinto plc – UK pence per share 2000   2001   2002   2003   2004  










 
Interim 12.66   14.03   18.87   18.45   17.54  
Final 26.21   27.65   18.60   18.68   23.94  
Total 38.87   41.68   37.47   37.13   41.48  










 
Rio Tinto Limited – Australian cents per share 2000   2001   2002   2003   2004  










 
Interim 32.68   39.42   54.06   45.02   45.53  
Final 69.76   75.85   51.87   44.68   58.29  
Total 102.44   115.27   105.93   89.70   103.82  










 
Rio Tinto plc and Rio Tinto Limited – US cents per ADS 2000   2001   2002   2003   2004  
Interim 76   80   118   120   128  
Final 154   156   122   136   180  
Total 230   236   240   256   308  










 

Dividend reinvestment plan (DRP)
Rio Tinto offers shareholders a DRP which provides the opportunity to use cash dividends to purchase Rio Tinto shares in the market free of commission. Please see Taxation on page 101 for an explanation of the tax consequences. The DRP is made available only to shareholders whose names are recorded on the respective Company’s register and due to local legislation cannot be extended to shareholders in the US, Canada and certain other countries. Please contact Computershare for further information.

POST BALANCE SHEET EVENTS
On 9 May 2005 Rio Tinto Limited announced the successful result of its off-market share buy-back. A total of approximately 27.3 million shares, representing 8.7 per cent of Rio Tinto Limited’s publicly held issued share capital (2.0 per cent of the Rio Tinto Group), were bought back at A$36.70 per share at a cost of approximately A$1 billion (US$780 million). The buy-back price of A$36.70 per share represented a 14 per cent discount to the relevant volume weighted average price of Rio Tinto Limited shares sold on the ASX over the five trading days up to and including the closing date of the buy-back. It also represented a discount of 15.6 per cent to the closing price for Rio Tinto Limited shares on 6 May 2005, of A$43.50.
      Under a separate buy-back, Tinto Holdings Australia accepted the same A$36.70 buy-back price for a proportion of its 37.5 per cent holding of Rio Tinto Limited shares so that there was no change in the proportional shareholding in Rio Tinto Limited as a result of the buy-back. Rio Tinto Limited therefore bought back a further 16.4 million shares at a cost of approximately A$600 million (US$470 million).

Rio Tinto 2004 Form 20-F   92


Back to Contents

Item 9.     The Offer and Listing

MARKET LISTINGS AND SHARE PRICES
Rio Tinto plc
The principal market for Rio Tinto plc shares is the London Stock Exchange (LSE).
      As a constituent of the Financial Times Stock Exchange 100 index (FTSE 100), Rio Tinto plc shares trade through the Stock Exchange Electronic Trading Service (SETS) system.
      Central to the SETS system is the electronic order book on which an LSE member firm can post buy and sell orders, either on its own behalf or for its clients. Buy and sell orders are executed against each other automatically in strict price, then size, priority. The order book operates from 8.00 am to 4.30 pm daily. From 7.50 am to 8.00 am orders may be added to, or deleted from the book, but execution does not occur. At 8.00 am the market opens by means of an uncrossing algorithm which calculates the greatest volume of trades on the book which can be executed, then matches the orders, leaving unexecuted orders on the book at the start of trading.
      All orders placed on the order book are firm and are for standard three day settlement. While the order book is vital to all market participants, orders are anonymous, with the counterparties being revealed to each other only after execution of the trade.
      Use of the order book is not mandatory but all trades, regardless of size, executed over the SETS system are published immediately. The only exception to this is where a Worked Principal Agreement (WPA) is entered into for trades greater than 8 x Normal Market Size (NMS). Rio Tinto plc has an NMS of 100,000 shares. Publication of trades entered under a WPA is delayed until the earlier of 80 per cent of the risk position assumed by the member firm taking on the trade being unwound or the end of the business day.
      Closing LSE share prices are published in most UK national newspapers and are also available during the day on the Rio Tinto and other websites. Share prices are also available on CEEFAX and TELETEXT and can be obtained through the Cityline service operated by the Financial Times in the UK: telephone 0906 843 3880; calls are currently charged at 60p per minute.
      Rio Tinto plc has a sponsored American Depositary Receipt (ADR) facility with JP Morgan Chase Bank NA under a Deposit Agreement, dated 13 July 1988, as amended on 11 June 1990, as further amended and restated on 15 February 1999 and as further amended and restated on 18 February 2005. JP Morgan Chase Bank NA replaced The Bank of New York following its removal as Depositary. The ADRs evidence Rio Tinto plc American Depositary Shares (ADS), each representing four ordinary shares. The shares are registered with the US Securities and Exchange Commission (SEC), are listed on the New York Stock Exchange (NYSE) and are traded under the symbol ‘RTP’.
     Rio Tinto plc shares are also listed on Euronext and on Deutsche Börse.
      The following table shows share prices for the period indicated, the reported high and low middle market quotations, which represent an average of bid and asked prices, for Rio Tinto plc’s shares on the LSE based on the LSE Daily Official List, and the highest and lowest sale prices of the Rio Tinto plc ADSs as reported on the NYSE composite tape.

  Pence per   US$ per  
  Rio Tinto plc share   Rio Tinto plc ADS  
  High   Low   High   Low  








 
2000 1,478   900   96.56   55.13  
2001 1,475   930   84.10   55.00  
2002 1,492   981   85.93   62.00  
2003 1,543   1,093   111.35   71.70  
2004 1,574   1,212   119.39   86.42  








 
Aug 2004 1,434   1,356   105.77   100.40  
Sept 2004 1,496   1,348   108.65   98.05  
Oct 2004 1,562   1,421   111.68   103.48  
Nov 2004 1,548   1,438   118.47   105.78  
Dec 2004 1,540   1,430   119.39   111.59  
Jan 2005 1,690   1,472   126.25   111.57  
Feb 2005 1,835   1,621   141.57   120.67  
Mar 2005 1,851   1,679   142.80   124.41  
Apr 2005 1,735   1,557   130.75   118.50  
May 2005 1,679   1,570   126.76   115.80  








 
2003                
First quarter 1,298   1,093   83.80   71.70  
Second quarter 1,272   1,129   85.26   72.30  
Third quarter 1,420   1,132   93.83   75.31  
Fourth quarter 1,543   1,290   111.35   86.85  








 
2004                
First quarter 1,574   1,297   111.50   95.95  
Second quarter 1,409   1,212   105.30   86.42  
Third quarter 1,496   1,313   108.65   97.03  
Fourth quarter 1,562   1,421   119.39   103.48  








 
2005                
First quarter 1,851   1,472   142.80   111.57  








 

Rio Tinto 2004 Form 20-F   93


Back to Contents

As at 10 June 2005, there were 57,585 holders of record of Rio Tinto plc’s shares. Of these holders, 247 had registered addresses in the US and held a total of 140,715 Rio Tinto plc shares, representing 0.01 per cent of the total number of Rio Tinto plc shares issued and outstanding as at such date. In addition, 129 million Rio Tinto plc shares were registered in the name of a custodian account in London. These shares were represented by 32.23 million Rio Tinto plc ADSs held of record by 377 ADR holders. In addition, certain accounts of record with registered addresses other than in the US hold shares, in whole or in part, beneficially for US persons.

Rio Tinto Limited
Rio Tinto Limited shares are listed on the Australian Stock Exchange (ASX) and the New Zealand Stock Exchange. The ASX is the principal trading market for Rio Tinto Limited shares. The ASX is a national stock exchange operating in the capital city of each Australian State with an automated trading system. Although not listed, Rio Tinto Limited shares are also traded in London.
      Closing ASX share prices are published in most Australian newspapers and are also available during the day on the Rio Tinto and other websites.
      Rio Tinto Limited has an ADR facility with The Bank of New York under a Deposit Agreement, dated 6 June 1989, as amended on 1 August 1989, and as amended and restated on 2 June 1992. The ADRs evidence Rio Tinto Limited’s ADSs, each representing four shares and are traded in the over the counter market under the symbol ‘RTOLY’.
      The following tables set out for the periods indicated the high and low closing sale prices of Rio Tinto Limited shares based upon information provided by the ASX and the highest and lowest trading prices of Rio Tinto Limited ADSs, as advised by The Bank of New York. There is no established trading market in the US for Rio Tinto Limited’s shares or ADSs.

  A$ per   US$ per  
  Rio Tinto Limited share   Rio Tinto Limited ADS  
  High   Low   High   Low  








 
2000 33.54   22.65   87.50   50.00  
2001 38.62   28.40   80.55   54.00  
2002 41.35   29.05   85.24   63.62  
2003 37.54   28.17   112.42   73.85  
2004 40.20   31.98   125.00   91.60  








 
Aug 2004 38.35   35.88   105.00   103.00  
Sept 2004 38.60   35.70   108.20   102.00  
Oct 2004 39.63   36.30   111.60   107.00  
Nov 2004 39.52   36.59   122.20   110.60  
Dec 2004 40.20   37.81   125.00   108.00  
Jan 2005 43.80   38.75   135.00   118.80  
Feb 2005 47.28   42.36   152.00   129.25  
Mar 2005 47.93   44.46   153.00   137.00  
Apr 2005 45.90   41.40   142.50   129.45  
May 2005 44.91   41.40   139.90   127.50  








 
2003                
First quarter 35.25   30.69   83.22   73.85  
Second quarter 33.26   29.21   84.00   74.53  
Third quarter 35.31   28.17   94.00   76.55  
Fourth quarter 37.54   32.32   112.42   88.22  








 
2004                
First quarter 38.50   33.80   115.00   99.45  
Second quarter 36.18   31.98   108.00   91.60  
Third quarter 38.60   35.56   108.20   102.00  
Fourth quarter 40.20   36.30   125.00   107.00  








 
2005                
First quarter 47.93   38.75   153.00   118.80  








 

As at 10 June 2005, a total of 330,380 Rio Tinto Limited shares were held of record by 219 persons with registered addresses in the US, which represented approximately 0.70 per cent of the total number of Rio Tinto Limited shares issued and outstanding as of such date. In addition, an aggregate of 269,413 Rio Tinto Limited ADSs were outstanding, representing 1,077,652 Rio Tinto Limited shares, and were held of record by 28 persons with registered addresses in the US, which represented less than one per cent of the total number of Rio Tinto Limited shares issued and outstanding. In addition, nominee accounts of record with registered addresses other than in the US may hold Rio Tinto Limited shares, in whole or in part, beneficially for US persons.

ADR holders
ADR holders may instruct either JPMorgan Chase Bank NA or The Bank of New York as appropriate as to how the shares represented by their ADRs should be voted.

Rio Tinto 2004 Form 20-F   94


Back to Contents

     Registered holders of ADRs will have the Annual review and interim reports mailed to them at their record address. Brokers or financial institutions, which hold ADRs for shareholder clients, are responsible for forwarding shareholder information to their clients and will be provided with copies of the Annual review and interim reports for this purpose.
      Rio Tinto is subject to the US Securities and Exchange Commission (SEC) reporting requirements for foreign companies. This Form 20-F corresponds with the Form-10K which US public companies are required to file with the SEC. Rio Tinto’s Form 20-F and other filings can be viewed on the SEC web site at www.sec.gov.

Investment warning
Past performance of shares is not necessarily a guide to future performance. The value of investments and any income from them is not guaranteed and can fall as well as rise depending on market movements. You may not get back the original amount invested
.

Item 10.      Additional Information

DUAL LISTED COMPANIES STRUCTURE
On 20 December 1995, Rio Tinto shareholders approved the terms of the dual listed companies merger (the DLC merger) which was designed to place the shareholders of both Companies in substantially the same position as if they held shares in a single enterprise owning all of the assets of both Companies. As a condition of its approval of the DLC merger, the Australian Government required Rio Tinto plc to reduce its shareholding in Rio Tinto Limited to 39 per cent by the end of 2005. The current holding is approximately 37.6 per cent.
      Following the approval of the DLC merger, both Companies entered into a DLC Merger Sharing Agreement (the Sharing Agreement) through which each Company agreed:
to ensure that the businesses of Rio Tinto plc and Rio Tinto Limited are managed on a unified basis,
to ensure that the boards of directors of each Company is the same, and
to give effect to certain arrangements designed to provide shareholders of each Company with a common economic interest in the combined enterprise.
In order to achieve this third objective, the Sharing Agreement provided for the ratio of dividend, voting and capital distribution rights attached to each Rio Tinto plc share and to each Rio Tinto Limited share to be fixed in an Equalisation Ratio which has remained unchanged at 1:1. The Sharing Agreement has provided for this ratio to be revised in special circumstances where, for example, certain modifications are made to the share capital of one Company, such as rights issues, bonus issues, share splits and share consolidations, but not to the share capital of the other. Outside these specified circumstances, the Equalisation Ratio can only be altered with the approval of shareholders under the Class Rights Action approval procedure described under Voting rights. In addition, any adjustments are required to be confirmed by the auditors.
      One consequence of the DLC merger is that Rio Tinto is subject to a wide range of laws, rules and regulatory review across multiple jurisdictions. Where these rules differ, in many instances it means that Rio Tinto, as a Group, complies with the strictest applicable level.
      Consistent with the creation of a single combined enterprise under the DLC merger, directors of each Company are to act in the best interests of the shareholders of both Companies ie, in the best interests of Rio Tinto as a whole. Identified areas where there may be a conflict of the interests of the shareholders of each Company must be approved under the Class Rights Action approval procedure.
      To ensure that directors of each Company are the same, resolutions to appoint or remove directors must be put to shareholders of both Companies as a joint electorate as a Joint Decision as described under Voting rights, and it is a requirement that a person can only be a director of one Company if the person is also a director of the other Company. So, for example, if a person was removed as a director of one Company, he or she would also cease to be a director of the other.

Dividend rights
The Sharing Agreement provides for dividends paid on Rio Tinto plc and Rio Tinto Limited shares to be equalised on a net cash basis, that is without taking into account any associated tax credits. Dividends are determined in US dollars and are then, except for ADR holders, translated and paid in sterling and Australian dollars. The Companies are also required to announce and pay their dividends and other distributions as close in time to each other as possible.
      In the unlikely event that one Company did not have sufficient distributable reserves to pay the equalised dividend or the equalised capital distribution, it would be entitled to receive a top up payment from the other Company. The top up payment could be made as a dividend on the DLC Dividend Share, on the Equalisation Share if on issue or by way of a contractual payment.
      If the payment of an equalised dividend would contravene the law applicable to one of the Companies, then they may depart from the Equalisation Ratio. However, should such a departure occur then the relevant Company will put aside reserves to be held for payment on the relevant shares at a later date.
      Rio Tinto shareholders have no direct rights to enforce the dividend equalisation provisions of the Sharing Agreement.

Rio Tinto 2004 Form 20-F   95


Back to Contents

     The DLC Dividend Share can also be utilised to provide the Group with flexibility for internal funds management by allowing dividends to be paid between the two parts of the Group. Such dividend payments are of no economic significance to the shareholders of either Company, as they will have no effect on the Group's overall resources.

Voting rights
In principle, the Sharing Agreement provides for the public shareholders of Rio Tinto plc and Rio Tinto Limited to vote as a joint electorate on all matters which affect shareholders of both Companies in similar ways. These are referred to as Joint Decisions. Such Joint Decisions include the creation of new classes of share capital, the appointment or removal of directors and auditors and the receiving of annual financial statements. Joint Decisions are voted on a poll.
      The Sharing Agreement also provides for the protection of the public shareholders of each Company by treating the shares issued by each Company as if they were separate classes of shares issued by a single company. So decisions that do not affect the shareholders of both Companies equally require the separate approval of the shareholders of both Companies. Matters requiring this approval procedure are referred to as Class Rights Actions and are voted on a poll.
      Thus, the interests of the shareholders of each Company are protected against decisions which affect them and the shareholders in the other company differently, by requiring their separate approval. For example, fundamental elements of the DLC merger cannot be changed unless approved by shareholders under the Class Rights Action approval procedure.
      Exceptions to these principles can arise in situations such as where legislation requires the separate approval of a decision by the appropriate majority of shareholders in one Company and where approval of the matter by shareholders of the other Company is not required.
      Where a matter has been expressly categorised as either a Joint Decision or a Class Rights Action, the directors do not have the power to change that categorisation. If a matter falls within both categories, it is treated as a Class Rights Action. In addition, the directors can determine that matters not expressly listed in either category should be put to shareholders for their approval under either procedure.
      To facilitate the joint voting arrangements each Company has entered into shareholder voting agreements. Each Company has issued a Special Voting Share to a special purpose company held in trust by a common Trustee.
      Rio Tinto plc has issued its Special Voting Share (RTP Special Voting Share) to RTL Shareholder SVC and Rio Tinto Limited has issued its Special Voting Share (RTL Special Voting Share) to RTP Shareholder SVC. The total number of votes cast on Joint Decisions by the public shareholders of one Company are voted at the parallel meeting of the other Company. The role of these special purpose companies in achieving this is described below.
      In exceptional circumstances, certain public shareholders of the Companies can be excluded from voting at the respective Company’s general meetings because they have acquired shares in one Company in excess of a given threshold without making an offer for all the shares in the other Company. If this should occur, the votes cast by these excluded shareholders will be disregarded.
      Following the Companies’ general meetings the overall results of the voting on Joint Decisions and the results of voting on separate decisions will be announced to the stock exchanges, published on the Rio Tinto website and advertised in the Financial Times and Australian newspapers.

Rio Tinto plc
At a Rio Tinto plc shareholders’ meeting at which a Joint Decision will be considered, each Rio Tinto plc share will carry one vote and the holder of its Special Voting Share will have one vote for each vote cast by the public shareholders of Rio Tinto Limited. The holder of the Special Voting Share is required to vote strictly and only in accordance with the votes cast by public shareholders for and against the equivalent resolution at the parallel Rio Tinto Limited shareholders’ meeting.
      The holders of Rio Tinto Limited ordinary shares do not actually hold any voting shares in Rio Tinto plc by virtue of their holding in Rio Tinto Limited and cannot enforce the voting arrangements relating to the Special Voting Share.

Rio Tinto Limited
At a Rio Tinto Limited shareholders’ meeting at which a Joint Decision will be considered, each Rio Tinto Limited share will carry one vote and, together with the Rio Tinto Limited ordinary shares held by Tinto Holdings Australia, the holder of its Special Voting Share will carry one vote for each vote cast by the public shareholders of Rio Tinto plc in their parallel meeting. Tinto Holdings Australia and the holder of the Special Voting Share are required to vote strictly, and only, in accordance with the votes cast for and against the equivalent resolution at the parallel Rio Tinto plc shareholders’ meeting.
      The holders of Rio Tinto plc ordinary shares do not actually hold any voting shares in Rio Tinto Limited by virtue of their holding in Rio Tinto plc and cannot enforce the voting arrangements relating to the Special Voting Share.

Rio Tinto 2004 Form 20-F   96


Back to Contents

Capital distribution rights
If either of the Companies goes into liquidation, the Sharing Agreement provides for a valuation to be made of the surplus assets of both Companies. If the surplus assets available for distribution by one Company on each of the shares held by its public shareholders exceed the surplus assets available for distribution by the other Company on each of the shares held by its public shareholders, then an equalising payment between the two Companies shall be made, to the extent permitted by applicable law, such that the amount available for distribution on each share held by public shareholders of each Company conforms to the Equalisation Ratio. The objective is to ensure that the public shareholders of both Companies have equivalent rights to the assets of the combined Group on a per share basis, taking account of the Equalisation Ratio.
      The Sharing Agreement does not grant any enforceable rights to the shareholders of either Company upon liquidation of a Company.

Limitations on ownership of shares and merger obligations
The laws and regulations of the UK and Australia impose certain restrictions and obligations on persons who control interests in public quoted companies in excess of certain thresholds that, under certain circumstances, include obligations to make a public offer for all of the outstanding issued shares of the relevant company. The threshold applicable to Rio Tinto plc under UK law and regulations is 30 per cent and to Rio Tinto Limited under Australian laws and regulations is 20 per cent.
      As part of the DLC merger, the memorandum and articles of association of Rio Tinto plc and the constitution of Rio Tinto Limited were amended with the intention of extending these laws and regulations to the combined enterprise and, in particular, to ensure that a person cannot exercise control over one Company without having made offers to the public shareholders of both Companies. It is consistent with the creation of the single economic enterprise and the equal treatment of the two sets of shareholders, that these laws and regulations should operate in this way. The articles of association of Rio Tinto plc and the constitution of Rio Tinto Limited impose restrictions on any person who controls, directly or indirectly, 20 per cent or more of the votes on a Joint Decision. If, however, such a person only has an interest in Rio Tinto Limited or Rio Tinto plc, then the restrictions will only apply if they control, directly or indirectly, 30 per cent or more of the votes at that Company’s general meetings.
      If one of the thresholds specified above is breached then, subject to certain limited exceptions and notification by the relevant Company, such persons
may not attend or vote at general meetings of the relevant Company;
may not receive dividends or other distributions from the relevant Company; and
may be divested of their interest by the directors of the relevant Company.
These restrictions will continue to apply until such persons have either made a public offer for all of the publicly held shares of the other Company, or have reduced their controlling interest below the thresholds specified, or have acquired through a permitted means at least 50 per cent of the voting rights of all the shares held by the public shareholders of each Company.
      These provisions are designed to ensure that offers for the publicly held shares of both Companies would be required to avoid the restrictions set out above, even if the interests which breach the thresholds are only held in one of the Companies. The directors do not have the discretion to exempt a person from the operation of these rules.
      Under the Sharing Agreement, the Companies agree to cooperate to enforce the restrictions contained in their articles of association and constitution and also agree that no member of the Rio Tinto Group shall accept a third party offer for Rio Tinto Limited shares unless such acceptance is approved by a Joint Decision of the public shareholders of both Companies.

Guarantees
In December 1995, each Company entered into a Deed Poll Guarantee in favour of creditors of the other Company. Pursuant to the Deed Poll Guarantees, each Company guaranteed the contractual obligations of the other Company and the obligations of other persons which are guaranteed by the other Company, subject to certain limited exceptions. Beneficiaries under the Deed Poll Guarantees may make demand upon the guarantor thereunder without first having recourse to the Company or persons whose obligations are being guaranteed. The obligations of the guarantor under each Deed Poll Guarantee expire upon termination of the Sharing Agreement and under other limited circumstances, but only in respect of obligations arising after such termination and, in the case of other limited circumstances, the publication and expiry of due notice. The shareholders of the Companies cannot enforce the provision of the Deed Poll Guarantees.

MEMORANDUM AND ARTICLES OF ASSOCIATION
Rio Tinto plc adopted new Articles of Association by Special Resolution passed on 11 April 2002 and amended on 14 April 2005; and Rio Tinto Limited amended its Constitution by Special Resolution on 18 April 2002 and on 29 April 2005. The resolutions passed during April 2005 were in consequence to a growing market practice in Australia for companies to undertake off market tender buy backs where the buy back price is below the prevailing market prices. Subject to obtaining regulatory relief, such buy backs do not require shareholder approval. The effect of the resolutions was to make it clear that, provided a buy back complied with all applicable laws, it would not require additional shareholder approval for purposes of the dual listed companies (‘DLC’).

Rio Tinto 2004 Form 20-F   97


Back to Contents

Introduction
As explained on pages 95 to 97 under the terms of the DLC merger the shareholders of Rio Tinto plc and of Rio Tinto Limited entered into certain contractual arrangements which are designed to place the shareholders of both Companies in substantially the same position as if they held shares in a single enterprise which owned all of the assets of both Companies. Generally and as far as is permitted by the UK Companies Act and the Australian Corporations Law this principle is reflected in the Memorandum and Articles of Association of Rio Tinto plc and in the Constitution of Rio Tinto Limited. The summaries below include descriptions of material rights of the shareholders of both Rio Tinto plc and Rio Tinto Limited. Unless stated otherwise the Memorandum and Articles of Association of and Constitution are identical.
      Rio Tinto plc is incorporated under the name “Rio Tinto plc” and is registered in England and Wales with registered number 719885 and Rio Tinto Limited is incorporated under the name “Rio Tinto Limited” and is registered in Australia with ACN Number 004458404.
      No holder of shares, which may be held in either certificated or uncertificated form, will be required to make any additional contributions of capital.

Objects
The objects of Rio Tinto plc are set out in the fourth clause of its Memorandum of Association and the objects of Rio Tinto Limited are set out in the second clause of its Constitution. Included in these objects is the right for each Company to enter into, with one another, operate and carry into effect an Agreement known as the DLC Merger Sharing Agreement and a Deed Poll Guarantee.

Other objects of Rio Tinto plc include provisions:
to carry on as an Investment Holding Company;
to subscribe for, sell, exchange or dispose of any type of security or investment;
to purchase any estate or interest in property or assets;
to borrow and raise money to secure or discharge any debt or obligation of or binding on the Company;
to draw, make or deal in negotiable or transferable instruments;
to amalgamate with and co-operate with or assist or subsidise any company, firm or person and to purchase or otherwise acquire or undertake all or any part of the business property or liabilities of any person, body or company carrying on any business which this Company is authorised to carry on;
to promote the Company;
to lend money and guarantee contracts or obligations of the Company and to give all kinds of indemnities;
to sell, lease, grant licences and other rights over any part of the Company;
to procure the registration of the Company outside England;
to subscribe or guarantee money to any national, charitable, benevolent, public, general or exhibition which may further the objects of the Company or the interest of its members;
to grant pensions or gratuities to employees, ex-employees, officers and ex-officers;
to establish any scheme or trust which may benefit employees;
to lend money to employees to purchase Company shares;
to purchase and maintain insurance for employees and to carry on the objects of the Company in any part of the world either as principals, agents, contractors, trustees or otherwise.
 
Other objects of Rio Tinto Limited include the powers: 
to prospect for, explore, quarry, develop, excavate, dredge for, open, work, win, purchase or otherwise obtain all minerals, metals and substances;
to carry on business as proprietors of and to purchase, take on, lease or in exchange or otherwise acquire and control mineral and other properties, lands and hereditaments of any tenure, mines and other rights or options thereon;
to raise, win, get, quarry, crush, smelt, calcine, refine, dress, amalgamate, manipulate and otherwise treat, prepare, sell and deal in ores, metals and other products of mines;
to carry on business as ship owners, railway proprietors, motor car, lorry and coach proprietors, and garage proprietors, carriers and hauliers, bankers, storekeepers, wharfingers, cartage, storage, building and general contractors and to buy and sell or otherwise deal in real or personal property of any kind;
to carry on business as manufacturers of and dealers in and exporters and importers of goods and merchandise of all kinds and merchants generally; and
to guarantee the payment of premiums on any sinking fund or endowment policy or policies taken out by any company having objects similar to the objects of the Company.

Directors
Under Rio Tinto plc's Articles of Association a director may not vote in respect of any proposal in which he or any other person connected with him, has any material interest other than by virtue of his interests in shares or debentures or other securities of or otherwise in or through the Company, except where resolutions:
(a) indemnify him or a third party in respect of obligations incurred by the director on behalf of, or for the benefit of, the Company, or in respect of obligations of the Company, for which the director has assumed responsibility under an indemnity, security or guarantee;
(b) relate to an offer of securities in which he may be interested as a holder of securities or as an underwriter;

Rio Tinto 2004 Form 20-F   98


Back to Contents

(c) concern another body corporate in which the director is beneficially interested in less than one per cent of the issued shares of any class of shares of such a body corporate;
(d) relate to an employee benefit in which the director will share equally with other employees; and
(e) relate to liability insurance that the Company is empowered to purchase for the benefit of directors of the Company in respect of actions undertaken as directors (or officers) of the Company.
Under Rio Tinto Limited's Constitution, except where a director is constrained by Australian law, a director may be present at a meeting of the board while a matter in which the director has a material interest is being considered and may vote in respect of that matter.
      The directors are empowered to exercise all the powers of the Companies to borrow money, to charge any property or business of the Companies or all or any of their uncalled capital and to issue debentures or give any other security for a debt, liability or obligation of the Companies or of any other person. The directors shall restrict the borrowings of Rio Tinto plc to the limitation that the aggregate amount of all moneys borrowed by the Company and its subsidiaries shall not exceed an amount equal to one and one half times the Company’s share capital plus aggregate reserves unless sanctioned by an ordinary resolution of the Company.
      Directors are not required to hold any shares of either Company by way of qualification, but a director is nevertheless entitled to attend and speak at shareholders' meetings. Nevertheless, as disclosed in the Remuneration report on pages 71 to 81 the Remuneration committee has informed the executive directors that they would be expected to build up a shareholding equal in value to two times salary over five years.
      Directors are required to retire in accordance with statutory age limits. Directors who were elected or re-elected a director in the third year before each annual general meeting are required to retire by rotation and such further directors (if any) shall retire by rotation as would bring the number retiring by rotation up to one third of the number of directors in office at the date of the notice of meeting (or, if their number is not a multiple of three, the number nearest to but not greater than one third). These further directors required to retire shall be selected from the other directors subject to retirement by rotation who have been longest in office since their last re-election and where directors were re-elected on the same day then, unless they otherwise agree amongst themselves, they will be selected by the alphabetical order of their names. In addition any director appointed by the directors since the last annual general meeting is also required to retire. A retiring director shall be eligible for re-election.
      In the absence of an independent quorum, the directors are not competent to vote compensation to themselves or to any members of their body.

Rights attaching to shares
Under English law, dividends on shares may only be paid out of profits available for distribution, as determined in accordance with generally accepted accounting principles and by the relevant law. Shareholders are entitled to receive such dividends as may be declared by the directors. The directors may also pay shareholders such interim dividends as appear to them to be justified by the financial position of the Group.
      Any Rio Tinto plc dividend unclaimed after 12 years from the date the dividend was declared, or became due for payment, will be forfeited and returned to the Company. Any Rio Tinto Limited dividend unclaimed may be invested or otherwise made use of by the board for the benefit of the Company until claimed or otherwise disposed of according to Australian law.

Voting rights
Voting at any general meeting of shareholders is by a show of hands unless on a poll, being a written vote, that has been duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. On a poll, every shareholder who is present in person or by proxy has one vote for every ordinary share or share for which he or she is the holder and, in the case of Joint Decisions, the holder of the Special Voting Share has one vote for each vote cast by the public shareholders at the parallel meeting of shareholders. The voting rights attached to the Special Voting Share have been set out on page 96. A poll may be demanded by any of the following:
the chairman of the meeting;
at least five shareholders entitled to vote at the meeting;
any shareholder or shareholders representing in the aggregate not less than one tenth (Rio Tinto plc) or one twentieth (Rio Tinto Limited) of the total voting rights of all shareholders entitled to vote at the meeting;
any shareholder or shareholders holding shares conferring a right to vote at the meeting on which there have been paid-up sums in the aggregate equal to not less than one tenth of the total sum paid up on all the shares conferring that right; or
the holder of the Special Voting Share.
A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.
      The necessary quorum for a Rio Tinto plc general meeting is three persons and for a Rio Tinto Limited general meeting is two persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy.
      Matters are transacted at general meetings by the proposing and passing of resolutions, of which there are three kinds:

Rio Tinto 2004 Form 20-F   99


Back to Contents

an ordinary resolution, which includes resolutions for the election of directors, the receiving of financial statements, the cumulative annual payment of dividends, the appointment of auditors, the increase of authorised share capital or the grant of authority to allot shares;
a special resolution, which includes resolutions amending the Company’s Memorandum and Articles of Association, disapplying statutory pre-emption rights or changing the Company’s name; and
an extraordinary resolution, which includes resolutions modifying the rights of any class of the Company’s shares at a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up.
An ordinary resolution requires the affirmative vote of a majority of the votes of those persons voting at a meeting at which there is a quorum. Special and extraordinary resolutions require the affirmative vote of not less than three fourths of the persons voting at a meeting at which there is a quorum. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting is entitled to cast the deciding vote in addition to any other vote he may have.
     The DLC Merger Sharing Agreement further classifies these three kinds of resolutions into ‘Joint Decisions’ and ‘Class Rights Actions’ as explained on page 96.
     Annual general meetings must be convened with 21 days advance written notice for Rio Tinto plc and with 28 days for Rio Tinto Limited. Other meetings must be convened with 21 days advance written notice for the passing of a special resolution and with 14 days for any other resolution, depending on the nature of the business to be transacted. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The board of directors may, if they choose, make arrangements for shareholders who are unable to attend the place of the meeting to participate at other places.

Variation of Rights
If, at any time, the share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the relevant legislation, with the consent in writing of holders of three fourths in value of the shares of that class or upon the adoption of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provision of the Articles of Association and Constitution relating to proceedings at a general meeting apply, except that the quorum is to be the number of persons (which must be two or more) who hold or represent by proxy not less than one third in nominal value of the issued shares of the class.
     The DLC Merger Sharing Agreement provides for the protection of the public shareholders of both Companies and so any variations of rights would be dealt with as ‘Class Rights Actions’ that require the separate approval of the shareholders of both Companies.

Rights in a Winding-up
Except as the shareholders have agreed or may otherwise agree, upon a winding up, the balance of assets available for distribution:
after the payment of all creditors including certain preferential creditors, whether statutorily preferred creditors or normal creditors; and
subject to any special rights attaching to any class of shares;
is to be distributed among the holders of ordinary shares according to the amounts paid-up on the shares held by them. This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of an extraordinary resolution of the shareholders, divide among the shareholders the whole or any part of the assets in kind.
     The DLC Merger Sharing Agreement further sets out the rights of ordinary shareholders in a liquidation as explained on page 96.

Limitations on Voting and Shareholding
There are no limitations imposed by either law or Rio Tinto plc's Memorandum or Articles of Association or Rio Tinto Limited's Constitution on the right of non-residents or foreign persons to hold or vote the ordinary shares or ADSs, other than the limitations that would generally apply to all shareholders and those that arise from the DLC merger.
     There are no restrictions under Rio Tinto plc’s Memorandum and Articles of Association or under English law that limit the right of non resident or foreign owners to hold or vote its shares. Nor are there any restrictions under Rio Tinto Limited’s constitution or under Australian law that limit the right of non residents to hold or vote its shares, other than under the Foreign Acquisitions and Takeovers Act 1975, see Limitations on ownership of shares and merger obligations on page 97 for details. A description of the change in control provisions triggered by significant share ownership is also set out on page 97.

Rio Tinto 2004 Form 20-F   100


Back to Contents

TAXATION
UK resident individuals
Taxation of dividends
Dividends carry a tax credit equal to one ninth of the dividend. Individuals who are not liable to income tax at the higher rate will have no further tax to pay. Higher rate taxpayers are liable to tax on UK dividends at 32.5 per cent which, after taking account of the tax credit, produces a further tax liability of 25 per cent of the dividend received.

Reclaiming income tax on dividends
Tax credits on dividends are no longer recoverable. However, tax credits on dividends paid into Personal Equity Plans or Individual Savings Accounts will be refunded on dividends paid prior to 6 April 2004.

Dividend reinvestment plan (DRP)
The taxation effect of participation in the DRP will depend on individual circumstances. Shareholders will generally be liable for tax on dividends reinvested in the DRP on the same basis as if they had received the cash and arranged the investment. The dividend should, therefore, be included in the annual tax return in the normal way.
     The shares acquired should be added to shareholdings at the date and at the net cost shown on the share purchase advice. The actual cost of the shares, for Rio Tinto plc shareholders including the stamp duty/stamp duty reserve tax, will form the base cost for capital gains tax purposes.

Capital gains tax
Shareholders who have any queries on capital gains tax issues are advised to consult their financial adviser.
     A leaflet which includes details of relevant events since 31 March 1982 and provides adjusted values for Rio Tinto plc securities as at that date is available from the company secretary.

Australian resident individuals
Taxation of dividends
The basis of the Australian dividend imputation system is that when Australian resident shareholders receive dividends from Rio Tinto Limited, they may be entitled to a credit for the tax paid by the Group in respect of that income, depending on the tax status of the shareholder.
     The application of the system results in tax paid by the Group being allocated to shareholders by way of franking credits attaching to the dividends they receive. Such dividends are known as franked dividends. A dividend may be partly or fully franked. The current Rio Tinto Limited dividend is fully franked and the franking credits attached to the dividend are shown in the distribution statement provided to shareholders.
     The extent to which a company can frank a dividend depends on the credit balance in its franking account. Credits to this account can arise in a number of ways, including when a company pays company tax or receives a franked dividend from another company. The dividend is required to be included in a resident individual shareholder’s assessable income. In addition, an amount equal to the franking credit attached to the franked dividend is also included in the assessable income of the resident individual, who may then be entitled to a rebate of tax equal to the franking credit amount included in their income. Should the franking credits exceed the tax due, the excess is refunded to the resident individual.
     The effect of the dividend imputation system on non resident shareholders is that, to the extent that the dividend is franked, no Australian tax will be payable and there is an exemption from dividend withholding tax.
     A withholding tax is normally levied at the rate of 15 per cent when unfranked dividends are paid to residents of countries with which Australia has a taxation treaty. Most Western countries have a taxation treaty with Australia. A rate of 30 per cent applies to countries where there is no taxation treaty.
     Since 1988, all dividends paid by Rio Tinto Limited have been fully franked. It is the Group’s policy to pay fully franked dividends whenever possible.

Dividend reinvestment plan (DRP)
Shareholders will generally be liable for tax on dividends reinvested in the DRP on the same basis as if they had received the cash and arranged the investment. The dividend should therefore be included in the annual tax return in the normal way.
     The shares acquired should be added to the shareholding at the date of acquisition at the actual cost of the shares, which is the amount of the dividend applied by the shareholder to acquire shares and any incidental costs associated with the acquisition, including stamp duty, will form part of the cost base or reduced cost base of the shares for capital gains tax purposes.

Capital gains tax
The Australian capital gains tax legislation is complex. Shareholders are advised to seek the advice of an independent taxation consultant on any possible capital gains tax exposure.
     If shareholders have acquired shares after 19 September 1985 they may be subject to capital gains tax on the disposal of those shares.

Rio Tinto 2004 Form 20-F   101


Back to Contents

US resident individuals
The following is a summary of the principal UK tax, Australian tax and US Federal income tax consequences of the ownership of Rio Tinto plc ADSs, Rio Tinto plc shares, Rio Tinto Limited ADSs and Rio Tinto Limited shares (‘the Group’s ADSs and Shares’) by a US holder as defined below. It is not intended to be a comprehensive description of all the tax considerations that are relevant to all classes of taxpayer.
     It is based in part on representations by the Group’s depositary banks as Depositaries for the ADRs evidencing the ADSs and assumes that each obligation in the deposit agreements will be performed in accordance with its terms.
     You are a US holder if you are a beneficial owner of the Group’s ADSs and Shares and you are:
a citizen or resident of the United States;
a corporation created or organised under the laws of the United States or any of its political subdivision;
an estate whose income is subject to United States federal income tax regardless of its source; or
a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorised to control all substantial decisions of the trust.
This section does not apply to you if you are a member of a special class of holders subject to special rules, including:
a dealer in securities;
a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;
a tax-exempt organisation;
a life insurance company;
a person liable for alternative minimum tax;
a person that actually or constructively owns 10% or more of our voting stock;
a person that holds the Group’s ADSs and Shares as a part of a straddle or a hedging or conversion transaction; or
a person whose functional currency is not the US dollar.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and on the convention between the United States of America and United Kingdom, that was ratified and came in force on 31 March 2003, and the convention between the United States of America and Australia (“the Conventions”) which may affect the tax consequences of the ownership of the Group’s ADSs and Shares. These laws are subject to change, possibly on a retroactive basis.
     US holders should consult their tax advisers regarding United States federal, state and local and other tax consequences of owning and disposing of the Group’s ADSs and Shares in their particular circumstances.

UK taxation of shareholdings in Rio Tinto plc
Taxation of dividends
US holders do not suffer deductions of UK withholding tax on dividends paid by Rio Tinto plc. Dividends carry a tax credit equal to one ninth of the net dividend, or ten per cent of the net dividend plus the tax credit. The tax credit is not repayable to US holders.

Capital gains
A US holder will not normally be liable to UK tax on capital gains realised on the disposition of Rio Tinto plc ADSs or shares unless the holder carries on a trade, profession or vocation in the UK through a permanent establishment in the UK and the ADSs or shares have been used for the purposes of the trade, profession or vocation or are acquired, held or used for the purposes of such a permanent establishment.

Inheritance tax
Under the UK Estate Tax Treaty, a US holder, who is domiciled in the US and is not a national of the UK, will not be subject to UK inheritance tax upon the holder’s death or on a transfer during the holder’s lifetime unless the ADSs and shares form part of the business property of a permanent establishment in the UK or pertain to a fixed base situated in the UK used in the performance of independent personal services. In the exceptional case where ADSs or shares are subject both to UK inheritance tax and to US Federal gift or estate tax, the UK Estate Tax Treaty generally provides for tax payments to be relieved in accordance with the priority rules set out in the Treaty.

Stamp duty and stamp duty reserve tax
Transfers of Rio Tinto plc ADSs will not be subject to UK stamp duty provided that the transfer instrument is not executed in, and at all times remains outside, the UK.
     Purchases of Rio Tinto plc shares are subject either to stamp duty at a rate of 50 pence per £100 or to stamp duty reserve tax (SDRT) at a rate of 0.5 per cent. Conversions of Rio Tinto plc shares into Rio Tinto plc ADSs will be subject to additional SDRT at a rate of 1.5 per cent on all transfers to the Depositary or its nominee.

Australian taxation of shareholdings in Rio Tinto Limited
Taxation of dividends
US holders are not normally liable to Australian withholding tax on dividends paid by Rio Tinto Limited because such dividends are normally fully franked under the Australian dividend imputation system, meaning that they are paid out of income that has borne Australian income tax. Any unfranked dividends would suffer Australian withholding tax which under the Australian income tax convention is limited to 15 per cent of the gross dividend.

Rio Tinto 2004 Form 20-F   102


Back to Contents

Capital gains
US holders are not normally subject to any Australian tax on the disposal of Rio Tinto Limited ADSs or shares unless they have been used in carrying on a trade or business wholly or partly through a permanent establishment in Australia, or the gain is in the nature of income sourced in Australia.

Gift, estate and inheritance tax
Australia does not impose any gift, estate or inheritance taxes in relation to gifts of shares or upon the death of a shareholder.

Stamp duty
An issue or transfer of Rio Tinto Limited ADSs or a transfer of Rio Tinto Limited shares does not require the payment of Australian stamp duty.

US Federal income tax
Dividends

Dividends on the Group’s ADSs and shares will generally be treated as dividend income for purposes of US Federal income tax. In the case of Rio Tinto Limited, the income will be the net dividend plus, in the event of a dividend not being fully franked, the withholding tax.
       Dividend income will not be eligible for the dividends received deduction allowed to US corporations. Dividends paid by Qualified Foreign Corporations (QFCs) are subject to a maximum rate of income tax of 15 per cent. This maximum rate applies to taxable years beginning after 31 December 2002 and ending before 1 January 2009. Both Rio Tinto plc and Rio Tinto Limited expect to be QFCs throughout this period. To qualify for the 15 per cent maximum income tax rate on dividends the stock of the QFC must be held for more than 60 days during the 121 day period beginning on the date which is 60 days before the ex-dividend date.

EXCHANGE CONTROLS
Rio Tinto plc
At present, there are no UK foreign exchange controls or other restrictions on the export or import of capital or on the payment of dividends to non resident holders of Rio Tinto plc shares or the conduct of Rio Tinto plc’s operations. The Bank of England, however, upholds international law and maintains financial sanctions against specified terrorist organisations and specific targets related to Myanmar, Federal Republic of Yugoslavia and Serbia, Iraq, Liberia and Zimbabwe.
      There are no restrictions under Rio Tinto plc’s memorandum and articles of association or under English law that limit the right of non resident or foreign owners to hold or vote Rio Tinto plc’s shares.

Rio Tinto Limited
Under existing Australian legislation, the Reserve Bank of Australia does not restrict the import and export of funds and no permission is required by Rio Tinto Limited for the movement of funds into or out of Australia, except that restrictions apply to certain transactions relating to the following:
supporters of the former government of the Federal Republic of Yugoslavia; and
ministers and senior officials of the Government of Zimbabwe.
The Department of Foreign Affairs and Trade upholds international law that prohibits anyone from making assets available to terrorists and their sponsors.
      Members of the general public are also required to report the sending of A$10,000 or more in currency out of Australia to the Australian Transaction and Reports Analysis Centre. Rio Tinto Limited must also deduct withholding tax from foreign remittances of dividends, to the extent that they are unfranked, and of interest payments.
      There are no limitations, either under the laws of Australia or under the constitution of Rio Tinto Limited, on the right of non residents, other than the Foreign Acquisitions and Takeovers Act 1975 (the Takeovers Act). The Takeovers Act may affect the right of non Australian residents, including US residents, to acquire or hold Rio Tinto Limited shares but does not affect the right to vote, or any other right associated with any Rio Tinto Limited shares held in compliance with its provisions.
      Under the Takeovers Act, a foreign person must notify the Treasurer of the Commonwealth of Australia of a proposal to acquire a “substantial shareholding” in an Australian corporation, which involves a person, together with associates, holding 15 per cent or more of the issued shares or voting power of the corporation. In addition, acquisition or issue of shares, including an option to acquire shares, in a corporation that carries on an Australian business, such as Rio Tinto Limited, which would result in foreign persons “controlling” the corporation, or a change in the foreign persons “controlling” it, is also subject to prior notification to, and review and approval by, the Treasurer, who may refuse approval if satisfied that the result would be contrary to the Australian national interest. A foreign person will “control” a corporation if it, together with associates, holds 15 per cent or more of the issued shares or voting power, and the Treasurer is satisfied that it is in a position to determine the policy of the corporation, and a number of foreign persons will “control” a corporation if it, together with associates, holds 40 per cent or more of the issued shares or voting power, and the Treasurer is satisfied that it is in a position to determine the policy of the corporation.

Rio Tinto 2004 Form 20-F   103


Back to Contents

  In the context of the Takeovers Act, a foreign person is:
an individual not ordinarily resident in Australia; and
any corporation or trust in which there is a substantial foreign interest.
Unless the Treasurer in the particular circumstances deems otherwise, a “substantial foreign interest” in a corporation is an interest of 15 per cent or more in the ownership of voting power by a single foreign interest either alone or together with associates, or an interest of 40 per cent or more in aggregate in the ownership or voting power by more than one foreign interest and the associates of any of them.
      If a single foreign interest, either alone or together with associates, holds a beneficial interest in 15 per cent or more of the capital or income of a trust, or if two or more foreign interests and any associates together hold 40 per cent or more, there will be a substantial foreign interest in the trust. A beneficiary under a discretionary trust is deemed, for this purpose, to hold a beneficial interest in the maximum percentage that could be distributed to the beneficiary.
      In addition to the Takeovers Act, there are statutory limitations in Australia on foreign ownership of certain businesses, such as banks and airlines, not relevant to Rio Tinto Limited. There are no other statutory or regulatory provisions of Australian law or ASX requirements that restrict foreign ownership or control of Rio Tinto Limited.

DOCUMENTS ON DISPLAY
Rio Tinto plc and Rio Tinto Limited file reports and other information with the SEC. You may read without charge and copy at prescribed rates any document filed at the public reference facilities of the SEC’s principal office at 450 Fifth Street, NW, Washington, D.C. 20549, United States of America. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

Item 11.     Quantitative and Qualitative Disclosures about Market Risk
The Rio Tinto Group's policies for currency, interest rate and commodity price exposures, and the use of derivative financial instruments are discussed in the financial review on pages 37 to 40. In addition, the Group's quantitive and qualitative disclosures about market risk are set out in Note 28 on pages A-44 to A-49. The discussion regarding market risk contains certain forward looking statements and attention is drawn to the Cautionary statement on page 10.

Item 12.      Description of Securities other than Equity Securities
Not applicable.

PART II

Item 13.      Defaults, Dividend Arrearages and Delinquencies
There are no defaults, dividend arrearages or delinquencies.

Item 14.     Material Modifications to the Rights of Security Holders and Use of Proceeds
There are no material modifications to the rights of security holders.

Item 15.     Controls and Procedures
In designing and evaluating the disclosure controls and procedures of each of Rio Tinto plc and Rio Tinto Limited, the common management of each of Rio Tinto plc and Rio Tinto Limited, including their common chief executive and finance director, recognised that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the management of each of Rio Tinto plc and Rio Tinto Limited necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within each of Rio Tinto plc and Rio Tinto Limited have been detected.
      The common management of each of Rio Tinto plc and Rio Tinto Limited with the participation of their common chief executive and finance director have evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the period covered by the Annual report. Based on that evaluation, the common chief executive and finance director of each of Rio Tinto plc and Rio Tinto Limited have concluded that these disclosure controls and procedures are effective at the reasonable assurance level.

Rio Tinto 2004 Form 20-F   104


Back to Contents

     There were no significant changes in the internal controls or in other factors that could significantly affect internal controls of each of Rio Tinto plc and Rio Tinto Limited subsequent to the date of their most recent evaluation.

Item 16A.     Audit Committee Financial Expert
See Corporate governance on page 87 for information regarding the identification of the Audit committee financial expert.

Item 16B.     Code of Ethics
The way we work, Rio Tinto’s statement of business practice, summarises the Group’s principles and policies for all directors and employees.
      Since the first edition of The way we work in 1998, expectations of corporate responsibilities have increased. Although the Group’s values and objectives are unchanged its responses have evolved and have been further developed and reflected in a revised 2003 edition.
      The way we work is supported by supplementary guidance documents and applies to all Rio Tinto managed businesses.
      The way we work and the supplementary guidance documents are discussed more fully under Corporate governance on page 85. They can be viewed on Rio Tinto’s website: www.riotinto.com and will be provided to any person without charge upon written request received by one the company secretaries.

Item 16C.     Principal Accountant Fees and Services
Auditors’ remuneration including audit fees, audit related fees, further assurance services, taxation services and all other fees have been dealt with in Note 37 to the consolidated financial statements on page A-56.
      Rio Tinto has adopted policies designed to uphold the independence of the Group’s principal auditors by prohibiting their engagement to provide a range of accounting and other professional services that might compromise their appointment as independent auditors. The engagement of the Group’s principal auditors to provide statutory audit services, certain other assurance services, tax services and certain limited other services are pre approved. The engagement of the Group’s principal auditors to provide other permitted services are individually subject to the specific approval of the Audit committee or its chairman.
      Prior to the commencement of each financial year the Group’s Finance director and its principal auditors submit to the Audit committee a schedule of the types of services that are expected to be performed during the following year for its approval. The Audit committee may impose a US dollar limit on the total value of other permitted services that can be provided. Any non audit service provided by the Group’s principal auditors, where the expected fee exceeds a pre determined level, must be subject to the Group’s normal tender procedures. However, in exceptional circumstances the Finance director is authorised to engage the Group’s principal auditors to provide such services without going to tender, but if the fees are expected to exceed $250,000 then the chairman of the audit committee must approve the engagement.
      The Audit committee adopted policies for the pre approval of permitted services provided by the Group’s principal auditors during January 2003 which were further refined and adopted during September 2003. All of the engagements for services provided by the Group's principal auditors since the adoption of these policies were either within the pre approval policies or approved by the Audit committee.

Item 16D.     Exemptions from the Listing Standards for Audit Committees
Not applicable.

Item 16E.     Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.

PART III

Item 17.     Financial Statements
Not applicable.

Item 18.     Financial Statements
The 2004 financial statements are included as the “A” pages to this annual report.

Rio Tinto 2004 Form 20-F   105


Back to Contents

Item 19.     Exhibits

Exhibits marked “*” have been filed as exhibits to this annual report on Form 20-F and other exhibits have been incorporated by reference as indicated.

Index

Exhibit
Number Description

1.1* Memorandum and Articles of Association of Rio Tinto plc (adopted by special resolution passed on 11 April 2002 and amended on 14 April 2005)
1.2* Constitution of Rio Tinto Limited (ACN 004 458 404) (as adopted by special resolution passed on 24 May 2000 and amended by special resolution on 18 April 2002 and 29 April 2005)
3.1 DLC Merger Implementation Agreement, dated 3 November 1995 between CRA Limited and The RTZ Corporation PLC relating to the implementation of the DLC merger (incorporated by reference to Exhibit 2.1 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 1995, File No. 1-10533)
3.2* DLC Merger Sharing Agreement, dated 21 December 1995 and amended on 29 April 2005 between CRA Limited and The RTZ Corporation PLC relating to the ongoing relationship between CRA and RTZ following the DLC merger
3.3 RTZ Shareholder Voting Agreement, dated 21 December 1995 between The RTZ Corporation PLC, RTZ Shareholder SVC Pty. Limited, CRA Limited, R.T.Z. Australian Holdings Limited and The Law Debenture Trust Corporation p.l.c. (incorporated by reference to Exhibit 2.3 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 1995, File No. 1-10533)
3.4 CRA Shareholder Voting Agreement, dated 21 December 1995 between CRA Limited, CRA Shareholder SVC Limited, The RTZ Corporation PLC and The Law Debenture Trust Corporation p.l.c., relating to the RTZ Special Voting Share (incorporated by reference to Exhibit 2.4 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 1995, File No. 1-10533)
4.01 Letter dated 1 January 1992 to Mr R Adams about supplementary pension arrangements (incorporated by reference to Exhibit 4.23 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.02 Supplementary letter dated 1 January 1992 to Mr R Adams about pension arrangements (incorporated by reference to Exhibit 4.24 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.03 Letter dated 22 November 1994 to Mr R Adams about supplementary pension arrangements (incorporated by reference to Exhibit 4.29 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.04 Letter dated 20 January 1997 to Mr R Adams about directors' pension arrangements (incorporated by reference to Exhibit 4.32 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2001, File No. 1-10533).
4.05 Service Agreement dated 15 April 2003 between Mr R Adams and Rio Tinto London Limited (incorporated by reference to Exhibit 4.30 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2002, File No. 1-10533)
4.06 Memorandum effective 1 March 2004 to Service Agreement dated 15 April 2003 between Mr R Adams and Rio Tinto London Limited (incorporated by reference to Exhibit 4.06 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2003, File No. 1-10533)
4.07* Service Agreement dated 30 March 2004 between Mr R L Clifford and Rio Tinto Limited
4.08* Supplemental letter dated 30 March 2004 to Service Agreement dated 30 March 2004 between Mr R L Clifford and Rio Tinto Limited
4.09* Memorandum effective 1 March 2005 to Service Agreement dated 30 March 2004 between Mr R L Clifford and Rio Tinto Limited
4.10 Service Agreement dated 19 June 2002 between Mr G R Elliott and Rio Tinto London Limited (incorporated by reference to Exhibit 4.31 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2002, File No. 1-10533)
4.11 Memorandum effective 1 March 2003 to Service Agreement dated 19 June 2002 between Mr G R Elliott and Rio Tinto Limited (incorporated by reference to Exhibit 4.32 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2002, File No. 1-10533)
 
4.12 Memorandum effective 1 March 2004 to Service Agreement dated 19 June 2002 between Mr G R Elliott and Rio Tinto London Limited (incorporated by reference to Exhibit 4.32 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2002, File No. 1-10533)
4.13* Memorandum effective 1 March 2005 to Service Agreement dated 19 June 2002 between Mr G R Elliott and Rio Tinto London Limited
4.14 Service Agreement dated 19 January 1999 between Mr O L Groeneveld and Rio Tinto Limited (incorporated by reference to Exhibit 4.53 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
   

Rio Tinto 2004 Form 20-F   106


Back to Contents

4.15 Memorandum effective 1 April 1999 to Service Agreement dated 19 January 1999 between Mr O L Groeneveld and Rio Tinto Limited (incorporated by reference to Exhibit 4.54 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.16 Memorandum effective 1 April 2000 to Service Agreement dated 19 January 1999 between Mr O L Groeneveld and Rio Tinto Limited (incorporated by reference to Exhibit 4.55 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.17 Memorandum effective 1 April 2001 to Service Agreement dated 19 January 1999 between Mr O L Groeneveld and Rio Tinto Limited (incorporated by reference to Exhibit 4.56 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.18 Memorandum effective 1 March 2002 to Service Agreement dated 19 January 1999 between Mr O L Groeneveld and Rio Tinto Limited (incorporated by reference to Exhibit 4.61 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2001, File No. 1-10533)
4.19 Memorandum effective 1 March 2003 to Service Agreement dated 19 January 1999 between Mr O L Groeneveld and Rio Tinto Limited (incorporated by reference to Exhibit 4.38 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2002, File No. 1-10533)
4.20 Service Agreement dated 19 January 2004 between Mr O L Groeneveld and Rio Tinto Limited. Limited (incorporated by reference to Exhibit 4.23 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2003, File No. 1-10533)
4.21 Memorandum effective 1 March 2004 to Service Agreement dated 19 January 2004 between Mr O L Groeneveld and Rio Tinto Limited. Limited (incorporated by reference to Exhibit 4.24 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2003, File No. 1-10533)
4.22 Mining Companies Comparative Plan (incorporated by reference to Exhibit 4.65 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.23 Share Option Plan (incorporated by reference to Exhibit 4.66 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.24 Medical expenses plan (incorporated by reference to Exhibit 4.67 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
4.25 Pension plan (incorporated by reference to Exhibit 4.68 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 2000, File No. 1-10533)
   
8.1* List of subsidiary companies.
   
12.1* Certifications pursuant to Rule 13a-14(a) of the Exchange Act.
   
13.1* Certifications furnished pursuant to Rule 13a-14(b) of the Exchange Act (such certificate is not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference with any filing under the Securities Act).
   
15.1* Consent of Independent Accountants.

Rio Tinto 2004 Form 20-F   107


Back to Contents

SIGNATURE

The Registrants hereby certify that they meet all of the requirements for filing on Form 20-F and that they have duly caused and authorised the undersigned to sign this Annual Report on their behalf.

Rio Tinto plc Rio Tinto Limited
(Registrant) (Registrant)
   
   
   
   
/s/ Anette Lawless /s/ Anette Lawless
Name: Anette Lawless Name: Anette Lawless
Title: Secretary Title: Assistant Secretary
   
Date: 27 June 2005 Date: 27 June 2005

Rio Tinto 2004 Form 20-F   108


Back to Contents

GLOSSARY

NON MINING DEFINITIONS
Throughout this document, the collective expressions Rio Tinto, Rio Tinto Group and Group are used for convenience only. Depending on the context in which they are used, they mean Rio Tinto plc and/or Rio Tinto Limited and/or one or more of the individual companies in which Rio Tinto plc and/or Rio Tinto Limited directly or indirectly own investments, all of which are separate and distinct legal entities.

Unless the context indicates otherwise, the following terms have the meanings shown below:

ADR   American Depositary Receipt evidencing American Depositary Shares (ADS).
     
Australian dollars   Australian currency. Abbreviates to A$
     
Australian GAAP   Generally accepted accounting principles in Australia.
     
Billion   One thousand million.
     
Canadian dollars   Canadian currency. Abbreviates to C$
     
Company/Companies   Means, as the context so requires, Rio Tinto plc and/or Rio Tinto Limited.
     
DLC merger   Refers to the dual listed companies merger (1995).
     
IFRS   International Financial Reporting Standards.
     
LME   London Metal Exchange.
     
New Zealand dollars   New Zealand currency. Abbreviates to NZ$
     
Pounds sterling   UK currency. Abbreviates to pence or p.
     
Public shareholders   The holders of Rio Tinto plc shares that are not companies in the Rio Tinto Limited Group and the holders of Rio Tinto Limited shares that are not companies in the Rio Tinto plc Group.
     
Rand   South African currency. Abbreviates to R.
     
Rio Tinto Limited   Refers to Rio Tinto Limited, and, where the context permits, its subsidiaries, joint ventures and associated companies.
     
Rio Tinto Limited ADS   An American Depositary Share representing the right to receive four Rio Tinto Limited shares.
     
Rio Tinto Limited Group   Rio Tinto Limited and its subsidiaries, joint ventures and associated companies.
     
Rio Tinto Limited shareholders   The holders of Rio Tinto Limited shares.
     
Rio Tinto Limited shares   The ordinary shares in Rio Tinto Limited.
     
Rio Tinto Limited Shareholder   The agreement, dated 21 December 1995, between Rio Tinto plc, Rio Tinto Limited, RTL Shareholder
     
Voting Agreement   SVC Limited and the Law Debenture Trust Corporation p.l.c. relating to the voting rights of the Rio Tinto plc Special Voting Share at meetings of shareholders of Rio Tinto plc.
     
Rio Tinto Limited/RTL Special Voting Share   The Special Voting Share in Rio Tinto Limited.
     
Rio Tinto plc   Rio Tinto plc and its subsidiaries, joint ventures and associated companies.
     
Rio Tinto plc ADS   An American Depositary Share representing the right to receive four Rio Tinto plc ordinary shares.
     
Rio Tinto plc Group   Rio Tinto plc and its subsidiaries, joint ventures and associated companies.
     
Rio Tinto plc ordinary shares   The ordinary shares of 10p each in Rio Tinto plc.
     
Rio Tinto plc shareholders   The holders of Rio Tinto plc shares.
     
Rio Tinto Shareholder Voting Agreement   The agreement, dated 21 December 1995, between Rio Tinto plc, Rio Tinto Australian Holdings Limited, RTP Shareholder SVC Pty Limited, Rio Tinto Limited and the Law Debenture Trust Corporation p.l.c. relating to the voting rights of the Rio Tinto Limited shares held by the Rio Tinto plc Group and the Rio Tinto Limited Special Voting Share at meetings of Rio Tinto Limited shareholders.
     

Rio Tinto 2004 Form 20-F   109


Back to Contents

Rio Tinto plc shares   Rio Tinto plc ordinary shares.
     
Rio Tinto plc/RTP Special Voting   The Special Voting Share of 10p in Rio Tinto plc.
     
Share/shares   Rio Tinto Limited shares or Rio Tinto plc ordinary shares, as the context requires.
     
Sharing Agreement   The agreement, dated 21 December 1995, as amended between Rio Tinto Limited and Rio Tinto plc relating to the regulation of the relationship between Rio Tinto Limited and Rio Tinto plc following the DLC merger.
     
UK GAAP   Generally accepted accounting principles in the UK.
     
US dollars   United States currency. Abbreviates to dollars, $ or US$ and US cents.
     
US GAAP   Generally accepted accounting principles in the United States.
     
MINING AND TECHNICAL DEFINITIONS
Alumina   Aluminium oxide. It is extracted from bauxite in a chemical refining process and is subsequently the principal raw material in the electro-chemical process by which aluminium is produced.
     
Anode copper   At the final stage of the smelting of copper concentrates, molten copper is cast into specially shaped slabs called anodes for subsequent electrolytic refining to produce refined cathode copper.
     
Bauxite   Mainly hydrated aluminium oxides (Al2O3.2H2 O). Principal ore of alumina, the raw material from which aluminium is made.
     
Beneficiated bauxite   Bauxite ore that has been treated to remove waste material to improve its physical or chemical characteristics.
     
Bioleaching   The deliberate use of bacteria to speed the chemical release of metals from ores.
     
Block caving   An underground bulk mining method. It involves undercutting the orebody to induce ore fracture and collapse by gravity. The broken ore is recovered mechanically through draw points below.
     
Borates   A generic term for mineral compounds which contain boron and oxygen.
     
Cathode copper   Refined copper produced by electrolytic refining of impure copper or by electrowinning.
     
Classification   Separating crushed and ground ore into portions of different size particles.
     
Coking coal   Also referred to as metallurgical coal. By virtue of its carbonisation properties, it is used in the manufacture of coke, which is used in the steel making process.
     
Concentrate   The product of a physical concentration process, such as flotation or gravity concentration, which involves separating ore minerals from unwanted waste rock. Concentrates require subsequent processing, such as smelting or leaching, to break down or dissolve the ore minerals and obtain the desired elements, usually metals.
     
Cutoff grade   The lowest grade of mineralised material considered economic to process. It is used in the calculation of the quantity of ore present in a given deposit.
     
Doré   A precious metal alloy which is produced by smelting. refined to produce pure gold and silver.
     
DWT   Dead weight tons is the combined weight in long tons (2,240 pounds weight) of cargo, fuel and fresh water that a ship can carry.
     
Flotation   A method of separating finely ground minerals using a froth created in water by specific reagents. In the flotation process certain mineral particles are induced to float by becoming attached to bubbles of froth whereas others, usually unwanted, sink.
     
Grade   The proportion of metal or mineral present in ore, or any other host material, expressed in this document as per cent, grams per tonne or ounces per tonne.
     
Head grade   The average grade of ore delivered to the mill.
     

Rio Tinto 2004 Form 20-F   110


Back to Contents

Ilmenite   Mineral composed of iron, titanium and oxygen.
     
Ore   A rock from which a metal(s) or mineral(s) can be economically extracted.
     
Ore milled   The quantity of ore processed.
     
Ore hoisted   The quantity of ore which is removed from an underground mine for processing.
     
Ore reserve   That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
     
Pressure oxidation   A method of treating sulphide ores. In the case of refractory gold ores, the object is to oxidise the sulphides to sulphates and hence liberate the gold for subsequent cyanide leaching. The technique involves reaction of the ore with sulphuric acid under pressure in the presence of oxygen gas.
     
Probable ore reserves   Reserves for which quantity and grade and/or quality are computed from information similar to that used for proved reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proved reserves, is high enough to assume continuity between points of observation.
     
Proved ore reserves   Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.
     
Rock mined   The quantity of ore and waste rock excavated from the mine. In this document, the term is only applied to surface mining operations.
     
Rutile   A mineral composed of titanium and oxygen (TiO2).
     
Stripping ratio   The tonnes of waste material which must be removed to allow the mining of one tonne of ore.
     
Solvent extraction and electrowinning (SX-EW)   Processes for extracting metal from an ore and producing pure metal. First the metal is leached into solution; the resulting solution is then purified in the solvent extraction process; the solution is then treated in an electro-chemical process (electrowinning) to recover cathode copper.
     
Tailing   The rock wastes which are rejected from a concentrating process after the recoverable valuable minerals have been extracted.
     
Thermal coal   Also referred to as steam or energy coal. It is used as a fuel source in electrical power generation, cement manufacture and various industrial applications.
     
Titanium dioxide feedstock   A feedstock rich in titanium dioxide, produced, in Rio Tinto’s case, by smelting ores containing titanium minerals.
     
Zircon   Zirconium mineral (ZrSiO4).

Rio Tinto 2004 Form 20-F   111


Back to Contents

CONVERSION OF WEIGHTS AND MEASURES
  1 troy ounce = 31.1 grams
  1 kilogram = 32.15 troy ounces
  1 kilogram = 2.2046 pounds
  1 metric tonne = 1,000 kilograms
  1 metric tonne = 2,204.6 pounds
  1 metric tonne = 1.1023 short tons
  1 short ton = 2,000 pounds
  1 long ton = 2,240 pounds
  1 gram per metric tonne = 0.02917 troy ounces per short ton
  1 gram per metric tonne = 0.03215 troy ounces per metric tonne
  1 kilometre = 0.6214 miles
  1 megajoule per kilogram = 430.2 British thermal units (btu) per pound (coal)

EXCHANGE RATES
The following table shows, for the periods and dates indicated, certain information regarding the exchange rates for the pound sterling and the Australian dollar, based on the Noon Buying Rates for pounds sterling and Australian dollars expressed in US dollars per £1 and per A$1.00.

Pounds sterling                 Australian dollars              
Year ended 31 December* Period   Average   High   Low   Year ended 31 December* Period   Average   High   Low
  end   rate             end   rate        

















2004 1.93   1.83   1.95   1.76   2004 0.783   0.737   0.798   0.686
2003 1.78   1.63   1.79   1.55   2003 0.749   0.648   0.752   0.562
2002 1.61   1.50   1.61   1.41   2002 0.563   0.544   0.575   0.506
2001 1.45   1.44   1.50   1.37   2001 0.512   0.517   0.571   0.483
2000 1.49   1.52   1.65   1.40   2000 0.556   0.579   0.672   0.511

















* The Noon Buying Rate on such dates differed slightly from the rates used in the preparation of Rio Tinto’s consolidated financial statements as of such date. No representation is made that pound sterling and Australian dollar amounts have been, could have been or could be converted into dollars at the Noon Buying Rate on such dates or at any other dates.

Rio Tinto 2004 Form 20-F   112


REPORT OF THE INDEPENDENT ACCOUNTANTS

To the members of Rio Tinto plc and Rio Tinto Limited

We have audited the financial statements of the Rio Tinto Group ("the Group") and of the Rio Tinto plc and Rio Tinto Limited parts of the Group (see "Accounting Presentation" on page A-10) set out on pages A-2.2004 to A-84, which are expressed in US dollars. These consolidated financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Auditing Standards generally accepted in the United Kingdom and Auditing Standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion the consolidated financial statements set out on pages A-2.2004 to A-84 present fairly, in all material respects, the financial position of the Rio Tinto Group and of the Rio Tinto plc and Rio Tinto Limited parts of the Group at 31 December 2004 and 2003 and their results of operations and cash flows for each of the three years in the period ended 31 December 2004, in conformity with accounting principles generally accepted in the United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from those generally accepted in the United States of America. The application of the latter would have affected the determination of consolidated net income for each of the three years in the period ended 31 December 2004 and the determination of consolidated shareholders' funds at 31 December 2004, 2003 and 2002 to the extent summarised in Note 42 to the consolidated financial statements.

As discussed in Note 42 to the consolidated financial statements, the Group changed its method of accounting for asset retirement obligations, in accordance with US GAAP, with effect from 1 January 2003.

/s/ PricewaterhouseCoopers LLP /s/ PricewaterhouseCoopers
PricewaterhouseCoopers LLP PricewaterhouseCoopers
Chartered Accountants and Registered Auditors Chartered Accountants
London, England Perth, Australia
27 June 2005 27 June 2005
In respect of the members of Rio Tinto plc In respect of the members of Rio Tinto Limited

A-1


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2004

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
Rio
Tinto Group
   
 
 
 
    2004   2004   2004  
   
 
 
 
Note   US$m   US$m   US$m  
  Gross turnover (including share of joint            
  ventures and associates) (c) 9,606   7,544   14,608  
  Share of joint ventures' turnover (c) (1,418 ) (957 ) (2,375 )
  Share of associates' turnover (c) (2,913 ) (63 ) (434 )
   
 
 
 
  Consolidated turnover 5,275   6,524   11,799  
2 Net operating costs (c) (4,986 ) (5,091 ) (10,077 )
   
 
 
 
  Group operating profit 289   1,433   1,722  
  Share of operating profit of joint ventures 762   290   1,052  
  Share of operating profit of associates 768   9   156  
  Profit on disposal of interests in operations 833   139   920  
   
 
 
 
  Profit on ordinary activities before interest 2,652   1,871   3,850  
5 Net interest payable (69 ) (121 ) (149 )
6 Amortisation of discount (76 ) (46 ) (105 )
   
 
 
 
  Profit on ordinary activities before taxation 2,507   1,704   3,596  
7 Taxation (534 ) (477 ) (841 )
   
 
 
 
  Profit on ordinary activities after taxation 1,973   1,227   2,755  
  Attributable to outside shareholders 100   (42 ) 58  
   
 
 
 
  Profit for the financial year (net earnings) 2,073   1,185   2,813  
               
4 Exceptional items            
               
  Profit on disposal of interests in operations 833   139   920  
  Asset write downs and provision for contract obligation (558 ) -   (558 )
  Environmental remediation charge -   -   -  
  Taxation 98   (2
)
97  
  Attributable to outside equity shareholders 133   -   133  
   
 
 
 
    506   137   592  
  Adjusted earnings 1,567   1,048   2,221  
               
8 Dividends to shareholders (822 ) (385 ) (1,062 )
   
 
 
 
  Retained profit/(loss) for the financial year 1,251   800   1,751  
   
 
 
 
9 Earnings per ordinary share (US cents) 194.2c   237.4c   204.0c  
9 Adjusted earnings per ordinary share (US cents) 146.8c   210.0c   161.0c  
9 Diluted earnings per ordinary share (US cents) 193.9c   236.9c   203.6c  
9 Diluted adjusted earnings per ordinary share (US cents) 146.6c   209.5c   160.8c  
  Dividends per share            
8 –– Rio Tinto Group (US cents) 77.00c   77.00c   77.00c  
8 –– Rio Tinto plc (pence) 41.48p       41.48p  
8 –– Rio Tinto Limited (Australian cents)     103.82c   103.82c  

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-2.2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2003

    Rio Tinto plc -
part of Rio Tinto Group
  Rio Tinto Limited -
part of Rio Tinto Group
  Rio Tinto Group  
   
 
 
 
    2003   2003   2003  
   
 
 
 
Note   US$m   US$m   US$m  
  Gross turnover (including share of joint            
  ventures and associates) (c) 7,988   6,253   12,119  
  Share of joint ventures' turnover (c) (1,128 ) (703 ) (1,831 )
  Share of associates' turnover (c) (2,768 ) (74 ) (720 )
   
 
 
 
  Consolidated turnover 4,092   5,476   9,568  
2 Net operating costs (c) (3,724 ) (4,348 ) (8,072 )
   
 
 
 
  Group operating profit 368   1,128   1,496  
  Share of operating profit of joint ventures 419   117   536  
  Share of operating profit of associates 678   20   234  
  Profit on disposal of interests in operations 47   126   126  
   
 
 
 
  Profit on ordinary activities before interest 1,512   1,391   2,392  
5 Net interest payable (138 ) (100 ) (206 )
6 Amortisation of discount (69 ) (36 ) (92 )
   
 
 
 
  Profit on ordinary activities before taxation 1,305   1,255   2,094  
7 Taxation (341 ) (360 ) (567 )
   
 
 
 
  Profit on ordinary activities after taxation 964   895   1,527  
  Attributable to outside shareholders (8 ) (11 ) (19 )
   
 
 
 
  Profit for the financial year (net earnings) 956   884   1,508  
               
4 Exceptional items            
               
  Profit on disposal of interests in operations 47   126   126  
  Asset write downs and provision for contract obligation -   -   -  
  Environmental remediation charge -   -   -  
  Taxation -   -   -  
  Attributable to outside equity shareholders -   -   -  
   
 
 
 
    47   126   126  
  Adjusted earnings 909   758   1,382  
               
8 Dividends to shareholders (683 ) (320 ) (882 )
   
 
 
 
  Retained profit/(loss) for the financial year 273   564   626  
   
 
 
 
9 Earnings per ordinary share (US cents) 89.7c   177.2c   109.5c  
9 Adjusted earnings per ordinary share (US cents) 85.3c   151.9c   100.3c  
9 Diluted earnings per ordinary share (US cents) 89.5c   176.9c   109.3c  
9 Diluted adjusted earnings per ordinary share (US cents) 85.1c   151.7c   100.2c  
  Dividends per share            
8 –– Rio Tinto Group (US cents) 64.00c   64.00c   64.00c  
8 –– Rio Tinto plc (pence) 37.13p       37.13p  
8 –– Rio Tinto Limited (Australian cents)     89.70c   89.70c  

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-2.2003


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2002

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2002   2002   2002  
   
 
 
 
Note   US$m   US$m   US$m  
  Gross turnover (including share of joint            
  ventures and associates) (c) 7,367   5,678   11,119  
  Share of joint ventures' turnover (c) (859 ) (808 ) (1,667 )
  Share of associates' turnover (c) (2,515 ) (148 ) (737 )
   
 
 
 
  Consolidated turnover 3,993   4,722   8,715  
2 Net operating costs (c) (4,012 ) (3,867 ) (7,884 )
   
 
 
 
  Group operating profit (19 ) 855   831  
  Share of operating profit of joint ventures 258   274   532  
  Share of operating profit of associates 671   51   239  
  Profit on disposal of interests in operations -   -   -  
   
 
 
 
  Profit on ordinary activities before interest 910   1,180   1,602  
5 Net interest payable (156 ) (124 ) (237 )
6 Amortisation of discount (39 ) (23 ) (54 )
   
 
 
 
  Profit on ordinary activities before taxation 715   1,033   1,311  
7 Taxation (442 ) (423 ) (708 )
   
 
 
 
  Profit on ordinary activities after taxation 273   610   603  
  Attributable to outside shareholders (78 ) 126   48  
   
 
 
 
  Profit for the financial year (net earnings) 195   736   651  
               
4 Exceptional items            
  Profit on disposal of interests in operations -   -   -  
  Asset write downs and provision for contract obligation (639 ) (433 ) (978 )
  Environmental remediation charge (116 ) -   (116 )
  Taxation 9   42   42  
  Attributable to outside equity shareholders 7   166   173  
   
 
 
 
    (739 ) (225 ) (879 )
  Adjusted earnings 934   961   1,530  
               
8 Dividends to shareholders (639 ) (299 ) (826 )
   
 
 
 
  Retained profit/(loss) for the financial year (444 ) 437   (175 )
   
 
 
 
9 Earnings per ordinary share (US cents) 18.3c   147.6c   47.3c  
9 Adjusted earnings per ordinary share (US cents) 87.7c   192.7c   111.2c  
9 Diluted earnings per ordinary share (US cents) 18.3c   147.4c   47.2c  
9 Diluted adjusted earnings per ordinary share (US cents) 87.5c   192.4c   110.0c  
  Dividends per share            
8 –– Rio Tinto Group (US cents) 60.00c   60.00c   60.00c  
8 –– Rio Tinto plc (pence) 37.47p       37.47p  
8 –– Rio Tinto Limited (Australian cents)     105.93c   105.93c  

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-2.2002


Back to Contents

Footnotes to the profit and loss accounts

(a) The results for all years relate wholly to continuing operations.
(b) The profit for each year is stated after the exceptional items set out in the box above. 'Adjusted earnings' excludes these items where they are of such magnitude that their exclusion is necessary in order that 'Adjusted earnings' fulfil its purpose of reflecting the underlying performance of the Group. See note 4 for further details.
(c)

Turnover and operating costs have been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase Gross turnover in 2004 by US$473 million (2003: US$364 million, 2002: US$291 million) and increase Net operating costs in 2004 by US$455 million (2003: US$340 million, 2002: US$272 million).

The separate financial statements for Rio Tinto plc and 100 per cent of Rio Tinto Limited shown above are prepared on the basis of the legal ownership of the various operations within each part of the Group. The distinction between the legal and economic interests represented by Rio Tinto plc and Rio Tinto Limited shareholdings is explained on page A-10. The amounts attributable to the economic interests of Rio Tinto plc shareholders and shareholders of Rio Tinto Limited other than Rio Tinto plc are as follows:

 
Rio Tinto plc
shareholders
 
Rio Tinto Limited
shareholders other than
Rio Tinto plc
 
Rio Tinto Group
 
 
 
 
 
  2004   2004   2004  
 
 
 
 
  US$m   US$m   US$m  
Economic interests in profit for the financial year 2,177   636   2,813  
Average percentage of Rio Tinto Limited held by            
shareholders other than Rio Tinto plc     62.5 %    

 

 
Rio Tinto plc
shareholders
 
Rio Tinto Limited
shareholders other than
Rio Tinto plc
 
Rio Tinto Group
 
 
 
 
 
  2003   2003   2003  
 
 
 
 
  US$m   US$m   US$m  
Economic interests in profit for the financial year 1,167   341   1,508  
Average percentage of Rio Tinto Limited held by            
shareholders other than Rio Tinto plc     62.4 %    

 

 
Rio Tinto plc
shareholders
 
Rio Tinto Limited
shareholders other than
Rio Tinto plc
 
Rio Tinto Group
 
 
 
 
 
  2002   2002   2002  
 
 
 
 
  US$m   US$m   US$m  
Economic interests in profit for the financial year 504   147   651  
Average percentage of Rio Tinto Limited held by            
shareholders other than Rio Tinto plc     62.4 %    

 

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-2.Footnotes


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2004 (US GAAP format)

   
Rio Tinto plc - part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2004   2004   2004  
   
 
 
 
Note   US$m   US$m   US$m  
               
  Revenues (b) 5,275   6,524   11,799  
               
  Operating costs and expenses            
  Costs and expenses applicable to revenues (exclusive of
   depreciation and amortisation shown separately below) (b)
(2,957 ) (3,497 ) (6,454 )
  Depreciation of fixed assets and amortisation of goodwill (488 ) (716 ) (1,204 )
  Fixed asset write downs and provision for contract obligation (558 ) -   (558 )
  Environmental remediation costs -   -   -  
  Selling, general and administrative expenses (552 ) (525 ) (1,077 )
  Royalties (256 ) (230 ) (486 )
  Exploration, research & development (133 ) (77 ) (210 )
  Bad and doubtful debts 16   (1 ) 15  
  Foreign currency exchange gain/(loss) (32 ) (1 ) (33 )
  Other operating income/(expense) (26 ) (44 ) (70 )
   
 
 
 
    (4,986 ) (5,091 ) (10,077 )
               
  Non operating income/(expenses)            
  Gain on sale of fixed asset investments 781   139   920  
  Interest expense & amortisation of discount on provisions (49 ) (164 ) (213 )
   
 
 
 
  Income before income tax, minority            
     interest and equity income 1,021   1,408   2,429  
  Income tax expense (102 ) (386 ) (488 )
  Minority interest in income of consolidated subsidiaries 100   (42
58  
  Equity income of unconsolidated joint ventures and affiliates 1,054   205   814  
   
 
 
 
  Net income 2,073   1,185   2,813  
   
 
 
 
               
  Earnings per ordinary share (US cents) 194.2 c 237.4 c 204.0 c
  Diluted earnings per ordinary share (US cents) 193.9 c 236.9 c 203.6 c
               
   
(a) These Condensed Income Statements are in the format prescribed by the SEC as referred to in note 4 on page A-19.
(b) Revenue and Operating costs and expenses have been adjusted to reclassify, as revenue, certain amounts charged to customers for freight and handling costs, which previously were deducted from Operating costs and expenses. The effect was to increase revenue and to increase Operating costs and expenses in 2004 by US$455 million.

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-3.2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2003 (US GAAP format)

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2003   2003   2003  
   
 
 
 
Note   US$m   US$m   US$m  
               
  Revenues (b) 4,092   5,476   9,568  
               
  Operating costs and expenses            
  Costs and expenses applicable to revenues (exclusive of
   depreciation and amortisation shown separately below) (b)
(2,460 ) (3,030 ) (5,490 )
  Depreciation of fixed assets and amortisation of goodwill (385 ) (621 ) (1,006 )
  Fixed asset write downs and provision for contract obligation -   -   -  
  Environmental remediation costs -   -   -  
  Selling, general and administrative expenses (460 ) (357 ) (817 )
  Royalties (220 ) (219 ) (439 )
  Exploration, research & development (107 ) (43 ) (150 )
  Bad and doubtful debts (28 ) (3 ) (31 )
  Foreign currency exchange gain/(loss) (40 ) (83 ) (123 )
  Other operating income/(expense) (24 8   (16 )
   
 
 
 
    (3,724 ) (4,348 ) (8,072 )
               
  Non operating income/(expenses)            
  Gain on sale of fixed asset investments -   126   126  
  Interest expense & amortisation of discount on provisions (97 ) (131 ) (228 )
   
 
 
 
  Income before income tax, minority            
     interest and equity income 271   1,123   1,394  
  Income tax expense (7 ) (318 ) (325 )
  Minority interest in income of consolidated subsidiaries (8 ) (11
(19
  Equity income of unconsolidated joint ventures and affiliates 700   90   458  
   
 
 
 
  Net income 956   884   1,508  
   
 
 
 
               
  Earnings per ordinary share (US cents) 89.7 c 177.2 c 109.5 c
  Diluted earnings per ordinary share (US cents) 89.5 c 176.9 c 109.3 c
               
   
(a) These Condensed Income Statements are in the format prescribed by the SEC as referred to in note 4 on page A-19.
(b) Revenue and Operating costs and expenses have been adjusted to reclassify, as revenue, certain amounts charged to customers for freight and handling costs, which previously were deducted from Operating costs and expenses. The effect was to increase revenue and to increase Operating costs and expenses in 2003 by US$340 million.

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-3.2003


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2002 (US GAAP format)

   
Rio Tinto plc
-part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2002   2002   2002  
   
 
 
 
Note   US$m   US$m   US$m  
               
  Revenues (b) 3,993   4,722   8,715  
               
  Operating costs and expenses            
  Costs and expenses applicable to revenues (exclusive of
   depreciation and amortisation shown separately below) (b)
(2,226 ) (2,383 ) (4,609 )
  Depreciation of fixed assets and amortisation of goodwill (423 ) (531 ) (954 )
  Fixed asset write downs and provision for contract obligation (529 ) (433 ) (962 )
  Environmental remediation costs (116 ) -   (116 )
  Selling, general and administrative expenses (380 ) (276 ) (656 )
  Royalties (204 ) (186 ) (390 )
  Exploration, research & development (111 ) (44 ) (155 )
  Bad and doubtful debts (2 ) (13 ) (15 )
  Foreign currency exchange gain/(loss) (28 ) (13 ) (41 )
  Other operating income/(expense) 7   12   14  
   
 
 
 
    (4,012 ) (3,867 ) (7,884 )
               
  Non operating income/(expenses)            
  Gain on sale of fixed asset investments -   -   -  
  Interest expense & amortisation of discount on provisions (82 ) (131 ) (213 )
   
 
 
 
  Income before income tax, minority            
     interest and equity income (101 ) 724   618  
  Income tax expense (142 ) (341 ) (483 )
  Minority interest in income of consolidated subsidiaries (78 ) 126   48  
  Equity income of unconsolidated joint ventures and affiliates 516   227   468  
   
 
 
 
  Net income 195   736   651  
   
 
 
 
               
  Earnings per ordinary share (US cents) 18.3 c 147.6 c 47.3 c
  Diluted earnings per ordinary share (US cents) 18.3 c 147.4 c 47.2 c
               
   
(a) These Condensed Income Statements are in the format prescribed by the SEC as referred to in note 4 on page A-19.
(b) Revenue and Operating costs and expenses have been adjusted to reclassify, as revenue, certain amounts charged to customers for freight and handling costs, which previously were deducted from Operating costs and expenses. The effect was to increase revenue and to increase Operating costs and expenses in 2002 by US$272 million.

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-3.2002


<

Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2004   2004   2004  
   
 
 
 
Note   US$m   US$m   US$m  
  Cash flow from operating activities (see page A-4.2002-2004) 1,284   2,337   3,621  
                
  Dividends from joint ventures 469   279   748  
  Dividends from associates 198   6    80  
   
 
 
 
  Total cash flow from operations 1,951   2,622   4,449  
  Interest received 87   8    23  
  Interest paid (81 ) (159 ) (168 )
  Dividends paid to outside shareholders (31 ) (30 ) (61 )
   
 
 
 
  Returns on investment and servicing of finance (25 ) (181 ) (206 )
  Taxation (205 ) (670 ) (875 )
  Purchase of property, plant and equipment (595 ) (1,569 ) (2,164 )
  Funding of Group share of joint ventures' and             
     associates' capital expenditure (12 ) (21 ) (33 )
  Payments from/(other funding of) joint ventures            
     and associates 15   -   15  
11 Exploration and evaluation expenditure (123 ) (70 ) (193 )
  Sale of property, plant and equipment 12    28    40  
  Sales less purchases of other investments 140   110   250  
  Loans (to)/repaid by Rio Tinto Limited (1,423 ) -    -  
  Purchase of redeemable preference shares             
     in a Rio Tinto Limited subsidiary by a Rio Tinto             
     plc subsidiary -   -    -  
   
 
 
 
  Capital expenditure and financial investment (1,986 ) (1,522 ) (2,085 )
  Purchase of subsidiaries, joint arrangements,             
     joint ventures and associates     -    -  
35 Sale of interests in operations 1,306   205   1,511  
  Purchases/sales of subsidiaries between              
     Rio Tinto Limited and Rio Tinto plc -    -    -  
  Receipt of share buy back proceeds from Rio              
     Tinto Limited -    -    -  
   
 
 
 
  Disposals less acquisitions 1,306   205   1,511  
  Equity dividends paid - Rio Tinto plc and              
     Rio Tinto Limited shareholders (700 ) (330 ) (906 )
  Cash inflow/(outflow) before management              
     of liquid resources and financing 341   124   1,888  
23  Net cash inflow/(outflow) from management of            
     liquid resources 96   (6 )  90  
  Ordinary shares in Rio Tinto issued for cash 21   5   26  
  Ordinary shares in subsidiaries issued to            
     outside shareholders    6     7   
23 Loans (repaid) less received (415 ) (1,418 ) (1,833 )
  Payment of share buy back proceeds to Rio Tinto plc -    -    -  
  Loans received from/(repaid to) Rio Tinto plc -   1,423    -  
  Purchase of redeemable preference shares              
     in a Rio Tinto Limited subsidiary by a Rio Tinto plc            
     subsidiary -    -    -  
   
 
 
 
  Management of liquid resources and financing (297 )  10   (1,710 )
   
 
 
 
23
Increase/(decrease) in cash per UK GAAP 44   134   178  
   
 
 
 

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-4.2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2003

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2003   2003   2003  
   
 
 
 
Note   US$m   US$m   US$m  
  Cash flow from operating activities (see page A-4.2002-2004) 975   1,913   2,888  
                 
  Dividends from joint ventures 338   132   470  
  Dividends from associates 397   8   128  
   
 
 
 
  Total cash flow from operations 1,710   2,053   3,486  
  Interest received 48   13   30  
  Interest paid (121 ) (141 ) (231 )
  Dividends paid to outside shareholders (47 ) (29 ) (76 )
   
 
 
 
  Returns on investment and servicing of finance (120 ) (157 ) (277 )
  Taxation (182 ) (735 ) (917 )
  Purchase of property, plant and equipment (559 ) (974 ) (1,533 )
  Funding of Group share of joint ventures' and            
     associates' capital expenditure (13 ) (81 ) (94 )
  Payments from/(other funding of) joint ventures            
     and associates (18 ) -   (18 )
11 Exploration and evaluation expenditure (88 ) (42 ) (130 )
  Sale of property, plant and equipment 9   10   19  
  Sales less purchases of other investments 67   16   83  
  Loans (to)/repaid by Rio Tinto Limited 5   -   -  
  Purchase of redeemable preference shares            
     in a Rio Tinto Limited subsidiary by a Rio Tinto            
     plc subsidiary (500 ) -   -  
   
 
 
 
  Capital expenditure and financial investment (1,097 ) (1,071 ) (1,673 )
  Purchase of subsidiaries, joint arrangements,            
     joint ventures and associates -   -   -  
35 Sale of interests in operations -   405   405  
  Purchases/sales of subsidiaries between            
     Rio Tinto Limited and Rio Tinto plc 1   (1 ) -  
  Receipt of share buy back proceeds from Rio            
     Tinto Limited 1,208   -   -  
   
 
 
 
  Disposals less acquisitions 1,209   404   405  
  Equity dividends paid - Rio Tinto plc and            
     Rio Tinto Limited shareholders (645 ) (465 ) (833 )
  Cash inflow/(outflow) before management            
     of liquid resources and financing 875   29   191  
23  Net cash inflow/(outflow) from management of            
     liquid resources (110 ) 5   (105 )
  Ordinary shares in Rio Tinto issued for cash 20   5   25  
  Ordinary shares in subsidiaries issued to            
     outside shareholders      
23 Loans (repaid) less received (794 ) 592   (202 )
  Payment of share buy back proceeds to Rio Tinto plc -   (1,208 ) -  
  Loans received from/(repaid to) Rio Tinto plc -   (5 ) -  
  Purchase of redeemable preference shares            
     in a Rio Tinto Limited subsidiary by a Rio Tinto plc            
     subsidiary -   500   -  
   
 
 
 
  Management of liquid resources and financing (884 ) (103 ) (274 )
   
 
 
 
23
Increase/(decrease) in cash per UK GAAP (9 ) (74 ) (83 )
   
 
 
 

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-4.2003


<

Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

CASH FLOW STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2002

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2002   2002   2002  
   
 
 
 
Note   US$m   US$m   US$m  
  Cash flow from operating activities (see page A-4.2002-2004) 1,380   1,754   3,134  
               
  Dividends from joint ventures 228   285   513  
  Dividends from associates 368   4   96  
   
 
 
 
  Total cash flow from operations 1,976   2,043   3,743  
  Interest received 46   52   80  
  Interest paid (109 ) (173 ) (264 )
  Dividends paid to outside shareholders (78 ) (39 ) (117 )
   
 
 
 
  Returns on investment and servicing of finance (141 ) (160 ) (301 )
  Taxation (240 ) (482 ) (722 )
  Purchase of property, plant and equipment (667 ) (629 ) (1,296 )
  Funding of Group share of joint ventures' and            
     associates' capital expenditure (28 ) (109 ) (137 )
  Payments from/(other funding of) joint ventures            
     and associates (7 ) 1   (6 )
11 Exploration and evaluation expenditure (89 ) (35 ) (124 )
  Sale of property, plant and equipment 3   13   16  
  Sales less purchases of other investments (330 ) 7   (323 )
  Loans (to)/repaid by Rio Tinto Limited (87 ) -   -  
  Purchase of redeemable preference shares            
     in a Rio Tinto Limited subsidiary by a Rio Tinto            
     plc subsidiary -   -   -  
   
 
 
 
  Capital expenditure and financial investment (1,205 ) (752 ) (1,870 )
  Purchase of subsidiaries, joint arrangements,            
     joint ventures and associates (1 (105 ) (106 )
35 Sale of interests in operations 3   230   233  
  Purchases/sales of subsidiaries between            
     Rio Tinto Limited and Rio Tinto plc (13 13   -  
  Receipt of share buy back proceeds from Rio            
     Tinto Limited 115   -   -  
   
 
 
 
  Disposals less acquisitions 104   138   127  
  Equity dividends paid - Rio Tinto plc and            
     Rio Tinto Limited shareholders (729 ) (495 ) (948 )
  Cash inflow/(outflow) before management            
     of liquid resources and financing (235 292   29  
23  Net cash inflow/(outflow) from management of            
     liquid resources 142   71   213  
  Ordinary shares in Rio Tinto issued for cash 10   5   15  
  Ordinary shares in subsidiaries issued to            
     outside shareholders   22   22  
23 Loans (repaid) less received 67   (476 ) (409 )
  Payment of share buy back proceeds to Rio Tinto plc -   (115 ) -  
  Loans received from/(repaid to) Rio Tinto plc -   87   -  
  Purchase of redeemable preference shares            
     in a Rio Tinto Limited subsidiary by a Rio Tinto plc            
     subsidiary -   -   -  
   
 
 
 
  Management of liquid resources and financing 219   (406 ) (159 )
   
 
 
 
23
Increase/(decrease) in cash per UK GAAP (16)   (114 ) (130 )
   
 
 
 

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-4.2002


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2004   2004   2004  
   
 
 
 
    US$m   US$m   US$m  
  Cash flow from operating activities            
  Group operating profit 289   1,433   1,722  
  Asset write downs and provision for contract            
     obligation 558   -   558  
2 Depreciation and amortisation 488   716   1,204  
11 Exploration & evaluation charged against profit 116   71   187  
20 Provisions (excluding exceptional items) 109   38   147  
20 Utilisation of provisions (101 ) (85 ) (186 )
  Change in inventories (101 ) (78 ) (179 )
  Change in accounts receivable & prepayments (200 ) 43   (48 )
  Change in accounts payable and accruals 95   182   168  
  Other items 31   17   48  
   
 
 
 
  Cash flow from operating activities 1,284   2,337   3,621  
   
 
 
 
               
   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2003   2003   2003  
   
 
 
 
    US$m   US$m   US$m  
  Cash flow from operating activities            
  Group operating profit 368   1,128   1,496  
  Asset write downs and provision for contract            
     obligation -   -   -  
2 Depreciation and amortisation 385   621   1,006  
11 Exploration & evaluation charged against profit 90   37   127  
20 Provisions (excluding exceptional items) 60   94   154  
20 Utilisation of provisions (62 ) (97 ) (159 )
  Change in inventories (85 ) 42   (43 )
  Change in accounts receivable & prepayments (52 ) (58 ) 154  
  Change in accounts payable and accruals 180   150   66  
  Other items 91   (4 ) 87  
   
 
 
 
  Cash flow from operating activities 975   1,913   2,888  
   
 
 
 
               
   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
    2002   2002   2002  
   
 
 
 
    US$m   US$m   US$m  
  Cash flow from operating activities            
  Group operating profit (19 ) 855   831  
  Asset write downs and provision for environmental remediation 645   433   1,078  
2 Depreciation and amortisation 423   531   954  
11 Exploration & evaluation charged against profit 94   36   130  
20 Provisions (excluding exceptional items) 33   25   58  
20 Utilisation of provisions (35 ) (83 ) (118 )
  Change in inventories 42   43   85  
  Change in accounts receivable & prepayments 113   23   158  
  Change in accounts payable and accruals 81   (116 ) (57 )
  Other items 3   7   15  
   
 
 
 
  Cash flow from operating activities 1,380   1,754   3,134  
   
 
 
 

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-4.2002-2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

BALANCE SHEETS FOR THE YEAR ENDED 31 DECEMBER 2004

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
Note   2004   2004   2004  
   
 
 
 
    US$m   US$m   US$m  
  Intangible fixed assets            
10 Goodwill 215   924   1,139  
11 Exploration and evaluation 27   70   97  
   
 
 
 
    242   994   1,236  
  Tangible fixed assets            
12 Property, plant and equipment 5,972   10,633   16,605  
  Investments            
13 Share of gross assets of joint ventures 2,027   1,448   3,475  
13 Share of gross liabilities of joint ventures (749 ) (294 ) (1,043 )
   
 
 
 
    1,278   1,154   2,432  
13 Investments in associates/other investments 3,168   72   385  
   
 
 
 
  Total investments 4,446   1,226   2,817  
   
 
 
 
  Total fixed assets 10,660   12,853   20,658  
   
 
 
 
  Current assets            
15 Inventories 1,099   927   2,026  
  Accounts receivable and prepayments            
16    Falling due within one year 1,083   1,031   1,723  
16    Falling due after more than one year 540   296   836  
   
 
 
 
  Total accounts receivable 1,623   1,327   2,559  
38 Loans made to Rio Tinto Limited and its subsidiaries 1,875   -   -  
17 Investments 78   -   78  
17 Cash 181   209   390  
   
 
 
 
  Total current assets 4,856   2,463   5,053  
   
 
 
 
  Current liabilities            
18 Short term borrowings (232 ) (574 ) (806 )
38 Loans made by Rio Tinto plc and its subsidiaries -   (1,875 ) -  
19 Accounts payable and accruals (1,529 ) (1,736 ) (2,589 )
   
 
 
 
  Total current liabilities (1,761 ) (4,185 ) (3,395 )
   
 
 
 
  Net current assets/(liabilities) 3,095   (1,722 ) 1,658  
   
 
 
 
  Total assets less current liabilities 13,755   11,131   22,316  
   
 
 
 
  Liabilities due after one year            
22 Medium and long term borrowings (1,452 ) (1,885 ) (3,337 )
19 Accounts payable and accruals (175 ) (226 ) (401 )
20 Provisions for liabilities and charges (2,870 ) (2,188 ) (5,058 )
  Outside shareholders' interests (119 ) (1,317 ) (936 )
   
 
 
 
  Net assets 9,139   5,515   12,584  
   
 
 
 
  Capital and reserves            
  Share capital            
24    - Rio Tinto plc 155   -   155  
24    - Rio Tinto Limited (excl. Rio Tinto plc interest) -   1,336   1,133  
25 Share premium account 1,650   -   1,650  
25 Other reserves 248   125   326  
25 Profit and loss account 7,086   4,054   9,320  
   
 
 
 
  Equity shareholders' funds 9,139   5,515   12,584  
   
 
 
 

The separate financial statements for Rio Tinto plc and 100 per cent of Rio Tinto Limited shown above are prepared on the basis of the legal ownership of the various operations within each part of the Group. The distinction between the legal and economic interests represented by Rio Tinto plc and Rio Tinto Limited shareholdings is explained on page A-10. The amounts of the consolidated shareholders' funds attributable to the economic interests of Rio Tinto plc shareholders and the shareholders of RioTinto Limited other than Rio Tinto plc are as follows:

 
 
 
 
Rio Tinto Limited 
 
 
 
 
 
Rio Tinto plc 
 
shareholders other 
 
 
 
 
 
shareholders 
 
than Rio Tinto plc 
 
Rio Tinto Group 
 
   
 
 
 
    2004   2004   2004  
   
 
 
 
    US$m   US$m   US$m  
  Economic interests in consolidated
   shareholders' funds
9,740   2,844   12,584  
  Closing percentage of Rio Tinto Limited held
    by shareholders other than Rio Tinto plc
    62.5 %    

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-5.2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

BALANCE SHEETS FOR THE YEAR ENDED 31 DECEMBER 2003

   
Rio Tinto plc -
part of Rio Tinto Group
 
Rio Tinto Limited -
part of Rio Tinto Group
 
Rio Tinto Group
 
   
 
 
 
Note   2003   2003   2003  
   
 
 
 
    US$m   US$m   US$m  
  Intangible fixed assets            
10 Goodwill 253   932   1,185  
11 Exploration and evaluation 2   67   69  
   
 
 
 
    255   999   1,254  
  Tangible fixed assets            
12 Property, plant and equipment 6,095   9,095   15,196  
  Investments            
13 Share of gross assets of joint ventures 1,845   1,388   3,233  
13 Share of gross liabilities of joint ventures (731 ) (279 ) (1,010 )
   
 
 
 
    1,114   1,109   2,223  
13 Investments in associates/other investments 2,680   62   517  
   
 
 
 
  Total investments 3,794   1,171   2,740  
   
 
 
 
  Total fixed assets 10,144   11,265   19,190  
   
 
 
 
  Current assets            
15 Inventories 968   815   1,783  
  Accounts receivable and prepayments            
16    Falling due within one year 991   1,070   1,674  
16    Falling due after more than one year 555   254   809  
   
 
 
 
  Total accounts receivable 1,546   1,324   2,483  
38 Loans made to Rio Tinto Limited and its subsidiaries 563   -   -  
17 Investments 230   -   230  
17 Cash 257   138   395  
   
 
 
 
  Total current assets 3,564   2,277   4,891  
   
 
 
 
  Current liabilities            
18 Short term borrowings (542 ) (1,652 ) (2,194 )
38 Loans made by Rio Tinto plc and its subsidiaries -   (563 ) -  
19 Accounts payable and accruals (1,325 ) (1,291 ) (2,140 )
   
 
 
 
  Total current liabilities (1,867 ) (3,506 ) (4,334 )
   
 
 
 
  Net current assets/(liabilities) 1,697   (1,229 ) 557  
   
 
 
 
  Total assets less current liabilities 11,841   10,036   19,747  
   
 
 
 
  Liabilities due after one year            
22 Medium and long term borrowings (1,559 ) (2,290 ) (3,849 )
19 Accounts payable and accruals (156 ) (166 ) (322 )
20 Provisions for liabilities and charges (2,543 ) (1,993 ) (4,536 )
  Outside shareholders' interests (240 ) (1,263 ) (1,003 )
   
 
 
 
  Net assets 7,343   4,324   10,037  
   
 
 
 
  Capital and reserves            
  Share capital            
24    - Rio Tinto plc 155   -   155  
24    - Rio Tinto Limited (excl. Rio Tinto plc interest) -   1,280   1,085  
25 Share premium account 1,629   -   1,629  
25 Other reserves 261   117   334  
25 Profit and loss account 5,298   2,927   6,834  
   
 
 
 
  Equity shareholders' funds 7,343   4,324   10,037  
   
 
 
 

The separate financial statements for Rio Tinto plc and 100 per cent of Rio Tinto Limited shown above are prepared on the basis of the legal ownership of the various operations within each part of the Group. The distinction between the legal and economic interests represented by Rio Tinto plc and Rio Tinto Limited shareholdings is explained on page A-10. The amounts of the consolidated shareholders' funds attributable to the economic interests of Rio Tinto plc shareholders and the shareholders of RioTinto Limited other than Rio Tinto plc are as follows:

 
 
 
Rio Tinto Limited 
 
 
 
 
Rio Tinto plc 
 
shareholders other 
 
 
 
 
shareholders 
 
than Rio Tinto plc 
 
Rio Tinto Group 
 
 
 
 
 
  2003   2003   2003  
 
 
 
 
  US$m   US$m   US$m  
Economic interests in consolidated
   shareholders' funds
7,767   2,270   10,037  
Closing percentage of Rio Tinto Limited held
    by shareholders other than Rio Tinto plc
    62.4 %    

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-5.2003


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

RECONCILIATION WITH AUSTRALIAN GAAP AT 31 DECEMBER

  Rio Tinto Group   
 


 
  2004   2003  
 
 
 
  US$m   US$m  
Net earnings under UK GAAP 2,813   1,508  
Increase/(decrease) net of tax in respect of:        
   Goodwill amortisation (139 ) (164 )
   Profit on sale of operations 99    -  
   Contributions to fixed asset additions 99    -  
   Taxation (23 ) (5 )
   Other  -    7  
 
 
 
Net earnings attributable to members under Australian GAAP 2,849   1,346  
 
 
 
Earnings per ordinary share under Australian GAAP 206.6 c 97.7 c
Diluted earnings per share under Australian GAAP 206.3 c 97.5 c
 
 
 
         
  Rio Tinto Group   
 


 
  2004   2003  
 
 
 
  US$m   US$m  
Shareholders' funds under UK GAAP 12,584   10,037  
Increase/(decrease) net of tax in respect of:        
   Goodwill 601   872  
   Taxation 46   69  
   Dividend 626   469  
   Contributions to fixed asset additions 105   -  
   Other (26 ) (24 )
 
 
 
Shareholders' funds under Australian GAAP 13,936   11,423  
 
 
 

The Group’s financial statements have been prepared in accordance with UK GAAP, which differs in certain respects from Australian GAAP. These differences relate principally to the following items, and the effect of each of the adjustments to net earnings and shareholders’ funds that would be required under Australian GAAP is set out above.

Goodwill
For 1997 and prior years, UK GAAP permitted the write off of purchased goodwill on acquisitions directly against reserves. Under Australian GAAP, goodwill is capitalised and amortised by charges against income over the period during which it is expected to be of benefit, subject to a maximum of 20 years. Goodwill previously written off directly to reserves in the UK GAAP accounts has been reinstated and amortised for the purpose of the reconciliation statements. For acquisitions in 1998 and subsequent years, goodwill is capitalised under UK GAAP, in accordance with FRS 10. Adjustments are required for Australian GAAP purposes where such capitalised goodwill is amortised over periods exceeding 20 years in the UK GAAP accounts.

Profit on sale of operations
Under UK GAAP, goodwill previously written off to reserves is reinstated for the purpose of calculating profit on the sale of an operation. Under Australian GAAP, the equivalent goodwill is capitalised and is subject to amortisation. The adjustment to the profit on sale of operations under Australian GAAP reflects the lower book value of goodwill for operations sold under Australian GAAP compared with UK GAAP, which results from the above amortisation.

Contributions to fixed asset additions
Under UK GAAP, contributions made by governments to the cost of acquiring fixed assets are deferred on the balance sheet and credited to the profit and loss account over the expected useful economic life of the fixed assets to which they relate. Under Australian GAAP, such contributions are recognised immediately in the profit and loss account.

Taxation
Under UK GAAP, provision for taxes arising on remittances of earnings can be made only if the dividends have been accrued or if there is a binding agreement for the distribution of the earnings. Under Australian GAAP, provision must be made for tax arising on expected future remittances of past earnings.

Under UK GAAP, tax benefits associated with goodwill charged directly to reserves, in 1997 and previous years, must be accumulated in the deferred tax provision. This means that the tax benefits are not included in earnings until the related goodwill is charged through the profit and loss account, on disposal or closure. For Australian GAAP, no provision is required for such deferred tax because the goodwill that gave rise to these tax benefits was capitalised and gives rise to amortisation charges against profit.

Dividends
Under UK GAAP, ordinary dividends are recognised in the financial year in respect of which they are paid. Under Australian GAAP, such dividends are not recognised until they are declared, determined or publicly recommended by the Board of directors. Prior to 1 January 2003, Australian GAAP was consistent with UK GAAP.

Exceptional items
Earnings under UK GAAP, stated above, include exceptional net gains of US$592 million (2003 US$126 million) relating to profits on disposal of interests in operations less asset write downs and a provision for a contract obligation.

A-6


<

Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEARS ENDED 31 DECEMBER

  Rio Tinto plc -
part of Rio Tinto Group
  Rio Tinto Limited -
part of Rio Tinto Group
  Rio Tinto Group  
 
 
 
 
  2004   2004   2004  
 
 
 
 
  US$m   US$m   US$m  
Profit for the financial year            
Parent companies and
   subsidiaries
1,019   980   1,999  
Joint ventures 510   199   709  
Associates 544   6   105  
 
 
 
 
  2,073   1,185   2,813  
             
Adjustment on currency
    translation
(a)
           
Parent companies and
    subsidiaries
156   383   537  
Joint ventures -   1   1  
Associates 140   2   4  
 
 
 
 
  296   386   542  
             
Total recognised gains and
    losses relating to the
    financial year
           
Parent companies and
    subsidiaries
1,175   1,363   2,536  
Joint ventures 510   200   710  
Associates 684   8   109  
 
 
 
 
  2,369   1,571   3,355  
 
 
 
 

  Rio Tinto plc -
part of Rio Tinto Group
  Rio Tinto Limited -
part of Rio Tinto Group
  Rio Tinto Group  
   
 
 
 
    2003   2003   2003  
   
 
 
 
    US$m   US$m   US$m  
Profit for the financial year              
Parent companies and
   subsidiaries
  256   794   1,050  
Joint ventures   284   76   360  
Associates   416   14   98  
   
 
 
 
    956   884   1,508  
               
Adjustment on currency
    translation
(a)
             
Parent companies and
    subsidiaries
  553   1,353   1,864  
Joint ventures   -   53   53  
Associates   495   3   7  
   
 
 
 
    1,048   1,409   1,924  
               
Total recognised gains and
    losses relating to the
    financial year
             
Parent companies and
    subsidiaries
  809   2,147   2,914  
Joint ventures   284   129   413  
Associates   911   17   105  
   
 
 
 
    2,004   2,293   3,432  
   
 
 
 

     The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-7


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEARS ENDED 31 DECEMBER

  Rio Tinto plc -
part of Rio Tinto Group
  Rio Tinto Limited -
part of Rio Tinto Group
  Rio Tinto Group  
   
 
 
 
    2002   2002   2002  
   
 
 
 
    US$m   US$m   US$m  
Profit for the financial year              
Parent companies and
   subsidiaries
  (321 ) 509   183  
Joint ventures   159   180   339  
Associates   357   47   129  
   
 
 
 
    195   736   651  
               
Adjustment on currency
    translation
(a)
             
Parent companies and
    subsidiaries
  198   374   560  
Joint ventures   3   11   13  
Associates   137   1   6  
   
 
 
 
    338   386   579  
               
Total recognised gains and
    losses relating to the
    financial year
             
Parent companies and
    subsidiaries
  (123 ) 883   743  
Joint ventures   162   191   352  
Associates   494   48   135  
   
 
 
 
    533   1,122   1,230  
   
 
 
 
   
(a) Adjustment on currency translation' is net of current and deferred tax charges (see note 7).

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR YEAR ENDED 31 DECEMBER 2004

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group      part of Rio Tinto Group      Rio Tinto Group  
 
 
 
 
  2004   2004   2004  
 
 
 
 
  US$m   US$m   US$m  
Profit for the financial year 2,073   1,185   2,813  
Dividends (822 ) (385 ) (1,062 )
 
 
 
 
  1,251   800   1,751  
Adjustment on currency translation
296   386   542  
Goodwill written back on disposal of interest in operation
228   -   228  
Shares issued by Rio Tinto plc and Rio Tinto Limited (b)
21   5   26  
Dividend on DLC share from Rio Tinto Limited
-   -   -  
 
 
 
 
  1,796   1,191   2,547  
Opening shareholders' funds 7,343   4,324   10,037  
 
 
 
 
Closing shareholders' funds 9,139   5,515   12,584  
 
 
 
 
(a) A reconciliation of each individual reserve within shareholders' funds is shown in note 25.
(b) The carrying value of Rio Tinto plc's investment in Rio Tinto Limited increased by US$nil in 2004 (2003: US$1 million) as a result of the Rio Tinto Limited share issues during the year. In 2003, Rio Tinto plc's share of the proceeds received exceeded the dilution of its interest resulting from the share issues.

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-8


Back to Contents

 

RIO TINTO PLC - RIO TINTO LIMITED

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR YEARS ENDED 31 DECEMBER

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto
Group
     part of Rio Tinto Group      Rio Tinto Group  
   
 
 
 
    2003   2003   2003  
   
 
 
 
    US$m   US$m   US$m  
Profit for the financial year   956   884   1,508  
Dividends   (683 ) (320 ) (882 )
   
 
 
 
    273   564   626  
Adjustment on currency translation
  1,048   1,409   1,924  
Goodwill written back on disposal of interest in operation
  -   -   -  
Shares issued by Rio Tinto plc and Rio Tinto Limited (b)
  21   5   25  
Dividend on DLC share from Rio Tinto Limited
  102   (164 ) -  
   
 
 
 
    1,444   1,814   2,575  
Opening shareholders' funds   5,899   2,510   7,462  
   
 
 
 
Closing shareholders' funds   7,343   4,324   10,037  
   
 
 
 
(a) A reconciliation of each individual reserve within shareholders' funds is shown in note 25.
(b) The carrying value of Rio Tinto plc's investment in Rio Tinto Limited increased by US$nil in 2004 (2003: US$1 million) as a result of the Rio Tinto Limited share issues during the year. In 2003, Rio Tinto plc's share of the proceeds received exceeded the dilution of its interest resulting from the share issues.
   
  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group      part of Rio Tinto Group      Rio Tinto Group  
 
 
 
 
  2002   2002   2002  
 
 
 
 
  US$m   US$m   US$m  
Profit for the financial year 195   736   651  
Dividends (639 ) (299 ) (826 )
 
 
 
 
  (444 ) 437   (175 )
Adjustment on currency translation
338   386   579  
Goodwill written back on disposal of interest in operation
-   -   -  
Shares issued by Rio Tinto plc and Rio Tinto Limited
12   5   15  
Dividend on DLC share from Rio Tinto Limited
91   (146 ) -  
 
 
 
 
  (3 ) 682   419  
Opening shareholders' funds 5,902   1,828   7,043  
 
 
 
 
Closing shareholders' funds 5,899   2,510   7,462  
 
 
 
 

The notes on pages A-10 to A-84 form part of these accounts. Material variations from accounting principles generally
accepted in the United States are set out on pages A-65.2004 to A-84.

A-9


Back to Contents

 

RIO TINTO PLC - RIO TINTO LIMITED

OUTLINE OF DUAL LISTED COMPANIES STRUCTURE
AND BASIS OF FINANCIAL STATEMENTS

The Rio Tinto Group
Set out on pages A-2.2004 to A-84 are the financial statements of the Rio Tinto Group (the 'Group'), formed through the dual listed companies ('DLC') merger of Rio Tinto plc and Rio Tinto Limited that created a single economic enterprise, together with separate financial statements for the Rio Tinto plc and Rio Tinto Limited parts of the Group. The financial statements of the Group have been presented by both Rio Tinto plc and Rio Tinto Limited as their consolidated accounts in accordance with both United Kingdom and Australian legislation and regulations.

Product and geographical analyses of the Group's Operating assets, Turnover, Profit before tax and Net earnings are shown in notes 26 and 27 respectively.

Merger terms
On 21 December 1995, Rio Tinto plc and Rio Tinto Limited, which are listed respectively on Stock Exchanges in the United Kingdom and Australia, entered into a dual listed companies ('DLC') merger. This was effected by contractual arrangements between the Companies and amendments to Rio Tinto plc's Memorandum and Articles of Association and Rio Tinto Limited's constitution.

As a result, Rio Tinto plc and Rio Tinto Limited and their respective groups operate together as a single economic enterprise, with neither assuming a dominant role. In particular, the arrangements:

- confer upon the shareholders of Rio Tinto plc and Rio Tinto Limited a common economic interest in both groups;
- provide for common boards of directors and a unified management structure;
- provide for equalised dividends and capital distributions; and 
- provide for the shareholders of Rio Tinto plc and Rio Tinto Limited to take key decisions, including the election of directors, through an electoral procedure in which the public shareholders of the two Companies effectively vote on a joint basis.

The merger involved no change in the legal ownership of any assets of Rio Tinto plc or Rio Tinto Limited, nor any change in the ownership of any existing shares or securities of Rio Tinto plc or Rio Tinto Limited, nor the issue of any shares, securities or payment by way of consideration, save for the issue by each company of one special voting share to a trustee company which provides the joint electoral procedure for public shareholders. During 2002, each of the parent Companies issued a DLC Dividend Share to facilitate the efficient management of funds within the DLC structure.

Accounting presentation
Under United Kingdom generally accepted accounting principles, the DLC merger is a business combination that has been accounted for as a merger under FRS 6 on the basis that it has created a single economic enterprise for operating and financial reporting purposes.

For the purposes of their filings in the United States under the requirements of the Securities and Exchange Commission, the primary financial statements of the Rio Tinto plc and Rio Tinto Limited parts of the Group are their separate consolidated financial statements prepared on the basis of the legal ownership of the various operations within each part of the Group. Accordingly, the consolidated financial statements for Rio Tinto Limited consolidate Rio Tinto Limited with the Group undertakings under its legal ownership; and the consolidated financial statements for Rio Tinto plc consolidate Rio Tinto plc with the Group undertakings under its legal ownership; Rio Tinto Limited is included on an equity basis that reflects Rio Tinto plc's average 37.5 per cent (2003: 37.6 per cent) ownership of Rio Tinto Limited during the year as shown in the table below.

 
Net earnings
  Shareholders' funds  
 
 
 
 
2004
 
2003
 
2002
 
2004
 
2003
 
 
 
 
 
 
 
 
US$m
 
US$m
 
US$m
 
US$m
 
US$m
 
Rio Tinto plc - part of Rio Tinto Group (a) 2,073   956   195   9,139   7,343  
Rio Tinto Limited - part of Rio Tinto Group 1,185   884   736   5,515   4,324  
Elimination (b) (445 ) (332 ) (280 ) (2,070 ) (1,630 )
 
 
 
 
 
 
Rio Tinto Group 2,813   1,508   651   12,584   10,037  
 
 
 
 
 
 
   
(a) Rio Tinto plc Equity shareholders' funds and Net earnings include its share of Rio Tinto Limited.
(b) The Elimination removes Rio Tinto plc's equity interest in Rio Tinto Limited

The DLC merger between Rio Tinto plc and Rio Tinto Limited has the effect that their shareholders have substantially the same economic interests as if they held shares in a single enterprise which owned all of the assets of both companies. The Directors therefore consider that the combined financial statements of the Rio Tinto Group provide the most meaningful financial representation of the state of affairs, profit and cash flows.

The financial statements are presented in US dollars as most Group revenues are denominated in US dollars, as are many of the Group's costs. In explaining key features and trends of Group financial performance, the US dollar provides a more consistent view which should correspond more closely to underlying business performance.

A-10


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

OUTLINE OF DUAL LISTED COMPANIES STRUCTURE
AND BASIS OF FINANCIAL STATEMENTS (continued)

Australian Corporations Act

The financial statements are drawn up in accordance with an order, under section 340 of the Australian Corporations Act 2001, issued by the Australian Securities and Investments Commission ('ASIC') on 21 July 2003. The main provisions of the order are that the financial statements are:

- to be made out in accordance with United Kingdom requirements applicable to consolidated accounts;
- to be expressed in United States dollars, but may also be expressed in United Kingdom and Australian currencies; and
- to include a reconciliation from United Kingdom GAAP to Australian GAAP (see page A-65.2004).

United Kingdom Companies Act
In order to present a true and fair view of the Rio Tinto Group, in accordance with FRS 6, the principles of merger accounting have been adopted. This represents a departure from the provision of the United Kingdom Companies Act 1985 ('the Companies Act 1985'), which sets out the conditions for merger accounting based on the assumption that a merger is effected through the issue of equity shares.

The main consequence of adopting merger rather than acquisition accounting is that the balance sheet of the merged Group includes the assets and liabilities of Rio Tinto plc and Rio Tinto Limited at their carrying values prior to the merger, subject to adjustments to achieve uniformity of accounting policies, rather than at their fair values at the date of the merger.

In the particular circumstances of the merger, the effect of applying acquisition accounting cannot reasonably be quantified.

In order that the financial statements should present a true and fair view, it is necessary to differ from the presentational requirements of the Companies Act 1985 by including amounts attributable to both Rio Tinto plc and Rio Tinto Limited public shareholders in the capital and reserves shown in the balance sheet and in the profit for the financial year. The Companies Act 1985 would require presentation of the capital and reserves and profit for the year attributable to Rio Tinto Limited public shareholders (set out on pages A-2.2004 and A-4.2004) as a minority interest in the financial statements of the Rio Tinto Group. This presentation would not give a true and fair view of the effect of the Sharing Agreement under which the position of all public shareholders is as nearly as possible the same as if they held shares in a single company.

A-11


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS

1   Principal accounting policies

a   Basis of preparation
The Group's accounting policies comply with applicable United Kingdom accounting standards and are consistent with last year. As explained in the section headed 'Outline of dual listed companies structure and basis of financial statements', the accounting policies depart from the requirements of the UK Companies Act 1985 in order to provide a true and fair view of the merger between Rio Tinto plc and Rio Tinto Limited. The financial statements are prepared on the historical cost basis. Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs.

b   Basis of consolidation
The financial statements consist of the consolidation of the accounts of Rio Tinto plc and Rio Tinto Limited and their respective subsidiary undertakings ('subsidiaries'). The financial statements of the Rio Tinto plc part of the Group consist of the consolidation of the accounts of Rio Tinto plc and its subsidiaries. Within these financial statements, Rio Tinto plc 'equity accounts' for its 37.5 per cent interest in Rio Tinto Limited. The financial statements of the Rio Tinto Limited part of the Group consists of the consolidation of the accounts of Rio Tinto Limited and its subsidiaries.

Subsidiaries: A subsidiary is an entity which is controlled by one of the parent companies. Control exists where the parent owns the majority of the voting rights (which does not always equate to percentage ownership) in another entity, except where severe permanent or long-term restrictions substantially hinder the exercise of the parent's rights over the assets or management of the entity (which includes the veto rights held by joint venture partners). Control can also arise in other situations, for example where the parent has the right to control board decisions or otherwise exercise dominant influence over the entity. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the parent and its subsidiaries after eliminating intercompany balances and transactions. For partly owned subsidiaries, the net assets and net earnings attributable to other shareholders are presented as 'outside shareholders' interests ' on the consolidated balance sheet and consolidated profit and loss account.

Associated undertakings ('associates'): An associate is an entity in which the Group has a participating interest, and over whose operating and financial policies it exercises significant influence. Significant influence is presumed to exist where an ownership interest of between 20 per cent and 50 per cent is held, but can also arise where the Group holds less than 20 per cent if it is actively involved and influential in policy decisions affecting the entity. The Group's share of the net assets, results and reserves of associates are included in the financial statements using the equity accounting method. This involves recording the investment initially at cost to the Group and then, going forward, adjusting the carrying amount of the investment to reflect the Group's share of the associate's results less any amortisation or impairment of goodwill and any other changes to the associate's net assets such as dividends.

Joint ventures: A joint venture is an entity in which a long-term interest is held and which is jointly controlled by the Group and one or more other venturers under a contractual arrangement (such that significant operating and financial decisions affecting the entity require the consent of all venturers that together jointly control the entity). Joint ventures are accounted for using the gross equity accounting method. This is the same as the equity accounting method, except the Group's share of a joint venture's assets and liabilities are separately disclosed on the balance sheet.

Joint arrangements that are not entities ('joint arrangements'): The Group has certain contractual arrangements under which the participants engage in joint activities that do not create an entity carrying on a trade or business of its own. This includes situations where the participants derive benefit from the joint activity through a share of the production, rather than by receiving a share in the results of trading. The Group's proportionate interest in the assets, liabilities, revenues, expenses and cash flows of joint arrangements are incorporated into the Group's financial statements under the appropriate headings.

Acquisitions and disposals: The results of acquired businesses are brought into the consolidated financial statements from the date of acquisition; the results of businesses sold during the year are included in the consolidated financial statements for the period up to the date of disposal. Gains or losses on disposal are calculated as the difference between the sale proceeds (net of expenses) and the net assets attributable to the interest which has been sold (including any goodwill which has been capitalised but not amortised and any goodwill previously written off through reserves). Where a disposal has a material effect on the nature or focus of the Group's operations, the operating results attributable to the disposal are shown separately in the consolidated profit and loss account under the heading 'discontinued operations'.

A-12


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS

1   Principal accounting policies (continued)

c   Turnover
Turnover comprises sales to third parties at invoiced amounts, with most sales being priced ex-works, free on board (FOB) or cost, insurance and freight (CIF). Turnover excludes any applicable sales taxes. Mining royalties are presented as an operating cost. By-product revenues are included in turnover.

   
A large proportion of Group production is sold under medium to long term contracts, but turnover is only recognised on individual sales when persuasive evidence exists indicating that all of the following criteria are met:
there has been a transfer of risks and benefits to the customer and in exchange the Group has received the right to consideration
the product requires no further work or processing by the Group
the quantity and quality of the goods has been determined with reasonable accuracy
the selling price is fixed or determinable
collection of the sale proceeds is reasonably assured.
   
These conditions are generally satisfied when title passes to the customer. In most instances turnover is recognised when the product is delivered to the destination specified by the customer, which is typically the vessel on which it will be shipped, the destination port or the customer's premises.
   
The turnover from sales of many products is subject to adjustment based on a survey of the product by the customer. In such cases, turnover is initially recognised on a provisional basis using the Group's best estimate of the contained metal. Any subsequent adjustments to the initial estimate of metal content are recorded in turnover once they have been determined.
Certain products are 'provisionally priced', i.e. the selling price is subject to final adjustment at the end of a period normally ranging from 30 to 180 days after delivery to the customer, based on the market price at the relevant quotation point stipulated in the contract. Turnover is initially recognised when the conditions set out above have been met, using market prices at that date. At each reporting date the provisionally priced metal is marked to market, with adjustments recorded in turnover, based on the forward selling price for the quotational period stipulated in the contract until the quotational period expires. For this purpose, the selling price is considered determinable for those products, such as copper, for which there exists an active and freely traded commodity market such as the London Metals Exchange and the value of the product sold by the Group is directly linked to the form in which it is traded on that market.
   
Gross turnover shown in the profit and loss account includes the Group's share of the turnover of joint ventures and associates.
   
d   Shipping and handling costs
All shipping and handling costs incurred by the Group are recognised as operating costs. Amounts billed to customers in respect of shipping and handling, where the Group is responsible for the carriage, insurance and freight, are classified as turnover. If, however, the Group is acting solely as an agent, amounts billed to customers are credited to operating costs. Turnover has been adjusted to reclassify certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs.
   
e   Currency translation
Transactions in foreign currencies are translated at the exchange rate ruling at the date of transaction or, where foreign currency forward contracts have been arranged, at contractual rates. Monetary assets and liabilities denominated in foreign currencies are retranslated at year-end exchange rates, or at a contractual rate if applicable.
   
On consolidation, profit and loss account items are translated into US dollars at average rates of exchange. Balance sheet items are translated into US dollars at year end exchange rates. Certain non-United States resident companies, whose functional currency is the US dollar, account in that currency.
   
The Group finances its operations primarily in US dollars and the majority of the Group's US dollar debt is located in subsidiaries having functional currencies other than the US dollar. Exchange gains and losses relating to US dollar debt impact on the profit and loss accounts of such subsidiaries. However, such exchange gains and losses are excluded from the Group's profit and loss account on consolidation, with a corresponding adjustment to reserves. This means that financing in US dollars impacts in a consistent manner on the Group's consolidated accounts irrespective of the functional currency of the particular subsidiary where the debt is located. Exchange differences on the translation of the net operating assets of companies with functional currencies other than the US dollar, less offsetting exchange differences on net debt in currencies other than the US dollar financing those net assets, are dealt with through reserves.
   
All other exchange differences are charged or credited to the profit and loss account in the year in which they arise, except as set out below in note (q) relating to derivative contracts.
   
f   Goodwill and intangible assets
Goodwill represents the difference between the cost of acquisition and the fair value of the identifiable net assets acquired. Goodwill and intangible assets arising on acquisitions after 31 December 1997 are capitalised in accordance with FRS 10. The goodwill and intangible assets are amortised over their useful economic lives. The amortisation period may exceed 20 years where the lives of the relevant operations are sufficient to justify this, supported by ore reserves (and, for some operations, mineral resources).
   
In 1997 and previous years, goodwill was eliminated against reserves in the year of acquisition as a matter of accounting policy. Such goodwill was not reinstated on implementation of FRS 10; but on sale or closure of a business, any related goodwill eliminated against reserves is charged to the profit and loss account.

A-13


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS

1   Principal accounting policies (continued)

g   Exploration and evaluation
Exploration and evaluation expenditure comprises costs which are directly attributable to: researching and analysing existing exploration data; conducting geological studies, exploratory drilling and sampling; examining and testing extraction and treatment methods; and compiling pre-feasibility and feasibility studies. Exploration and evaluation expenditure also includes the costs incurred in acquiring mineral rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects.
 
During the initial stage of a project, full provision is made for the costs thereof by charge against profits for the year. Expenditure on a project after it has reached a stage at which there is a high degree of confidence in its viability is carried forward and transferred to tangible fixed assets if the project proceeds. If a project does not prove viable, all irrecoverable costs associated with the project are written off. If an undeveloped project is sold, any gain or loss is included in operating profit, such transactions being a normal part of the Group's activities. Where expenditure is carried forward in respect of a project which may not proceed to commercial development for some time, provision is made against the possibility of non-development by charge against profits over a period of up to seven years. When it is decided to proceed with development, any provisions made in previous years are reversed to the extent that the relevant costs are recoverable.
 
h   Tangible fixed assets
The cost of a tangible fixed asset comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use. Once a mining project has been established as commercially viable, expenditure other than that on land, buildings, plant and equipment is capitalised under mining properties and leases together with any amount transferred from exploration and evaluation. This includes costs incurred in preparing the site for mining operations, including stripping costs (see below). Costs associated with a start up period are capitalised where the asset is available for use but incapable of operating at normal levels without a commissioning period. Development costs incurred after the commencement of production are capitalised to the extent they give rise to a future economic benefit. Pre-tax interest payable on borrowings related to construction or development projects is capitalised until the point when substantially all the activities that are necessary to make the asset ready for use are complete.
 
i   Mining properties and leases
As noted above, stripping (i.e. overburden and other waste removal) costs incurred in the development of a mine before production commences are capitalised as part of the cost of constructing the mine and subsequently amortised over the life of the operation.
 
The Group defers stripping costs incurred during the production stage of its operations for those operations where this is the most appropriate basis for matching the costs against the related economic benefits because of fluctuations in stripping costs over the life of the mine, and the effect is material. Deferred stripping costs are presented within "mining properties and leases". The amount of stripping costs deferred is based on the ratio ('Ratio') obtained by dividing the tonnage of waste mined either by the quantity of ore mined or by the quantity of minerals contained in the ore. Stripping costs incurred in the period are deferred to the extent that the current period Ratio exceeds the life of mine Ratio. Such deferred costs are then charged against reported profits to the extent that, in subsequent periods, the Ratio falls short of the life of mine Ratio. The life of mine Ratio is based on proven and probable reserves of the operation.
 
In some operations, there are distinct periods of new development during the production stage of the mine. These may, for example, relate to a separate ore body or discrete section of the ore body. The new development will be characterised by a major departure from the life of mine Ratio. Excess stripping costs during such periods are deferred and charged against reported profits in subsequent periods, on a units of production basis.
 
If the Group were to expense stripping costs as incurred, there would be greater volatility in the year-to-year results from operations and excess stripping costs would be expensed at an earlier stage of a mine's operations.
 
Deferred stripping costs form part of the total investment in the relevant income generating unit, which is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
 
Amortisation of deferred stripping costs is included in depreciation of property, plant and equipment or in the Group's share of the results of its equity accounted operations, as appropriate. Changes to the life of mine stripping ratio are accounted for prospectively.

A-14


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS

1  Principal accounting policies (continued)

j   Depreciation and carrying values of fixed assets
Assets are fully depreciated over their economic lives, or over the remaining life of the mine if shorter. The major categories of fixed assets are depreciated on a units of production and/or straight-line basis as follows:

Units of production basis
For mining properties and leases and certain mining equipment, the economic benefits from the asset are consumed in a pattern which is linked to the production level. Except as noted below, such assets are depreciated on a units of production basis.

Straight line basis
Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight line basis as follows:

Buildings 10 to 40 years
Property, plant and equipment 3 to 35 years
Land Not depreciated

Changes to the estimated economic life of fixed assets are accounted for prospectively. In applying the units of production method, depreciation is normally calculated using the quantity of material extracted from the mine in the period as a percentage of the total quantity of material to be extracted in current and future periods based on proven and probable reserves (and, for some mines, mineral resources). Development costs that relate to a discrete section of an ore body and which only provide benefit over the life of those reserves, are depreciated over the estimated life of that discrete section. Development costs incurred which benefit the entire ore body are depreciated over the estimated life of the ore body.

Tangible and intangible fixed assets are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. This applies to the Group's share of the fixed assets held by associates, joint ventures and joint arrangements as well as the fixed assets held by the Group itself. In addition, goodwill is reviewed for impairment at the end of the first complete financial year after the relevant acquisition and, where the goodwill is being amortised over a period exceeding 20 years, annually thereafter. When a review for impairment is conducted, the recoverable amount is assessed by reference to the net present value of expected future cash flows of the relevant income generating unit, or disposal value if higher. Future cash flows are based on estimates of the quantities of ore reserves and certain mineral resources for which there is a high degree of confidence of economic extraction, future production levels, future commodity prices (assuming that the current market prices will revert to the Group's assessment of the long-term average price, generally over a period of three to five years), future exchange rates (which are assessed using historical average exchange rates as a starting point), and future cash costs of production, capital, close down, restoration and environmental clean up. For operations with a functional currency other than the US dollar, the impairment review is undertaken in the relevant functional currency. These estimates are based on detailed mine plans and operating budgets, modified as appropriate to meet the requirements of FRS 11.

The discount rate applied is based upon the Group’s weighted average cost of capital with appropriate adjustment for the risks associated with the relevant unit, to the extent that such risks are not reflected in the forecast cashflows.

k   Determination of ore reserves
The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves of December 2004 (the JORC code)). Reserves and, for certain mines, resources determined in this way are used in the calculation of depreciation, amortisation and impairment charges, the assessment of life of mine stripping ratios and for forecasting the timing of the payment of close down and restoration costs.

In assessing the life of a mine for accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction.

l   Provisions for close down and restoration and for environmental clean up costs
Close down and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. Close down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs, whether this occurs during mine development or during the production phase, based on the net present value of estimated future costs. Provisions for close down and restoration costs do not include any additional obligations which are expected to arise from future disturbance. The costs are estimated on the basis of a closure plan. The cost estimates are updated annually during the life of the operation to reflect known developments and are subject to formal review at regular intervals.

The amortisation or 'unwinding' of the discount applied in establishing the net present value of provisions is charged to the profit and loss account in each accounting period. The amortisation of the discount is shown as a financing cost rather than as an operating cost. Other movements in the provisions for close down and restoration costs, including those resulting from new disturbance, updated cost estimates, changes to the lives of operations and revisions to discount rates, are capitalised within fixed assets. These costs are then depreciated over the lives of the assets to which they relate.

Where rehabilitiation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the outstanding continuous rehabilitation work at each balance sheet date. All other costs of continuous rehabilitation are charged to the profit and loss account as incurred. Provision is made for the estimated present value of the costs of environmental clean up obligations outstanding at the balance sheet date. These costs are charged to the profit and loss account. Movements in the environmental clean up provisions are presented as an operating cost, except for the unwind of the discount which is shown as a financing cost.

A-15


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

1  Principal accounting policies (continued)

m   Inventories
Inventories are valued at the lower of cost and net realisable value on a first in, first out ('FIFO') basis. Cost for raw materials and stores is purchase price and for partly processed and saleable products is generally the cost of production, including the appropriate proportion of depreciation and overheads. For this purpose, the costs of production include labour costs, materials and contractor expenses which are directly attributable to the extraction and processing of ore; the depreciation of mining properties and leases and of fixed assets used in the extraction and processing of ore; and production overheads.

Stockpiles represent ore that has been extracted and is available for further processing. If there is significant uncertainty as to when the stockpiled ore will be processed the related costs are expensed as incurred. Where the future processing of this ore can be predicted with confidence because it exceeds the mine's cut off grade, it is valued at the lower of cost and net realisable value. If the ore will not be processed within the 12 months after the balance sheet date it is disclosed as 'Inventories not expected to be sold nor used within 12 months'.

Work in progress inventory includes ore stockpiles and other partly processed material. Quantities are assessed primarily through surveys and assays.

n   Costs and expenses applicable to revenues
Costs and expenses applicable to revenues include inventory values transferred to the profit and loss account upon sale, together with associated distribution costs.
 
o   Deferred tax
Full provision is made for deferred taxation on all timing differences that have arisen but have not reversed at the balance sheet date, except in limited circumstances. The main exceptions are as follows:
 
- Tax payable on the future remittance of the past earnings of subsidiaries, associates and joint ventures is provided only to the extent that dividends have been accrued or there is a binding agreement to distribute such past earnings.
   
- Deferred tax is not recognised on revaluations of non-monetary assets arising on acquisitions unless there is a binding agreement to sell the asset and the gain or loss expected to arise from the disposal has been recognised.
   
- Deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered.

Provisions for deferred tax are made in respect of tax benefits related to goodwill that was charged directly to reserves on acquisitions made prior to 1998. Such provisions are released when the related goodwill is charged through the profit and loss account on disposal or closure. Deferred tax balances are not discounted to their present value.

p   Post retirement benefits
In accordance with SSAP 24, the expected costs of post retirement benefits under defined benefit arrangements are charged to the profit and loss account so as to spread the costs over the service lives of employees entitled to those benefits. Variations from the regular cost are spread on a straight line basis over the expected average remaining service lives of relevant current employees. Costs are assessed in accordance with the advice of qualified actuaries.
 
q   Financial instruments
The Group's policy with regard to 'Treasury management and financial instruments' is set out in the Financial Review. When the Group enters into derivative contracts, these transactions are designed to reduce exposures related to assets and liabilities, firm commitments or anticipated transactions, and are therefore accounted for as hedges. Amounts receivable and payable in respect of interest rate swaps are recognised as an adjustment to net interest over the life of the contract. Gains or losses on foreign currency forward contracts and currency swaps relating to financial assets and liabilities are matched against the losses or gains on the hedged items, either in the profit and loss account or through reserves, as appropriate. Gains and losses on financial instruments relating to firm commitments or anticipated transactions for revenue items are deferred and recognised when the hedged transaction occurs. Gains and losses on financial instruments relating to firm commitments or anticipated transactions for capital expenditure are capitalised and depreciated in line with the underlying asset. The cash flows from these contracts are classified in a manner consistent with the underlying nature of the related transaction.

A-16


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

2 Net operating costs
   
      Rio Tinto plc -   Rio Tinto Limited -              
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group



2004   2003   2002 2004   2003   2002 2004   2003   2002

 
 

 
 

 
 
Note   US$m   US$m   US$m US$m   US$m   US$m US$m   US$m   US$m
    Operating costs from continuing operations                                    
    Raw materials and consumables 1,629   1,455   1,277   1,841   1,520   1,314   3,470   2,975   2,591  
    Depreciation and amortisation (a) 488   385   423   716   621   531   1,204   1,006   954  
3   Employment costs 897   845   687   945   821   650   1,842   1,666   1,337  
    Royalties and other mining taxes 256   220   204   230   219   186   486   439   390  
    Decrease in inventories 82   4   18   11   51   63   93   55   81  
    Other external costs (a) (c) 866   716   622   1,377   1,075   793   2,243   1,791   1,415  
20   Provisions (a) 109   60   33   38   94   25   147   154   58  
11   Exploration and evaluation 116   90   94   71   37   36   187   127   130  
    Research and development 17   17   17   6   6   8   23   23   25  
    Net exchange losses on monetary items 32   40   28   1   83   13   33   123   41  
    Costs included above qualifying for capitalisation (51 ) (68 ) (33 ) 1   (100 ) (80 ) (50 ) (168 ) (113 )
    Other operating income (13 ) (40 ) (3 ) (146 ) (79 ) (105 ) (159 ) (119 ) (103 )
     
 
 
 
 
 
 
 
 
 
    Net operating costs before exceptional                                    
    charges 4,428   3,724   3,367   5,091   4,348   3,434   9,519   8,072   6,806  
    Exceptional charges (a) 558   -   645   -   -   433   558   -   1,078  
     
 
 
 
 
 
 
 
 
 
      4,986   3,724   4,012   5,091   4,348   3,867   10,077   8,072   7,884  
     
 
 
 
 
 
 
 
 
 
                                         
(a) The above detailed analysis of costs is before exceptional charges. Including exceptional charges, the total charge for depreciation and amortisation for the Rio Tinto Group was US$1,612 million in 2004 and US$1,893 million in 2002. The charge for provisions was US$296 million in 2004 and US$174 million in 2002; other external costs were US$1,166 million in 2002.
  The total charge for depreciation and amortisation for Rio Tinto plc was US$896 million in 2004 and US$929 million in 2002; the charge for provisions was US$258 million in 2004 and US$149 million in 2002; and other external costs were US$581 million in 2002.
  The total charge for depreciation and amortisation for Rio Tinto Limited was US$964 million in 2002 and other external costs were US$585 million in 2002.
   
(b) Information on auditor's remuneration is included in note 37.
   
(c) Turnover and operating costs have been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase Net operating costs in 2004 by US$455 million (2003: US$340 million, 2002: US$272 million).
   
3 Employee costs
   
      Rio Tinto plc -   Rio Tinto Limited -      
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group



2004   2003   2002 2004   2003   2002 2004   2003   2002

 
 

 
 

 
 
US$m   US$m   US$m US$m   US$m   US$m US$m   US$m   US$m
                                         
    Employment costs, excluding joint ventures and associates:                                    
       - Wages and salaries 824   730   647   871   785   615   1,695   1,515   1,262  
       - Social security costs 62   59   55   12   13   13   74   72   68  
       - Net post retirement cost (a) 68   101   21   105   83   58   173   184   79  
     
 
 
 
 
 
 
 
 
 
      954   890   723   988   881   686   1,942   1,771   1,409  
    Less: charged within provisions (57 ) (45 ) (36 ) (43 ) (60 ) (36 ) (100 ) (105 ) (72 )
     
 
 
 
 
 
 
 
 
 
      897   845   687   945   821   650   1,842   1,666   1,337  
     
 
 
 
 
 
 
 
 
 
                                         
(a)   The net post retirement cost includes the gradual recognition under SSAP 24 of the deficits and surpluses in the Group's defined benefit pension schemes.
(b)   UITF Abstract 17 requires the intrinsic value of share options to be recognised as a cost. However, the Group's SAYE schemes are exempt from this requirement. None of the Group's other share option schemes involve granting new options at a discount to market value.

A-17


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

4   Exceptional items

              2004   2003   2002  
Outside Net Net Net
shareholders' amount amount amount
Pre-tax Taxation interests US$m US$m US$m
 
 
 
 
 
 
 
Rio Tinto Group US$m   US$m   US$m   US$m   US$m   US$m  
Gains/(losses) relating to disposals of:                        
Subsidiaries 213   (9 ) 4   208   (6 ) -  
Joint ventures (c) 67   (2 ) -   65   107   -  
Associates (d) 536   -   -   536   25   -  
Other investments 104   -   -   104   -   -  
 
 
 
 
 
 
 
  920   (11 ) 4   913   126   -  
Asset write downs and provision for contract obligation (e) (558 ) 108   129   (321 ) -   (879 )
 
 
 
 
 
 
 
Net exceptional items 362   97   133   592   126   (879 )
 
 
 
 
 
 
 
                         
                              2004      2003      2002     
Outside Net Net Net
shareholders' amount amount amount
Pre-tax Taxation interests US$m US$m US$m
 
 
 
 
 
 
 
Rio Tinto plc US$m   US$m   US$m   US$m   US$m   US$m  
Gains/(losses) relating to disposals of:                        
Subsidiaries 233   (9 ) 4   228   -   -  
Joint ventures (c) 25   (1 ) -   24   40   -  
Associates (d) 536   -   -   536   7   -  
Other investments 39   -   -   39   -   -  
 
 
 
 
 
 
 
  833   (10 ) 4   827   47   -  
Asset write downs and provision for contract obligation (e) (558 ) 108   129   (321 ) -   (739 )
 
 
 
 
 
 
 
Net exceptional items 275   98   133   506   47   (739 )
 
 
 
 
 
 
 
                         
                              2004      2003      2002     
Outside Net Net Net
shareholders' amount amount amount
Pre-tax Taxation interests US$m US$m US$m
 
 
 
 
 
 
 
Rio Tinto Limited US$m   US$m   US$m   US$m   US$m   US$m  
Gains/(losses) relating to disposals of:                        
Subsidiaries (32 ) -   -   (32 ) -   -  
Joint ventures (c) 67   (2 ) -   65   107   -  
Associates (d) -   -   -   -   19   -  
Other investments 104   -   -   104   -   -  
 
 
 
 
 
 
 
  139   (2 ) -   137   126   -  
Asset write downs -   -   -   -   -   (225 )
 
 
 
 
 
 
 
Net exceptional items 139   (2 ) -   137   126   (225 )
 
 
 
 
 
 
 
                         
(a) The exceptional items analysed above, and within the profit and loss account, are added back in arriving at adjusted earnings and adjusted earnings per share.
(b) Additional information on the disposals of interests in subsidiaries, joint ventures, associates and other investments is included in note 35.
(c) The gain from disposal of a joint venture in 2004 relates to the sale of a 10 per cent interest in Hail Creek. The Group retained joint control after the disposal.
(d) Gains relating to disposals of associates include US$518 million profit on sale of the Group's equity interest in Freeport-McMoRan Copper & Gold Inc. ('FCX'). Rio Tinto invested in the Grasberg ore body through purchase of an equity interest in FCX and participation in the Grasberg joint venture. The investment occurred prior to the introduction of FRS 10 and the goodwill arising was therefore eliminated directly against reserves in accordance with Rio Tinto's UK GAAP accounting policy at the time. On disposal of the equity interest in FCX, the US$228 million of goodwill attributable to this interest was written back through reserves and deducted in arriving at the profit on disposal.
(e) The 2004 asset write down and contract obligation comprises US$160 million (both before and after taxation and minority interests) in respect of Colowyo and US$398 before taxation and minority interests (US$161 million after taxation and minority interests) in respect of Palabora.
(f) The asset write down for Palabora aligns the balance sheet value of the relevant fixed assets with the net present value of the expected future cash flows relating to those assets. The pre-tax discount rate of nine per cent used in calculating the net present value of expected future cash flows was derived from the Group's weighted average cost of capital, with appropriate adjustments for risk. This discount rate has been applied to the relevant pre-tax cash flows stated in real terms.
(g) Future operating and development costs relating to Colowyo are now estimated to be substantially higher than previously expected. This has resulted in the above exceptional charge of US$160 million, which includes assets write downs totalling US$11 million and a provision of US$149 million in respect of the Group's obligations under the management agreement referred to in note 14. These charges are based on the expected further cash flows of the Colowyo operation, having regard to the Group's obligations under the management agreement. In calculating the asset write downs and provision for contract obligations, the cash flows have been estimated in real terms and discounted at a pre-tax discount rate of five per cent. The major area of uncertainty affecting the provision for contract obligations relates to the future operating and development costs of the Colowyo operation, which have been estimated over the next eighteen years.
(h) The gains arising on disposals of subsidiaries, joint ventures and associates in 2003 did not give rise to a tax charge.
(i) The taxation credit for 2004 comprises a deferred tax credit of US$112 million offset by a current tax charge of US$15 million.

A-18


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

4   Exceptional items (continued)
   
(j) The exceptional charges of US$879 million recognised in 2002 comprised provisions of US$763 million for the impairment of asset carrying values and a charge of US$116 million related to environmental remediation works at Kennecott Utah Copper ('KUC'). Of the impairment charge, US$480 million related to KUC and US$235 million related to the Iron Ore Company of Canada ('IOC'). Of the total charge, US$16 million before tax related to joint ventures and the remainder to subsidiaries. Most of the 2002 impairment provisions were calculated so as to ensure that the carrying value of the relevant assets were the same as the present value of the expected future cash flows relating to those assets. The discount rates used in calculating the present value of expected future cash flows were derived from the Group's weighted average cost of capital, with appropriate risk adjustments. When adjusted to include inflation and grossed up at the Group's average tax rate for 2 002, before exceptional items, the discount rate applied to the relevant income generating units was equivalent to 10 per cent, except for gold production for which a rate equivalent to 7 per cent was used. The impairment provision against IOC aligned the carrying value with the value negotiated between shareholders during 2002 as part of a financial restructuring exercise.
(k) In preparing financial statements in accordance with the Companies Act and UK GAAP certain information is presented that would be viewed as ‘non-GAAP’ under regulations issued by the United States Securities and Exchange Commission (‘SEC’). The Group has described such items, provided disclosure on the effects and reasons for presentation along with a condensed income statement using the format prescribed by the SEC. The disclosure of asset write downs and contract obligations in 2004 and 2002, as well as the disclosure of the profit on disposal of interests in operations in 2004 and 2003, as exceptional items is expressly permitted under FRS 3. Otherwise, disclosure of these amounts as exceptional items would be prohibited within the Form 20-F. Management consider these asset write downs, contract obligations and profits on disposal to be exceptional in nature because large items of this type do not occur regularly. Their impact on earnings may be positive in some years and negative in others. The environmental remediation charge in 2002 is similarly presented as an exceptional item under FRS 3. Management consider this charge to be exceptional in nature because large items of this type do not occur regularly. Such items do not reflect the performance of the business unit to which they relate in the particular year in which they are recognised.

5   Net interest payable and similar charges

    Rio Tinto plc -   Rio Tinto Limited -              
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group
   
 




 




 
    2004   2003   2002   2004   2003   2002   2004   2003   2002  
   
 
 
 
 
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
  Interest payable on                                    
     Bank borrowings (26 ) (26 ) (21 ) (27 ) (30 ) (23 ) (53 ) (56 ) (44 )
     Other loans (52 ) (64 ) (95 ) (139 ) (100 ) (112 ) (119 ) (143 ) (189 )
   
 
 
 
 
 
 
 
 
 
    (78 ) (90 ) (116 ) (166 ) (130 ) (135 ) (172 ) (199 ) (233 )
  Amounts capitalised 1   12   14   34   27   8   35   39   22  
   
 
 
 
 
 
 
 
 
 
    (77 ) (78 ) (102 ) (132 ) (103 ) (127 ) (137 ) (160 ) (211 )
   
 
 
 
 
 
 
 
 
 
  Interest receivable and similar income from fixed asset investments                     
     Joint ventures 9   8   10   4   -   -   13   8   10  
     Associates 72   31   18   -   5   1   -   5   1  
     Other investments 2   4   9   1   -   -   3   4   9  
   
 
 
 
 
 
 
 
 
 
    83   43   37   5   5   1   16   17   20  
  Other interest receivable 1   (7 ) 13   7   1   17   8   4   30  
   
 
 
 
 
 
 
 
 
 
    84   36   50   12   6   18   24   21   50  
   
 
 
 
 
 
 
 
 
 
  Group net interest payable 7   (42 ) (52 ) (120 ) (97 ) (109 ) (113 ) (139 ) (161 )
                                       
  Share of joint ventures' net interest payable (a) (19 (11 (20 (1 (2 ) (6 ) (20 ) (13 ) (26 )
  Share of associates' net interest payable (a) (57 ) (85 ) (84 ) -   (1 ) (9 ) (16 ) (54 ) (50 )
   
 
 
 
 
 
 
 
 
 
  Net interest payable (69 ) (138 ) (156 ) (121 ) (100 ) (124 ) (149 ) (206 ) (237 )
6 Amortisation of discount (76 ) (69 ) (39 ) (46 ) (36 ) (23 ) (105 ) (92 ) (54 )
   
 
 
 
 
 
 
 
 
 
  Net interest payable and similar charges (145 ) (207 ) (195 ) (167 ) (136 ) (147 ) (254 ) (298 ) (291 )
   
 
 
 
 
 
 
 
 
 
                                       
(a) The Group's share of net interest payable by joint ventures and associates relates to its share of the net debt of joint ventures and associates, which is disclosed in note 14.
(b) Interest of US$72 million payable from Rio Tinto Limited to Rio Tinto plc is included as 'Interest receivable from associates' for Rio Tinto plc and as 'Interest payable on other loans' for Rio Tinto Limited.

6   Amortisation of discount

  Rio Tinto plc -   Rio Tinto Limited -              
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 




 




 




 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Subsidiaries (56 ) (63 ) (40 ) (44 ) (34 ) (22 ) (100 ) (97 ) (62 )
Share of joint ventures (2 ) (1 ) (1 ) (2 ) (2 ) (1 ) (4 ) (3 ) (2 )
Share of associates (18 ) (13 ) (8 ) -   -   -   (1 ) -   -  
 
 
 
 
 
 
 
 
 
 
  (76 ) (77 ) (49 ) (46 ) (36 ) (23 ) (105 ) (100 ) (64 )
Amounts capitalised (b) -   8   10   -   -   -   -   8   10  
 
 
 
 
 
 
 
 
 
 
Amortisation of discount (76 ) (69 ) (39 ) (46 ) (36 ) (23 ) (105 ) (92 ) (54 )
 
 
 
 
 
 
 
 
 
 
(a) The amortisation of discount relates principally to provisions for close down and restoration and for environmental clean up costs as explained in accounting policy 1(l). It also includes the unwind of the discount on non-interest bearing long term accounts payable.
(b) Amounts capitalised relate to costs on specific projects for which construction or development activities are ongoing.
(c) Under US GAAP 'Amortisation of discount' would be accounted for as an operating cost.

A-19


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

7   Taxation charge for the year

  Rio Tinto plc -   Rio Tinto Limited -              
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group
 




 




 




 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
UK taxation                                    
Corporation tax at 30%                                    
   Current 22   99   58   -   -   (4 ) 22   99   54  
   Deduct: relief for overseas taxes (15 ) (96 ) (63 ) -   -   -   (15 ) (96 ) (63 )
 
 
 
 
 
 
 
 
 
 
  7   3   (5 ) -   -   (4 ) 7   3   (9 )
   Deferred -   (7 ) 11   -   -   1   -   (7 ) 12  
 
 
 
 
 
 
 
 
 
 
  7   (4 ) 6   -   -   (3 ) 7   (4 ) 3  
Australian taxation                                    
Corporation tax at 30%                                    
   Current 5   3   3   385   297   342   390   300   345  
   Deferred 2   (2 ) -   (27 ) 11   21   (25 ) 9   21  
 
 
 
 
 
 
 
 
 
 
  7   1   3   358   308   363   365   309   366  
Other countries taxation                                    
   Current 162   20   123   42   27   40   204   47   163  
   Deferred (74 ) (10 ) 10   (14 ) (17 ) (17 ) (88 ) (27 ) (7 )
 
 
 
 
 
 
 
 
 
 
  88   10   133   28   10   23   116   20   156  
Joint ventures - charge for year (b) 231   123   78   88   37   87   319   160   165  
Associates - charge for year (including share of tax relief on exceptional asset write-downs for Rio Tinto plc of: (2002: US$9 million) (b)
201   211   222   3   5   (5 ) 34   82   60  
Subsidiary companies' deferred tax related to exceptional charges
-   -   -   -   -   (42 ) -   -   (42 )
 
 
 
 
 
 
 
 
 
 
  534   341   442   477   360   423   841   567   708  
 
 
 
 
 
 
 
 
 
 
(a) A current tax charge of US$20 million (2003: US$194 million; 2002: US$48 million) and a deferred tax charge of US$13 million (2003: US$162 million; 2002: US$13 million) are dealt with in the Statement of Total Recognised Gains and Losses ('STRGL'). These tax charges relate to exchange gains and losses which are themselves dealt with in the STRGL.
(b) Some tax recognised by subsidiary holding companies is presented in these accounts as part of the tax charge on the profits of the joint ventures and associates to which it relates.
(c) A benefit of US$15 million was recognised in 2004 (2003: US$34 million; 2002: US$20 million) for operating losses that are expected to be recovered in future years. Of this benefit, US$5 million is included within 'UK taxation', US$nil within 'Australian taxation' and US$10 million within 'Other countries'.
(d) Adjustments of prior year accruals and provisions reduced the total tax charge by a net amount of US$8 million (2003: US$28 million; 2002 US$16 million).
(e) The 2004 tax charge was reduced by US$26 million (2003: US$11 million) as a result of the entry into the Australian tax consolidation regime with effect from 1 January 2003.
(f) The Group's effective tax rate for 2004 is 29.0 per cent (2003: 28.8 per cent; 2002: 31.2 per cent) excluding exceptional items and 23.4 per cent (2003: 27.1 per cent; 2002: 54.0 per cent) including exceptional items.
(g) Tax paid during 2003, of US$917 million, included an amount of US$106 million relating to the disputed tax assessment from the Australian Tax Office described in note 29. The amount paid has been recorded as a receivable in these accounts because the Directors believe that the relevant tax assessments are not sustainable. Tax payments also include amounts related to exchange gains and losses on net debt which are recorded directly in the Statement of Total Recognised Gains and Losses.
   
  Rio Tinto plc -   Rio Tinto Limited -              
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group
 




 




 




 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Prima facie tax reconciliation                                    
Profit on ordinary activities before taxation 2,507   1,305   715   1,704   1,255   1,033   3,596   2,094   1,311  
 
 
 
 
 
 
 
 
 
 
Prima facie tax payable at UK and Australian rate of 30% 752   392   215   511   377   310   1,079   628   393  
Impact of exceptional items (54 ) -   227   (40 ) (38 ) 130   (94 ) (38 ) 328  
Other permanent differences                                    
Other tax rates applicable outside the UK and Australia 91   49   55   4   14   1   93   59   56  
Permanently disallowed amortisation/depreciation 23   22   22   52   48   44   55   53   51  
Research, development and other investment allowances (6 (5 (5 (2 -   (4 ) (8 ) (5 ) (7 )
Resource depletion allowances (87 ) (54 ) (58 ) -   -   -   (87 ) (54 ) (58 )
Other (h) (41 ) (31 ) 25   (21 ) (8 ) 1   (30 ) (24 ) 24  
 
 
 
 
 
 
 
 
 
 
  (20 ) (19 ) 39   33   54   42   23   29   66  
Other deferral of taxation                                    
Capital allowances in excess of other depreciation charges (95 ) (30 ) (82 ) 6   (27 ) (12 ) (89 ) (48 ) (69 )
Other timing differences 17   4   19   30   5   (4 ) 34   14   -  
 
 
 
 
 
 
 
 
 
 
Total timing differences related to the current year (78 ) (26 ) (63 ) 36   (22 ) (16 ) (55 ) (34 ) (69 )
 
 
 
 
 
 
 
 
 
 
Current taxation charge for the year 600   347   418   540   371   466   953   585   718  
 
















 
Deferred tax recognised on timing differences 78   26   63   (36 ) 22   (26 ) 55   34   27  
Deferred tax impact of changes in tax rates -   -   (15 ) -   -   3   -   -   (14 )
Deferred tax impact of exceptional charges (112 ) -   -   -   -   -   (112 ) -   -  
Other deferred tax items (i) (32 ) (32 ) (24 ) (27 ) (33 ) (20 ) (55 ) (52 ) (23 )
 
 
 
 
 
 
 
 
 
 
Total taxation charge for the year 534   341   442   477   360   423   841   567   708  
 
 
 
 
 
 
 
 
 
 
(h) 'Other' components of the current tax charge include the benefit of reduced Alternative Minimum Tax payable in the United States.
(i) 'Other deferred tax items' include benefits from adjustments of prior year provisions (see (d) above) and from Australian tax consolidation (see (e) above).

A-20


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

8   Dividends                
  2004     2003     2002  
 
    
    
 
  US$m     US$m     US$m  
Rio Tinto plc Ordinary Interim dividend 341     320     314  
Rio Tinto plc Ordinary Final dividend 481     363     325  
 
   
   
 
  822     683     639  
 
   
   
 
Rio Tinto Limited Ordinary Interim dividend 160     150     146  
Rio Tinto Limited Ordinary Final dividend 225     170     153  
Less dividends payable to Rio Tinto plc (e) (145 )   (121 )   (112 )
 
   
   
 
Rio Tinto Limited dividends payable to public shareholders (b) 240     199     187  
 
   
   
 
Total dividends payable to public shareholders 1,062     882     826  
 
   
   
 
                         
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
  Rates per share   Number of shares  
      (millions)  
Rio Tinto plc Interim (pence) 17.54 p 18.45 p 18.87 p 1,067.5   1,066.1   1,065.4  
Rio Tinto plc Final (pence) 23.94 p 18.68 p 18.60 p 1,068.0   1,066.7   1,065.5  
 
 
 
             
   41.48 p 37.13 p 37.47 p            
 
 
 
             
Rio Tinto Limited Interim - fully franked at 30% (Australian Cents) 45.53 c 45.02 c 54.06 c 499.1   499.0   498.8  
Less shares held by Rio Tinto plc             (187.4 ) (187.4 ) (187.4 )
             
 
 
 
Shares held by public shareholders (b)             311.7   311.6   311.4  
             
 
 
 
Rio Tinto Limited Final – fully franked at 30% (Australian Cents) 58.29 c 44.68 c 51.87 c 499.3   499.0   498.8  
Less shares held by Rio Tinto plc             (187.4 ) (187.4 ) (187.4 )
 
 
 
 
 
 
 
   103.82 c 89.70 c 105.93 c            
 
 
 
             
Shares held by public shareholders (b)             311.9   311.6   311.4  
             
 
 
 
   
(a) The 2004 dividends have been based on the following US cents per share amounts: interim – 32.0 cents, final – 45.0 cents.
(b) For the Group accounts, the number of shares on which the Rio Tinto Limited dividends are based excludes those shares held by Rio Tinto plc, in order that the dividends shown represent those paid to public shareholders.
(c) The proposed Rio Tinto Limited dividends will be franked out of existing franking credits or out of franking credits arising from the payment of income tax during 2005.
(d) Rio Tinto Limited formed a tax consolidated group in Australia with effect from 1 January 2003. The approximate amount of the Rio Tinto Limited tax consolidated group's retained profits and reserves that could be distributed as dividends and franked out of the existing franking credits which arose from net payments of income tax in respect of periods up to 31 December 2004 (after deducting franking credits on the proposed final dividend) is US$3,360 million.
(e) In addition, Rio Tinto Limited paid a dividend of US$nil (2003: US$164 million) to Rio Tinto plc on the DLC Dividend Share.

A-21


<

Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

9   Earnings per ordinary share             
  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
  
  
  
  
  
  
  
  
  
 
Average number of ordinary shares in issue (million) (b) 1,067   1,066   1,065   499   499   499   1,379   1,378   1,377  
 
 
 
 
 
 
 
 
 
 
US$m                                    
Profit for the financial year 2,073   956   195   1,185   884   736   2,813   1,508   651  
Exceptional items (note 4) (506 ) (47 ) 739   (137 ) (126 ) 225   (592 ) (126 ) 879  
 
 
 
 
 
 
 
 
 
 
Adjusted earnings 1,567   909   934   1,048   758   961   2,221   1,382   1,530  
 
 
 
 
 
 
 
 
 
 
US cents                                    
Earnings per ordinary share 194.2 c 89.7 c 18.3 c 237.4 c 177.2 c 147.6 c 204.0 c 109.5 c 47.3 c
 
 
 
 
 
 
 
 
 
 
Exceptional items per ordinary share (47.4 )c (4.4 )c 69.4 c (27.4 )c (25.3 )c 45.1 c (43.0 )c (9.2 )c 63.9 c
 
 
 
 
 
 
 
 
 
 
Adjusted earnings per ordinary share 146.8 c 85.3 c 87.7 c 210.0 c 151.9 c 192.7 c 161.0 c 100.3 c 111.2 c
 
 
 
 
 
 
 
 
 
 
US cents                                    
Diluted earnings per share 193.9 c 89.5 c 18.3 c 236.9 c 176.9 c 147.4 c 203.6 c 109.3 c 47.2 c
 
 
 
 
 
 
 
 
 
 
Exceptional items per share 47.3 c 4.4 c (69.2 )c 27.4 c 25.2 c (45.0 )c 42.8 c 9.1 c (62.8 )c
 
 
 
 
 
 
 
 
 
 
Diluted adjusted earnings per ordinary share 146.6 c 85.1 c 87.5 c 209.5 c 151.7 c 192.4 c 160.8 c 100.2 c 110.0 c
 
 
 
 
 
 
 
 
 
 
   
(a) Adjusted earnings and adjusted earnings per share exclude exceptional items of such magnitude that their exclusion is necessary in order that adjusted earnings fulfil their purpose of reflecting the underlying performance of the Group.
(b) For the Rio Tinto Group, the daily average number of ordinary shares in issue of 1,379 million (2003: 1,378 million, 2002: 1,377 million) excludes the Rio Tinto Limited shares held by Rio Tinto plc.
(c) The daily average number of ordinary shares used for the diluted earnings per share calculation is 1,381 million (2003: 1,379 million, 2002: 1,379 million) and excludes the Rio Tinto Limited shares held by Rio Tinto plc. The extra two million shares included in the calculation relate to unexercised share options.

 

10   Goodwill            
  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Cost                        
At 1 January 482   463   1,080   819   1,562   1,282  
Adjustment on currency translation (1 ) (1 ) 42   261   41   260  
Additions   20         20  
 
 
 
 
 
 
 
At 31 December 481   482   1,122   1,080   1,603   1,562  
 
 
 
 
 
 
 
Accumulated amortisation                        
At 1 January (229 ) (191 ) (148 ) (76 ) (377 ) (267 )
Adjustment on currency translation     (10 ) (30 ) (10 ) (30 )
Amortisation for the year (37 ) (34 ) (40 ) (42 ) (77 ) (76 )
Other movements   (4 )       (4 )
 
 
 
 
 
 
 
At 31 December (266 ) (229 ) (198 ) (148 ) (464 ) (377 )
 
 
 
 
 
 
 
Net balance sheet amount 215   253   924   932   1,139   1,185  
 
 
 
 
 
 
 
   
(a) Goodwill is being amortised over the economic lives of the relevant operations, which involves periods ranging from nine to 40 years with a weighted average of around 26 years (2003: 26 years). The amortisation period exceeds 20 years where the ore reserves (and, for some mines, mineral resources) are sufficient to justify this.

A-22


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

11   Exploration and evaluation            
  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
At cost less amounts written off                        
At 1 January 372   355   462   339   834   694  
Adjustment on currency translation 2   1   21   118   23   119  
Expenditure in year 123   88   70   42   193   130  
Charged against profit for the year (45 ) (48 ) (6 ) 1   (51 ) (47 )
Disposals, transfers and other movements (a) (12 ) (24 ) (27 ) (38 ) (39 ) (62 )
 
 
 
 
 
 
 
At 31 December 440   372   520   462   960   834  
 
 
 
 
 
 
 
Provision                        
At 1 January (370 ) (350 ) (395 ) (287 ) (765 ) (637 )
Adjustment on currency translation (2 ) -   (18 ) (104 ) (20 ) (104 )
Charged against profit for the year (71 ) (42 ) (65 ) (38 ) (136 ) (80 )
Disposals, transfers and other movements 30   22   28   34   58   56  
 
 
 
 
 
 
 
At 31 December (413 ) (370 ) (450 ) (395 ) (863 ) (765 )
 
 
 
 
 
 
 
Net balance sheet amount 27   2   70   67   97   69  
 
 
 
 
 
 
 
   
(a) 'Disposals, transfers and other movements' includes the capitalisation of US$17 million of close down and restoration provisions in respect of certain exploration projects.
(b) The total of US$187 million (2003: US$127 million) charged against profit in respect of exploration and evaluation includes US$51 million (2003: US$47 million) written off cost and an increase in the provision of US$136 million (2003: US$80 million).

 

12   Property, plant and equipment                        
  Mining   Land   Plant   Capital          
  properties   and   and   works in   2004   2003  
  and leases   buildings   equipment   progress   Total   Total  
 
 
 
 
 
 
 
                  US$m   US$m  
Rio Tinto Group                        
Cost                        
At 1 January 5,392   3,523   17,942   1,739   28,596   23,327  
Adjustment on currency translation 213   101   825   51   1,190   4,273  
Capitalisation of additional closure costs (note 20) 260   -   -   -   260   167  
Other additions (g) 199   97   570   1,559   2,425   1,462  
Disposals (13 ) (29 ) (208 ) (2 ) (252 ) (449 )
Subsidiaries acquired/newly consolidated -   -   -   -   -   3  
Subsidiaries sold (203 ) (12 ) (244 ) -   (459 ) (185 )
Transfers and other movements (c) 160   123   1,356   (1,621 ) 18   (2 )
 
 
 
 
 
 
 
At 31 December 6,008   3,803   20,241   1,726   31,778   28,596  
 
 
 
 
 
 
 
Accumulated depreciation                        
At 1 January (1,409 ) (1,540 ) (10,317 ) (134 ) (13,400 ) (11,144 )
Adjustment on currency translation (66 ) (49 ) (472 ) -   (587 ) (1,886 )
Exceptional asset write downs (7 ) (3 ) (398 ) -   (408 ) -  
Other depreciation for the year (246 ) (119 ) (762 ) -   (1,127 ) (930 )
Disposals 13   9   160   1   183   419  
Subsidiaries sold 71   -   110   -   181   148  
Transfers and other movements (c) 10   (18 ) (4 ) (3 ) (15 ) (7 )
 
 
 
 
 
 
 
At 31 December (1,634 ) (1,720 ) (11,683 ) (136 ) (15,173 ) (13,400 )
 
 
 
 
 
 
 
Net balance sheet amount at 31 December 2004 4,374   2,083   8,558   1,590   16,605      
 
 
 
 
 
     
Net balance sheet amount at 31 December 2003 3,983   1,983   7,625   1,605       15,196  
 
 
 
 
     
 

A-23


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

12  Property, plant and equipment (continued)
   
(a) The net balance sheet amount at 31 December 2004 includes US$374 million (2003: US$394 million) of pledged assets, in addition to assets held under the finance leases disclosed in note 22.
(b) The net balance sheet amount for land and buildings includes freehold US$2,005 million; long leasehold US$68 million; and short leasehold US$10 million.
(c) 'Transfers and other movements' includes reclassifications between categories.
(d) Accumulated depreciation on 'Capital works in progress' at 1 January 2004 relates to an exceptional charge made in 2002.
(e) Interest is capitalised at a rate based on the Group's cost of borrowing or at the rate on project specific debt where applicable.
(f) During 2002, the Group acquired North Jacob's Ranch for US$380 million. Payments of US$76 million were made in each of 2002, 2003 and 2004. The remainder of the consideration, US$152 million, is payable over the next two years.
(g)
During 2004, the Group acquired additional reserves at West Antelope at a cost of US$146 million.
(h) At 31 December 2004, net tangible assets per share amounted to US$8.22 (31 December 2003: US$6.38).
(i)
A change in the mine plan at Kennecott Utah Copper was approved in February 2005. Pending any extension of the assumed mine life there will be an increase in the annual depreciation charge and amortisation of the discount relating to provisions, together totalling approximately US$45 million, from 2005.
   
  Mining   Land   Plant   Capital          
properties and and works in 2004 2003
and leases buildings equipment progress Total Total
 
 
 
 
 
 
 
Rio Tinto plc - part of Rio Tinto Group                 US$m   US$m  
Cost                        
At 1 January 1,791   1,855   7,481   160   11,287   10,518  
Adjustment on currency translation 46   29   286   3   364   543  
Capitalisation of additional closure costs (note 20) 105   -   -   -   105   67  
Other additions 105   79   168   269   621   485  
Disposals (13 ) (21 ) (114 ) -   (148 ) (321 )
Subsidiaries acquired/newly consolidated -   -   -   -   -   3  
Subsidiaries sold (18 ) (12 ) (142 ) -   (172 ) -  
Transfers and other movements (92 ) 1   180   (65 ) 24   (8 )
 
 
 
 
 
 
 
At 31 December 1,924   1,931   7,859   367   12,081   11,287  
 
 
 
 
 
 
 
                         
Accumulated depreciation                        
At 1 January (345 ) (685 ) (4,162 ) -   (5,192 ) (4,955 )
Adjustment on currency translation (13 ) (5 ) (185 ) -   (203 ) (183 )
Exceptional charges (7 ) (3 ) (398 ) -   (408 ) -  
Other depreciation for the year (73 ) (58 ) (320 ) -   (451 ) (351 )
Disposals 13   6   85   -   104   305  
Subsidiaries sold -   -   37   -   37   -  
Transfers and other movements 73   -   (69 ) -   4   (8 )
 
 
 
 
 
 
 
At 31 December (352 ) (745 ) (5,012 ) -   (6,109 ) (5,192 )
 
 
 
 
 
 
 
Net balance sheet amount at 31 December 2004 1,572   1,186   2,847   367   5,972      
 
 
 
 
 
     
Net balance sheet amount at 31 December 2003 1,446   1,170   3,319   160       6,095  
 
 
 
 
     
 
   

(a)

The net balance sheet amount at 31 December 2004 includes US$nil (2003: US$25 million) of pledged assets, in addition to assets held under the finance leases disclosed in note 22.

 

  Mining   Land   Plant   Capital          
properties and and works in 2004 2003
and leases buildings equipment progress Total Total
 
 
 
 
 
 
 
Rio Tinto Limited - part of Rio Tinto Group                 US$m   US$m  
Cost                        
At 1 January 3,601   1,668   10,455   1,579   17,303   12,803  
Adjustment on currency translation 167   72   539   48   826   3,730  
Capitalisation of additional closure costs (note 20) 155   -   -   -   155   100  
Other additions 94   18   402   1,290   1,804   977  
Disposals -   (8 ) (94 ) (2 ) (104 ) (128 )
Subsidiaries acquired/newly consolidated -   -   -   -   -   -  
Subsidiaries sold (185 ) -   (102 ) -   (287 ) (185 )
Transfers and other movements 252   122   1,182   (1,556 ) -   6  
 
 
 
 
 
 
 
At 31 December 4,084   1,872   12,382   1,359   19,697   17,303  
 
 
 
 
 
 
 
                         
Accumulated depreciation                        
At 1 January (1,064 ) (855 ) (6,155 ) (134 ) (8,208 ) (6,189 )
Adjustment on currency translation (53 ) (44 ) (287 ) -   (384 ) (1,703 )
Exceptional charges -   -   -   -   -   -  
Other depreciation for the year (173 ) (61 ) (442 ) -   (676 ) (579 )
Disposals -   3   75   1   79   114  
Subsidiaries sold 71   -   73   -   144   148  
Transfers and other movements (63 ) (18 ) 65   (3 ) (19 ) 1  
 
 
 
 
 
 
 
At 31 December (1,282 ) (975 ) (6,671 ) (136 ) (9,064 ) (8,208 )
 
 
 
 
 
 
 
Net balance sheet amount at 31 December 2004 2,802   897   5,711   1,223   10,633      
 
 
 
 
 
     
Net balance sheet amount at 31 December 2003 2,537   813   4,300   1,445       9,095  
 
 
 
 
     
 
   
(a) The net balance sheet amount at 31 December 2004 includes US$374 million (2003: US$369 million) of pledged assets in addition to assets held under the finance leases disclosed in note 22.

A-24


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

12   Property, plant and equipment (continued)

  Rio Tinto plc -     Rio Tinto Limited -     Rio Tinto  
part of Rio Tinto Group part of Rio Tinto Group Group
 
 



  US$m   US$m   US$m  
The 2004 net balance sheet amounts for land and buildings include:            
Freehold 1,166   839   2,005  
Long leasehold 10   58   68  
Short leasehold 10   -   10  
 
 
 
 
  1,186   897   2,083  
 
 
 
 

Deferred stripping
Deferred stripping costs which are included in 'Mining properties and leases' and 'Investments in Joint Ventures and Associates' (note 13), are analysed below:

  Rio Tinto Group  

2004   2003   2002
 
 
 
 
  US$m   US$m   US$m  
At 1 January            
   Subsidiaries 441   326   292  
   Share of equity accounted operations 230   198   175  
 
 
 
 
  671   524   467  
 
 
 
 
Adjustment on currency translation            
   Subsidiaries 10   17   -  
   Share of equity accounted operations 1   3   -  
 
 
 
 
  11   20   -  
 
 
 
 
Net deferral of stripping costs during the year            
   Subsidiaries 116   77   29  
   Share of equity accounted operations 19   32   27  
 
 
 
 
  135   109   56  
 
 
 
 
Other            
   Subsidiaries 2   21   5  
   Share of equity accounted operations (35 ) (3 ) (4 )
 
 
 
 
  (33 ) 18   1  
 
 
 
 
Deferred stripping balance carried forward at 31 December            
   Subsidiaries 569   441   326  
   Share of equity accounted operations 215   230   198  
 
 
 
 
  784   671   524  
 
 
 
 
                         
  Rio Tinto plc      Rio Tinto Limited -  
part of Rio Tinto Group part of Rio Tinto Group


2004   2003   2002 2004   2003   2002
 
 
 

 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
At 1 January                        
   Subsidiaries 355   260   242   86   66   50  
   Equity accounted operations 250   218   191   20   8   4  
 
 
 
 
 
 
 
  605   478   433   106   74   54  
 
 
 
 
 
 
 
Adjustment on currency translation                        
   Subsidiaries 4   2   -   6   15   -  
   Equity accounted operations 3   7   -   1   3   -  
 
 
 
 
 
 
 
  7   9   -   7   18   -  
 
 
 
 
 
 
 
Net deferral of stripping costs during the year                        
   Subsidiaries 61   66   13   55   11   16  
   Equity accounted operations 40   29   31   -   12   4  
 
 
 
 
 
 
 
  101   95   44   55   23   20  
 
 
 
 
 
 
 
Other                        
   Subsidiaries 3   27   5   (1 ) (6 ) -  
   Equity accounted operations (22 ) (3 ) (4 ) (21 ) (3 ) -  
 
 
 
 
 
 
 
  (19 ) 24   1   (22 ) (9 ) -  
 
 
 
 
 
 
 
Deferred stripping balance carried forward at                        
31 December                        
   Subsidiaries 423   355   260   146   86   66  
   Equity accounted operations 271   251   218   -   20   8  
 
 
 
 
 
 
 
  694   606   478   146   106   74  
 
 
 
 
 
 
 

A-25


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

13   Fixed asset investments

  Investments       Loans to       Investments       Loans                      
in joint joint in associates/ to 2004 2003
ventures ventures other associates Total Total






Rio Tinto Group                 US$m   US$m  
At 1 January 2,051   172   515   2   2,740   2,577  
Adjustment on currency translation 34   2   13   -   49   283  
Group’s share of earnings net of distributions 166   -   47   -   213   12  
Additions (excluding acquisitions) 30   -   14   -   44   135  
Disposals and repayments of advances (31 ) (10 ) (229 ) (2 ) (272 ) (254 )
Transfers and other movements 16   2   25   -   43   (13 )
 
 
 
 
 
 
 
At 31 December 2,266   166   385   -   2,817   2,740  
 
 
 
 
 
 
 
                         
  Investments     Loans to     Investments     Loans              
in joint joint in associates/ to 2004 2003
ventures ventures other associates Total Total
 
 
 
 
 
 
 
Rio Tinto plc - part of Rio Tinto Group                 US$m   US$m  
At 1 January 963   151   2,589   91   3,794   2,535  
Adjustment on currency translation -   -   147   -   147   546  
Group’s share of earnings net of distributions 158   -   344   -   502   193  
Additions (excluding acquisitions) 8   -   14   196   218   852  
Disposals and repayments of advances -   (10 ) (211 ) (2 ) (223 ) (318 )
Transfers and other movements 9   (1 ) -   -   8   (14 )
 
 
 
 
 
 
 
At 31 December 1,138   140   2,883   285   4,446   3,794  
 
 
 
 
 
 
 
                         
  Investments     Loans to     Investments     Loans              
in joint joint in associates/ to 2004 2003
ventures ventures other associates Total Total






Rio Tinto Limited - part of Rio Tinto Group                 US$m   US$m  
At 1 January 1,088   21   62   -   1,171   1,072  
Adjustment on currency translation 34   2   5   -   41   267  
Group’s share of earnings net of distributions 8   -   4   -   12   (29 )
Additions (excluding acquisitions) 22   -   -   -   22   89  
Disposals and repayments of advances (31 ) -   (6 ) -   (37 ) (233 )
Transfers and other movements 7   3   7   -   17   5  
 
 
 
 
 
 
 
At 31 December 1,128   26   72   -   1,226   1,171  
 
 
 
 
 
 
 
(a) The Group’s investments in joint ventures and associates include, where appropriate, entry premiums on acquisition plus interest capitalised by the Group during the development period of the relevant mines. At 31 December 2004, this capitalised interest less accumulated amortisation amounted to US$21 million (2003: US$12 million).
(b) The cash flow statement analyses additions to joint ventures and associates between the following:
- 'Funding of Group share of joint ventures' and associates’ capital expenditure', which reports cash supplied by the Group for the formation of new operating assets whose benefits will be attributable to the Group, and
- 'Repayments from/(other funding of) joint ventures and associates' which includes any financial investment in joint ventures and associates that does not have the above characteristics, and all loan repayments.
- 'Loans (to)/repaid by Rio Tinto Limited'. This includes the change in Rio Tinto plc's loans made to Rio Tinto Limited and its subsidiaries' (which is included in current assets) as well as the increase of US$196 million in loans to associates, which is included in the above table.
(c) Investments in and loans to associates by the Rio Tinto plc part of the Group include amounts relating to Rio Tinto Limited which are eliminated in arriving at the Rio Tinto Group figures.
(d) Further details of investments in joint ventures and associates are set out on page A-27 and in notes 14, 32 and 33.

A-26


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

13   Fixed asset investments (continued)

  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 

 

 


 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
Joint Ventures US$m   US$m   US$m   US$m   US$m   US$m  
Rio Tinto's share of assets                        
Fixed assets 1,591   1,573   1,158   1,195   2,749   2,768  
Current assets 436   272   290   193   726   465  
 
 
 
 
 
 
 
  2,027   1,845   1,448   1,388   3,475   3,233  
Rio Tinto's share of third party liabilities                        
Liabilities due within one year (316 ) (200 ) (121 ) (112 ) (437 ) (312 )
Liabilities due after more than one year (including provisions) (433 ) (531 ) (173 ) (167 ) (606 ) (698 )
 
 
 
 
 
 
 
  (749 ) (731 ) (294 ) (279 ) (1,043 ) (1,010 )
 
 
 
 
 
 
 
Rio Tinto's share of net assets 1,278   1,114   1,154   1,109   2,432   2,223  
 
 
 
 
 
 
 
                         
(a) The Group's share of joint venture liabilities set out above excludes US$166 million (2003: US$172 million) due to the Group. These excluded liabilities correspond with the loans to joint ventures that are presented earlier in this note as an asset of the Group. Including these loans, the Group's share of the total liabilities of joint ventures was US$1,209 million (2003: US$1,182 million).
(b) Of the US$606 million of liabilities due after more than one year, US$482 million relates to long term debt, which matures as follows: US$111 million between 1-2 years; US$111 million between 2-3 years; US$96 million between 3-4 years; US$63 million between 4-5 years and US$101 million after 5 years.
   
  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 

 

 

 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
Associates US$m   US$m   US$m   US$m   US$m   US$m  
Rio Tinto's share of assets                        
Fixed assets 5,127   5,132   177   182   480   1,083  
Current assets/(liabilities) 1,003   1,197   1   1   79   327  
 
 
 
 
 
 
 
  6,130   6,329   178   183   559   1,410  
Rio Tinto's share of third party liabilities                        
Liabilities due within one year (1,589 ) (1,423 ) (38 ) (36 ) (56 ) (214 )
Liabilities due after more than one year (including provisions) (1,489 ) (2,300 ) (96 ) (104 ) (256 ) (733 )
 
 
 
 
 
 
 
  (3,078 ) (3,723 ) (134 ) (140 ) (312 ) (947 )
Non equity capital and outside shareholders' interests (494 ) (515 ) -   -   -   (42 )
 
 
 
 
 
 
 
Rio Tinto's share of net assets 2,558   2,091   44   43   247   421  
 
 
 
 
 
 
 
                         
(a) Of the US$256 million of liabilities due after more than one year, US$230 million relates to long term debt, which matures as follows: US$58 million between 1-2 years; US$60 million between 2-3 years; US$60 million between 3-4 years; US$15 million between 4-5 years and US$37 million after 5 years.
   
  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 

 
  2004   2003   2004   2003   2004   2003  
  US$m   US$m   US$m   US$m   US$m   US$m  
Investments in and loans to associates/other                        
Investments in and loans to associates 2,558   2,091   44   43   247   421  
Other investments (a) 610   589   28   19   138   96  
 
 
 
 
 
 
 
  3,168   2,680   72   62   385   517  
 
 
 
 
 
 
 
                         
(a) Other investments include listed investments of US$46 million with a market value of US$114 million (2003: US$92 million). At 31 December 2004 the Group owned 19 per cent of the Labrador Iron Ore Royalty Income Fund which itself owns 15.1 per cent of Iron Ore Company of Canada Inc. The Group sold its investment in the Labrador Iron ore Royalty Income Fund in March 2005.
(b) Further information on the net debt of joint ventures and associates is shown in note 14.

A-27


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

14   Net debt of joint ventures and associates

      Rio Tinto       Rio Tinto  
  Rio Tinto   share of   Rio Tinto   share of  
  percentage   net debt   percentage   net debt  
  2004   2004   2003   2003  
 
 
 
 
 
  %   US$m   %   US$m  
Joint ventures                
Minera Escondida Limitada 30.0   324   30.0   414  
Leichhardt 44.7   22   44.7   31  
Colowyo 20.0   31   20.0   32  
Warkworth 42.1   28   42.1   34  
                 
Associates                
Freeport-McMoRan Copper & Gold Inc. -   -   13.1   236  
Tisand (Pty) Limited 50.0   137   50.0   121  
Port Waratah Coal Services 27.6   106   27.6   114  
Sociedade Mineira de Neves-Corvo SA (Somincor) -   -   49.0   37  
                 
Other     (46 )     (15 )
     
     
 
Net debt of joint ventures and associates     602       1,004  
     
     
 
   
(a) In accordance with FRS 9, the Group includes its net investment in joint ventures and associates in its consolidated balance sheet. This investment is shown net of the Group's share of the net debt of joint ventures and associates due to third parties, which is set out above.
(b) Some of the debt of joint ventures and associates is subject to financial and general covenants.
(c) The group holds 44.7 per cent of the equity of the Leichhardt joint venture, which has a 31.4 per cent interest in the Blair Athol joint venture. Leichhardt has US$91 million (2003: US$85 million) of shareholders' funds and US$50 million (2003: US$70 million) of debt finance.
(d) The Group has a partnership interest in the Colowyo Coal Company and has undertaken, via a subsidiary company which entered into a management agreement, to cause the partnership to perform its obligations under certain coal supply contracts. The debt of US$156 million owed by the Colowyo Coal Company is to be serviced and repaid out of the proceeds of these contracts. The exceptional charge in 2004, referred to in note 4, includes a provision of US$149 million in respect of the Group's obligations under the above management agreement.
(e) Except for the obligations referred to above, in relation to Colowyo, the debt of joint ventures and associates is without recourse to the Rio Tinto Group.
   
15   Inventories                        
  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 


  


 


 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Raw material and purchased components 217   205   120   142   337   347  
Consumable stores 157   124   210   166   367   290  
Work in progress 238   219   222   163   460   382  
Finished goods and goods for resale 487   420   375   344   862   764  
 
 
 
 
 
 
 
  1,099   968   927   815   2,026   1,783  
 
 
 
 
 
 
 
Comprising:                        
Inventories expected to be sold or used within 12 months 1,099   968   889   778   1,988   1,746  
Inventories not expected to be sold nor used within 12 months -   -   38   37   38   37  
 
 
 
 
 
 
 
  1,099   968   927   815   2,026   1,783  
 
 
 
 
 
 
 
                         
General and administrative costs                        
- charged to inventory during the year 129   98   120   112   249   210  
- remaining in inventory at year end 44   34   17   18   61   52  
 
 
 
 
 
 
 
                         
(a) As reported in the Cash flow statement, the increase in inventories during 2004 was US$179 million excluding the effects of subsidiaries sold and changes in exchange rates on translation into US dollars.

A-28


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

16 Accounts receivable and prepayments
 
  Rio Tinto plc -        Rio Tinto Limited -                    
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group



2004     2003 2004     2003 2004     2003






Falling due within one year US$m US$m US$m US$m US$m US$m
Trade debtors 623   569   716   740   1,339   1,309  
Provision for doubtful debts (26 ) (33 ) (8 ) (10 ) (34 ) (43 )
Bills receivable 6   3   14   10   20   13  
Amounts owed by joint ventures 5   -   -   -   5   -  
Amounts owed by associates (a) 286   248   -   1   2   4  
Other debtors (b) 105   99   270   268   268   225  
Current tax recoverable 33   93   -   9   33   102  
Pension prepayments (c) 35   -   -   5   35   5  
Other prepayments 16   12   39   47   55   59  
 
 
 
 
 
 
 
  1,083   991   1,031   1,070   1,723   1,674  
 
 
 
 
 
 
 
Falling due after more than one year                        
Pension prepayments (c) 497   530   84   85   581   615  
Other debtors 12   1   27   35   39   36  
Current tax recoverable 10   -   128   130   138   130  
Deferred tax assets 21   22   21   (5 ) 42   17  
Bills receivable -   2   -   4   -   6  
Other prepayments -   -   36   5   36   5  
 
 
 
 
 
 
 
  540   555   296   254   836   809  
 
 
 
 
 
 
 
(a) Amounts owed to Rio Tinto plc by associates includes US$284 million (2003: US$245 million) due from Rio Tinto Limited.
(b) Other debtors for Rio Tinto Limited include US$107 million (2003: US$142 million) due from Rio Tinto plc.
(c) Movements on pension prepayments are included in Other items in the Cash flow statement.

 

17 Current asset investments, cash and liquid resources
   
  Rio Tinto plc -        Rio Tinto Limited -                    
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group



2004     2003 2004     2003 2004     2003






US$m US$m US$m US$m US$m US$m
Liquid resources                        
   Time deposits 48   147   68   59   116   206  
   Other 2   2   -   -   2   2  
 
 
 
 
 
 
 
Total liquid resources 50   149   68   59   118   208  
Deduct: investments qualifying as cash for balance sheet disclosure (48 ) (147 ) (68 ) (59 ) (116 ) (206 )
 
 
 
 
 
 
 
  2   2   -   -   2   2  
Other current asset investments                        
US Treasury bonds (a) 76   228   -   -   76   228  
 
 
 
 
 
 
 
Investments per balance sheet (unlisted) 78   230   -   -   78   230  
 
 
 
 
 
 
 
                         
Cash                        
Cash as defined in FRS1 Revised ('FRS1 cash') 67   36   139   5   206   41  
Investments qualifying as cash 48   147   68   59   116   206  
Add back Bank borrowings repayable on demand included in FRS 1 cash 66   74   2   74   68   148  
                         
 
 
 
 
 
 
 
Cash per balance sheet 181   257   209   138   390   395  
 
 
 
 
 
 
 
(a) Current asset investments of Rio Tinto plc and Rio Tinto Group include US$76 million (2003: US$228 million) relating to US treasury bonds that are not regarded as liquid assets because they are held as security for the deferred consideration for certain assets acquired during 2002.
(b) Information on cash and cash equivalents under US GAAP is given in note 42 Reconciliation to US Accounting Principles.

A-29


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

18 Short term borrowings  
     
                     
  Rio Tinto plc -    Rio Tinto Limited -           
  part of Rio Tinto Group    part of Rio Tinto Group    Rio Tinto Group   
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Secured                        
Bank loans repayable within 12 months 27   36   19   16   46   52  
Other loans repayable within 12 months 16   21   10   38   26   59  
 
 
 
 
 
 
 
  43   57   29   54   72   111  
Unsecured                        
Bank borrowings repayable on demand 66   74   2   74   68   148  
Bank loans repayable within 12 months -   91   8   -   8   91  
Other loans repayable within 12 months 123   44   535   113   658   157  
Commercial paper (a) -   276   -   1,411   -   1,687  
 
 
 
 
 
 
 
  189   485   545   1,598   734   2,083  
 
 
 
 
 
 
 
Total short term borrowings per balance sheet 232   542   574   1,652   806   2,194  
 
 
 
 
 
 
 
                         
(a) US$1.1 billion of the commercial paper outstanding at 31 December 2003 was backed by medium term facilities. Under Australian GAAP this amount would be grouped within non-current borrowings.  
                           
19 Accounts payable and accruals                        
                         
  Rio Tinto plc -     Rio Tinto Limited -            
  part of Rio Tinto Group     part of Rio Tinto Group     Rio Tinto Group    
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Due within one year                        
Trade creditors 398   365   552   372   950   737  
Amounts owed to joint ventures 5   3   -   6   5   9  
Amounts owed to associates (a) 121   185   1   1   15   44  
Other creditors (a) 222   141   570   355   303   226  
Tax on profits 63   40   126   210   189   250  
Employee entitlements 78   83   68   42   146   125  
Royalties and mining taxes 92   82   59   51   151   133  
Accruals and deferred income 63   59   135   64   198   123  
Dividends payable to outside shareholders of                        
   subsidiaries -   -   -   1   -   1  
Dividends payable to Rio Tinto plc and Rio Tinto                        
   Limited shareholders 487   367   225   189   632   492  
 
 
 
 
 
 
 
  1,529   1,325   1,736   1,291   2,589   2,140  
 
 
 
 
 
 
 
Due in more than one year                        
Other creditors (a) 154   143   54   51   208   194  
Accruals and deferred income (b) -   -   130   29   130   29  
Tax on profits 21   13   42   86   63   99  
 
 
 
 
 
 
 
  175   156   226   166   401   322  
 
 
 
 
 
 
 
                         
(a) 'Other creditors' for the Rio Tinto Group include deferred consideration of US$250 million (2003: US$219 million) relating to certain assets acquired during 2002 and 2004, of which US$96 million (2003: US$76 million) is due within one year. The deferred consideration is included at its net present value. The amortisation of the discount applied in establishing the net present value is treated as a finance cost. All of the deferred consideration relates to Rio Tinto plc.
  Other creditors for Rio Tinto Limited include US$489 million (2003: US$270 million) due to Rio Tinto plc. Dividends payable by Rio Tinto Limited include US$80 million (2003: US$64 million) due to Rio Tinto plc. For Rio Tinto plc US$107 million (2003: US$142 million) of amounts owed to associates relate to balances with Rio Tinto Limited.
(b) 'Accruals and deferred income' include contributions made by governments to the cost of acquiring fixed assets which are to be credited to the profit and loss account over the expected useful economic life of the fixed assets to which they relate.

A-30


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

20 Provisions for liabilities and charges
   
  Post   Other   Close down &              
  retirement   employee   restoration/       2004   2003  
  health care   entitlements   environmental   Other    Total   Total  
 
 
 
 
 
 
 
                  US$m   US$m  
Rio Tinto Group                        
At 1 January 498   337   2,092   211   3,138   2,562  
Adjustment on currency translation 9   11   71   2   93   335  
Capitalisation of additional closure costs (note 12) -   -   260   -   260   167  
Charged/(released) to profit for the year 43   57   53   (6 ) 147   154  
Exceptional charge (note 4) -   -   -   149   149      
Amortisation of discount related to provisions -   -   95   5   100   89  
Utilised in year:                        
   provisions set up on acquisition of businesses -   -   -   (3 ) (3 ) (4 )
   other provisions (26 ) (84 ) (51 ) (22 ) (183 ) (155 )
Subsidiaries sold (1 ) (10 ) (62 ) -   (73 ) (7 )
Transfers and other movements -   (19 ) 31   11   23   (3 )
 
 
 
 
 
 
 
  523   292   2,489   347   3,651   3,138  
 
 
 
 
 
 
 
Provision for deferred taxation (note 21)                 1,407   1,398  
                 
 
 
Provisions for liabilities and charges per balance sheet                 5,058   4,536  
                 
 
 
                         
  Post   Other   Close down &              
  retirement   employee   restoration/       2004   2003  
  health care   entitlements   environmental   Other   Total   Total  
 
 
 
 
 
 
 
                  US$m   US$m  
Rio Tinto plc - part of Rio Tinto Group                        
At 1 January 444   84   1,215   60   1,803   1,621  
Adjustment on currency translation 6   1   23   (1 ) 29   59  
Capitalisation of additional closure costs (note 12) -   -   105   -   105   67  
Charged/(released) to profit for the year 33   24   53   (1 ) 109   60  
Exceptional charges -   -   -   149   149      
Amortisation of discount related to provisions -   -   51   5   56   55  
Utilised in year:                        
   provisions set up on acquisition of businesses -   -   -   -   -   -  
   other provisions (24 ) (44 ) (25 ) (8 ) (101 ) (62 )
Subsidiaries sold -   -   (52 ) -   (52 )    
Transfers and other movements -   -   13   17   30   3  
 
 
 
 
 
 
 
  459   65   1,383   221   2,128   1,803  
 
 
 
 
 
 
 
Provision for deferred taxation (note 21)                 742   740  
                 
 
 
Provisions for liabilities and charges per balance sheet                 2,870   2,543  
                 
 
 
                         
  Post   Other   Close down &              
  retirement   employee   restoration/       2004   2003  
  health care   entitlements   environmental   Other   Total   Total  
 
 
 
 
 
 
 
                  US$m   US$m  
Rio Tinto Limited - part of Rio Tinto Group                        
At 1 January 54   253   877   151   1,335   941  
Adjustment on currency translation 3   10   48   3   64   276  
Capitalisation of additional closure costs (note 12) -   -   155   -   155   100  
Charged/(released) to profit for the year 10   33   -   (5 ) 38   94  
Exceptional charges -   -   -   -   -   -  
Amortisation of discount related to provisions -   -   44   -   44   34  
Utilised in year:                        
   provisions set up on acquisition of businesses -   -   -   (3 ) (3 ) (4 )
   other provisions (2 ) (40 ) (26 ) (14 ) (82 ) (93 )
Subsidiaries sold (1 ) (10 ) (10 ) -   (21 ) (7 )
Transfers and other movements -   (19 ) 18   (6 ) (7 ) (6 )
 
 
 
 
 
 
 
  64   227   1,106   126   1,523   1,335  
 
 
 
 
 
 
 
Provision for deferred taxation (note 21)                 665   658  
                 
 
 
Provision for liabilities and charges per balance sheet                 2,188   1,993  
                 
 
 

A-31


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

20 Provisions for liabilities and charges (continued)
   
(a) The main assumptions used to determine the provision for post retirement healthcare are disclosed in note 40. The provision is expected to be utilised over the next 15 to 20 years.
(b) The provision for other employee entitlements includes pension entitlements of US$53 million and a provision for long service leave, based on the relevant entitlements in certain Group operations. Some US$64 million is expected to be utilised within the next year.
(c) The Group's policy on close down and restoration costs is shown in note 1(l). Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure is incurred at the end of the life of the mine. Remaining lives of mines and infrastructure range from 2 to over 50 years with an average, weighted by discounted closure provision, of around 16 years. Although the ultimate cost to be incurred is uncertain, subsidiary companies have estimated their respective costs based on feasibility and engineering studies using current restoration standards and techniques. Provisions of US$2,489 million for close down and restoration costs and for environmental clean up obligations include estimates of the effect of future inflation and have been discounted to their present value at an average of approximately six per cent per annum, being an estimate of the risk free pre-tax cost of borrowing. Excluding the effects of future inflation, but before discounting, the provision is equivalent to some US$4.1 billion.
(d) Some US$142 million of environmental clean up expenditure is expected to take place within the next five years. The remainder includes amounts for the operation and maintenance of remediation facilities in later years. The provision for environmental expenditure includes the issue described in (e) below.
(e) In 1995, Kennecott Utah Copper ('KUC') agreed with the US Environmental Protection Agency (‘EPA’) and the State of Utah to complete certain source control projects and perform specific environmental studies regarding contamination of groundwater in the vicinity of the Bingham Canyon mine. A remedial investigation and feasibility study on the South Zone groundwater contamination, completed in March 1998, identified a range of alternative measures to address this issue pursuant to KUC’s obligation to prevent the further spread of groundwater contamination and to acquire, restore or replace water for the public in the affected area.
Provisions for such environmental obligations had been established in 1989, when KUC was acquired by Rio Tinto and these provisions were updated from time to time taking account of the latest information about future costs. At the start of 2002, a provision of US$273 million had been included in the balance sheet for control and remediation of groundwater contamination, which was based on the expected future cash flows relating to the remediation plan determined at that time, discounted to present value.
Action had been taken, by 2000, to prevent further spread of groundwater contamination. Facilities for filtration of the water and treatment of the contaminants were tested. However, in 2002, following discussions with the EPA a modified plan was developed to accommodate the views expressed by the EPA, which required changes in the methodology for treatment of contaminated groundwater. The provision for the net present value of the expected costs of construction and operation of treatment plants was accordingly increased by US$116 million.
Reviews in 2003 and 2004 of the engineering estimates did not require any modifications to the 2002 estimated cost of remediation. However, in 2004 KUC adopted a new long-term mine plan which would lead to earlier payment of the environmental costs than under the previous mine plan. For that reason the discounted amount of the environmental remediation provision increased in 2004 by US$46 million. The timing of the cash outflows relating to the revised remediation plan is reliably determinable. The plan involves costs that will arise during the operating life of KUC and beyond, including costs of management of groundwater that will continue in perpetuity after the closure of the mine.
(f) At KUC, provisions for close down and restoration costs were increased by US$76 million in 2004 based on the current assumption that the expenditure will occur earlier as a result of the change in the mine plan.
(g) Other provisions deal with a variety of issues and include US$35 million relating to the remaining provision for the market valuation of the hedge books held by companies acquired in 2000 and 2001, which will be utilised over the next seven years (see note 28), and US$40 million relating to payments received from employees for accommodation at some sites which are refundable in certain circumstances.

A-32


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

21

Deferred taxation

   
                           
Rio Tinto plc - Rio Tinto Limited -      
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group



2004    2003 2004    2003 2004    2003






US$m US$m US$m US$m US$m US$m
At 1 January 718   638   663   368   1,381   1,006  
Adjustment on currency translation 45   52   29   145   74   197  
Reported in the STRGL (a)  3    -   10   162   13   162  
Subsidiaries acquired/sold (2 )  -    2    6    -    6  
(Released)/charged to profit for the year (72 ) (19 ) (41 ) (6 ) (113 ) (25 )
Other movements (b) 29   47   (19 ) (12 ) 10   35  
 
 
 
 
 
 
 
  721   718   644   663   1,365   1,381  
 
 
 
 
 
 
 
Included in provisions for liabilities and charges 742   740   665   658   1,407   1,398  
Included in accounts receivable (21 ) (22 ) (21 )  5   (42 ) (17 )
 
 
 
 
 
 
 
  721   718   644   663   1,365   1,381  
 
 
 
 
 
 
 
(a) The amounts reported in the Statement of Total Recognised Gains and Losses relate to the provisions for tax relief on exchange differences on net debt recorded directly in reserves.
(b) 'Other movements' include deferred tax recognised by subsidiary holding companies that is presented in these accounts as part of the tax charge on the profits of the joint ventures and associates to which it relates.
                Other                     
Rio Tinto Group UK Australian countries' 2004 2003
tax tax tax Total Total
Provided in the accounts




        US$m US$m
Deferred tax assets 13   315   1,208   1,536   1,369  
Deferred tax liabilities (130 ) (983 ) (1,788 ) (2,901 ) (2,750 )
 
 
 
 
 
 
Balance as shown above (117 ) (668 ) (580 ) (1,365 ) (1,381 )
 
 
 
 
 
 
Comprising:                      
Accelerated capital allowances (6 ) (608 ) (1,018 ) (1,632 ) (1,574 )
Other timing differences (124 ) (79 ) 247   44   (89 )
Tax losses 13   19   191   223   282  
 
 
 
 
 
 
Balance as shown above (117 ) (668 ) (580 ) (1,365 ) (1,381 )
 
 
 
 
 
 
                Other                     
Rio Tinto plc - part of Rio Tinto Group UK Australian countries' 2004 2003
tax tax tax Total Total
Provided in the accounts




        US$m US$m
Deferred tax assets 13   1   1,128   1,142   886  
Deferred tax liabilities (130 ) -   (1,733 ) (1,863 ) (1,604 )
 
 
 
 
 
 
Balance as shown above (117 ) 1   (605 ) (721 ) (718 )
 
 
 
 
 
 
Comprising:                      
Accelerated capital allowances (6 ) 1   (1,031 ) (1,036 ) (893 )
Other timing differences (124 ) -   241   117   (58 )
Tax losses 13   -   185   198   233  
 
 
 
 
 
 
Balance as shown above (117 ) 1   (605 ) (721 ) (718 )
 
 
 
 
 
 
          Other            
Rio Tinto Limited - part of Rio Tinto Group UK   Australian   countries'   2004   2003  
tax   tax   tax   Total   Total  
Provided in the accounts
 
 
 
 
 
              US$m   US$m  
Deferred tax assets -   314   80   394   483  
Deferred tax liabilities -   (983 ) (55 ) (1,038 ) (1,146 )
 
 
 
 
 
 
Balance as shown above -   (669 ) 25   (644 ) (663 )
 
 
 
 
 
 
Comprising:                      
Accelerated capital allowances -   (609 ) 13   (596 ) (681 )
Other timing differences -   (79 ) 6   (73 ) (31 )
Tax losses -   19   6   25   49  
 
 
 
 
 
 
Balance as shown above -   (669 ) 25   (644 ) (663 )
 
 
 
 
 
 
(c) US$342 million (2003: US$380 million) of potential deferred tax assets have not been recognised as an asset in these accounts. There is no time limit for the recovery of these potential assets. This total includes US$298 million (2003: US$306 million) of United States Alternative Minimum Tax credits and US tax losses for which recovery is dependent on the level of taxable profits in the US tax group and US$44 million (2003: US$74 million) of tax losses arising in countries other than the US.
(d) There is a limited time period for the recovery of US$6 million (2003: US$26 million) of tax losses which have been recognised as deferred tax assets in the accounts.

A-33


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

22 Medium and long term borrowings
   
  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
At 1 January 2,027   2,729   3,868   3,184   5,895   5,913  
Adjustment on currency translation 18   92   7   92   25   184  
Subsidiaries sold (12 ) -   -   -   (12 ) -  
Loans drawn down 70   602   135   1,215   205   1,817  
Loan repayments (485 ) (1,396 ) (1,553 ) (623 ) (2,038 ) (2,019 )
 
 
 
 
 
 
 
At 31 December 1,618   2,027   2,457   3,868   4,075   5,895  
Deduct: short term (166 ) (468 ) (572 ) (1,578 ) (738 ) (2,046 )
 
 
 
 
 
 
 
Medium and long term borrowings 1,452   1,559   1,885   2,290   3,337   3,849  
 
 
 
 
 
 
 
Borrowings at 31 December                        
Commercial paper -   276   -   1,411     1,687  
                         
Bank loans                        
Secured 30   41   251   109   281   296  
Unsecured 106   173   117   262   223   289  
 
 
 
 
 
 
 
  136   214   368   371   504   585  
Other loans                        
Secured                        
   Loans 3   12   30   35   33   47  
   Finance leases 84   99   16   20   100   119  
Unsecured                        
   Rio Tinto Finance (USA) Limited Bonds 5.75% 2006 -   -   500   500   500   500  
   Rio Tinto Finance (USA) Limited Bonds 2.625% 2008 -   -   600   600   600   600  
   Rio Tinto Finance (USA) Limited Bonds 7.125% 2013 -   -   100   100   100   100  
   European Medium Term Notes (b) 1,237   1,237   262   381   1,499   1,618  
   North Finance (Bermuda) Limited 7% 2005 -   -   200   200   200   200  
   Other unsecured loans 158   189   381   250   539   439  
 
 
 
 
 
 
 
  1,482   1,537   2,089   2,086   3,571   3,623  
 
 
 
 
 
 
 
Total borrowings 1,618   2,027   2,457   3,868   4,075   5,895  
 
 
 
 
 
 
 
(a) The majority of the fixed rate borrowings shown above are swapped to floating rates. Details of interest rate and currency swaps and of available standby credit facilities are shown in note 28.
(b) The Group has a US$3 billion European Medium Term Note programme for the issuance of short to medium term debt of which US$1.5 billion was drawn down at 31 December 2004.
(c) Intragroup borrowings between the Rio Tinto plc and Rio Tinto Limited parts of the Group are included in 'Loans made by Rio Tinto plc and its subsidiaries' and 'Accounts payable and accruals'.
(d) Rio Tinto Finance (USA) Limited is a 100 per cent owned finance subsidiary of Rio Tinto Limited. Rio Tinto Limited and Rio Tinto plc have fully and unconditionally guaranteed the securities issued by Rio Tinto Finance (USA) Limited.

A-34


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

23 Net debt                    
                     

Analysis of changes in consolidated net debt:

Rio Tinto Group

FRS 1       Liquid   2004   2003  
cash (a)   Borrowings   resources (a)   Net debt   Net debt  

 
 
 
 
 
US$m   US$m   US$m   US$m   US$m  
                     
At 1 January 41   (5,895 ) 208   (5,646 ) (5,747 )
Adjustment on currency translation (13 ) (25 ) 4   (34 ) (123 )
Subsidiaries sold -   12   (4 ) 8   -  
Per cash flow statement 178   1,833   (90 ) 1,921   224  
 
 
 
 
 
 
At 31 December 206   (4,075 ) 118   (3,751 ) (5,646 )
 
 
 
 
 
 
                     
  FRS 1       Liquid   2004   2003  
  cash (a)   Borrowings   resources (a)   Net debt   Net debt  
Rio Tinto plc - part of Rio Tinto Group
 
 
 
 
 
US$m   US$m   US$m   US$m   US$m  
                     
At 1 January 36   (2,027 ) 149   (1,842 ) (2,625 )
Adjustment on currency translation (13 ) (18 ) 1   (30 ) (112 )
Subsidiaries sold -   12   (4 ) 8   -  
Per cash flow statement 44   415   (96 ) 363   895  
 
 
 
 
 
 
At 31 December 67   (1,618 ) 50   (1,501 ) (1,842 )
 
 
 
 
 
 
                     
  FRS 1       Liquid   2004   2003  
  cash (a)   Borrowings   resources (a)   Net debt   Net debt  
 
 
 
 
 
 
Rio Tinto Limited - part of Rio Tinto Group US$m   US$m   US$m   US$m   US$m  
                     
At 1 January 5   (3,868 ) 59   (3,804 ) (3,122 )
Adjustment on currency translation -   (7 ) 3   (4 ) (11 )
Subsidiaries sold -   -   -   -   -  
Per cash flow statement 134   1,418   6   1,558   (671 )
 
 
 
 
 
 
At 31 December 139   (2,457 ) 68   (2,250 ) (3,804 )
 
 
 
 
 
 
(a) A reconciliation of these figures to their respective balance sheet categories is shown in note 17. 
   
  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Reconciliation of cash flow to movement in net debt                        
Increase/(decrease) in cash per cash flow statement 44   (9 ) 134   (74 ) 178   (83 )
Decrease/(increase) in borrowings 415   794   1,418   (592 ) 1,833   202  
(Decrease)/increase in liquid resources (96 ) 110   6   (5 ) (90 ) 105  
 
 
 
 
 
 
 
Decrease/(increase) in net debt 363   895   1,558   (671 ) 1,921   224  
 
 
 
 
 
 
 
Net cash flow from movement in liquid resources comprises:                        
(Decrease)/increase in time deposits (96 ) 110   6   3   (90 ) 113  
Decrease in other liquid investments -   -   -   (8 ) -   (8 )
 
 
 
 
 
 
 
Net cash outflow/(inflow) (96 ) 110   6   (5 ) (90 ) 105  
 
 
 
 
 
 
 

A-35


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

24 Share capital - Rio Tinto plc
   
  2004   2003   2004   2003  
 
 
 
 
 
  Number(m)   Number(m)   US$m   US$m  
Share capital account                
At 1 January 1,066.67   1,065.48   155   154  
Ordinary shares issued 1.35   1.19   -   1  
 
 
 
 
 
At 31 December 1,068.02   1,066.67   155   155  
 
 
 
 
 
Issued and fully paid share capital                
Special voting share of 10p (d) 1 only   1 only   -   -  
DLC dividend share (d) 1 only   1 only   -   -  
Ordinary shares of 10p each (equity) 1,068.02   1,066.67   155   155  
         
 
 
Total issued share capital         155   155  
         
 
 
Unissued share capital                
Ordinary shares of 10p each 352.01   353.36   51   51  
Equalisation share of 10p (d) 1 only   1 only   -   -  
 
 
 
 
 
Total authorised share capital 1,420.03   1,420.03   206   206  
 
 
 
 
 
Options outstanding                
Options outstanding at 1 January 9.61   9.34          
- granted
1.54   2.70          
- exercised
(1.15 ) (1.43 )        
- cancelled
(0.27 ) (1.00 )        
 
 
         
Options outstanding at 31 December (b) 9.73   9.61          
 
 
         
(a) 1,346,874 Ordinary shares were issued during the year resulting from the exercise of options under Rio Tinto plc employee share option schemes at prices between 521p and 1,107p (2003: 1,192,702 shares at prices between 521p and 1,061p).
(b) At 31 December 2004, options over the following number of Ordinary shares were outstanding:
  -nil under the Rio Tinto plc Executive Share Option Scheme 1985 (31 December 2003: 23,000 shares at price of 861p).
  -8,053,292 under the Rio Tinto Share Option Plan 1998 at prices between 808.8p and 1,458.6p (31 December 2003: 7,662,925 shares at prices between 808.8p and 1458.6p). The exercise of share options is subject to the satisfaction of a graduated performance condition set by the Remuneration committee at various dates up to April 2014.
  -1,679,702 under the Rio Tinto plc Share Savings Plan at prices between 711p and 1,277p and exercisable at various dates up to June 2010 (31 December 2003: 1,920,430 shares at prices between 521p and 1,150p).
(c) At the 2004 annual general meeting the shareholders resolved to renew the general authority for the company to buy back up to 10 per cent (within any 12 months) of its Ordinary shares of 10p each for a further period of 18 months. This approval was renewed at the annual general meeting in 2005. During the year to 31 December 2004, no shares were bought back (2003: nil).
(d) The 'special voting share' was issued to facilitate the joint voting by shareholders of Rio Tinto plc and Rio Tinto Limited on Joint Decisions, following the DLC merger. Directors have the ability to issue an equalisation share if that is required under the terms of the DLC Merger Sharing Agreement. The 'DLC dividend share' was issued to facilitate the efficient management of funds within the DLC structure.
(e) The aggregate consideration received for shares issued during 2004 was US$21 million (2003: US$20 million).

Further information on share options is given in note 42 'Reconciliation to US Accounting Principles'.

A-36


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

24 Share capital - Rio Tinto Limited (100 per cent)
   
  2004   2003   2004   2003  
 
 
 
 
 
  Number(m)   Number(m)   US$m   US$m  
Share capital account                
At 1 January 499.06   498.82   1,280   964  
Adjustment on currency translation -   -   51   311  
Share issues 0.28   0.24   5   5  
 
 
 
 
 
At 31 December 499.34   499.06   1,336   1,280  
 
 
 
 
 
Options outstanding                
Options outstanding at 1 January 6.00   4.69          
- granted
1.34   1.63          
- exercised
(0.22 ) (0.07 )        
- cancelled
(0.38 ) (0.25 )        
 
 
         
Options outstanding at 31 December (d) 6.74   6.00          
 
 
         
(a) 280,332 (2003: 240,466) shares were issued during the year, of which 223,617 (2003: 71,563) resulted from the exercise of share options under various Rio Tinto Limited employee share option schemes at prices between A$20.14 and A$27.86 (2003: A$20.37 and A$27.86) and 56,715 (2003: 168,903) from the vesting of shares under the Rio Tinto Mining Companies Comparative Plan.
(b) Rio Tinto Limited is authorised by shareholder approvals obtained in 2004 to buyback up to all the Rio Tinto Limited shares held by Tinto Holdings Australia Pty Limited (a wholly owned subsidiary of Rio Tinto plc) plus, on-market, up to ten per cent of the publicly held shares in any 12 month period. This approval was renewed at the Rio Tinto Limited annual general meeting in 2005. During the year to 31 December 2004 no shares were bought back (2003: nil).
(c) Total share capital in issue at 31 December 2004 was 499.3 million plus one special voting share and one DLC dividend share (31 December 2003: 499.1 million plus one special voting share and one DLC dividend share). The 'special voting share' was issued to facilitate the joint voting by shareholders of Rio Tinto Limited and Rio Tinto plc on Joint Decisions following the DLC merger. Directors have the ability to issue an equalisation share if that is required under the terms of the DLC Merger Sharing Agreement. The 'DLC dividend share' was issued to facilitate the efficient management of funds within the DLC structure.
(d) At 31 December 2004, options over the following number of shares were outstanding: 
  -4,073,599 shares under the Rio Tinto Share Option Plans 1998 & 2004 at prices between A$20.37 and A$39.87 ('31 December' 2003: 3,602,137 shares at prices between A$20.14 and A$39.87). These share options are exercisable at various dates up to April 2014, subject to the satisfaction of a graduated performance condition set by the Remuneration committee.
  -2,651,980 shares under the Rio Tinto Limited Share Savings Plan at prices between A$25.57 and A$29.04 (31 December 2003: 2,385,453 shares at prices between A$25.57 and A$27.86). These share options are exercisable at various dates up to June 2010.
(e) The aggregate consideration received for shares issued during 2004 was US$5 million (2003: US$5 million).
   
24(a) Post Balance Sheet events
  In May 2005 Rio Tinto Limited bought back approximately 27.3 million shares from shareholders other than Rio Tinto plc for approximately A$1 billion, through an off market tender. In addition Rio Tinto Limited bought back approximately 16.4 million shares held by a wholly owned subsidiary of Rio Tinto plc. Rio Tinto plc's proportional shareholding in Rio Tinto Limited did not change as a result of the off-market buy-back.

A-37


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

25 Share premium and reserves

  Rio Tinto plc -     Rio Tinto Limited -            
  part of Rio Tinto Group     part of Rio Tinto Group     Rio Tinto Group   
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
                         
Share premium account                        
At 1 January 1,629   1,610   -   -   1,629   1,610  
Premium on issues of ordinary shares 21   19   -   -   21   19  
 
 
 
 
 
 
 
At 31 December 1,650   1,629   -   -   1,650   1,629  
 
 
 
 
 
 
 
                         
Parent and subsidiary companies' profit and loss account                        
At 1 January 3,529   2,800   2,716   1,156   6,266   3,968  
Adjustment on currency translation (b) 156   553   325   1,009   487   1,569  
Retained profit for the year 747   80   790   593   1,538   614  
Goodwill written back on disposal of interest in                        
   operation (c) 228   -   -   -   228   -  
Transfers and other movements (d) 56   96   (8 ) (42 ) 48   115  
 
 
 
 
 
 
 
At 31 December 4,716   3,529   3,823   2,716   8,567   6,266  
 
 
 
 
 
 
 
                         
Joint ventures' profit and loss account                        
At 1 January 335   267   193   237   526   504  
Adjustment on currency translation (b) -   -   1   55   1   53  
Retained profit/(loss) for the year 158   52   8   (37 ) 166   15  
Transfers and other movements (d) 1   16   8   (62 ) 9   (46 )
 
 
 
 
 
 
 
At 31 December 494   335   210   193   702   526  
 
 
 
 
 
 
 
                         
Associates' profit and loss account                        
At 1 January 1,434   819   18   67   42   107  
Adjustment on currency translation (b) 137   483   2   3   4   7  
Retained profit/(loss) for the year 346   141   2   8   47   (3 )
Transfers and other movements (d) (41 ) (9 ) (1 ) (60 ) (42 ) (69 )
 
 
 
 
 
 
 
At 31 December 1,876   1,434   21   18   51   42  
 
 
 
 
 
 
 
Total profit and loss account 7,086   5,298   4,054   2,927   9,320   6,834  
 
 
 
 
 
 
 
                         
Other reserves                        
At 1 January 261   249   117   86   334   303  
Adjustment on currency translation 3   12   7   31   7   31  
Transfers and other movements (16 ) -   1   -   (15 ) -  
 
 
 
 
 
 
 
At 31 December 248   261   125   117   326   334  
 
 
 
 
 
 
 
                         
Total reserves                        
   - Parent and subsidiary companies 4,919   3,731   3,948   2,835   8,893   6,585  
   - Joint ventures 492   335   210   191   702   526  
   - Associated companies 1,923   1,493   21   18   51   57  
 
 
 
 
 
 
 
  7,334   5,559   4,179   3,044   9,646   7,168  
 
 
 
 
 
 
 
                         
(a) A substantial portion of Group reserves are in overseas companies. If these reserves were distributed, there would be a liability to withholding taxes and to corporate tax in the UK and Australia. This would, however, be reduced by double taxation relief. Provision is made in these accounts for such additional tax only to the extent that dividends have been accrued or there is a binding agreement to distribute such past earnings.
(b) Adjustments on currency translation include net of tax exchange gains on net debt of US$139 million (2003: gains of US$715 million), Rio Tinto plc gains of US$59million (2003: gains of US$299 million) and Rio Tinto Limited gains of US$128 million (2003: gains of US$667 million).
(c) The goodwill written back relates to the disposal of the Group's interest in Freeport-McMoRan Copper & Gold Inc. (see note 4).
(d) 'Transfers and other movements' for Rio Tinto plc in 2004 include US$nil (2003: US$102 million) relating to a dividend on the DLC dividend share received from Rio Tinto Limited and US$nil (2003: US$1 million) relating to Rio Tinto Limited share issues (page A-8 note (b)). Other 'Transfers and other movements' relate primarily to the disposal of interests in operations in 2003 and 2004.
(e) At 31 December 2004, cumulative goodwill written off directly to reserves for the Rio Tinto Group amounted to US$2,936 million (2003: US$3,142 million), Rio Tinto plc US$2,518 million (2003: US$2,740 million) and Rio Tinto Limited US$418 million (2003: US$402 million).

A-38


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

26   Product analysis - Rio Tinto Group

  2004   2003   2004   2003  
 
 
 
 
 
  %   %   US$m   US$m  
Operating assets (a)                
Copper, gold and by-products 16.2   18.2   2,697   2,877  
Iron ore 28.6   25.0   4,757   3,951  
Coal 11.5   14.1   1,910   2,234  
Aluminium 22.2   20.6   3,690   3,261  
Industrial minerals 12.9   12.9   2,150   2,044  
Diamonds 7.6   8.0   1,261   1,261  
Other products 1.0   1.2   144   181  
 
 
 
 
 
Total 100.0   100.0   16,609   15,809  
 
 
         
Unallocated items         (274 ) (126 )
Less: net debt         (3,751 ) (5,646 )
         
 
 
Net assets         12,584   10,037  
         
 
 
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
  %   %   %   US$m   US$m   US$m  
Gross turnover (e)                        
Copper 15.3   12.4   12.3   2,233   1,507   1,372  
Gold (all sources) 4.3   8.8   9.4   634   1,068   1,046  
Iron ore 20.1   18.8   16.6   2,932   2,273   1,843  
Coal 18.2   17.6   19.9   2,665   2,137   2,211  
Aluminium 16.7   15.7   15.5   2,441   1,906   1,723  
Industrial minerals 14.9   16.2   18.0   2,175   1,964   1,997  
Diamonds 5.1   4.6   3.3   744   556   372  
Other products 5.4   5.9   5.0   784   708   555  
 
 
 
 
 
 
 
Total 100.0   100.0   100.0   14,608   12,119   11,119  
 
 
 
 
 
 
 
Profit before tax                        
Copper, gold and by-products 31.5   27.3   19.0   1,186   680   536  
Iron ore 23.1   30.1   24.2   869   748   680  
Coal 13.7   10.2   18.5   516   255   520  
Aluminium 13.3   11.5   13.0   501   287   365  
Industrial minerals 9.7   11.5   19.9   366   286   559  
Diamonds 7.6   7.5   3.4   288   187   96  
Other products 1.1   1.9   2.0   40   46   58  
 
 
 
 
 
 
 
  100.0   100.0   100.0   3,766   2,489   2,814  
 
 
 
             
Exploration and evaluation             (187 ) (127 ) (130 )
Net interest (c)             (113 ) (139 ) (161 )
Other items             (232 ) (255 ) (118 )
             
 
 
 
              3,234   1,968   2,405  
Exceptional items (d)             362   126   (1,094 )
             
 
 
 
Total             3,596   2,094   1,311  
             
 
 
 
Net earnings                        
Copper, gold and by-products 33.8   27.1   20.8   861   429   369  
Iron ore 22.4   31.6   25.6   569   500   455  
Coal 13.8   10.3   17.9   350   163   318  
Aluminium 13.1   11.9   14.5   334   189   257  
Industrial minerals 9.3   10.0   16.4   236   159   292  
Diamonds 6.6   7.0   3.5   169   111   63  
Other products 1   2.1   1.3   25   33   22  
 
 
 
 
 
 
 
  100.0   100.0   100.0   2,544   1,584   1,776  
 
 
 
             
Exploration and evaluation             (152 ) (98 ) (109 )
Net interest (c)             (57 ) (59 ) (95 )
Other items             (114 ) (45 ) (42 )
             
 
 
 
              2,221   1,382   1,530  
Exceptional items (d)             592   126   (879 )
             
 
 
 
Total             2,813   1,508   651  
             
 
 
 
                         
Note references above are explained on page A-40.                        

A-39


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

26   Product analysis - Rio Tinto Group (continued)

Notes
(a) Operating assets of subsidiaries comprise net assets before deducting net debt, less outside shareholders' interests which are calculated by reference to the net assets of the relevant companies (i.e. net of such companies' debt). For joint ventures and associates, Rio Tinto's net investment is shown.
(b) The above analyses include Rio Tinto's shares of the results of joint ventures and associates including interest.
(c) The amortisation of discount is included in the applicable product category. All other financing costs of subsidiaries are shown as Net interest.
(d) Exceptional items are shown separately in the above analysis of 'Profit before tax' and 'Net earnings'. Of the 2004 exceptional items, US$920 million before tax (US$913 million after tax and minority interests) relates to profit on disposal of interests in operations, US$(398) million before tax (US$(161) million after tax and minority interests) relates to Palabora which is part of the 'Copper, gold and by-products' segment and US$160 million before and after tax relates to Colowyo which is part of the 'Coal' segment.
(e) Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase Gross turnover in 2004 by US$473 million (2003: US$364 million, 2002: US$291 million).

The Group figures on page A-39 include the following amounts for joint ventures:

  2004   2003  
 
 
 
  US$m   US$m  
Net investment        
Copper, gold and by-products 1,236   1,072  
Coal 1,122   1,080  
Other 74   71  
 
 
 
Total 2,432   2,223  
 
 
 
  2004   2003   2002  
 
 
 
 
  US$m   US$m   US$m  
Gross turnover (b)            
Copper 1,088   625   419  
Gold 83   283   236  
Coal 1,123   847   961  
Other 81   76   51  
 
 
 
 
Total 2,375   1,831   1,667  
 
 
 
 
Profit before tax            
Copper, gold and by-products 692   378   232  
Coal 311   139   285  
Other 25      
Exceptional charges -   -   (16 )
 
 
 
 
Total 1,028   520   504  
 
 
 
 
Net earnings            
Copper, gold and by-products 465   256   155  
Coal 223   102   198  
Other 21      
Exceptional charges -   -   (16 )
 
 
 
 
  709   360   339  
 
 
 
 
The Group figures on page A-39 include the following amounts for associates:             
     
2004
 
2003
 
     
 
 
     
US$m
 
US$m
 
Net investment            
Copper, gold and by-products     180   362  
Other     67   59  
     
 
 
Total     247   421  
     
 
 
             
  2004   2003   2002  
 
 
 
 
  US$m   US$m   US$m  
Gross turnover (b)            
Copper 85   185   259  
Gold 211   411   355  
Other 138   124   123  
 
 
 
 
Total 434   720   737  
 
 
 
 
Profit before tax            
Copper, gold and by-products 120   147   130  
Other 19   33   59  
 
 
 
 
Total 139   180   189  
 
 
 
 
Net earnings            
Copper, gold and by-products 93   77   93  
Other 12   21   36  
 
 
 
 
Total 105   98   129  
 
 
 
 
(a) On 30 March 2004 Rio Tinto sold its 13.1 per cent shareholding in Freeport-McMoRan Copper & Gold Inc. which was included in 'Copper,gold and by-products'.
(b) Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase share of joint ventures turnover in 2004 by US$2 million (2003: US$11 million,2002: US$5 million) and to increase share of associates turnover by US$16 million (2003: US$13 million, 2002: US$14 million).

A-40


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

27 Geographical analysis - Rio Tinto Group
  By country of location
   
  2004   2003   2004   2003  
 
 
 
 
 
  %   %   US$m   US$m  
Operating assets                
North America 27.4   30.7   4,557   4,846  
Australia and New Zealand 61.3   55.7   10,176   8,799  
South America 4.1   4.1   680   652  
Africa 3.3   3.6   548   577  
Indonesia 2.4   3.5   398   554  
Europe and other countries 1.5   2.4   250   381  
 
 
 
 
 
Total 100.0   100.0   16,609   15,809  
 
 
         
Unallocated items         (274 ) (126 )
Less: net debt         (3,751 ) (5,646 )
         
 
 
Net assets         12,584   10,037  
         
 
 
                 
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
  %   %   %   US$m   US$m   US$m  
Gross turnover by country of origin (e)                        
North America 31.2   29.6   30.6   4,553   3,589   3,403  
Australia and New Zealand 47.9   45.0   42.5   7,000   5,449   4,720  
South America 7.7   5.7   4.7   1,131   684   527  
Africa 5.8   5.7   7.2   850   695   804  
Indonesia 2.2   8.6   9.6   314   1,047   1,061  
Europe and other countries 5.2   5.4   5.4   760   655   604  
 
 
 
 
 
 
 
Total 100.0   100.0   100.0   14,608   12,119   11,119  
 
 
 
 
 
 
 
                         
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
  %   %   %   US$m   US$m   US$m  
Profit before tax                        
North America 28.3   18.9   17.1   948   399   439  
Australia and New Zealand 49.8   53.7   57.1   1,666   1,131   1,464  
South America 18.5   11.1   3.4   619   234   86  
Africa 1.9   3.1   11.8   65   65   303  
Indonesia 2.4   16.5   12.2   80   348   312  
Europe and other countries (0.9 ) (3.3 ) (1.6 ) (31 ) (70 ) (38 )
 
 
 
 
 
 
 
  100.0   100.0   100.0   3,347   2,107   2,566  
 
 
 
             
Net interest (c)             (113 ) (139 ) (161 )
             
 
 
 
              3,234   1,968   2,405  
Exceptional items (d)             362   126   (1,094 )
             
 
 
 
Total             3,596   2,094   1,311  
             
 
 
 
                         
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
  %   %   %   US$m   US$m   US$m  
Net earnings                        
North America 32.0   25.2   20.1   730   363   326  
Australia and New Zealand 48.7   52.3   57.8   1,109   754   939  
South America 16.8   10.8   4.0   382   156   65  
Africa 0.7   0.8   7.1   15   12   115  
Indonesia 2.1   12.6   11.4   48   181   185  
Europe and other countries (0.3 ) (1.7 ) (0.4 ) (6 ) (25 ) (5 )
 
 
 
 
 
 
 
  100.0   100.0   100.0   2,278   1,441   1,625  
 
 
 
             
Net interest (c)             (57 ) (59 ) (95 )
             
 
 
 
              2,221   1,382   1,530  
Exceptional items (d)             592   126   (879 )
             
 
 
 
Total             2,813   1,508   651  
             
 
 
 
                         
Note references above are explained on page A-42.                        

A-41


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

27 Geographical analysis - Rio Tinto Group (continued)
   
Notes
(a) Operating assets of subsidiaries comprise net assets before deducting net debt, less outside shareholders' interests which are calculated by reference to the net assets of the relevant companies (i.e. net of such companies' debt). For joint ventures and associates, Rio Tinto's net investment is shown.
(b) The above analyses include the Rio Tinto share of the results of joint ventures and associates including interest.
(c) The amortisation of discount is included in the applicable geographical category. All other financing costs of subsidiaries are shown as Net interest.
(d) Exceptional items are shown separately in the above analysis of 'Profit before tax' and 'Net earnings'. Of the 2004 exceptional items, US$920 million before tax (US$913 million after tax and minority interests) relates to profit on disposal of interests in operations, US$(398) million before tax (US$(161) million after tax and minority interests) relates to Palabora which is included in the 'Africa' segment and US$160 million before and after tax relates to Colowyo which is included in the 'North America' segment. The exceptional items in 2003 relate to the profit on disposal of interests in a subsidiary, joint venture and associate. Of the 2002 exceptional charges, US$596 million before tax relates to Kennecott Utah Copper and US$443 million before tax relates to the Iron Ore Company of Canada, both of which are included in 'North America'. The impact of the exceptional charges on net earnings was US$536 million for Kennecott Utah Copper and US$235 million for the Iron Ore Company of Canada.
(e) Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase Gross turnover in 2004 by US$473 million (2003: US$364 million, 2002: US$291 million).

The Group figures shown on page A-41 include the following amounts for joint ventures:

      2004   2003  


US$m US$m
Net investment by origin            
Australia and New Zealand     1,154   1,108  
South America     710   552  
Indonesia     529   523  
North America     39   40  
     
 
 
Total     2,432   2,223  
     
 
 
             
    2004    2003    2002  



US$m US$m US$m
Gross turnover by origin (a)            
Australia and New Zealand 957   561   592  
South America 1,003   502   283  
Indonesia 153   539   565  
North America 262   229   227  
 
 
 
 
Total 2,375   1,831   1,667  
 
 
 
 
Profit before tax by origin            
Australia and New Zealand 287   57   214  
South America 632   183   49  
Indonesia 61   241   231  
North America 48   39   26  
Exceptional charges -   -   (16 )
 
 
 
 
Total 1,028   520   504  
 
 
 
 
Net earnings by origin            
Australia and New Zealand 199   46   151  
South America 420   122   32  
Indonesia 45   155   149  
North America 45   37   23  
Exceptional charges -   -   (16 )
 
 
 
 
Total 709   360   339  
 
 
 
 
             
(a) Turnover has been adjusted to reclassify, as turonver, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase share of joint ventures turnover in 2004 by US$2 million (2003: US$11 million, 2002: US$5 million).

A-42


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

27 Geographical analysis - Rio Tinto Group (continued)

The Group figures shown on page A-41 include the following amounts for associates:

      2004   2003  


US$m US$m
Net investment by origin            
North America     66   53  
Indonesia     -   143  
Other     181   225  
     
 
 
Total     247   421  
     
 
 
             
  2004   2003   2002  



US$m US$m US$m
Gross turnover by origin (b)            
North America 167   155   131  
Indonesia 43   344   306  
Other 224   221   300  
 
 
 
 
Total 434   720   737  
 
 
 
 
Profit before tax by origin            
North America 79   67   42  
Indonesia (1 ) 72   54  
Other 61   41   93  
 
 
 
 
Total 139   180   189  
 
 
 
 
Net earnings by origin            
North America 58   49   33  
Indonesia (4 ) 23   19  
Other 51   26   77  
 
 
 
 
Total 105   98   129  
 
 
 
 
             
(a) On 30 March 2004 Rio Tinto sold its 13.1 per cent shareholding in Freeport-McMoRan Copper & Gold Inc., which was included in 'Indonesia'.
   
(b) Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase share of associates turnover by US$16 million (2003: US$13million, 2002: US$14 million).
   
By destination                        
  2004   2003   2002   2004   2003   2002  






% % % US$m US$m US$m
Turnover by destination (b)                        
North America (c) 24.4   25.2   28.5   3,569   3,056   3,173  
Europe 21.3   23.2   21.9   3,109   2,813   2,435  
Japan 17.1   17.9   17.9   2,504   2,171   1,988  
Other Asia 23.7   21.9   19.2   3,460   2,655   2,134  
Australia and New Zealand 8.4   7.6   8.6   1,225   923   956  
Other 5.1   4.2   3.9   741   501   433  
 
 
 
 
 
 
 
Total 100.0   100.0   100.0   14,608   12,119   11,119  
 
 
 
 
 
 
 
                         

The Group figures shown above include the following amounts for joint ventures:

  2004   2003   2002  



US$m US$m US$m
Turnover by destination (b)            
North America 210   191   214  
Europe 355   300   303  
Japan 766   551   579  
Other 1,044   789   571  
 
 
 
 
Total 2,375   1,831   1,667  
 
 
 
 
             
The Group figures shown above include the following amounts for associates:
  2004   2003   2002  



US$m US$m US$m
Turnover by destination (b)            
North America 185   173   159  
Europe 125   224   252  
Other 124   323   326  
 
 
 
 
Total 434   720   737  
 
 
 
 
(a) An analysis of Property, Plant and Equipment by location is included in note 42 'Reconciliation to US Accounting Principles'.
(b) Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling costs, which previously were deducted from operating costs. The effect was to increase Gross turnover in 2004 by US$473 million (2003: US$364 million, 2002: US$291 million); increase share of joint ventures turnover in 2004 by US$2 million (2003: US$11 million, 2002: US$5 million) and to increase share of associates turnover by US$16 million (2003: US$13 million, 2002: US$14 million).
(c) North America includes US$3,215 million (2003: US$2,764 million, 2002: US$2,893 million) relating to the United States of America.

A-43


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

28   Financial Instruments

The Group's policies with regard to currency, interest rate and commodity price exposures, and the use of derivative financial instruments, are discussed in the following sections on pages 37 to 39 of the Financial review:
A Exchange rates, reporting currencies and currency exposure 
B Interest rates
C Commodity prices
D Treasury management and financial instruments

Except where stated, the information given below relates to the financial instruments of the parent companies and their subsidiaries and excludes joint ventures and associates. The information provided is as at the end of the financial year. Short term debtors and creditors are included only in the currency analysis.

Financial instruments held by companies acquired are marked to market as part of the adjustment of assets and liabilities acquired to fair value. Where appropriate, these fair value adjustments, calculated on a basis consistent with that disclosed in Section E, are shown in the disclosures below.

A)   Currency

The Group's currency derivatives are itemised below:

a)   Forward contracts hedging trading transactions

Buy Australian dollar: sell US dollar Buy   Sell   Weighted   Fair value   Total fair  
average   value
currency currency exchange  
amount amount rate
  A$m    US$m    A$/US$      US$m    US$m  
 
 
 
 
 
 
Less than 1 year 213   129   0.61   34      
1 to 5 years 529   321   0.61   64      
More than 5 years 30    18   0.61   2      
 
 
 
 
     
Total 772   468   0.61       100  
 
 
 
         
                     
Of the above, contracts to sell US$439 million were acquired with companies purchased in 2000 and 2001.              
                     
Buy New Zealand dollar: sell US dollar NZ$m   US$m   NZ$/US$   US$m      
 
 
 
 
     
                     
Less than 1 year 95    45   0.47   23      
1 to 5 years 520    233   0.45   100      
More than 5 years 130    58   0.45   19      
 
 
 
 
     
Total 745    336   0.45       142  
 
 
 
         
                     
Other currency forward contracts                 (6 )
                     
Total fair value                 236  
Adjust: Negative fair value recognised in respect of these contracts (of which US$11 million was recognised on acquisition)       13  
           
 
Fair value not recognised                 249  
                 
 

A-44


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

28   Financial Instruments (continued)

b) Options hedging trading transactions
The Group acquired a series of bought call options with companies purchased in 2000. The majority of these bought call options are matched at 31 December 2003 by sold puts. The combination of these instruments has a similar effect to forward contracts. During 2004 all of these sold puts totalling US$248 million were knocked-out, ie automatically cancelled, because the Australian dollar strengthened above a predetermined level.

          Weighted          
  Buy   Sell   average       Total  
  currency   currency   strike   Fair   fair  
  amount   amount   rate   value   value  
  A$m   US$m   A$/US$   US$m   US$m  
 
 
 
 
 
 
Bought A$ call options                    
                     
Less than 1 year 94   66   0.70   7      
1 to 5 years 247   173   0.70   17      
 
 
 
         
Total fair value 341   239   0.70       24  
 
 
 
         
Adjust: Fair value recognised on acquisition in respect of these contracts                 25  
                 
 
Fair value not recognised                 49  
                 
 
                     
c) Currency swaps hedging non US dollar debt                    
          Weighted          
  Buy   Sell   average       Total  
  currency   currency   exchange   Fair   fair  
  amount   amount   rate   value (a)   value  
      US$m           US$m  
 
 
 
 
 
 
Buy Euro: sell US dollars                    
Less than 1 year Euro 125m   153   0.82   17      
1 to 5 years Euro 850m   781   1.09   377      
     
 
 
     
      934   1.04   394      
     
 
 
     
                     
Buy Japanese yen: sell US dollars                    
1 to 5 years Yen 21 billion   177   119   28      
                     
Buy sterling: sell US dollars                    
Less than 1 year £10m   15   0.67   4      
1 to 5 years £165m   235   0.70   83      
     
 
 
     
      250   0.70   87      
     
 
 
     
                     
Buy Swiss francs: sell US dollars                    
Less than 1 year CHF50m   36   1.39   9      
1 to 5 years CHF20m   12   1.67   6      
     
 
 
     
      48   1.46   15      
     
 
 
     
                     
Total currency swaps     1,409           524  
Adjust: Fair value recognised within carrying value of debt                 (524 )
                 
 
Fair value not recognised                 -  
                 
 
(a) These fair values comprise only the 'currency element' of the swaps. The fair value of the 'interest element' is presented in the summary of interest rate swaps.

A-45


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

28   Financial Instruments (continued)

d) Currency exposures arising from the Group's net monetary assets/(liabilities)
After taking into account the effect of relevant derivative instruments, almost all the Group's net debt is either denominated in US dollars or in the functional currency of the entity holding the debt. The table below sets out the currency exposures arising from net monetary assets/(liabilities), other than net debt, which are not denominated in the functional currency of the relevant business unit. Gains and losses resulting from such exposures are recorded in the profit and loss account. This table reflects the currency exposures before adjusting for tax and outside interests.

  Currency of exposure     Currency of exposure    
  US   Other   2004   US   Other   2003  
  dollar   currencies   Total   dollar   currencies   Total  
  US$m   US$m   US$m   US$m   US$m   US$m  
 
 
 
 
 
 
 
Functional currency of business unit:                        
   United States dollar -   36   36   -   30   30  
   Australian dollar 345   9   354   385   (16 ) 369  
   Canadian dollar 57   -   57   51   (1 ) 50  
   South African rand 22   12   34   47   6   53  
   Other currencies 12   (19 ) (7 ) 20   15   35  
 
 
 
 
 
 
 
Total 436   38   474   503   34   537  
 
 
 
 
 
 
 

The table below shows the Rio Tinto share of the above currency exposures after tax and outside interests:

  Currency of exposure   Currency of exposure  
  US   Other   2004   US   Other   2003  
  dollar   currencies   Total   dollar   currencies   Total  
  US$m   US$m   US$m   US$m   US$m   US$m  
 
 
 
 
 
 
 
Functional currency of business unit:                        
   United States dollar -   24   24   -   20   20  
   Australian dollar 222   7   229   251   (11 ) 240  
   Canadian dollar 21   -   21   19   (1 ) 18  
   South African rand 8   3   11   16   2   18  
   Other currencies 5   (16 ) (11 ) 14   9   23  
 
 
 
 
 
 
 
Total 256   18   274   300   19   319  
 
 
 
 
 
 
 

B) Interest rates

(i) Financial liabilities and assets including the effect of interest rate and currency swaps
This table analyses the currency and interest rate composition of the Group's financial assets and liabilities:

                      2004   2003  
  United           South       Total   Total  
  States   Australian       African   Other   carrying   carrying  
  dollar   dollar   Sterling   rand   currencies   value   value  
  US$m   US$m   US$m   US$m   US$m   US$m   US$m  
 
 
 
 
 
 
 
 
Financial liabilities                            
Fixed rate (758 ) -   -   -   -   (758 ) (721 )
Floating rate (2,660 ) (422 ) (12 ) (265 ) (26 ) (3,385 ) (5,322 )
Non interest bearing (250 ) -   -   -   -   (250 ) (219 )
 
 
 
 
 
 
 
 
  (3,668 ) (422 ) (12 ) (265 ) (26 ) (4,393 ) (6,262 )
Financial assets                            
Fixed rate 87   -   -   -   -   87   239  
Floating rate (including loans to joint ventures and associates) 304   132   25   6   91   558   571  
 
 
 
 
 
 
 
 
  (3,277 ) (290 ) 13   (259 ) 65   (3,748 ) (5,452 )
 
 
 
 
 
         
Adjusted to exclude:                            
US Treasury bonds (fixed rate)                     (87 ) (239 )
Deferred consideration payable (non interest bearing)                     250   219  
Loans to joint ventures and associates (floating rate)                     (166 ) (174 )
                     
 
 
Net debt (note 23)                     (3,751 ) (5,646 )
                     
 
 

A-46


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

28    Financial Instruments (continued)

(ii) Fixed rate liabilities and assets, presented gross, and interest rate and currency swaps
The US$758 million (2003: US$721 million) of fixed rate liabilities shown in (i) above comprise gross liabilities of US$2,670 million (2003: US$2,716 million) less the interest rate and currency swaps of US$1,912 million (2003: US$1,995 million) shown below:

          2004           2003  
Gross liabilities         Excess of           Excess of  
    Average   fair value       Average   fair value  
    fixed   over       fixed   over  
Principal   rate   principal   Principal   rate   principal  
  US$m   % p.a.   US$m   US$m   % p.a.   US$m  
 
 
 
 
 
 
 
 Maturity                        
Less than 1 year 200   7.0   (6 ) -   -   -  
1 to 5 years 1,150   4.1   8   1,350   4.6   (33 )
More than 5 years 100   7.1   (18 ) 100   7.2   (17 )
 
 
 
 
 
 
 
US$ fixed rate liabilities 1,450   4.7   (16 ) 1,450   4.8   (50 )
 
 
 
 
 
 
 
Less than 1 year 15   5.4   -   46   2.3   -  
1 to 5 years 1,205   4.5   (67 ) 1,220   4.5   (62 )
 
 
 
 
 
 
 
Non US dollar fixed rate liabilities (a) 1,220   4.5   (67 ) 1,266   4.4   (62 )
 
 
 
 
 
 
 
Fixed rate liabilities before interest rate swaps 2,670       (83 ) 2,716       (112 )
 
     
 
     
 
Interest rate swaps                        
    Average           Average      
Maturity     fixed   2004       fixed   2003  
Principal   rate   Fair value(i)   Principal   rate   Fair value  
  US$m   % p.a.   US$m   US$m   % p.a.   US$m  
 
 
 
 
 
 
 
Less than 1 year 200   7.0   5   -   -   -  
1 to 5 years 850   4.7   5   1,050   5.1   41  
 
 
 
 
 
 
 
Interest rate swaps to US$ floating rates 1,050   5.1   10   1,050   5.1   41  
 
 
 
 
 
 
 
Less than 1 year 15   5.4   -   46    2.3   -  
1 to 5 years 1,205   4.5   59   1,220    4.5   55  
 
 
 
 
 
 
 
Interest rate swaps from non US$ fixed rates to US$ floating rates (a) 1,220   4.5   59   1,266   4.4   55  
 
 
 
 
 
 
 
Less than 1 year 225   7.0   (5 ) 20    7.5   (1 )
1 to 5 years 133   5.8   (11 ) 225   7.0   (19 )
More than 5 years -   -   -   76   5.6   (8 )
 
 
 
 
 
 
 
Interest rate swaps to US$ fixed rates (b) 358   6.6   (16 ) 321   6.7   (28 )
 
 
 
 
 
 
 
Interest rate swaps (net impact) 1,912       53   1,995       68  
 
     
 
     
 
Total fixed rate financial liabilities after interest rate swaps (b), (d) 758       (30 ) 721       (44 )
 
     
 
     
 
(i) These fair values include the interest element of the currency swaps described earlier.

 

          2004           2003  
Gross assets         Excess of           Excess of  
    Average   fair value       Average   fair value  
Maturity     fixed   over       fixed   over  
Principal   rate   principal   Principal   rate   principal  
  US$m   % p.a.   US$m   US$m   % p.a.   US$m  
 
 
 
 
 
 
 
Less than 1 year 87   2.1   -   239   1.0   (1 )
 
 
 
 
 
 
 
Total fixed rate financial assets 87   2.1   -   239   1.0   (1 )
 
 
 
 
 
 
 
   
(a) All of the above non US$ liabilities are swapped to US$. The principal amounts shown above reflect the currency element of the related currency swaps.
(b) As a consequence of acquisitions during 2000, the Group holds a number of interest rate swaps to receive US$ floating rates and pay US$ fixed rates which have been included in the total of fixed rate debt shown above. 
(c) The Group has US$100 million of finance leases (2003: US$119 million), the largest of which has a principal of US$74 million, a maturity of 2018 and a floating interest rate.
(d) After taking into account all interest rate swaps, the Group's fixed rate debt totals US$ 758 million and has a weighted average interest rate of 5.1 per cent and a weighted average time to maturity of four years (2003: US$721 million with a weighted average interest rate of 5.1 per cent and a weighted average time to maturity of four years).  
(e) Interest rates on the great majority of the Group's floating rate financial liabilities and assets will have been reset within six months. The interest rates applicable to the Group's US dollar denominated floating rate financial liabilities and assets did not differ materially at the year end from the three month US dollar LIBOR rate of 2.5 per cent (2003: 1.2 per cent).
(f) The above table does not include the remaining US$35 million (2003: US$39 million) net provision for the mark to market valuation of the hedge books held by companies acquired in 2000 and 2001 and other financial assets of US$216 million (2003: US$145 million), all of which are non interest bearing. Further details of the instruments included within the acquisition provision for mark to market valuation of the hedge books held by companies acquired are shown in section A above and section C below.
(g) These non interest bearing financial liabilities have been presented in the financial statements on a discounted basis, using a discount rate of 3.8 per cent.

A-47


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

 28    Financial Instruments (continued)


C) Commodities
The Group's material commodity derivatives are summarised below:

  2004   2003  
  Fair value   Fair value  
  US$m   US$m  
 
 
 
Commodity derivatives, including options (in 2003) (10 ) (20 )
Adjust: Fair value recognised on acquisition in respect of these contracts (1 ) (2 )
 
 
 
Fair value not recognised (11 ) (22 )
 
 
 

D) Liquidity
The maturity profile of the Group's net debt is discussed in the Balance Sheet section of the Financial review.

Financial assets and liabilities are repayable as follows:

  2004   2003  
 
 
 
  US$m   US$m  
Financial liabilities        
    Within 1 year, or on demand (903 ) (2,270 )
    Between 1 and 2 years (1,168 ) (672 )
    Between 2 and 3 years (1,000 ) (1,109 )
    Between 3 and 4 years (798 ) (1,019 )
    Between 4 and 5 years (43 ) (745 )
    After 5 years (481 ) (447 )
 
 
 
  (4,393 ) (6,262 )
Financial assets        
    Within 1 year, or on demand 515   670  
    Between 1 and 2 years 14   10  
    Between 2 and 3 years 15   14  
    Between 3 and 4 years 14   15  
    Between 4 and 5 years 15   14  
    After 5 years 72   87  
 
 
 
Total per currency/interest rate analysis (3,748 ) (5,452 )
 
 
 
 
In addition, of the remaining US$35 million net provision for the mark to market of the hedge books held by companies on acquisition in 2000 and 2001, US$10 million matures in 2005, US$24 million in 2006 to 2009 and US$1 million thereafter. There are other financial assets totalling US$216 million, of which US$138 million have no fixed maturity and US$78 million has a maturity greater than one year.
As at 31 December 2004, a total of US$1,499 million is outstanding under the US$3 billion European Medium Term Notes facility, of which US$204 million is repayable within one year.
In accordance with FRS 4, all commercial paper is classified as short term borrowings. There were no outstandings as at 31 December 2004, (2003: commercial paper of US$1.1 billion all backed by medium term facilities).
At 31 December 2004, the Group had unutilised standby credit facilities totalling US$1.45 billion. These facilities, which are summarised below, are for back-up support for the Group’s commercial paper programmes and for general corporate purposes:
         
  2004   2003  
 
 
 
  US$m   US$m  
Unutilised standby credit facilities        
Within 1 year 600   1,650  
Between 1 and 2 years 850   -  
After 2 years -   1,100  
 
 
 
  1,450   2,750  
 
 
 

A-48


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

28

Financial Instruments (continued)

E) Fair values of financial instruments
The carrying values and the fair values of Rio Tinto's financial instruments at 31 December are shown in the following table. Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties. Where available, market values have been used to determine fair values. In other cases, fair values have been calculated using quotations from independent financial institutions, or by discounting expected cash flows at prevailing market rates. The fair value of cash, short term borrowings and loans to joint ventures and associates approximates to the carrying value, as a result of their short maturity, or because they carry floating rates of interest.

If Rio Tinto's financial instruments were realised at the fair values shown, tax of US$84 million would become payable (2003: US$86 million payable). The maturity of the financial instruments is shown in the notes above.

    2004        2003       
   

US$m Carrying     Fair Carrying     Fair
value value value value
   



    US$m US$m US$m US$m
Primary financial instruments held or issued to                
   finance the Group's operations:                
  Cash (note 17) 390   390   395   395  
  Investments (b) 89   89   230   229  
  Short term borrowings (note 18) (a) (836 ) (836 ) (2,199 ) (2,199 )
  Medium and long term borrowings (note 22) (a) (3,831 ) (3,914 ) (4,231 ) (4,343 )
  Loans to joint ventures and associates (note 13) 166   166   174   174  
  Other assets 216   302   156   156  
  Other liabilities (250 ) (250 ) (219 ) (219 )
   
 
 
 
 
    (4,056 ) (4,053 ) (5,694 ) (5,807 )
Derivative financial instruments held to manage                
   the interest rate and currency profile:                
  Currency forward contracts hedging trading transactions (A) (13 ) 236   (22 ) 207  
  Currency option contracts hedging trading transactions (A) (25 ) 24   (27 ) 10  
  Currency forward contracts hedging future capital expenditure (A) -   -   -   93  
  Currency swaps hedging non US dollar debt (A) (a) 524   524   387   387  
  Interest rate swap agreements and options (B) -   53   -   68  
  Commodity forward/future contracts hedging trading transactions (C) 1   (10 ) 2   (20 )
   
 
 
 
 
    (3,569 ) (3,226 ) (5,354 ) (5,062 )
 
 
 
 
 
Less: mark to market provision at acquisition/other provisions 37       47      
'Other' financial assets (216 )     (145 )    
 
     
     
Total per liquidity analysis (3,748 )     (5,452 )    
 
     
     
(a) Of the currency swaps, of US$524 million, US$30 million are netted against short term borrowings in the balance sheet and US$494 million are netted against medium and long term borrowings.
(b) US$11 million of these investments are in fixed assets.

Gains and losses on hedges
Changes in the fair value of derivatives used as hedges of trading transactions, capital expenditure and interest rate exposures, including changes relating to derivatives held by companies acquired during 2000 and 2001, are not recognised in the financial statements until the hedged position matures.

          2004   2003  
          Total net   Total net  
US$m         gains/   gains/  
Gains   Losses   (losses)   (losses)  
 
 
 
 
 
                 
Unrecognised gains and losses on hedges at 1 January 471   (66 ) 405   25  
Gains and losses arising in previous years recognised in the year (161 ) 18   (143 ) (35 )
 
 
 
 
 
Gains and losses arising before 1 January that were not recognised in the year 310   (48 ) 262   (10 )
Gains and losses arising in the year that were not recognised in the year 87   (9 ) 78   415  
 
 
 
 
 
Unrecognised gains and losses on hedges at 31 December 397   (57 ) 340   405  
 
 
 
 
 
Of which:                
Gains and losses expected to be recognised within one year 105   (27 ) 78   143  
Gains and losses expected to be recognised in more than one year 292   (30 ) 262   262  
 
 
 
 
 
   397   (57 ) 340   405  
 
 
 
 
 

A-49


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

29 Contingent liabilities and commitments
   
  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Commitments                        
Contracted capital expenditure at 31 December (a) 110   56   590   556   700   612  
Operating lease commitments (b) 47   35   67   96   114   131  
Other commitments 30   -   110   67   140   67  
   
(a) 'Contracted capital expenditure' includes amounts falling due within one year of US$564 million (2003: US$598 million).
(b) 'Operating lease commitments' includes amounts falling due within one year of US$36 million (2003: US$38 million).

Unconditional purchase obligations

The aggregate amount of future payment commitments under unconditional purchase obligations outstanding at 31 December was:

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Within 1 year 38   38   348   230   386   268  
Between 1 and 2 years 38   38   344   240   382   278  
Between 2 and 3 years 38   38   327   237   365   275  
Between 3 and 4 years 8   8   316   235   324   243  
Between 4 and 5 years 8   8   279   226   287   234  
After 5 years 48   56   1,440   1,656   1,488   1,712  
 
 
 
 
 
 
 
  178   186   3,054   2,824   3,232   3,010  
 
 
 
 
 
 
 

Unconditional purchase obligations relate to commitments to make payments in the future for fixed or minimum quantities of goods or services at fixed or minimum prices. The balance outstanding at 31 December 2004 relates mainly to commitments under 'take or pay' contracts.

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2004   2003   2004   2003  
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Contingent liabilities                        
Indemnities and other performance guarantees on                        
which no material loss is expected 29   -   406   266   435   266  
                         
(a) Pursuant to the DLC merger both Rio Tinto plc and Rio Tinto Limited issued deed poll guarantees by which each guaranteed contractual obligations incurred by the other or, to the extent guaranteed by the other, any person. The amounts shown above for Rio Tinto plc and Rio Tinto Limited do not reflect these deed poll guarantees.
(b) In 2002, the Australian Tax Office issued assessments of approximately A$500 million (which amount includes penalties and interest) in relation to certain transactions undertaken in 1997 to acquire franking credits. The transactions were conducted based on the Group’s considered view of the law prevailing at the time. Subsequently, the law was changed. The Group lodged objections to the assessments and on 26 May 2003 the Australian Tax Office (‘ATO’) substantially disallowed those objections. The Group subsequently lodged proceedings in the Federal Court to dispute the assessments.
  As required by Australian tax law and practice, part payment of the disputed tax assessments was required pending resolution of the dispute. A payment of A$164 million (US$128 million at the year end exchange rate) was made, which will be subject to recovery with interest if, as it is believed based on Counsels’ opinion, the Group is successful in challenging the assessments. Consequently, the amount paid has been recorded as a receivable on the balance sheet.
  As at the year end, the amount of the disputed tax assessments, penalties and interest stood at approximately A$479 million (US$373 million at the year end exchange rate) after tax relief on the general interest charge component.
(c) There are a number of legal claims arising from the normal course of business which are currently outstanding against the Group. No material loss to the Group is expected to result from these claims.

A-50


Back to Contents

 

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

30 Average number of employees
   
  Subsidiaries and joint arrangements (a)  
 
 
  2004   2003   2002  
 
 
 
 
The principal locations of employment were :            
Australia and New Zealand 10,002   9,274   8,721  
North America 8,275   8,478   8,906  
Africa 4,724   5,661   6,012  
Europe 2,630   3,059   2,765  
South America 1,361   1,794   1,708  
Indonesia 511   569   908  
Other countries 195   205   150  
 
 
 
 
  27,698   29,040   29,170  
 
 
 
 
             
  Joint ventures and associates (a)  
    (Rio Tinto share)    
 
 
  2004   2003   2002  
 
 
 
 
The principal locations of employment were :            
Australia and New Zealand 925   983   995  
North America 1,055   1,034   873  
Africa 441   422   450  
Europe 161   386   433  
South America 851   773   940  
Indonesia 1,754   3,234   4,154  
Other countries 155   144   158  
 
 
 
 
  5,342   6,976   8,003  
 
 
 
 
             
    Group total    
 
 
  2004   2003   2002  
 
 
 
 
The principal locations of employment were :            
Australia and New Zealand 10,927   10,257   9,716  
North America 9,330   9,512   9,779  
Africa 5,165   6,083   6,462  
Europe 2,791   3,445   3,198  
South America 2,212   2,567   2,648  
Indonesia 2,265   3,803   5,062  
Other countries 350   349   308  
 
 
 
 
  33,040   36,016   37,173  
 
 
 
 
(a) Employee numbers, which represent the average for the year, include 100 per cent of employees of subsidiary companies. Employee numbers for joint arrangements, joint ventures and associates are proportional to the Group's equity interest.
(b) Part-time employees are included on a full time equivalent basis. Temporary employees are included in employee numbers.
(c) People employed by contractors are not included.

A-51


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

31    Principal subsidiaries at 31 December 2004

      Class of   Proportion   Group   Ultimate
Company and country     shares   of class   interest   parent
of incorporation/operation Principal activities   held   held %   %   company










Australia                  
Argyle Diamond Mines Mining and processing of diamonds   (a)        100   Rio Tinto Limited
Coal & Allied Industries Limited Coal mining   Ordinary   75.71   75.71   Rio Tinto Limited
Comalco Limited Bauxite mining; alumina production;   Ordinary   100   100   Rio Tinto Limited
  primary aluminium smelting                
Dampier Salt Limited Salt production   Ordinary   64.94   64.94   Rio Tinto Limited
Energy Resources of Australia Ltd Uranium mining   Class A   68.39   68.39   Rio Tinto Limited
Hamersley Iron Pty Limited Iron ore mining   Ordinary   100   100   Rio Tinto Limited
Rio Tinto Coal Australia Pty Limited Coal mining   Ordinary   100   100   Rio Tinto Limited










Canada                  
Iron Ore Company of Canada Inc (b) Iron ore mining; iron ore pellets   Series A & E   58.72   58.72   Rio Tinto Limited
QIT-Fer et Titane Inc Titanium dioxide feedstock; high   Common shares   100   100   Rio Tinto plc
  purity iron and steel   Preferred shares   100   100    










France                  
Talc de Luzenac S.A. Mining, refining and marketing of talc   E15.25   99.94   99.94   Rio Tinto plc










Indonesia                  
P.T. Kelian Equatorial Mining Gold mining   Ordinary US$1   90   90   Rio Tinto Limited










Namibia                  
Rossing Uranium Limited (c) Uranium mining   'B'N$1   71.16  } 68.58   Rio Tinto plc
      'C'N10c    70.59      










Papua New Guinea                  
Bougainville Copper Limited (d) Copper and gold mining   Ordinary 1 Kina   53.58   53.58   Rio Tinto Limited










South Africa                  
Palabora Mining Company Limited Copper mining, smelting and refining   R1    75.2   49.2   Rio Tinto plc
Richards Bay Iron and Titanium Titanium dioxide feedstock;   R1    50.5   50   Rio Tinto plc
(Pty) Limited high purity iron                










United Kingdom                  
Anglesey Aluminium Metal Limited Aluminium smelting   Ordinary £1   51   51   Rio Tinto plc










United States of America                  
Kennecott Holdings Corporation Copper and gold mining, smelting   Common US$0.01   100   100   Rio Tinto plc
(including Kennecott Utah Copper, and refining, land development                
Kennecott Minerals and Kennecott                  
Land Company)                  
Kennecott Energy & Coal Company Coal mining   Common US$1   100   100   Rio Tinto plc
U.S. Borax Inc. Mining, refining and marketing of borates   Common US$1   100   100   Rio Tinto plc










(a) The entity marked (a) is unincorporated.
(b) In addition, at 31 December 2004 the Group held 19.0 per cent of the Labrador Iron Ore Royalty Income Fund which has a 15.1 per cent interest in the Iron Ore Company of Canada. The Group sold its investment in the Labrador Iron Ore Royalty Income Fund in March 2005.
(c) The Group's shareholding in Rossing Uranium Limited carries 35.54 per cent of the total voting rights. Rossing is consolidated by virtue of Board control.
(d) The results of Bougainville Copper Limited are not consolidated (see note 39).
(e) The Group comprises a large number of companies and it is not practical to include all of them in this list. The list therefore only includes those companies that have a more significant impact on the profit or assets of the Group.
(f) The Group's principal subsidiaries are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.
(g) All entities operate mainly in the countries in which they are incorporated.

A-52


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

32    Principal joint venture interests at 31 December 2004

      Class of       Group   Ultimate
Name and country     shares     interest   parent
of incorporation/operation Principal activities   held     %   company










Australia                  
Blair Athol Coal Coal mining   (b)       71.2   Rio Tinto Limited
Kestrel Coal mining   (b)       80.0   Rio Tinto Limited
Hail Creek Coal mining   (b)       82.0   Rio Tinto Limited
Mount Thorley Coal mining   (b)       60.6   Rio Tinto Limited
Bengalla Coal mining   (b)       30.3   Rio Tinto Limited
Warkworth Coal mining   (b)       42.1   Rio Tinto Limited










Chile                  
Minera Escondida Limitada (f) Copper mining and refining   (b)       30   Rio Tinto plc










Indonesia                  
Grasberg expansion Copper and gold mining   (b)       40   Rio Tinto plc










United States of America                  
Decker Coal mining   (b)       50.0   Rio Tinto plc
Greens Creek Silver, gold, zinc and lead mining   (b)       70.3   Rio Tinto plc
Rawhide Gold mining   (b)       51.0   Rio Tinto plc










(a) The Group has joint control of the above ventures and therefore includes them in its accounts using the gross equity accounting technique.
(b) These entities are unincorporated.
(c) The Group comprises a large number of entities and it is not practical to include all of them in this list. The list therefore only includes those entities that have a more significant impact on the profit or assets of the Group.
(d) The Group's principal joint ventures are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.
(e) All entities operate mainly in the countries in which they are incorporated.
(f) The year end of Minera Escondida Limitada is 30 June.

33    Principal associates at 31 December 2004

           Class of   Proportion   Group   Ultimate
Name and country     Number of shares   shares   of class   interest   parent
of incorporation/operation Principal activities   held by the Group   held   held %   %   company












Papua New Guinea                      
Lihir Gold Limited (a) Gold mining   185,758,126   Ordinary Kina 0.1   14.46   14.46   Rio Tinto plc












South Africa                      
Tisand (Pty) Limited Rutile and zircon mining   7,353,675   R1   49.5   50   Rio Tinto plc












United States of America                      
Cortez Gold mining       (b)       40.0   Rio Tinto plc












(a) The Group continues to have significant influence over the activities of Lihir Gold Limited, including Board representation; consequently the Group equity accounts for its interest in this company.
(b) This entity is unincorporated.
(c) The Group comprises a large number of entities and it is not practical to include all of them in this list. The list therefore only includes those entities that have a more significant impact on the profit or assets of the Group.
(d) The Group's principal associates are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.
(e) All entities operate mainly in the countries in which they are incorporated.

34    Principal joint arrangements at 31 December 2004

           Class of   Proportion   Group   Ultimate
Name and country     Number of shares   shares   of class   interest   parent
of incorporation/operation Principal activities   held by the Group   held   held %   %   company












Australia                      
Boyne Smelters Limited Aluminium smelting   153,679,560   Ordinary   59.4   59.4   Rio Tinto Limited
Gladstone Power Station Power generation       (b)       42.1   Rio Tinto Limited
Northparkes Mine Copper/gold mining and processing   (b)       80   Rio Tinto Limited
Queensland Alumina Limited Alumina production   854,078   Ordinary   38.6   38.6   Rio Tinto Limited
Robe River Iron Associates Iron ore mining       (b)       53   Rio Tinto Limited
Hlsmelt® Kwinana Joint Venture Iron technology       (b)       60   Rio Tinto Limited
Bao-HI Ranges Joint Venture Iron ore mining       (b)       54   Rio Tinto Limited












Canada                      
Diavik Mining and processing of diamonds   (b)       60   Rio Tinto plc












New Zealand                      
New Zealand Aluminium Smelters Limited Aluminium smelting   24,998,400   Ordinary   79.36   79.36   Rio Tinto Limited












(a) The Group comprises a large number of entities and it is not practical to include all of them in this list. The list therefore only includes those entities that have a more significant impact on the profit or assets of the Group.
(b) These entities are unincorporated.
(c) All entities operate mainly in the countries in which they are incorporated.
(d) The Group's principal joint arrangements are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.

A-53


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

35   Sales and purchases of subsidiaries, joint ventures, associates and other interests in operations

2004 Disposals                
Name of operation Location Principal activities Ownership Date of
      disposed disposal
      %  








 
Rio Tinto plc - part of Rio Tinto Group                
                 
Subsidiaries                
Mineracao Serra de Fortaleza Limitada Brazil   Nickel mining   99.9   1 January 2004  
Rio Paracatu Mineracao S.A. Brazil   Gold mining   51.0   31 December 2004  








 
Associates                
Freeport-McMoRan Copper & Gold Inc. (b) USA   Copper and gold mining in Indonesia   13.1   30 March 2004  
Sociedade Mineira de Neves-Corvo S.A. Portugal   Copper mining   49.0   18 June 2004  
(Somincor)                








 
Rio Tinto Limited - part of Rio Tinto Group                
Subsidiaries                
Zinkgruvan AB Sweden   Zinc, lead and silver mining   100.0   2 June 2004  








 
Joint ventures                
Hail Creek Australia   Coal mining   10.0   15 November 2004  








 
Other investments                
Lake Cowal Australia   Gold mining   (c ) 9 July 2001  
Sepon Laos   Gold mining   20.0   1 January 2004  
Boke Guinea   Bauxite mining   4.0   25 June 2004  








 
(a) The aggregate profit on disposal of interests in operations in 2004 was US$920 million, which is analysed in note 4. These gains have been classified as exceptional items and consequently excluded from adjusted earnings at the foot of the profit and loss account.
(b) The sale of investment in Freeport-McMoRan Copper & Gold Inc. does not affect the terms of the Grasberg joint venture referred to in note 32 above.
(c) The Group disposed of the Lake Cowal gold project in July 2001. In accordance with the sale agreement, a US$15 million payment on commencement of mining activity was made to the Group on 5 March 2004.
(d) In accordance with FRS 2 and FRS 9, the Group consolidates the results of subsidiary operations, and recognises its share of the results of joint ventures and associates, up to the date of disposal. In addition to the amount recorded as 'Profit on disposal of interests in operations' on the face of the profit and loss account, the subsidiaries which were disposed of during the year contributed US$16 million to Group profit.
(e) The Cash flow statement includes proceeds from disposals of interests in operations as follows:  
  –US$1,511 million included in 'Disposals less acquisitions' which, in accordance with FRS1, is stated net of US $16 million cash and overdrafts transferred on sale of subsidiaries. This comprises US$431 million in respect of subsidiaries and US$1,080 in respect of joint ventures and associates.  
  –US$110 million included in 'Sales less purchases of other investments'.  
                 
2003 Disposals                
Name of operation Location   Principal activities   Ownership   Date of  
        disposed   disposal  
        %      








 
Rio Tinto Limited - part of Rio Tinto Group                
                 
Subsidiaries                
Peak Gold Mines Pty Limited Australia    Gold mining   100   17 March 2003  








 
Joint ventures                
P.T. Kaltim Prima Coal Indonesia    Coal mining   50   10 October 2003  








 
Associates                
Minera Alumbrera Limited Argentina    Copper and gold mining   25   17 March 2003  








 
   
(f) The profit on disposal of interests in operations in 2003 was US$126 million. This was classified as an exceptional items and consequently excluded from adjusted earnings at the foot of the profit and loss account.
(g) The sale proceeds of US$403 million relating to these disposals were included in the Cash flow statement within 'Disposals less acquisitions'.
   

2003 Acquisitions

During 2003 Kennecott Energy, an indirect subsidiary of Rio Tinto plc, increased its holding in Pegasus Technologies Inc. from 20 per cent to 86 per cent. The transaction gave rise to goodwill of US$20 million. The transaction did not involve any cash consideration.

A-54


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

36 Directors' remuneration

Aggregate remuneration of the directors of the parent Companies was as follows:

          Rio Tinto Group     

2004    2003    2002



    US$'000   US$'000   US$'000  
Emoluments   9,992   9,571   9,541  
Long term incentive plans   57   3,278   8,443  
   
 
 
 
    10,049   12,849   17,984  
   
 
 
 
Pension contributions   669   424   65  
Gains made on exercise of share options   2,414   2,029   2,992  

For 2004, a total of US$4,190,900 (2003: US$4,048,800) was attributable to the highest paid director in respect of the aggregate amounts disclosed in the above table, including gains made on exercise of share options. The accrued pension entitlement for the highest paid director was US$712,400 (2003: US$1,158,700).

The aggregate remuneration incurred by Rio Tinto plc in respect of its directors was US$7,756,000 (2003: US$9,794,000).

There were no pension contributions.

The aggregate remuneration, including pension contributions and other retirement benefits, incurred by Rio Tinto Limited in respect of its directors was US$5,376,000 (2003: US$5,508,000). The aggregate pension contribution was US$668,982 (2003: US$423,938).

During 2004, four directors (2003: six) accrued retirement benefits under defined benefit arrangements.

Shares awarded last year in respect of the MCCP 2000 performance periods vested after the publication of the 2003 Annual Report and financial statements and the value of awards provided therein were estimated based on share prices of 1,386p and A$35.24. The actual share prices on 27 February 2004 when the awards vested were 1,440.5p and A$35.83 and the above 2004 figures for long term incentive plans have included this adjustment. Further details are given in the Remuneration report.

Emoluments included in the table above have been translated from local currency at the average rate for the year with the exception of bonus payments which, together with amounts payable under long term incentive plans, have been translated at the year end rate.

More detailed information concerning directors’ remuneration, shareholdings and options is shown in the Remuneration report, including Tables 1 to 5, on pages 76 to 81.

A-55


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

37 Auditors' remuneration
  Rio Tinto plc -   Rio Tinto Limited -      
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group



2004   2003   2002 2004   2003   2002 2004   2003   2002









US$m US$m US$m US$m US$m US$m US$m US$m US$m
Auditors' remuneration - Group Auditors                                    
Audit services                                    
- Statutory audit 3.4   3.1   2.6   2.6   2.1   1.5   6.0   5.2   4.1  
- Audit-related regulatory reporting 1.7   0.9   0.7   1.7   0.4   0.4   3.4   1.3   1.1  
Further assurance services 0.1   0.1   0.2   0.1   0.2   0.2   0.2   0.3   0.4  
Tax services                                    
   - Compliance 0.5   0.4   0.4   0.5   1.3   1.1   1.0   1.7   1.5  
   - Advisory 0.4   0.4   0.2   0.4   0.7   0.7   0.8   1.1   0.9  
Other services                                    
- Financial information technology -   0.1   -   -   -   -   -   0.1   -  
- Internal audit -   0.1   0.3   -   -   -   -   0.1   0.3  
- Other services not covered above -   0.1   0.2   0.1   0.2   0.2   0.1   0.3   0.4  
 
 
 
 
 
 
 
 
 
 
  6.1   5.2   4.6   5.4   4.9   4.1   11.5   10.1   8.7  
 
 
 
 
 
 
 
 
 
 
                                     
Remuneration payable to other accounting firms                                    
Statutory audit 0.4   0.3   0.2   -   0.1   0.1   0.4   0.4   0.3  
Tax services 0.7   0.3   0.2   2.3   2.2   0.6   3.0   2.5   0.8  
Internal audit 1.0   1.2   0.3   0.8   1.1   0.7   1.8   2.3   1.0  
Other services 2.0   2.0   1.1   3.9   4.9   2.6   5.9   6.9   3.7  
 
 
 
 
 
 
 
 
 
 
  4.1   3.8   1.8   7.0   8.3   4.0   11.1   12.1   5.8  
 
 
 
 
 
 
 
 
 
 
  10.2   9.0   6.4   12.4   13.2   8.1   22.6   22.2   14.5  
 
 
 
 
 
 
 
 
 
 

 

(a) The audit fees payable to PricewaterhouseCoopers, the Group Auditors, are reviewed by the Audit committee. The committee sets the policy for the award of non-audit work to the auditors and reviews the nature and extent of such work, and the amount of the related fees, to ensure that independence is maintained. The fees disclosed above consolidate all payments made to PricewaterhouseCoopers by the companies and their subsidiaries.
(b) 'Audit-related regulatory reporting' includes the audit of employee benefit plans, consultation regarding the application of accounting principles (including IFRS) and work performed in connection with Section 404 of the Sarbanes-Oxley Act.
(c) 'Further assurance services' includes financial due diligence for potential business acquisitions and disposals.
(d) 'Tax services' includes tax compliance, involving the preparation or review of returns for corporation, income, sales and excise taxes; acquisitions advice on transfer pricing and dealing with tax returns for expatriates.
(e) 'Other services' includes reviews of risk management policies and procedures, forensic investigations and provision of training services.
(f) Internal audit fees payable to Group Auditors in 2003 relate to projects which were carried forward from 2002. There were no internal audit services provided by the Group auditors in 2004.
(g) 'Remuneration payable to other accounting firms' does not include fees for similar services payable to suppliers of consultancy services other than accountancy firms.
(h) Amounts payable to PricewaterhouseCoopers for non-audit work for the Group's UK companies were US$1.7 million (2003: US$1.3 million 2002: US$0.9 million) and for the Group's Australian companies were US$2.1 million (2003: US$2.3 million 2002: US$1.7 million).

A-56


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

38    Related party transactions

Information about material related party transactions of the Rio Tinto Group is set out below:

Subsidiary companies: Details of investments in principal subsidiary companies are disclosed in note 31.

Joint ventures and associates: Information relating to joint ventures and associates can be found in the following notes:

 Note 4 -  Exceptional items
Note 5 -  Net interest payable and similar charges
Note 6 -  Amortisation of discount
  Note 7 -  Taxation charge
Note 12 -  Property, plant and equipment
Note 13 -  Fixed asset investments
Note 14 -  Net debt of joint ventures and associates
Note 16 -  Accounts receivable and prepayments
Note 19 -  Accounts payable and accruals
Note 25 -  Share premium and reserves
Note 26 -  Product analysis
Note 27 -  Geographical analysis
Note 30 -  Average number of employees
Note 32 -  Principal joint venture interests
Note 33 -  Principal associates
Note 35 -  Purchases and sales of subsidiaries, joint arrangements, joint ventures and associates

Information relating to joint arrangements can be found in note 34 - Principal joint arrangements.

Pension funds: Information relating to pension fund arrangements is disclosed in note 40.

Directors: Details of directors' remuneration are set out in note 36 and in the Remuneration report.

Transactions between the Rio Tinto plc part of the Group and the Rio Tinto Limited part of the Group
These are eliminated on the consolidation of the Rio Tinto Group. Transactions during 2004 and 2003 included the following:

- During 2004, Rio Tinto plc made loans of US$1.4 billion to Rio Tinto Limited.
   
- During 2003, a subsidiary of the Rio Tinto plc part of the Group acquired US$500 million of redeemable preference shares in a subsidiary of the Rio Tinto Limited part of the Group.
   
- During 2003, a payment of US$1,208 million was made by the Rio Tinto Limited part of the Group to the Rio Tinto plc part of the Group in respect of a number of shares which were bought back during 2000.
   
- During 2003 a dividend of US$164 million was paid by Rio Tinto Limited on the DLC Dividend Share, which was issued to facilitate the efficient management of funds within the DLC structure. Of this, US$62 million was paid out of Rio Tinto plc's 37.6% share of the reserves of Rio Tinto Limited and, therefore, had no impact on the shareholders' funds of Rio Tinto plc. The remaining US$102 million of this dividend gave rise to an increase in the shareholders' funds of the Rio Tinto plc part of the Group.This dividend, however, had no impact on the shareholders' funds of the Rio Tinto Group as the economic interests of shareholders both of Rio Tinto plc and Rio Tinto Limited are in the combined net assets of the two dual listed companies. There was no such dividend in 2004.

Leighton Holdings Limited (Leighton)
In 2001, John Morschel became a director and, subsequently, the chairman of Leighton, Australia's largest project development and contracting group. A number of Rio Tinto companies in Australia and Indonesia have, in the ordinary course of their businesses, awarded commercial contracts to subsidiaries of Leighton. The Board does not consider the value of these contracts to be material to the business of either Leighton or the Rio Tinto Group. John Morschel resigned from the board of Leighton on 25 March 2004.

Barclays Bank plc and ANZ Banking Group Limited
On 1 October 2004, Leigh Clifford became a director of Barclays Bank plc and John Morschel became a director of ANZ Banking Group Limited. Rio Tinto is a client of both these banks.

Dupont
Richard Goodmanson's employer, The DuPont Company, has commercial buy and sell arrangements with Rio Tinto. These are not material to either company and, in the normal course of his duties, he does not play a role in nor exert influence over these transactions.

39    Bougainville Copper Limited ('BCL')

The Panguna mine remains shut down. Access to the mine site has not been possible and an accurate assessment of the condition of the assets cannot be determined. Considerable funding would be required to recommence operations to the level which applied at the time of the mine's closure in 1989 and these funding requirements cannot be forecast accurately. The directors do not have access to reliable, verifiable or objective information on BCL and the directors have therefore decided to exclude BCL information from the financial statements. BCL reported a net profit of US$2 million for the financial year (2003: profit of US$4 million, 2002: profit of US$2 million). This is based upon actual transactions for the financial year. The aggregate amount of capital and reserves reported by BCL as at 31 December 2004 was US$106 million (2003: US$97 million). The Group owns 214,887,966 shares in BCL, representing 53.6 per cent of the issued share capital. The investment of US$195 million was fully provided against in 1991. At 31 December 2004, the market value of the shareholding in BCL was US$40 million.

A-57


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

40   Post retirement benefits

(a)   SSAP 24 accounting and disclosure
Pensions
The Group operates a number of pension plans around the world. Whilst some of these plans are defined contribution, the majority are of the funded defined benefit type, with assets held in separate trustee administered funds. Valuations of these plans are updated annually to 31 December by independent qualified actuaries. Further details regarding the plans are provided in the FRS 17 disclosures in section (b) of this note.

Summary of independent actuarial reviews UK   Australia   US   Canada   Other (e)  
 
 
 
 
 
 
                     
At 31 December 2004                    
                     
Assumptions                    
Rate of return on investments (a) 6.8 % 6.4 % 6.8 % 6.8 % 8.2 %
Rate of earnings growth, where appropriate (b) 4.9 % 4.7 % 4.2 % 4.4 % 6.0 %
Rate of increase in pensions 2.9 % 2.7 % -   -   4.0 %
                     
Results                    
Smoothed market value of assets ($m) (c) 1,738   1,273   682   815   208  
Percentage of coverage of liabilities by assets (d) 121 % 101 % 91 % 82 % 112 %
Amount of deficit for individual plans with net deficits ($m) 15   -   97   186   12  
                     
At 31 December 2003                    
                     
Assumptions                    
Rate of return on investments (a) 6.9 % 6.4 % 6.7 % 6.5 % 9.2 %
Rate of earnings growth, where appropriate (b) 4.8 % 4.0 % 4.0 % 4.0 % 6.5 %
Rate of increase in pensions 2.8 % 2.5 % -   -   4.5 %
                     
Results                    
Smoothed market value of assets ($m) (c) 1,506   962   573   673   194  
Percentage of coverage of liabilities by assets (d) 124 % 100 % 81 % 80 % 91 %
Amount of deficit for individual plans with net deficits ($m) 13   7   145   174   19  
   
(a) The rate of return on investments assumed for Australia is after taking into account the tax applicable to Australian pension schemes.
(b) The rate of earnings growth assumed includes a promotional salary scale where appropriate.
(c) Assets were measured at market value smoothed over a one year period.
(d) Asset coverage of the liability is quoted after allowing for expected increases in earnings.
(e) The assumptions vary by location for the 'Other ' plans. Assumptions shown are for Africa.

Other information
A triennial actuarial valuation of the Group's UK plan was made at 31 March 2003 using the projected unit method. In Australia, whilst Group companies sponsor or subscribe to a number of pension plans, the Rio Tinto Staff Superannuation Fund is the only significant plan. This plan principally contains defined contribution liabilities but also has defined benefit liabilities. Valuations are made at least every three years using the projected unit method, with the latest valuation being as at 30 June 2004. A number of defined benefit pension plans are sponsored by the US entities, typically with separate provision for salaried and hourly paid staff. Valuations are made annually at 1 January using the projected unit method. A number of defined benefit pension plans are sponsored by entities in Canada. Valuations are updated annually using the projected unit method. Other defined benefit plans sponsored by the Group around the world were assessed at various dates during 2002, 2003 and 2004. Th e above summary is based on the most recent valuation in each case, updated to the appropriate balance sheet date. The expected average remaining service life in the plans relating to the Group's major entities ranges from eight to 17 years, with an overall average of 12 years. The main pension plans, providing purely defined contribution benefits, held assets equal to their liabilities, of US$180 million as at 31 December 2004 (US$186 million at 31 December 2003). The Group's contributions to these plans of US$6 million (2003:US$9 million) are charged against profits and are included in the 'Regular cost' shown below. The Group also operates a number of unfunded plans, which are included within the deficit and percentage coverage statistics above, measured on a basis consistent with both SSAP 24 and FRS 17.

Profit and loss account - effect of pension costs, before tax and outside shareholders' interests

  2004   2003  
US$m US$m
 
 
 
Regular cost (118 ) (102 )
Variation cost (92 ) (90 )
Interest on prepayment under SSAP 24 39   42  
Settlement 41   -  
 
 
 
Net post retirement cost (130 ) (150 )
 
 
 

The variation cost reflects the amortisation of the excess of the pension asset carried in the balance sheet at the beginning of the year over the surplus/(deficit) in the relevant plans calculated on a SSAP 24 valuation basis. The settlement represents a pension surplus allocated to the Group in South Africa, which is reflected as a credit.

A-58


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

40   Post retirement benefits (continued)

Balance sheet - effect of pension assets and liabilities, before tax and outside shareholders' interests

  2004   2003  
US$m US$m
 
 
 
Prepayment under SSAP 24 616   620  
Provisions (53
)
(77 )
 
 
 
Net post retirement asset 563   543  
 
 
 

Post retirement healthcare
Certain subsidiaries of the Group, mainly in the US, provide health and life insurance benefits to retired employees and in some cases their beneficiaries and covered dependants. Eligibility for cover is dependent upon certain age and service criteria. These arrangements are unfunded.

On 30 September 2004, the unfunded accumulated post retirement benefit obligation and annual cost of accrual of benefits were determined by independent actuaries using the projected unit method. The main financial assumptions were: discount rate 5.7 per cent (at 30 September 2003: 6.1 per cent), Medical Trend Rate 10.5 per cent reducing to 5.0 per cent by the year 2011 (at 30 September 2003 initially 11.2 per cent reducing to 4.7 per cent by the year 2011), claims cost based on individual company experience. The assumptions were consistent with those adopted for determining pension costs. At 30 September 2004, which is the measurement date, the unfunded accumulated post retirement benefits obligation (excluding associates and joint ventures) was US$523 million (at 30 September 2003: US$563 million).

Profit and loss account - effect of post retirement healthcare costs, before tax and outside shareholders' interests

  2004   2003  
US$m US$m
 
 
 
Regular cost (10 ) (9 )
Amortisation (4 ) 4  
Interest (32 ) (29 )
Curtailment 3   -  
 
 
 
Net post retirement cost (43 ) (34 )
 
 
 
         
Balance sheet - effect of post retirement healthcare liabilities, before tax and outside shareholders' interests        
  2004   2003  
  US$m   US$m  
 
 
 
Provisions (523 ) (498 )
         

b)   FRS 17 Transitional disclosures
FRS 17 - 'Retirement Benefits', which deals with accounting for post retirement benefits, has not been adopted, but the additional disclosures which are required are shown below. The standard requires pension deficits, and surpluses to the extent that they are considered recoverable, to be recognised in full. Annual service cost and net financial income on the assets and liabilities of the plans are recognised through earnings. Other fluctuations in the value of the surpluses/(deficits) are recognised in the Statement of Total Recognised Gains and Losses ('STRGL'). Details of post retirement benefit plan assets and liabilities at 31 December 2004, 2003 and 2002, valued on a projected unit basis in accordance with FRS 17, are set out below:

Main assumptions for FRS 17 purposes  UK    Australia     US    Canada  
Other
(mainly
Africa)
 
 
 
 
 
 
 
                     
At 31 December 2004                    
Rate of increase in salaries 4.9 % 4.7 % 4.2 % 4.4 % 6.0 %
Rate of increase in pensions 2.9 % 2.7 % -   -   4.0 %
Discount rate 5.3 % 5.1 % 5.6 % 5.6 % 8.5 %
Inflation 2.9 % 2.7 % 2.7 % 2.7 % 4.0 %
                     
At 31 December 2003                    
Rate of increase in salaries 4.8 % 4.0 % 4.0 % 4.0 % 6.5 %
Rate of increase in pensions 2.8 % 2.5 % -   -   4.5 %
Discount rate 5.4 % 6.0 % 5.9 % 6.1 % 9.0 %
Inflation 2.8 % 2.5 % 2.5 % 2.3 % 4.5 %
                     
At 31 December 2002                    
Rate of increase in salaries 4.8 % 4.0 % 3.2 % 3.7 % 10.5 %
Rate of increase in pensions 2.3 % 2.5 % -   -   7.0 %
Discount rate 5.6 % 6.2 % 6.2 % 6.5 % 11.5 %
Inflation 2.3 % 2.5 % 2.2 % 2.2 % 7.0 %

The main financial assumptions used for the health care schemes, which are predominantly in the US, were: discount rate: 5.6% (2003: 5.9%, 2002: 6.2%), Medical Trend Rate: 10.7% reducing to 5.2% by the year 2011 (2003: Medical Trend Rate: 11.5% reducing to 5.0% by the year 2011, 2002: Medical Trend Rate 8.0% reducing to 5.0% by the year 2009), claims cost based on individual company experience. For the pension and healthcare arrangements the post retirement mortality assumptions allow for expected increases in longevity. The mortality table used for the main arrangements implies that a 60 year old male has an expected future lifetime of 24 years.

A-59


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

40   Post retirement benefits (continued)

  UK   Australia   US   Canada  
Other
(mainly
Africa)
 
 
 
 
 
 
 
Long term rate of return expected at 31 December 2004                    
Equities 7.9 % 7.2 % 7.7 % 7.7 % 9.0 %
Fixed interest bonds 4.8 % 4.7 % 5.1 % 5.1 % 8.5 %
Index linked bonds 4.8 % 4.7 % 5.1 % 5.1 % 8.5 %
Other 4.5 % 4.9 % 5.2 % 4.0 % 5.0 %
                     
Long term rate of return expected at 31 December 2003                    
Equities 7.8 % 7.0 % 7.5 % 7.3 % 9.5 %
Fixed interest bonds 5.0 % 5.1 % 5.4 % 5.2 % 8.5 %
Index linked bonds 5.0 % 5.1 % 5.4 % 5.2 % 8.5 %
Other 4.6 % 5.1 % 5.1 % 3.3 % 5.6 %
                     
Long term rate of return expected at 31 December 2002                    
Equities 7.3 % 7.0 % 7.2 % 7.2 % 12.5 %
Fixed interest bonds 5.0 % 5.5 % 5.6 % 6.0 % 11.0 %
Index linked bonds 5.0 % 5.5 % 5.6 % 6.0 % 11.0 %
Other 4.6 % 5.9 % 6.4 % 5.0 % 10.2 %

Scheme assets
The assets in the pension plans and the contributions made were:

    UK      Australia      US       Canada    
Other
(mainly
Africa)
    Total    
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m  
Value at 31 December 2004                        
Equities 1,211   852   460   534   114   3,171  
Fixed interest bonds 318   299   154   228   14   1,013  
Index linked bonds 162   -   -   54   -   216  
Other 84   132   79   11   80   386  
 
 
 
 
 
 
 
  1,775   1,283   693   827   208   4,786  
 
 
 
 
 
 
 
Value at 31 December 2003                        
Equities 1,094   646   401   451   82   2,674  
Fixed interest bonds 300   229   126   193   15   863  
Index linked bonds 127   7   12   44   -   190  
Other 54   88   74   21   97   334  
 
 
 
 
 
 
 
  1,575   970   613   709   194   4,061  
 
 
 
 
 
 
 
Value at 31 December 2002                        
Equities 823   377   342   271   93   1,906  
Fixed interest bonds 294   160   139   148   18   759  
Index linked bonds 95   5   11   32   -   143  
Other 60   65   39   64   190   418  
 
 
 
 
 
 
 
  1,272   607   531   515   301   3,226  
 
 
 
 
 
 
 
Employer contributions made during 2004 * -   56   41   37   9   143  
 
 
 
 
 
 
 
Employer contributions made during 2003 * 6   45   4   43   5   103  
 
 
 
 
 
 
 
Employer contributions made during 2002 * -   10   4   15   4   33  
 
 
 
 
 
 
 
*The contributions shown include US$6 million (2003:US$9 million; 2002: US$13 million) for defined contribution plans.  

In addition, there were contributions of US$26 million (2003: US$18 million; 2002: US$16 million) in respect of unfunded health care schemes in the year. Since these schemes are unfunded, contributions for future years will be equal to benefit payments and therefore cannot be pre-determined. In relation to pensions, it is currently expected that there will be no significant regular employer or employee contributions to the UK plan in 2005. Contributions are made to the main Australian plan according to the recommendation of the plan actuary and are primarily to a mixed defined benefit/defined contribution type arrangement (included in the above figures). In North America, contributions are agreed annually in nominal terms. Whilst contributions for 2005 are yet to be determined, the currently expected level of contributions by the Group to the plans in Australia, Canada and the US is expected to be higher similar in aggregate to that made in 2004.

The most recent full valuation of the UK plans was at 31 March 2003. The most recent full valuation of the Australian plans was at 30 June 2004. For both the US and Canadian major plans, the most recent full valuation was at 1 January 2004.

A-60


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

40 Post retirement benefits (continued)

Surpluses/(deficits) in the plans
The following amounts were measured in accordance with FRS 17:

At 31 December 2004                     Total          
UK   Australia   US   Canada   Other   Pensions   Healthcare   Total  
  US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
 
 
 
 
 
 
 
 
 
Total market value of plan assets 1,775   1,283   693   827   208   4,786   -   4,786  
Present value of plan liabilities (1,760 ) (1,275 ) (868 ) (1,129 ) (185 ) (5,217 ) (544 ) (5,761 )
 
 
 
 
 
 
 
 
 
Surplus/(deficit) in the plans 15   8   (175 ) (302 ) 23   (431 ) (544 ) (975 )
 
 
 
 
 
 
 
     
Related deferred tax                             168  
Related outside shareholders' interest                             108  
                             
 
Net post retirement liability                             (699 )
                             
 
                                 
Surplus/(deficit) in the plans comprises:                                
Surplus 36   8   6   6   35   91   -   91  
Deficit (21 ) -   (181 ) (308 ) (12 ) (522 ) (544 ) (1,066 )
 
 
 
 
 
 
 
 
 
  15   8   (175 ) (302 ) 23   (431 ) (544 ) (975 )
 
 
 
 
 
 
 
 
 
                                 
                      Total          
At 31 December 2003 UK   Australia   US   Canada   Other   Pensions   Healthcare    Total   
  US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
 
 
 
 
 
 
 
 
 
Total market value of plan assets 1,575   970   613   709   194   4,061   -   4,061  
Present value of plan liabilities (1,477 ) (963 ) (768 ) (877 ) (213 ) (4,298 ) (561 ) (4,859 )
 
 
 
 
 
 
 
 
 
Surplus/(deficit) in the plans 98   7   (155 ) (168 ) (19 ) (237 ) (561 ) (798 )
 
 
 
 
 
 
 
     
Related deferred tax                             123  
Related outside shareholders' interest                             92  
                             
 
Net post retirement liability                             (583 )
                             
 
                                 
Surplus/(deficit) in the plans comprises:                                
Surplus 121   7   12   2   -   142   -   142  
Deficit (23 ) -   (167 ) (170 ) (19 ) (379 ) (561 ) (940 )
 
 
 
 
 
 
 
 
 
  98   7   (155 ) (168 ) (19 ) (237 ) (561 ) (798 )
 
 
 
 
 
 
 
 
 

If the above amounts had been recognised in the financial statements, the Group's shareholders' funds at 31 December would have been as follows:

  2004   2003  
  US$m   US$m  
 
 
 
Shareholders' funds including SSAP 24 post retirement net asset 12,584   10,037  
Deduct: SSAP 24 post retirement net asset 362   357  
Deduct: SSAP 24 post retirement healthcare liability (305 ) (290 )
 
 
 
Shareholders' funds excluding SSAP 24 post retirement pension net asset 12,527   9,970  
Include: FRS 17 post retirement net liability (382 ) (242 )
Include: FRS 17 post retirement healthcare liability (317 ) (341 )
 
 
 
Shareholders' funds including FRS 17 post retirement net liability 11,828   9,387  
 
 
 
         
The post retirement assets and liablities shown above are net of tax and outside shareholders' interests.        
         
Movements in deficit during the year        

The net post retirement deficit under FRS 17 before deferred tax and outside shareholders interests would have moved as follows during 2004:

  Pension   Other   2004   2003  
  benefits   benefits   Total   Total  
          US$m   US$m  
 
 
 
 
 
Net post retirement deficit at 1 January (237 ) (561 ) (798 ) (666 )
Movement in year:                
Currency translation adjustment (12 ) (14 ) (26 ) (45 )
Total current service cost (employer and employee) (164 ) (10 ) (174 ) (149 )
Past service cost (15 ) (4 ) (19 ) (7 )
Curtailment and settlement gains 31   4   35   3  
Subsidiaries sold 7   -   7   -  
Plan amendments -   -   -   (10 )
Other net finance (expense)/income 19   (33 ) (14 ) (30 )
Contributions (including employee contributions) 185   26   211   156  
Actuarial (loss)/gain recognised in STRGL (245 ) 48   (197 ) (50 )
 
 
 
 
 
Net post retirement deficit at 31 December (431 ) (544 ) (975 ) (798 )
 
 
 
 
 

The curtailment and settlement gain primarily reflects the allocation of a surplus to the employer in a South African plan.

A-61


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

40 Post retirement benefits (continued)

Amounts which would have been recognised in the profit and loss account and in the STRGL under FRS 17

The following amounts would have been included within operating profit under FRS 17:

  Pension   Other   2004   2003  
  benefits   benefits   Total   Total  
          US$m   US$m  
 
 
 
 
 
Employer current service cost (125 ) (10 ) (135 ) (122 )
Past service cost (15 ) (4 ) (19 ) (7 )
Curtailment and settlement gains 31   4   35   3  
 
 
 
 
 
Total operating charge (109 ) (10 ) (119 ) (126 )
 
 
 
 
 

Employer contributions of US$6 million (2003: US$9 million) for defined contribution arrangements have been included in the above operating charge.

The following amounts would have been included as other net finance (expense)/income under FRS 17:

  Pension   Other   2004   2003  
  benefits   benefits   Total   Total  
          US$m   US$m  
 
 
 
 
 
Expected return on pension scheme assets 272   -   272   213  
Interest on post retirement liabilities (253 ) (33 ) (286 ) (243 )
 
 
 
 
 
Net return 19   (33 ) (14 ) (30 )
 
 
 
 
 

If the above amounts had been recognised in the financial statements instead of the SSAP24 charges, the Group's reported net earnings for 2004 would have increased by US$27 million (2003: increased by US$17 million).

The following amounts would have been recognised within the STRGL under FRS 17:

  2004   2003   2002  
  US$m   US$m   US$m  
 
 
 
 
Excess actual returns on plan assets compared with the expected return            
Amount (US$m) 226   354   (599 )
As a percentage of plan assets 5%   9%   -19%  
 
 
 
 
             
Experience (losses)/gains on plan liabilities:            
(i.e. variances between the actual estimate of liabilities and the subsequent outcome)            
Amount (US$m) (7 ) (118 ) 28  
As a percentage of the present value of the plan liabilities -   -2%   1%  
 
 
 
 
             
Change in assumptions:            
Amount (US$m) (416 ) (286 ) (148 )
 
 
 
 
             
Total amount recognised in STRGL            
Amount (US$m) (197 ) (50 ) (719 )
As a percentage of the present value of the plan liabilities -3%   -1%   -18%  
 
 
 
 

A-62


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

41    Rio Tinto financial information by business unit

  Rio Tinto   Gross turnover (a)   EBITDA (b)   Net earnings (c)  
  interest              
  %   2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
 
      US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Iron Ore                                        
Hamersley (inc. HIsmelt®) 100.0   1,858   1,409   1,173   800   711   676   447   424   401  
Robe River 53.0   614   400   253   325   213   160   119   68   54  
Iron Ore Company of Canada 58.7   428   442   400   55   47   25   3   7   (3 )
     
 
 
 
 
 
 
 
 
 
      2,900   2,251   1,826   1,180   971   861   569   499   452  
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy                                        
Kennecott Energy 100.0   1,107   955   949   277   236   267   119   88   90  
Rio Tinto Coal Australia 100.0   780   443   421   336   157   233   180   70   134  
Kaltim Prima Coal (d ) -   142   216   -   74   79   -   31   26  
Coal & Allied 75.7   779   599   627   204   52   207   51   (24 ) 68  
Rössing 68.6   124   86   112   8   (33 ) 50   (4 ) (19 ) 23  
Energy Resources of Australia 68.4   174   131   113   70   58   50   19   11   12  
     
 
 
 
 
 
 
 
 
 
      2,964   2,356   2,438   895   544   886   365   157   353  
     
 
 
 
 
 
 
 
 
 
Industrial Minerals     2,126   1,916   1,946   538   465   717   223   154   286  
     
 
 
 
 
 
 
 
 
 
Aluminium (e ) 2,478   1,995   1,722   720   488   510   334   200   256  
     
 
 
 
 
 
 
 
 
 
Copper                                        
Kennecott Utah Copper 100.0   1,113   722   755   496   230   236   293   88   86  
Escondida 30.0   1,003   502   283   699   284   121   416   122   32  
Freeport (f ) 43   344   306   7   169   139   (4 ) 23   19  
Grasberg joint venture (g ) 159   407   371   102   225   215   38   104   113  
Palabora 49.2   305   206   201   (20 ) 20   53   (21 ) 1   12  
Kennecott Minerals 100.0   263   239   205   129   122   93   79   60   38  
Rio Tinto Brasil (h ) 109   141   117   31   48   40   1   48   16  
Other Copper (d ) 169   178   256   91   51   100   54   (6 ) 25  
     
 
 
 
 
 
 
 
 
 
      3,164   2,739   2,494   1,535   1,149   997   856   440   341  
     
 
 
 
 
 
 
 
 
 
Diamonds                                        
Argyle 100.0   322   434   372   102   198   175   23   72   63  
Diavik 60.0   420   122   -   316   106   -   145   41   -  
Murowa 78.0   2   -   -   1   -   -   1   -   -  
     
 
 
 
 
 
 
 
 
 
      744   556   372   419   304   175   169   113   63  
     
 
 
 
 
 
 
 
 
 
Other Operations     145   184   208   83   77   81   28   21   25  
     
 
 
 
 
 
 
 
 
 
Product Group Total     14,521   11,997   11,006   5,370   3,998   4,227   2,544   1,584   1,776  
     
 
 
 
 
 
 
 
 
 
Other items     87   122   113   (221 ) (233 ) (137 ) (114 ) (45 ) (42 )
Exploration and evaluation                 (187 ) (127 ) (130 ) (152 ) (98 ) (109 )
Net interest                             (57 ) (59 ) (95 )
                             
 
 
 
Adjusted earnings                             2,221   1,382   1,530  
Exceptional items                 771   126   (116 ) 592   126   (879 )
     
 
 
 
 
 
 
 
 
 
Total     14,608   12,119   11,119   5,733   3,764   3,844   2,813   1,508   651  
     
 
 
 
 
 
 
 
 
 
     Depreciation & amortisation in subsidiaries                 (1,204 ) (1,006 ) (954 )            
     Asset write-downs relating to subsidiaries & joint ventures              (408 ) -   (955 )            
     Depreciation & amortisation in joint ventures and associates              (271 ) (366 ) (333 )            
               
 
 
             
     Profit on ordinary activities before interest and tax                3,850   2,392   1,602              
               
 
 
             
   
(a) Gross turnover includes 100 per cent of subsidiaries' turnover and the Group's share of the turnover of joint ventures and associates.
  Turnover has been adjusted to reclassify, as turnover, certain amounts charged to customers for freight and handling, which previously were deducted from operating costs.
(b) EBITDA of subsidiaries, joint ventures and associates represents profit before: exceptional items, tax, net interest payable, depreciation and amortisation, that is attributable to the Rio Tinto Group.
(c) Net earnings represent after tax earnings attributable to the Rio Tinto Group. Earnings of subsidiaries are stated before interest charges but after the amortisation of the discount related to provisions. Earnings attributable to joint ventures and associates include interest charges.
(d) During June 2004, Rio Tinto sold its interests in Somincor and Zinkgruvan. During 2003 Rio Tinto sold its interests in Kaltim Prima Coal, Alumbrera and Peak.
(e) Includes Rio Tinto's interest in Anglesey Aluminium (51 per cent) and Comalco (100 per cent).
(f) On 30 March 2004 Rio Tinto sold its 13.1 per cent shareholding in Freeport-McMoRan Copper & Gold Inc. The sale of the shares does not affect the terms of the joint venture referred to below.
(g) Under the terms of a joint venture agreement, Rio Tinto is entitled to 40 per cent of additional material mined as a consequence of expansions and developments of the Grasberg facilities since 1998.
(h) Rio Tinto sold its 99.9 per cent interest in Fortaleza on 1 January 2004, and its 51 per cent interest in Morro do Ouro on 31 December 2004.
(i) Business units have been classified above according to the Group’s management structure at 31 December 2004. Generally, this structure has regard to the primary product of each business unit but there are exceptions. For example, the Copper group includes certain gold operations. This summary differs, therefore, from the Product Analysis, in which the contributions of individual business units are attributed to several products as appropriate.
   
   

A-63


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

41   Rio Tinto financial information by business unit (continued)

  Capital expenditure (j)   Depreciation & amortisation (k)   Operating assets (l)   Employees (m)  
                 
  2004   2003   2002   2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
 
 
 
  US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Iron Ore                                                
Hamersley (inc. HIsmelt®) 745   298   79   161   110   94   2,211   1,543   923   2,581   2,169   2,006  
Robe River 109   75   81   93   74   50   1,910   1,852   1,409   527   478   496  
Iron Ore Company of Canada 51   37   39   41   29   35   530   489   416   1,528   1,884   1,936  
 
 
 
 
 
 
 
 
 
 
 
 
 
  905   410   199   295   213   179   4,651   3,884   2,748   4,636   4,531   4,438  
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy                                                
Kennecott Energy 169   168   152   118   105   128   447   561   486   1,771   1,776   1,710  
Rio Tinto Coal Australia 50   92   126   73   52   37   661   649   406   904   755   679  
Kaltim Prima Coal -   2   5   -   16   21   -   -   46   -   2,108   2,760  
Coal & Allied 15   34   58   94   91   69   717   787   626   1,095   1,338   1,375  
Rössing 2   4   5   15   7   5   40   46   48   814   810   786  
Energy Resources of Australia 7   5   4   35   30   23   179   178   140   273   238   262  
 
 
 
 
 
 
 
 
 
 
 
 
 
  243   305   350   335   301   283   2,044   2,221   1,752   4,857   7,025   7,572  
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial Minerals 248   139   133   176   172   158   2,170   2,038   2,063   6,575   6,581   6,723  
 
 
 
 
 
 
 
 
 
 
 
 
 
Aluminium 449   436   269   202   169   137   3,683   3,258   2,365   4,349   4,223   3,929  
 
 
 
 
 
 
 
 
 
 
 
 
 
Copper                                                
Kennecott Utah Copper 105   83   97   90   92   129   1,243   1,277   1,378   1,449   1,406   1,596  
Escondida 113   45   117   54   79   52   624   492   449   851   722   704  
Freeport -   33   23   3   54   50   -   144   128              
Grasberg joint venture 35   60   55   43   43   40   428   417   412   1,783   1,165   1,445  
Palabora 30   66   64   41   17   13   358   426   287   1,734   2,043   2,176  
Kennecott Minerals 36   9   21   27   42   43   166   136   155   714   672   763  
Rio Tinto Brasil 18   19   14   6   (18 ) 11   50   138   91   975   1,393   1,320  
Other Copper 42   63   60   23   52   73   190   335   443   467   931   1,266  
 
 
 
 
 
 
 
 
 
 
 
 
 
  379   378   451   287   361   411   3,059   3,365   3,343   7,973   8,332   9,270  
 
 
 
 
 
 
 
 
 
 
 
 
 
Diamonds                                                
Argyle 89   22   31   58   76   76   666   600   488   809   750   751  
Diavik 49   78   206   67   34   -   599   674   484   377   298   250  
Murowa 14   -   -   -   -   -   16   -   -   76   -   -  
 
 
 
 
 
 
 
 
 
 
 
 
 
  152   100   237   125   110   76   1,281   1,274   972   1,262   1,048   1,001  
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Operations 10   4   6   45   37   36   89   98   114   1,432   2,228   2,789  
 
 
 
 
 
 
 
 
 
 
 
 
 
Product Group Total 2,386   1,772   1,645   1,465   1,363   1,280   16,977   16,138   13,357   31,084   33,968   35,722  
 
 
 
 
 
 
 
 
 
 
 
 
 
Other items 5   17   13   418   9   7   (642 ) (455 ) (148 ) 1,956   2,048   1,451  
Less: Joint ventures and associates (j) (k) (234 ) (181 ) (241 ) (271 ) (366 ) (333 )                        
 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2,157   1,608   1,417   1,612   1,006   954   16,335   15,683   13,209   33,040   36,016   37,173  
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: net debt                         (3,751 ) (5,646 ) (5,747 )            
                         
 
 
             
Net Assets                         12,584   10,037   7,462              
                         
 
 
             
   
(j)

Capital expenditure comprises the net cash outflow on purchases less disposals of property, plant and equipment. The details provided include 100 per cent of subsidiaries' capital expenditure and Rio Tinto's share of the capital expenditure of joint ventures and associates. Amounts relating to joint ventures and associates not specifically funded by Rio Tinto are deducted before arriving at total capital expenditure for the Group.

(k) Depreciation figures include 100 per cent of subsidiaries' depreciation and amortisation of goodwill and include Rio Tinto's share of the depreciation and goodwill amortisation of joint ventures and associates. Amounts relating to joint ventures and associates are deducted before arriving at the total depreciation charge.
(l) Operating assets of subsidiaries comprise net assets before deducting net debt, less outside shareholders' interests which are calculated by reference to the net assets of the relevant companies (ie net of such companies' debt). For joint ventures and associates, Rio Tinto's net investment is shown. For joint ventures and associates shown above, Rio Tinto's shares of operating assets, defined as for subsidiaries, are as follows: Escondida US$948 million (2003: US$905 million; 2002: US$913 million), Grasberg joint venture US$428 million (2003: US$417 million; 2002: US$412 million).
(m) Employee numbers, which represent the average for the year, include 100 per cent of employees of subsidiary companies. Employee numbers for joint arrangements, joint ventures and associates are proportional to the Group's equity interest. Part time employees are included on a full time equivalent basis and people employed by contractors are not included. Temporary employees are included in employee numbers.

A-64


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles

Reconciliation with US GAAP

      Rio Tinto plc -
part of Rio Tinto Group
 
  Rio Tinto Limited -
part of Rio Tinto Group
 
  Rio Tinto Group   
     
 
 
 
      2004   2004   2004  
     
 
 
 
      US$m   US$m   US$m  
Net earnings under UK GAAP 2,073   1,185   2,813  
  Increase/(decrease) before tax in respect of:            
 
Amortisation of goodwill - subsidiaries and joint arrangements
37   40   77  
 
Amortisation of intangibles - subsidiaries and joint arrangements
(44 ) -   (44 )
 
Amortisation of intangibles - equity accounted companies (excluding Rio Tinto Limited)
(6 ) -   (6 )
  Exchange differences included in earnings under US GAAP 18   209   227  
  Mark to market of derivative contracts   23   27  
  Profit on sale of operations 114   -   114  
 
Adjustments to asset carrying values - subsidiaries and joint arrangements
(5 ) -   (5 )
 
Adjustments to asset carrying values - equity accounted companies (excluding Rio Tinto Limited)
-   -   -  
  Pensions/post retirement benefits 12   3   15  
  Exploration and evaluation (6 ) (65 ) (71 )
  Depreciation of mining assets (1 (67 ) (68 )
  Share options (14 ) (9 ) (23 )
 
Effect of historical average commodity prices and other items in ore reserve determination
(94 (2 (96
  Other (12 ) (53 ) (65 )
  Taxation:            
    Tax effect of the above adjustments 24   38   62  
    Other tax adjustments (137 ) -   (137 )
  Outside shareholders' interests in the above adjustments 4   (1 ) 3  
  Share of US GAAP adjustments of Rio Tinto Limited 43   -   -  
     
 
 
 
Net income/(loss) under US GAAP before cumulative effect of change in accounting principle
2,010   1,301   2,823  
     
 
 
 
 
Cumulative effect of change in accounting principle for close down and restoration costs
-   -   -  
  Share of US GAAP adjustment of Rio Tinto Limited -   -   -  
     
 
 
 
Net income/(loss) under US GAAP 2,010   1,301   2,823  
     
 
 
 
Basic earnings per ordinary share under US GAAP            
  Before cumulative effect of change in accounting principle 188.3 c 260.6 c 204.7 c
     
 
 
 
  Cumulative effect of change in accounting principle -   -   -  
     
 
 
 
  After cumulative effect of change in accounting principle 188.3 c 260.6 c 204.7 c
     
 
 
 
Diluted earnings per ordinary share under US GAAP            
  Before cumulative effect of change in accounting principle 188.0 c 260.1 c 204.4 c
     
 
 
 
  Cumulative effect of change in accounting principle -   -   -  
     
 
 
 
  After cumulative effect of change in accounting principle 188.0 c 260.1 c 204.4 c
     
 
 
 

A-65.2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles

Reconciliation with US GAAP

      Rio Tinto plc -
part of Rio Tinto Group
 
  Rio Tinto Limited -
part of Rio Tinto Group
 
  Rio Tinto Group   
     
 
 
 
      2003   2003   2003  
     
 
 
 
      US$m   US$m   US$m  
Net earnings under UK GAAP 956   884   1,508  
  Increase/(decrease) before tax in respect of:            
 
Amortisation of goodwill - subsidiaries and joint arrangements
34   42   76  
 
Amortisation of intangibles - subsidiaries and joint arrangements
(40 ) -   (40 )
 
Amortisation of intangibles - equity accounted companies (excluding Rio Tinto Limited)
(7 ) -   (7 )
  Exchange differences included in earnings under US GAAP 52   967   1,019  
  Mark to market of derivative contracts (24 311   287  
  Profit on sale of operations -   -    
 
Adjustments to asset carrying values - subsidiaries and joint arrangements
(32 ) -   (32 )
 
Adjustments to asset carrying values - equity accounted companies (excluding Rio Tinto Limited)
-   -   -  
  Pensions/post retirement benefits 55   4   59  
  Exploration and evaluation (8 (16 ) (24 )
  Depreciation of mining assets 16   (75 ) (59 )
  Share options (12 ) (9 ) (21 )
 
Effect of historical average commodity prices and other items in ore reserve determination
(82 ) -   (82
  Other (60 ) (37 ) (97 )
  Taxation:            
    Tax effect of the above adjustments 16   (412 ) (396 )
    Other tax adjustments (12 ) 7   (5 )
  Outside shareholders' interests in the above adjustments 8   (39 ) (31 )
  Share of US GAAP adjustments of Rio Tinto Limited 279   -   -  
     
 
 
 
Net income/(loss) under US GAAP before cumulative effect of change in accounting principle
1,139   1,627   2,155  
     
 
 
 
 
Cumulative effect of change in accounting principle for close down and restoration costs
(198 20   (178
  Share of US GAAP adjustment of Rio Tinto Limited 8   -   -  
     
 
 
 
Net income/(loss) under US GAAP 949   1,647   1,977  
     
 
 
 
Basic earnings per ordinary share under US GAAP            
  Before cumulative effect of change in accounting principle 106.8 c 326.1 c 156.4 c
     
 
 
 
  Cumulative effect of change in accounting principle (17.8 )c  4.0 (12.9 )c
     
 
 
 
  After cumulative effect of change in accounting principle 89.0 c 330.1 c 143.5 c
     
 
 
 
Diluted earnings per ordinary share under US GAAP            
  Before cumulative effect of change in accounting principle 106.7 c 326.0 c 156.2 c
     
 
 
 
  Cumulative effect of change in accounting principle (17.8 )c  4.0 (12.9 )c 
     
 
 
 
  After cumulative effect of change in accounting principle 88.9 c 330.0 c 143.3 c
     
 
 
 

A-65.2003


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles

Reconciliation with US GAAP

      Rio Tinto plc -
part of Rio Tinto Group
 
  Rio Tinto Limited -
part of Rio Tinto Group
 
  Rio Tinto Group   
     
 
 
 
      2002   2002   2002  
     
 
 
 
      US$m   US$m   US$m  
Net earnings under UK GAAP 195   736   651  
  Increase/(decrease) before tax in respect of:            
 
Amortisation of goodwill - subsidiaries and joint arrangements
52   38   90  
 
Amortisation of intangibles - subsidiaries and joint arrangements
(59 ) -   (59 )
 
Amortisation of intangibles - equity accounted companies (excluding Rio Tinto Limited)
(9 ) -   (9 )
  Exchange differences included in earnings under US GAAP (53 ) 293   240  
  Mark to market of derivative contracts   151   157  
  Profit on sale of operations -   -   -  
 
Adjustments to asset carrying values - subsidiaries and joint arrangements
(422 ) 420   (2 )
 
Adjustments to asset carrying values - equity accounted companies (excluding Rio Tinto Limited)
(87 ) -   (87 )
  Pensions/post retirement benefits 8   (7 ) 1  
  Exploration and evaluation -   (17 ) (17 )
  Depreciation of mining assets 10   (20 ) (10 )
  Share options (12 ) (5 ) (17 )
 
Effect of historical average commodity prices and other items in ore reserve determination
-   -   -  
  Other (39 ) (32 ) (71 )
  Taxation:            
    Tax effect of the above adjustments 11   (125 ) (114 )
    Other tax adjustments (13 ) -   (13 )
  Outside shareholders' interests in the above adjustments 6   (165 ) (159 )
  Share of US GAAP adjustments of Rio Tinto Limited 200   -   -  
     
 
 
 
Net income/(loss) under US GAAP before cumulative effect of change in accounting principle
(206 ) 1,267   581  
     
 
 
 
 
Cumulative effect of change in accounting principle for close down and restoration costs
-   -   -  
  Share of US GAAP adjustment of Rio Tinto Limited -   -   -  
     
 
 
 
Net income/(loss) under US GAAP (206 ) 1,267   581  
     
 
 
 
Basic earnings per ordinary share under US GAAP            
  Before cumulative effect of change in accounting principle (19.3 )c 254.0 c 42.2 c
     
 
 
 
  Cumulative effect of change in accounting principle -   -   -  
     
 
 
 
  After cumulative effect of change in accounting principle (19.3 )c 254.0 c 42.2 c
     
 
 
 
Diluted earnings per ordinary share under US GAAP            
  Before cumulative effect of change in accounting principle (19.3 )c 253.7 c 42.1 c
     
 
 
 
  Cumulative effect of change in accounting principle -   -   -  
     
 
 
 
  After cumulative effect of change in accounting principle (19.3 )c 253.7 c 42.1 c
     
 
 
 

A-65.2002


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Reconciliation with US GAAP

      Rio Tinto plc -
part of Rio Tinto Group
 
  Rio Tinto Limited -
part of Rio Tinto Group
 
  Rio Tinto Group   
     
 
 
 
      2004   2004   2004  
     
 
 
 
      US$m   US$m   US$m  
Shareholders' funds under UK GAAP 9,139   5,515   12,584  
  Increase/(decrease) before tax in respect of:            
  Goodwill - subsidiaries and joint arrangements 938   351   1,289  
 
Goodwill - equity accounted companies (excluding Rio Tinto Limited)
206   -   206  
  Intangibles - subsidiaries and joint arrangements 196   -   196  
 
Intangibles - equity accounted companies (excluding Rio Tinto Limited)
36   -   36  
  Mark to market of derivative contracts (66 ) 454   388  
 
Adjustments to asset carrying values - subsidiaries and joint arrangements
117   399   516  
  Pensions/post retirement benefits (389 ) (26 ) (415 )
  Exploration and evaluation (14 (241 ) (255 )
  Depreciation of mining assets 34   (219 ) (185 )
 
Effect of historical average commodity prices and other items in ore reserve determination
(176 (2 (178
  Provision for close down and restoration costs (63 70   7  
  Start up costs (128 ) (30 ) (158 )
  Proposed dividends 401   225   626  
  Other 55   (70 ) (15 )
  Tax effect of the above adjustments 48   (98 ) (50 )
  Deferred tax on acquisitions:            
    Impact on mining property -   789   789  
    Impact on tax provisions -   (789 ) (789 )
  Other tax adjustments (69 1   (68
 
Outside shareholders' interests in the above adjustments
20   (82 ) (62 )
  Share of US GAAP adjustments of Rio Tinto Limited 275   -   -  
     
 
 
 
Shareholders' funds under US GAAP 10,560   6,247   14,462  
     
 
 
 

A-66.2004


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Reconciliation with US GAAP

      Rio Tinto plc -
part of Rio Tinto Group
 
  Rio Tinto Limited -
part of Rio Tinto Group
 
  Rio Tinto Group   
     
 
 
 
      2003   2003   2003  
     
 
 
 
      US$m   US$m   US$m  
Shareholders' funds under UK GAAP 7,343   4,324   10,037  
  Increase/(decrease) before tax in respect of:            
  Goodwill - subsidiaries and joint arrangements 896   302   1,198  
 
Goodwill - equity accounted companies (excluding Rio Tinto Limited)
352   -   352  
  Intangibles - subsidiaries and joint arrangements 240   -   240  
 
Intangibles - equity accounted companies (excluding Rio Tinto Limited)
42   -   42  
  Mark to market of derivative contracts (65 ) 446   381  
 
Adjustments to asset carrying values - subsidiaries and joint arrangements
96   409   505  
  Pensions/post retirement benefits (410 ) (59 ) (469 )
  Exploration and evaluation (8 (172 ) (180 )
  Depreciation of mining assets 35   (142 ) (107 )
 
Effect of historical average commodity prices and other items in ore reserve determination
(82 -   (82
  Provision for close down and restoration costs (29 82   53  
  Start up costs (122 ) (34 ) (156 )
  Proposed dividends 299   170   469  
  Other (44 ) (84 ) (128 )
  Tax effect of the above adjustments 55   (157 ) (102 )
  Deferred tax on acquisitions:            
    Impact on mining property -   831   831  
    Impact on tax provisions -   (831 ) (831 )
  Other tax adjustments 68   1   69  
 
Outside shareholders' interests in the above adjustments
12   (90 ) (78 )
  Share of US GAAP adjustments of Rio Tinto Limited 253   -   -  
     
 
 
 
Shareholders' funds under US GAAP 8,931   4,996   12,044  
     
 
 
 

A-66.2003


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Reconciliation with US GAAP

      Rio Tinto plc -
part of Rio Tinto Group
 
  Rio Tinto Limited -
part of Rio Tinto Group
 
  Rio Tinto Group   
     
 
 
 
      2002   2002   2002  
     
 
 
 
      US$m   US$m   US$m  
Shareholders' funds under UK GAAP 5,899   2,510   7,462  
  Increase/(decrease) before tax in respect of:            
  Goodwill - subsidiaries and joint arrangements 862   203   1,065  
 
Goodwill - equity accounted companies (excluding Rio Tinto Limited)
352   -   352  
  Intangibles - subsidiaries and joint arrangements 271   -   271  
 
Intangibles - equity accounted companies (excluding Rio Tinto Limited)
49   -   49  
  Mark to market of derivative contracts (10 ) (44 ) (54 )
 
Adjustments to asset carrying values - subsidiaries and joint arrangements
133   420   553  
  Pensions/post retirement benefits (454 ) (18 ) (472 )
  Exploration and evaluation -   (124 ) (124 )
  Depreciation of mining assets 19   (37 ) (18 )
 
Effect of historical average commodity prices and other items in ore reserve determination
-   -   -  
  Provision for close down and restoration costs 216   71   287  
  Start up costs (81 ) (29 ) (110 )
  Proposed dividends 272   158   430  
  Other (33 ) (54 ) (87 )
  Tax effect of the above adjustments (32 ) (28 ) (60 )
  Deferred tax on acquisitions:            
    Impact on mining property -   825   825  
    Impact on tax provisions -   (825 ) (825 )
  Other tax adjustments 80   (6 ) 74  
 
Outside shareholders' interests in the above adjustments
(1 ) (100 ) (101 )
  Share of US GAAP adjustments of Rio Tinto Limited 155   -   -  
     
 
 
 
Shareholders' funds under US GAAP 7,697   2,922   9,517  
     
 
 
 

A-66.2002


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

The Group’s financial statements have been prepared in accordance with generally accepted accounting principles in the United Kingdom ('UK GAAP'), which differ in certain respects from those in the United States ('US GAAP'). These differences relate principally to the following items, and the effect of each of the adjustments to net earnings and shareholders' funds that would be required under US GAAP is set out on the preceding pages.

Goodwill
For 1997 and prior years, UK GAAP permitted the write off of purchased goodwill on acquisition, directly against reserves. For acquisitions in 1998 and subsequent years, goodwill is capitalised and amortised over its expected useful life under UK GAAP. Under US GAAP, goodwill is capitalised and, until 2001, was amortised by charges against income over the period during which it was expected to be of benefit, subject to a maximum of 40 years. Goodwill previously written off directly to reserves in the UK GAAP financial statements was therefore reinstated and amortised under US GAAP. From 1 January 2002, goodwill and indefinite lived intangible assets are no longer amortised under US GAAP but are reviewed annually for impairment under SFAS 142 'Goodwill and Other Intangible Assets'. Goodwill amortisation of US$77 million charged against UK GAAP earnings for 2004 (2003: US$76 million, 2002: US$90 million) is added back in the US GAAP reconciliation. No impairment write-downs were required on the initial transition to SFAS 142.

Intangible assets under US GAAP
The implementation of SFAS 141 'Business Combinations' resulted in the reclassification of US$340 million from goodwill to finite lived intangible assets at 1 January 2002. The accumulated cost relating to these intangible assets at 31 December 2004 was US$714 million and accumulated amortisation was US$482 million. The total amortisation expense for 2004 was US$50 million of which US$18 million is related to the amortisation of goodwill previously written off to reserves under UK GAAP now reclassified as finite lived intangible assets under US GAAP. The remaining US$32 million relates to the amortisation of an asset classified as goodwill on the UK GAAP balance sheet but now reclassified as finite lived intangible assets under US GAAP. The estimated amortisation charge relating to intangible assets for each of the next five years is US$50 million.

Exchange differences included in earnings under US GAAP
The Group finances its operations primarily in US dollars, and a significant proportion of the Group's US dollar debt is located in its Australian operations. Under UK GAAP, this debt is dealt with in the context of the currency status of the Group as a whole and exchange differences reported by the Australian operations are adjusted through reserves. US GAAP permits such exchange gains and losses to be taken to reserves only to the extent that the US dollar debt hedges US dollar assets in the Australian Group. Exchange gains of the Group of US$227 million pre-tax (2003: gains of US$1,019 million, 2002: gains of US$240 million), US$183 million net of tax and minorities (2003: US$623 million net of tax and minorities, 2002: US$177 million loss net of tax and minorities), on US dollar debt that does not qualify for hedge accounting under US GAAP have therefore been recorded in US GAAP earnings.

Mark to market of derivative contracts
The Group is party to derivative contracts in respect of some of its future transactions in order to hedge its exposure to fluctuations in exchange rates against the US dollar. Under UK GAAP, these contracts are accounted for as hedges: gains and losses are deferred and subsequently recognised when the hedged transaction occurs. Under SFAS 133 ' Accounting for Derivative Instruments and Hedging Activities', all derivative instruments are included in the balance sheet as assets or liabilities measured at fair value. Certain of the Group's derivative contracts do not qualify for hedge accounting under SFAS 133, principally because the hedge is not located in the entity with the relevant exposure. Unrealised pre-tax losses for the Group of US$87 million (2003: unrealised pre-tax gains of US$182 million, 2002: unrealised pre-tax gains of US$148 million), US$57 million after tax and minorities (2003: US$115 million after tax and minorities, 2002: US$104 million after tax and minorities), on such derivatives have therefore been recorded in US GAAP earnings. Realised gains of US$114 million pre tax (2003: US$105 million pre tax, 2002: US$9 million pre tax), US$79 million after tax and minorities, (2003: US$75 million after tax and minorities, 2002: US$6 million after tax and minorities), which have been capitalised under UK GAAP have also been recorded in earnings under US GAAP.

Accounting treatment for the derivatives disclosed in the Financial instruments note 28

Forward exchange contracts and currency options hedging trading transactions
Under UK GAAP, gains and losses on these contracts are taken to the profit and loss account in the same accounting period as the hedged item to which they relate. Under US GAAP, certain of these contracts qualify as cash flow hedges under SFAS 133. Unrealised gains and losses on these qualifying contracts are reflected in other comprehensive income until the maturity of the hedged item when they are reclassified to earnings. The remainder of these contracts do not qualify for hedge accounting under SFAS 133. Gains and losses on these contracts are recorded in earnings as they arise.

Forward exchange contracts hedging capital expenditure
Under UK GAAP, gains and losses on the contracts are credited or debited to the cost of the asset in the same accounting period as the hedged expenditure and are depreciated over the economic life of the asset. Under US GAAP, these contracts do not qualify for hedge accounting under SFAS 133. Gains and losses on contracts not qualifying for hedge accounting are recorded in earnings as they arise.

Currency swaps hedging non US dollar debt
Under UK GAAP, unrealised exchange gains and losses on the currency swaps hedging non US dollar debt are taken to reserves offsetting unrealised exchange gains and losses on the underlying hedged debt. Under US GAAP, both unrealised gains and losses on the currency swaps and unrealised gains and losses on the underlying debt are recorded in earnings.

A-67


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42   Reconciliation to US Accounting Principles (continued)

Interest rate swaps
Under UK GAAP, the interest differential arising from interest rate swaps is taken to the profit and loss account on an accruals basis, and matched against the interest charge on the hedged loan. Under US GAAP, for those interest rate swaps that qualify for fair value hedge accounting under SFAS 133, the fair value gain or loss on the interest rate swap and the offsetting gain or loss on the hedged loan are recorded to earnings. For those interest rate swaps that do not qualify for hedge accounting under SFAS 133 the fair value gain or loss is recorded in earnings.

Commodity derivatives
Under UK GAAP, gains and losses on these contracts are taken to the profit and loss account in the same accounting period as the hedged item to which they relate. Under US GAAP, unrealised gains and losses on the derivatives and the offsetting gains and losses on the underlying hedged item are recorded in earnings for those commodity derivatives that qualify as fair value hedges under SFAS 133. For those commodity derivatives that qualify as cash flow hedges under SFAS 133, unrealised gains and losses are reflected in other comprehensive income until the maturity of the hedged item when they are reclassified to earnings. For those commodity derivatives that do not qualify for either fair value or cash flow hedge accounting under SFAS 133, the unrealised gains and losses are immediately recorded in earnings.

Profit on sale of operations
Under UK GAAP, goodwill previously written off to reserves is reinstated for the purpose of calculating profit on the sale of an operation. Under US GAAP, the equivalent goodwill is capitalised and was subject to amortisation in the period from acquisition until 2001. The profit on sale of operations balance under US GAAP reflects the lower book values of operations sold under US GAAP compared to UK GAAP, principally as a result of such amortisation.

Adjustments to asset carrying values
Impairment of fixed assets under UK GAAP is recognised and measured by reference to the discounted cash flows expected to be generated by an Income Generating Unit or disposal value if higher. Under US GAAP, impairment, other than that relating to equity accounted investments, is recognised only when the anticipated undiscounted cash flows are insufficient to recover the carrying value of the asset group.

However, where an asset group is found to be impaired under US GAAP, its carrying value is written down to fair value. Fair value is normally assessed by reference to the discounted cash flows expected to be generated from the asset group, generally using the same assumptions and bases to those applicable under UK GAAP. For example, the evaluation is on a pre-tax and pre-debt basis. The amount of such impairment is, therefore, generally similar under US GAAP to that computed under UK GAAP, except where the US GAAP carrying value includes goodwill on acquisitions prior to 31 December 1997, which was written off to reserves on acquisition under UK GAAP. Furthermore under US GAAP, SFAS 143 'Accounting for Asset Retirement Obligations' requires that estimated cash flows related to a liability for an asset retirement obligation that has been recognised in the financial statements are excluded from the undiscounted cash flows used to test the asset for recoverability, the discounted cash flows used to measure the asset's fair value and the book value of the asset.

Under UK GAAP, impairment provisions may be written back in a future year if the expected recoverable amount of the Income Generating Unit increases. Any credits to UK GAAP earnings resulting from such write backs are reversed in the reconciliation to US GAAP because reversal of impairment provisions is not permitted under US GAAP.

Under US GAAP, APB 18 'The Equity Method of Accounting for Investments in Common Stock' provides that impairment of an equity accounted investment is recognised and measured by comparing the fair value of the investment with its carrying value. Any differences in impairment charges from UK GAAP would generally relate to differences in the carrying value. These differences may arise where the US GAAP carrying value includes goodwill that was written off to reserves on acquisition under UK GAAP.

In 2004 the impact of applying the guidance in SFAS 143 resulted in an additional impairment recognised under US GAAP of US$5 million pre-tax (US$nil million net of tax and minorities).

The adjustment to asset carrying values for the Group in 2003 under US GAAP, of US$32 million, relates to the reversal of a credit made to UK GAAP earnings on the write back of an impairment provision.

The asset write downs for the Group in 2002, under US GAAP, include amounts recognised in 2001 under UK GAAP of US$445 million and exclude asset write downs recognised in 2002 under UK GAAP of US$235 million. The 2002 Group US GAAP asset write downs also include an adjustment for goodwill. The 2002 US GAAP impairment write-down for the Group was US$1,067 million pre-tax (US$1,060 million net of tax and minorities). This is US$89 million pre-tax (US$297 million net of tax and minorities) above the charge of US$978 million pre-tax (US$763 million net of tax and minorities) included under UK GAAP. The asset write downs for Rio Tinto plc in 2002, under US GAAP, include amounts recognised in 2001 under UK GAAP, of US$445 million. The 2002 Rio Tinto plc asset write downs also include an adjustment for goodwill. The 2002 US GAAP impairment write-down for Rio Tinto plc was US$1,059 million pre-tax (US$1,052 million net of tax and minorities). This is US$420 million pre-tax (US$429 million net of tax and minorities) above the charge of US$639 million pre-tax (US$623 million net of tax and minorities) included under UK GAAP. The asset write downs for Rio Tinto Limited in 2002, under US GAAP, exclude asset write downs recognised in 2002 under UK GAAP of US$212 million. The 2002 US GAAP impairment write-down for Rio Tinto Limited was US$13 million pre-tax (US$13 million net of tax and minorities). This is US$420 million pre-tax (US$212 million net of tax and minorities) below the charge of US$433 million pre-tax (US$225 million net of tax and minorities) included under UK GAAP.

A-68


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42   Reconciliation to US Accounting Principles (continued)

Pensions/post retirement benefits
Under UK GAAP, post retirement benefits are accounted for in accordance with Statement of Standard Accounting Practice 24. The expected costs under defined benefit arrangements are spread over the service lives of employees entitled to those benefits. Variations from the regular cost are spread on a straight line basis over the expected average remaining service lives of relevant current employees. Under US GAAP, the annual pension cost comprises the estimated cost of benefits accruing in the period adjusted for the amortisation of the surplus arising when SFAS 87, 'Employers' Accounting for Pensions' was adopted. The charge is further adjusted to reflect the cost of benefit improvements and any surpluses/deficits that emerge as a result of variances from actuarial assumptions. For US purposes, only those surpluses/deficits outside a ten per cent fluctuation 'corridor' are spread. The reductions in shareholders' funds at 31 December 2004, 2003 and 2002 also include the effect of the US GAAP requirement to make immediate provision for pension fund deficits through other comprehensive income. The provision reflects the reduction in equity values over recent years. The additional disclosures required under FRS 17, 'Retirement Benefits', are included in note 40 to the consolidated financial statements.

Exploration and evaluation
Under UK GAAP, expenditure on a project can be carried forward after it has reached a stage where there is a high degree of confidence in its viability. US GAAP does not allow expenditure to be carried forward unless the viability of the project is supported by a final feasibility study. In addition, under UK GAAP, provisions made against exploration and evaluation in prior years can be reversed when the project proceeds to development, to the extent that the relevant costs are recoverable. US GAAP does not allow such provisions to be reversed.

Depreciation of mining assets
Under UK GAAP, mining assets are fully depreciated over their economic lives or the remaining life of the mine if shorter. In some cases, mineral resources that do not yet have the status of reserves are taken into account in determining depreciation charges, where there is a high degree of confidence that they will be mined economically. For US GAAP, only 'proven and probable reserves' are taken into account in the calculation of depreciation, depletion and amortisation charges. As a result, adjustments have been made to depreciation reducing Group US GAAP earnings.

Share option plans
Under UK GAAP, no cost is accrued where the option scheme applies to all relevant employees and the intention is to satisfy the share options by the issuance of new shares. Under the fair value recognition provisions of SFAS 123, ' Accounting for Stock-Based Compensation', the fair value of the plans is determined using an option pricing model.

Effect of historical average commodity prices and other items in ore reserve determination
For UK and Australian reporting, the Group’s ore reserve estimates are determined in accordance with the JORC code and are based on forecasts of future commodity prices. During 2003, the SEC formally indicated that, for US reporting, historical price data should be used. The application of historical prices has led to reduced ore reserve quantities for US reporting purposes for certain of the Group’s operations, which results in lower earnings for US reporting, largely as a result of higher depreciation charges. The reduced ore reserves also had the effect of increasing the present value of provisions for closure obligations for certain of the Group's operations. Details of the ore reserves used for US reporting are set out on pages A-85 to A-95.

Provisions for close down and restoration costs
SFAS 143 'Accounting for Asset Retirement Obligations' was implemented with effect from 1 January 2003. Under this US standard, provision is made in the accounting period when the related environmental disturbance occurs, based on the net present value of estimated future costs. The costs so recognised are capitalised and depreciated over the estimated useful life of the related asset. In each subsequent year, the discount applied to the provision 'unwinds', resulting in a charge to the profit and loss account for the year and an increase in the present value of the provision. This accounting treatment is broadly similar to Rio Tinto's established policy under UK GAAP.

Start up costs
Under US GAAP, Statement of Position 98-5, 'Reporting on the Costs of Start-up Activities', requires that the costs of start up activities are expensed as incurred. Under UK GAAP, some of these start up costs qualify for capitalisation and are amortised over the economic lives of the relevant assets.

Proposed dividends
Under UK GAAP, ordinary dividends are recognised in the financial year in respect of which they are paid. Under US GAAP, such dividends are recognised when they are formally declared by the board of directors or approved by the shareholders.

A-69


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42   Reconciliation to US Accounting Principles (continued)

Other
Other adjustments include amounts relating to differences between UK and US accounting principles in respect of revenue recognition, unrealised holding gains and losses and higher cost of sales resulting from acquisition accounting.

  Revenue recognition - Staff Accounting Bulletin No. 104 ('SAB 104') 'Revenue Recognition in Financial Statements' has the result that, in some cases, sales recorded as revenue under UK GAAP are deferred and are not recognised as revenue under US GAAP until a future accounting period. Occasionally, sales of goods recorded as revenue for UK GAAP purposes may be kept in store by Rio Tinto at the request of the buyer.
Under US GAAP, such transactions cannot be recognised as revenue unless the goods are physically segregated from the supplier's other inventory and certain additional criteria are met. In 2004, such timing differences resulted in an increase in Rio Tinto Group US GAAP pre tax earnings of US$24 million (2003: US$17 million reduction, 2002: US$4 million increase). The timing differences increased Rio Tinto plc pre tax earnings by US$23 million (2003: US$20 million reduction, 2002: nil); and increased Rio Tinto Limited's pre tax earnings by US$1 million (2003: US$3 million increase, 2002: US$4 million increase).
All of the turnover attributable to Rio Tinto's share of joint ventures and associates presented under UK GAAP would also be attributed to equity accounted units under US GAAP.
   
  Unrealised holding gains and losses - UK GAAP permits current asset investments to be valued at the lower of cost and net realisable value. Under US GAAP, SFAS 115 'Accounting for Certain Investments in Debt and Equity Securities' requires that unrealised holding gains and losses on investments classified as 'available for sale' are reported within a separate component of shareholders' funds and excluded from earnings until realised.
   
  Higher cost of sales resulting from acquisition accounting - Under UK GAAP, the inventories of acquired companies are valued at the lower of replacement cost and net realisable value. Under US GAAP, such inventories are recognised at the time of acquisition on the basis of expected net sales proceeds.

Taxation
Under UK GAAP, provision for taxes arising on remittances of earnings can only be made if the dividends have been accrued or if there is a binding agreement for the distribution of the earnings. Under US GAAP, provision must be made for tax arising on expected future remittances of past earnings.
Under UK GAAP, deferred tax is not provided in respect of upward fair value adjustments to tangible fixed assets and inventories made on acquisitions. Under US GAAP, deferred tax must be provided on all fair value adjustments to non-monetary assets recorded on acquisition with a consequential increase in the amount allocated to mining properties or goodwill as appropriate.
A valuation allowance of US$114 million has been recorded against a deferred tax asset that existed in the opening balance sheet, resulting in a non-recurring charge against earnings. Under UK GAAP, this deferred tax asset is offset against deferred tax liabilities relating to goodwill.

Profit contribution from equity accounted operations
Under US GAAP, investments in affiliates are accounted for using the equity method, and the reporting entity's share of the after tax profits and losses of its affiliates is included in the profit and loss account as a single line item. Under UK GAAP, the reporting entity's share of the trading results of its associates and joint ventures is split in the profit and loss account between its share of their operating profits/losses, interest receivable/payable and taxation.
The Group's share of the after tax profits and losses of associates and joint ventures is shown in its 'Statement of Total Recognised Gains and Losses'.

Consolidated statement of cash flows
The consolidated statement of cash flows prepared in accordance with FRS 1 (revised) presents substantially the same information as that required under US GAAP. Under US GAAP, however, there are certain differences from UK GAAP with regard to the classification of items within the cash flow statement and with regard to the definition of cash and cash equivalents. Under US GAAP, tax paid and interest would form part of operating cash flow. Similarly, deferred stripping costs which are shown as capital expenditure under UK GAAP would be included in operating cash flow for the purposes of the US GAAP cash flow disclosure. Under UK GAAP, cash for the purposes of the cash flow statement is defined as cash in hand and deposits repayable on demand with any qualifying financial institution, less bank borrowings from any qualifying financial institution repayable on demand. Deposits are repayable on demand if they can be withdrawn at any time without notice and without penalty or if a maturity or period of notice of not more than 24 hours or one working day has been agreed. Under US GAAP, cash equivalents comprise cash balances and current asset investments with an original maturity of less than three months and exclude bank borrowings repayable on demand. Under US GAAP, funding of the Group’s share of joint ventures’ and associates' capital and other expenditure would be included on one line within the investing section of the statement of cash flows.

Balance sheet classification
Under UK GAAP, Accounts receivable and prepayments falling due after more than one year and Inventories expected to be neither sold nor used within 12 months are included within Current assets. Under US GAAP, they would be classified as non-current assets.

A-70


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Income statement classification
Certain sales are made on the basis that the selling price will be determind at the end of a period ranging from 30 to 180 days after delivery to the customer. Such sales are recorded provisionally on the basis of the prices quoted in the market when the revenue is first recognised. Under UK GAAP, subsequent adjustments to such provisional prices are recorded in turnover. Under US GAAP such subsequent adjustments would be classified as derivative gains and losses. As a consequence, under US GAAP, revenues for 2004 would have been US$9 million lower than that reported under UK GAAP (2003: US$6 million lower, 2002: no difference).

Adjusted earnings
As permitted under UK GAAP, adjusted earnings and adjusted earnings per share have been presented excluding the impact of exceptional items to provide a measure that reflects the underlying performance of the Group. This is in addition to the presentation of net earnings and basic earnings per share, which include the exceptional items. Under US GAAP, earnings and earnings per share have been presented based on US GAAP earnings, without adjustment for the impact of exceptional items. Such additional measures of underlying performance are not permitted under US GAAP.

Guarantor's accounting
Under US GAAP there is a requirement for entities to recognise, upon issue of a guarantee, an initial liability for the fair value, or market value, of the associated obligation with disclosure of that information in its interim and annual financial statements. FIN 45 is effective, on a prospective basis, to guarantees issued or modified after 31 December 2002. The disclosure requirements of FIN 45 apply to these accounts and the following information is given in response to these.

Note 29 to the financial statements discloses indemnities and other performance guarantees totalling US$435 million on which no material loss is expected. This includes US$21 million relating to the Group's commitment to pay deferred consideration in relation to acquisitions of mining properties in 2002 and previous years. This does not include guarantees of payment of US$97 million entered into by the Group relating to deferred consideration arising from such acquisitions because the deferred consideration has been recognised as a liability within the Group's balance sheet. The disclosure in note 29 to the consolidated financial statements also includes guarantees for up to US$197 million relating to the costs of infrastructure financed by certain government authorities, which would be subject to reimbursement by the Group if the facilities are not completed or certain tests relating to the related project are not met. There are a further US$84 million of liabilities relating to the outstanding portion of a loan relating to a joint venture arrangement. Of the remaining US$133 million disclosed in note 29, US$40 million would be subject to reimbursement by a third party in the event that the Group was required to make payment under the guarantees.

In addition to the above, the Group has issued guarantees and indemnities totalling US$816 million relating to its close down, restoration and environmental remediation obligations. These are not disclosed as contingent liabilities because the obligations are included in the amounts recognised in the balance sheet as provisions for liabilities and charges.

A Group company has guaranteed that the quality of product from a joint venture in which it participates will be in accordance with agreed specifications. It has also undertaken to make up any shortfalls from minimum ore reserve quantities over the life of the joint venture. Currently, no shortfalls are anticipated.

As explained in Note 14 to the consolidated financial statements, the Group has a partnership interest in the Colowyo Coal Company and has undertaken, via a subsidiary company which entered into a management agreement, to cause the partnership to perform its obligations under certain coal supply contracts. The debt of US$156 million owed by the Colowyo Coal Company is to be serviced and repaid out of the proceeds of these contracts.

Variable Interest Entities
In January 2003, the FASB issued interpretation No. 46, 'Consolidation of Variable Interest Entities' (FIN 46). Under FIN 46, certain entities labelled “Variable Interest Entities” (VIE) must be consolidated by the “primary beneficiary” of the entity. The primary beneficiary is generally defined as the party exposed to the majority of the risks and rewards arising from the VIE. For VIE’s in which a significant variable interest is held that is not a majority interest, certain disclosures are required.

The Group has a 20% general partnership interest in the Colowyo limited partnership, which was acquired for US$25 million in December 1994. It is included in the UK GAAP Group accounts on the equity accounting basis. This joint venture falls within the definition of a Variable Interest Entity set out in FIN 46. The Colowyo joint venture produces coal, which is sold under long-term contracts. Colowyo’s total sales revenues for 2004 were US$119 million and its total assets as at 31 December 2004 were US$(150) million. A provision of US$160 million was recognised in 2004 for asset write-downs and contract obligations at Colowyo.

Colowyo has bonds in issue with outstanding capital of US$156 million at 31 December 2004. These are repayable by instalments up to 2016 with interest at rates between 9.56% and 10.19% per annum. The bonds are to be serviced and repaid exclusively out of the net revenues from certain specified sales contracts relating to coal supplies by Colowyo. The bondholders bear the risks of loss that might arise if the revenues are interrupted due to failure of the purchasers or force majeure. The Rio Tinto Group is responsible under a management contract in which it agreed, for the sole and exclusive benefit of the bondholders, to cause Colowyo to perform its obligations under the specified coal sales contracts.

A-71


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

New US Accounting Standards

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”), which replaced APB No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle by requiring voluntary changes in accounting principles to be reported using retrospective application, unless impracticable to do so. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

In March 2005, the EITF reached consensus on Issue No. 04-06, “Accounting for Stripping Costs Incurred during Production in the Mining Industry” (“EITF 04-06”). EITF 04-06 sets out guidance that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the cost of the inventory produced during the period that the stripping costs are incurred (the “inventory cost model”). EITF 04-06 is effective for the first reporting period in fiscal years beginning after December 15, 2005, with early adoption permitted. Details of deferred stripping balances and costs deferred during each of the three years to 31 December 2004 are set out in Note 12 to the consolidated financial statements. On implementation of EITF 04-06, deferred post production stripping balances brought forward will be written off through the cumulative effect of a change in accounting policy; and deferred stripping costs incurred in each year will be charged against earnings.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values beginning with the first annual period after June 15, 2005. Since the Group currently applies the provisions of SFAS 123, it does not expect the adoption of SFAS 123(R) to have a material impact on its financial position, results of operations or cash flows.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets”-An Amendment of APB Opinion No. 29. SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. The standard specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005. The Group does not expect the adoption of SFAS 153 to have a material impact on its financial position, results of operations or cash flows.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4”, clarifying the existing requirements in ARB No. 43 that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory based on normal capacity of the production facilities. The guidance is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Group does not expect the adoption of SFAS 151 to have a material impact on its financial position, results of operations or cash flows.

In March 2004, the EITF reached consensus on Issue No. 03-01, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments” (“EITF 03-01”). EITF 03-01 was intended to address the meaning of “other-than-temporary” impairment and its application to certain investments in debt and equity securities. A consensus was reached regarding disclosure requirements concerning unrealized losses on available-for-sale debt and equity securities accounted for under Financial Accounting Standard No. 115, Accounting for Certain Investments in Debt and Equity Securities (FAS 115). The guidance for evaluating whether an investment is other-than-temporarily impaired has been applied beginning January 1, 2005. The Group does not expect application of this guidance to have a material impact on its results of operations. The disclosure requirements of EITF 03-01 have been included in the consolidated financial statements for the year ended December 31, 2004, for available-for-sale and cost method investments. For all other investments within the scope of EITF 03-01, the disclosures will be effective for the year ending December 31, 2005.

In March 2004, the EITF reached a consensus on Issue No. 04-03, “Mineral Assets: Impairment and Business Combinations” (“EITF 04-03”). EITF 04-03 provides guidance that the value attributable to the value beyond proven and probable reserves (VBPP) and the effects of anticipated fluctuations in future market prices of minerals should be considered in a manner that is consistent with the expectations of marketplace participants when an entity tests its mining assets for impairment, and also when an entity allocates the purchase price to assets acquired in a business combination. The consensus applies prospectively to business combinations completed and impairment tests performed in reporting periods beginning after March 31, 2004. Adoption of this EITF did not have a material impact upon the Group.

A-72


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Post Retirement benefits

Information in respect of the net periodic benefit cost and related obligation determined in accordance with US Statements of Financial Accounting Standards 87, 106 and 132 is given below. The measurement date used to establish year end asset values and benefit obligations was 30 September 2004. The previous measurement date, used to determine 2004 costs, was 30 September 2003.

Benefits under the major pension plans are principally determined by years of service and employee remuneration. The Group’s largest defined benefit pension plans are in the UK, Australia, the US and Canada and a description of the investment policies and strategies followed is set out below

In the UK and the US, the investment strategy is determined by the pension plan trustee and investment committee respectively, after consulting the company. Agreed investment policies aim to ensure that the objectives are met in a prudent manner, consistent with established guidelines. The investment objectives include generating a return that exceeds consumer price and wage inflation over the long term. Ranges for the proportions to be held in each asset class have been agreed; a substantial proportion of the assets is invested in a spread of domestic and overseas equities, with a smaller proportion in fixed and variable income bonds, cash and, in the US, real estate. Risk is managed in various ways, including identifying investments considered to be unsuitable and placing limits on some types of investment. In particular, the funds are not allowed to invest directly in any Rio Tinto Group company.

In Australia, the investments reflect the various defined benefit and defined contribution liabilities and are primarily in Australian and overseas equities and fixed interest stocks.

At 30 September 2004, funded pension plans held assets invested in the following proportions:

  UK target   US target*   Group actual  
  2004   2003   2004   2003   2004   2003  
Equities 45%-85%   45%-85%   65%   65%   66%   65%  
Debt securities 15%-45%   15%-45%   30%   30%   26%   27%  
Real estate     5%   5%   3%   3%  
Other 0%-10%   0%-10%   -   -   5%   5%  
                         
*plus or minus 5%                        

The expected rate of return on pension plan assets is determined as management’s best estimate of the long term return of the major asset classes – equity, debt, real estate and other – weighted by the actual allocation of assets among the categories at the measurement date.

Pension plan funding policy is based on annual contributions at a rate that is intended to fund benefits as a level percentage of pay over the working lifetime of a plan’s participants, subject to local statutory minimum contribution requirements. Details of anticipated contributions in 2005 are set out in the FRS17 transitional disclosures on page A-56.

Assumptions used to determine the net periodic benefit cost and the end of year benefit obligation for the major pension plans varied between the limits shown below. The average rate for each assumption has been weighted by benefit obligation. The assumptions used to determine the end of year benefit obligation are also used to calculate the following year’s cost.

  2004 Cost**   Year end benefit obligation
 
 
Discount rate 5.4% to 9.5% (Average: 5.9%)   5.2% to 9.5% (Average: 5.6%)
Long term rate of return on plan assets 6.3% to 11.0% (Average: 6.6%)   6.3% to 7.9% (Average: 6.7%)
Increase in compensation levels 3.7% to 6.5% (Average: 4.2%)   4.0% to 6.5% (Average: 4.6%)
       
** 31st December 2003 year end benefit obligations were measured on the same assumptions as the 2004 cost.

The actuarial calculations in respect of the UK plans assume a rate of increase of pensions in payment of 2.9 per cent per annum at the year end. This assumption is consistent with the expected rates of return and salary increase assumptions in the respective valuations. Appropriate assumptions were made for plans in other countries.

Other post retirement benefits are provided to employees who meet the eligibility requirements, and their beneficiaries and dependants, through unfunded self-insurance arrangements. The majority of these plans are for employees in the United States. The plans are non-contributory, although some contain an element of cost sharing such as deductibles and co-insurance.

In the US, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 provides an employer subsidy beginning in 2006. The Group's post retirement medical plans are expected to be eligible for this employer subsidy. Therefore, in accordance with FASB Staff Position 106-2, the change in Accumulated Post Retirement Benefit Obligation (APBO) due to the estimated impact of the employer subsidy has been treated as a one-off gain that offsets any net accumulated unrecognised loss. This reduction in APBO in turn reduces the net periodic post retirement benefit cost due to corresponding reductions in the service cost, interest cost, and the amortisation of the net accumulated loss.

The weighted average assumptions used in determining the costs and year end benefit obligation for the major post retirement benefit plans other than pension plans were as shown below:

  2004 Cost**   Year end benefit obligation

 
Discount rate 5.4% to 9.5% (average 6.4%)   5.2% to 9.5% (average 6.1%)
Average healthcare cost trend rate      
- trend in first year 6.1% to 11.2% (average 10.6%)   6.4% to 10.5% (average 10.1%)
- reducing to long term rate by 2011 4.6% to 9.5% (average 5.5%)   5.0% to 7.5% (average 5.3%)
       
** 31st December 2003 year end benefit obligations were measured on the same assumptions as the 2004 cost.

A-73


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42

Reconciliation to US Accounting Principles (continued)

The components of net benefit expense under US GAAP are detailed in the table below.

    Rio Tinto plc -     Rio Tinto Limited -           
  part of Rio Tinto Group   part of Rio Tinto Group    Rio Tinto Group   
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Pension benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Service cost (58 ) (50 ) (42 ) (66 ) (53 ) (55 ) (124 ) (103 ) (97 )
Interest cost on benefit obligation (148 ) (140 ) (147 ) (90 ) (70 ) (60 ) (238 ) (210 ) (207 )
Expected return on plan assets 173   182   197   87   70   61   260   252   258  
Net amortisation and deferral:                                    
   - transitional obligation 5   10   10   -   -   -   5   10   10  
   - recognised (gains) and losses (13 ) 3   18   (19 ) (9 ) (8 ) (32 ) (6 ) 10  
   - prior service cost recognised (20 ) (21 ) (21 ) (2 ) (2 ) (1 ) (22 ) (23 ) (22 )
 
 
 
 
 
 
 
 
 
 
Total net amortisation and deferral (28 ) (8 ) 7   (21 ) (11 ) (9 ) (49 ) (19 ) (2 )
 
 
 
 
 
 
 
 
 
 
Net periodic benefit (cost)/credit (61 ) (16 ) 15   (90 ) (64 ) (63 ) (151 ) (80 ) (48 )
Curtailment and settlement credit/(charge) 37   -   (8 ) -   -   -   37   -   (8 )
 
 
 
 
 
 
 
 
 
 
Net benefit (expense)/credit (24 ) (16 ) 7   (90 ) (64 ) (63 ) (114 ) (80 ) (56 )
 
 
 
 
 
 
 
 
 
 

   Rio Tinto plc -    Rio Tinto Limited -       
  part of Rio Tinto Group   part of Rio Tinto Group    Rio Tinto Group    
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Other benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Service cost (9 ) (8 (6 (1 (1 (1 (10 ) (9 ) (7 )
Interest cost on benefit obligation (28 ) (25 (23 (4 (3 (2 (32 (28 ) (25 )
Net amortisation and deferral:                                    
   - recognised (gains) and losses 1   5   8   -   -   -   1   5   8  
   - prior service cost recognised 1   1   1   (4 -   -   (3 1   1  
 
 
 
 
 
 
 
 
 
 
Total net amortisation and deferral 2   6   9   (4 -   -   (2 6   9  
 
 
 
 
 
 
 
 
 
 
Net periodic benefit cost (35 (27 (20 (9 (4 (3 (44 (31 ) (23 )
Curtailment and settlement gain/(charge) 3   3   (2 -   -   -   3   3   (2 )
 
 
 
 
 
 
 
 
 
 
Net benefit expense (32 (24 (22 (9 (4 (3 (41 (28 ) (25 )
 
 
 
 
 
 
 
 
 
 

The 2004 pension cost recognised for defined contribution plans, of US$6 million (2003: US$9 million), is included in the above. The curtailment and settlement gain primarily reflects the allocation of a surplus to the employer in a South African plan.

The funded status of the Group's principal schemes is summarised in the table below.

    Rio Tinto plc -    Rio Tinto Limited -           
  part of Rio Tinto Group   part of Rio Tinto Group    Rio Tinto Group   
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Pension benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Benefit obligation at end of year (3,000 ) (2,680 ) (2,377 ) (1,817 ) (1,481 ) (989 ) (4,817 ) (4,161 ) (3,366 )
Fair value of plan assets 2,840   2,488   2,256   1,675   1,347   910   4,515   3,835   3,166  
 
 
 
 
 
 
 
 
 
 
Benefit obligations in excess of plan assets (160 ) (192 ) (121 ) (142 ) (134 ) (79 ) (302 ) (326 ) (200 )
Unrecognised prior service cost 124   140   155   3   4   4   127   144   159  
Unrecognised net loss 325   305   239   331   317   225   656   622   464  
Unrecognised transitional asset (5 ) (9 ) (27 ) (2 ) (2 ) (2 ) (7 ) (11 ) (29 )
Company contributions in fourth quarter 12   4   2   27   25   5   39   29   7  
 
 
 
 
 
 
 
 
 
 
Net amount recognised at end of year 296   248   248   217   210   153   513   458   401  
 
 
 
 
 
 
 
 
 
 
Comprising:                                    
   - benefit prepayment 281   243   212   171   171   134   452   414   346  
   - benefit provision (230 ) (293 ) (236 ) (120 ) (116 ) (83 ) (350 ) (409 ) (319 )
   - intangible asset 46   52   53   2   1   -   48   53   53  
   - amount recognised through accumulated                                    
      other comprehensive income 199   246   219   164   154   102   363   400   321  
 
 
 
 
 
 
 
 
 
 
Net amount recognised 296   248   248   217   210   153   513   458   401  
 
 
 
 
 
 
 
 
 
 

    Rio Tinto plc -    Rio Tinto Limited -            
part of Rio Tinto Group part of Rio Tinto Group Rio Tinto Group

 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  







 
 
Other benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Benefit obligation at end of year (458 ) (501 ) (396 ) (80 ) (62 ) (41 ) (538 ) (563 ) (437 )
Unrecognised prior service cost (2 ) (2 ) (2 ) -   -   -   (2 ) (2 ) (2 )
Unrecognised net loss/(gain) (16 ) 45   (40 ) 16   9   -   -   54   (40 )
Company contributions in fourth quarter 4   4   -   1   1   -   5   5   -  
 
 
 
 
 
 
 
 
 
 
Net amount recognised at end of year (472 ) (454 ) (438 ) (63 ) (52 ) (41 ) (535 ) (506 ) (479 )
 
 
 
 
 
 
 
 
 
 
Comprising:                                    
   - benefit provision (472 ) (454 ) (438 ) (63 ) (52 ) (41 ) (535 ) (506 ) (479 )
 
 
 
 
 
 
 
 
 
 
Net amount recognised (472 ) (454 ) (438 ) (63 ) (52 ) (41 ) (535 ) (506 ) (479 )
 
 
 
 
 
 
 
 
 
 

A-74


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42

Reconciliation to US Accounting Principles (continued)

Change in benefit obligation

  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Pension benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Benefit obligation at start of year (2,680 ) (2,377 ) (1,903 ) (1,481 ) (989 ) (900 ) (4,161 ) (3,366 ) (2,803 )
Service cost (57 ) (50 ) (42 ) (81 ) (62 ) (55 ) (138 ) (112 ) (97 )
Interest cost (148 ) (140 ) (147 ) (90 ) (70 ) (60 ) (238 ) (210 ) (207 )
Contributions by plan participants (2 ) (3 ) (3 ) (25 ) (23 ) (6 ) (27 ) (26 ) (9 )
Actuarial gains and (losses) (322 ) (381 ) (246 ) (140 ) (172 ) 42   (462 ) (553 ) (204 )
Benefits paid 190   151   141   137   109   54   327   260   195  
Benefits bought out -   191   -   (40 ) -   -   (40 ) 191   -  
Plan amendments 4   (6 ) (16 ) (9 ) (1 ) -   (5 ) (7 ) (16 )
Settlement, curtailment and other gain/(loss) 40   (13 ) -   -   23   -   40   10   -  
Plans relating to companies sold -   -   -   8   -   -   8   -   -  
Currency and other adjustments (25 ) (52 ) (161 ) (96 ) (296 ) (64 ) (121 ) (348 ) (225 )
 
 
 
 
 
 
 
 
 
 
Benefit obligation at end of year (3,000 ) (2,680 ) (2,377 ) (1,817 ) (1,481 ) (989 ) (4,817 ) (4,161 ) (3,366 )
 
 
 
 
 
 
 
 
 
 

  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Other benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Benefit obligation at start of year (501 ) (396 ) (323 ) (62 ) (41 ) (39 ) (563 ) (437 ) (362 )
Service cost (9 ) (8 ) (6 ) (1 ) (1 ) (1 ) (10 ) (9 ) (7 )
Interest cost (28 ) (25 ) (23 ) (4 ) (3 ) (2 ) (32 ) (28 ) (25 )
Actuarial gains and (losses) 64   (83 ) (48 ) (7 ) (10 ) -   57   (93 ) (48 )
Benefits paid 21   16   14   3   2   2   24   18   16  
Plan amendments -   5   (2 ) (4 ) -   -   (4 ) 5   (2 )
Settlement, curtailment and other gains 3   3   -   -   -   -   3   3   -  
Currency and other adjustments (8 ) (13 ) (8 ) (5 ) (9 ) (1 ) (13 ) (22 ) (9 )
 
 
 
 
 
 
 
 
 
 
Benefit obligation at end of year (458 ) (501 ) (396 ) (80 ) (62 ) (41 ) (538 ) (563 ) (437 )
 
 
 
 
 
 
 
 
 
 

The benefit obligation shown above includes an allowance for future salary increases, where applicable; the accumulated benefit obligation does not include this allowance. The accumulated benefit obligations for pension plans at 30 September 2004 amounted to US$4,610 million. At 30 September 2003, the corresponding total of accumulated benefit obligations was US$3,973 million. For each plan, where the accumulated benefit obligation exceeds the fair value of the assets and this deficit is greater than the amount provided, an increase in the provision is charged to other comprehensive income. To the extent that the deficit relates to previous benefit improvements an intangible asset is created which reduces the charge to other comprehensive income.

In Australia there has been a merger of plans, leading to an increase in both the benefit obligation and the plan assets of $40m in the Group's main Australian plan.

Change in plan assets

  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Pension benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Fair value of plan assets at start of year 2,488   2,256   2,271   1,347   910   917   3,835   3,166   3,188  
Actual return/(loss) on plan assets 456   486   (108 ) 212   203   (42 ) 668   689   (150 )
Contributions by plan participants 2   3   3   25   23   6   27   26   9  
Contributions by employer 50   25   13   102   67   17   152   92   30  
Benefits paid (190 ) (151 ) (141 ) (137 ) (109 ) (54 ) (327 ) (260 ) (195 )
Benefits bought out -   (191 ) -   40   -   -   40   (191 ) -  
Settlement, curtailment and other gain/(loss) (3 ) 4   -   -   (23 ) -   (3 ) (19 ) -  
Currency and other adjustments 37   56   218   86   276   66   123   332   284  
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at end of year 2,840   2,488   2,256   1,675   1,347   910   4,515   3,835   3,166  
 
 
 
 
 
 
 
 
 
 

  Rio Tinto plc -   Rio Tinto Limited -          
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Other benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Fair value of plan assets at start of year -   -   -       -   -       -   -  
Contributions by employer 21   16   14   3   2   2   24   18   16  
Benefits paid (21 ) (16 ) (14 ) (3 ) (2 ) (2 ) (24 ) (18 ) (16 )
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at end of year -   -   -   -   -   -   -   -   -  
 
 
 
 
 
 
 
 
 
 

A-75


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42

Reconciliation to US Accounting Principles (continued)

Change in additional minimum liability before tax

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  2004   2003   2002   2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
 
 
 
Pension benefits US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Accrued pension benefit expense (53 ) 26   187   11   53   34   (42 ) 79   221  
Decrease/(increase) in intangible asset 6   1   (21 ) (1 ) (1 ) -   5   -   (21 )
 
 
 
 
 
 
 
 
 
 
Other comprehensive income before tax (47 ) 27   166   10   52   34   (37 ) 79   200  
 
 
 
 
 
 
 
 
 
 

Sensitivity to change in healthcare trend

Changing the healthcare cost trend rates by 1% would result in the following effects:

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto   part of Rio Tinto      
  Group   Group   Rio Tinto Group  
 
 
 
 
  1% Increase   1% Decrease   1% Increase   1% Decrease   1% Increase   1% Decrease  
 
 
 
 
 
 
 
2004 US$m   US$m   US$m   US$m   US$m   US$m  
                         
(Increase)/decrease in service cost plus interest cost (5 ) 4   (1 ) 1   (6 ) 5  
(Increase)/decrease in benefit obligation at 30 September (55 ) 44   (9 ) 8   (64 ) 52  
                         
2003                        
                         
(Increase)/decrease in service cost plus interest cost (5 ) 4   -   -   (5 ) 4  
(Increase)/decrease in benefit obligation at 30 September (61 ) 54   (7 ) 6   (68 ) 60  
                         
2002                        
                         
(Increase)/decrease in service cost plus interest cost (5 ) 4   -   -   (5 ) 4  
(Increase)/decrease in benefit obligation at 30 September (43 ) 35   (5 ) 5   (48 ) 40  

Expected benefit payments

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto   part of Rio Tinto      
  Group   Group   Rio Tinto Group  
 
 
 
 
  US$m   US$m   US$m  
Pension benefits            
Expected benefit payments in 2005 (183 ) (63 ) (246 )
Expected benefit payments in 2006 (179 ) (61 ) (240 )
Expected benefit payments in 2007 (184 ) (70 ) (254 )
Expected benefit payments in 2008 (188 ) (68 ) (256 )
Expected benefit payments in 2009 (194 ) (64 ) (258 )
Expected benefit payments from 2010 to 2014 (1,078 ) (330 ) (1,408 )
             
Other benefits            
Expected benefit payments in 2005 (20 ) (4 ) (24 )
Expected benefit payments in 2006 (21 ) (4 ) (25 )
Expected benefit payments in 2007 (23 ) (4 ) (27 )
Expected benefit payments in 2008 (24 ) (4 ) (28 )
Expected benefit payments in 2009 (24 ) (5 ) (29 )
Expected benefit payments from 2010 to 2014 (128 ) (27 ) (155 )

A-76


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Accumulated foreign currency translation gains and (losses) recorded directly in shareholders' funds under US GAAP

  Rio Tinto plc -   Rio Tinto Limited -      
  part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
 
 
 
 
  US$m   US$m   US$m  
 
 
 
 
At 1 January 2004 (87 ) 568   287  
Current period change 388   255   551  
 
 
 
 
At 31 December 2004 301   823   838  
 
 
 
 
             
At 1 January 2003 (871 ) (261 ) (1,014 )
Current period change 784   829   1,301  
 
 
 
 
At 31 December 2003 (87 ) 568   287  
 
 
 
 
             
At 1 January 2002 (1,189 ) (428 ) (1,436 )
Current period change 318   167   422  
 
 
 
 
At 31 December 2002 (871 ) (261 ) (1,014 )
 
 
 
 

Additional US GAAP cash flow information
A summary of Rio Tinto's operating, investing and financing cash flows classified in accordance with US GAAP is presented below:

    Rio Tinto plc -   Rio Tinto Limited -      
    part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
   
 
 
 
    2004   2003   2002   2004   2003   2002   2004   2003   2002  
   
 
 
 
 
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Net cash flow from operating activities   1,721   1,413   1,536   1,771   1,156   1,379   3,368   2,292   2,640  
Net cash flow from investing activities   (680 ) 112   (1,042 ) (1,317 ) (667 ) (592 ) (574 ) (1,268 ) (1,663 )
Net cash flow from financing activities   (1,124 ) (1,439 ) (507 ) (387 ) (505 ) (948 ) (2,810 ) (954 ) (1,151 )
   
 
 
 
 
 
 
 
 
 
Increase/(decrease) in cash and cash equivalents per US GAAP
  (83 ) 86   (13 ) 67   (16 ) (161 ) (16 ) 70   (174 )
   
 
 
 
 
 
 
 
 
 
Increase/(decrease) in cash under UK GAAP   44   (9 ) (16 ) 134   (74 ) (114 ) 178   (83 ) (130 )
(Decrease)/increase in additional liquid resources qualifying for inclusion under US GAAP
  (110 ) 110   (2 ) 8   10   (25 ) (102 ) 120   (27 )
(Decrease)/increase in bank borrowings repayable on demand included in cash under UK GAAP
  (17 ) (15 ) 5   (75 ) 48   (22 ) (92 ) 33   (17 )
   
 
 
 
 
 
 
 
 
 
(Decrease)/increase in cash and cash equivalents under US GAAP
  (83 ) 86   (13 ) 67   (16 ) (161 ) (16 ) 70   (174 )
   
 
 
 
 
 
 
 
 
 
Cash per balance sheet under UK GAAP   181   257   174   209   138   151   390   395   325  
Qualifying liquid resources less non qualifying deposits
  (12 ) -   (1 ) (1 ) (36 ) (44 ) (13 ) (36 ) (45 )
   
 
 
 
 
 
 
 
 
 
Cash and cash equivalents under US GAAP   169   257   173   208   102   107   377   359   280  
   
 
 
 
 
 
 
 
 
 

The year end cash and cash equivalents position under US GAAP included in the above table reflects both the movement in cash and cash equivalents in the year and the impact of exchange gains and losses in the year.

Deferred tax credit/(charge)

    Rio Tinto plc -   Rio Tinto Limited -      
    part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
   
 
 
 
    2004   2003   2002   2004   2003   2002   2004   2003   2002  
   
 
 
 
 
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
The credit/(charge) under UK GAAP for deferred taxation arises as follows:
                                     
   - accelerated capital allowances   (58 ) (80 ) 158   36   (3 ) 28   (22 ) (83 ) 186  
   - pension prepayments   120   47   (1 ) 4   1   12   124   48   11  
   - provisions   (48 ) (26 ) 20   12   2   (14 ) (36 ) (24 ) 6  
   - provision against AMT credits and US tax losses   (7 ) 50   (228 ) -   -   -   (7 ) 50   (228 )
   - other timing differences   65   28   30   (11 ) 6   11   54   34   41  
   
 
 
 
 

 
 
 
 
    72   19   (21 ) 41   6   37   113   25   16  
   
 
 
 
 

 
 
 
 

A-77


Back to Contents

 

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

 

42    Reconciliation to US Accounting Principles (continued)

Fixed asset investments
The aggregated profit and loss accounts and balance sheets of equity and gross equity accounted companies on a 100 per cent basis are set out below:

    Rio Tinto plc -   Rio Tinto Limited -      
    part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
   
 
 
 
    2004   2003   2002   2004   2003   2002   2004   2003   2002  
   
 
 
 
 
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Profit and loss account:                                      
Sales revenue   11,913   11,541   9,529   1,566   1,085   1,871   6,945   7,133   6,666  
Cost of sales   (7,561 ) (8,171 ) (7,060 ) (1,042 ) (901 ) (1,247 ) (3,502 ) (4,707 ) (4,428 )
   
 
 
 
 
 
 
 
 
 
Operating profit   4,352   3,370   2,469   524   184   624   3,443   2,426   2,238  
Profit of equity accounted companies   300   137   325   -   -   -   1   -   -  
Profit on sale of fixed asset investments   139   126   -   -   -   -   -   -   -  
Net interest   (315 ) (445 ) (475 ) (7 ) (8 ) (49 ) (155 ) (317 ) (377 )
   
 
 
 
 
 
 
 
 
 
Profit before tax   4,476   3,188   2,319   517   176   575   3,289   2,109   1,861  
Taxation   (970 ) (1,070 ) (911 ) (155 ) (4 ) (91 ) (648 ) (714 ) (579 )
Profit attributable to outside shareholders   (42 ) (59 ) 90   -   -   -   -   (48 ) (36 )
   
 
 
 
 
 
 
 
 
 
Net profit on ordinary activities (100 per cent basis)   3,464   2,059   1,498   362   172   484   2,641   1,347   1,246  
   
 
 
 
 
 
 
 
 
 

 

    Rio Tinto plc -   Rio Tinto Limited -      
    part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
   
 
 
 
    2004   2003   2002   2004   2003   2002   2004   2003   2002  
   
 
 
 
 
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Balance sheet:                                      
Intangible fixed assets   994   1,062   988   2   1   1   2   64   194  
Tangible fixed assets   16,355   18,499   15,942   1,989   2,002   2,758   7,711   11,406   12,086  
Investments   1,277   1,247   1,235   2   2   3   53   78   166  
Working capital   (814 ) 1,040   (434 ) 73   17   86   616   775   593  
Net cash less current debt   (429 ) (1,182 ) (2,658 ) 16   (13 ) (33 ) (48 ) 319   (835 )
Long term debt   (3,540 ) (6,954 ) (5,667 ) (361 ) (402 ) (1,005 ) (2,016 ) (5,066 ) (5,406 )
Provisions   (2,952 ) (3,457 ) (2,648 ) (204 ) (164 ) (361 ) (742 ) (1,462 ) (1,658 )
Outside shareholders' interests   (1,317 ) (1,580 ) (847 ) (1 ) (1 ) -   (1 ) (321 ) (290 )
   
 
 
 
 
 
 
 
 
 
Aggregate shareholders' funds (100 per cent basis)   9,574   8,675   5,911   1,516   1,442   1,449   5,575   5,793   4,850  
   
 
 
 
 
 
 
 
 
 

For Rio Tinto plc the above disclosures include 100 per cent of the profit and loss account and balance sheet of Rio Tinto Limited.

The historical data for 2003 and 2002 has been reclassified for the impact of reporting reimbursement of certain shipping and handling costs incurred by the Group that are more appropriately classified as “turnover” rather than a reduction of “net operating costs”.

Joint arrangements equity accounted for under US GAAP
The Group accounts for nine joint arrangements using proportional consolidation under UK GAAP for which the equity method of accounting would be applied under US GAAP. The difference in treatment between proportional consolidation and the equity method of accounting has no impact on shareholders’ funds or net income. Condensed financial information relating to the Group’s proportionate interest in the joint arrangements that would be equity accounted under US GAAP is as follows:

    Rio Tinto plc -   Rio Tinto Limited -      
    part of Rio Tinto Group   part of Rio Tinto Group   Rio Tinto Group  
   
 
 
 
    2004   2003   2002   2004   2003   2002   2004   2003   2002  
   
 
 
 
 
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m   US$m  
Profit and loss account:                                      
Operating (loss)/profit   -   -   -   (34 ) (75 ) (4 ) (34 ) (75 ) (4 )
(Loss)/profit after interest, tax and outside interests
  -   -   -   (56 ) (74 ) (22 ) (56 ) (74 ) (22 )
                                       
Cash flow statement                                      
Net cash flow from operating activities   -   -   -   49   50   15   49   50   15  
Net cash flow from investing activities   -   -   -   (40 ) (63 ) (74 ) (40 ) (63 ) (74 )
Net cash flow from financing activities   -   -   -   (8 ) (6 ) (6 ) (8 ) (6 ) (6 )
                                       
Balance sheet:                                      
Current assets   -   -   -   675   599   525   675   599   525  
Non-current assets   -   -   -   1,732   1,724   1,484   1,732   1,724   1,484  
Current liabilities   -   -   -   (318 ) (537 ) (672 ) (318 ) (537 ) (672 )
Non-current liabilities   -   -   -   (1,376 ) (1,036 ) (699 ) (1,376 ) (1,036 ) (699 )
Outside interests   -   -   -   (4 ) (5 ) (4 ) (4 ) (5 ) (4 )

A-78


<

Back to Contents

 

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42    Reconciliation to US Accounting Principles (continued)

Deferred Stripping
Information about the stripping ratios of the Business Units that account for the majority of the deferred stripping balance at 31 December 2004, and the year in which deferred stripping is expected to be fully amortised (as shown in brackets), is set out in the following table:

  Actual stripping ratio   Life of mine stripping  
  for year   ratio  
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
Kennecott Utah Copper (2017) 1.83   1.86   2.05   1.24   1.24   1.19  
Borax (2034) 20.50   23.00   25.00   18.70   16.00   16.00  
Argyle Diamonds (2008) 6.70   6.10   7.29   4.91   4.10   4.40  
Freeport Joint Venture (2014) 3.39   2.84   2.35   2.43   1.93   1.77  
Diavik (2009) 14.52   20.31   24.93   4.69   8.54   8.87  

In addition, Escondida, Rio Tinto's 30 per cent owned joint venture, defers stripping costs based on the ratio of waste tonnes to pounds of copper mined. The actual stripping ratio for 2004 was 0.1145 (2003: 0.1024, 2002: 0.1458). The life of mine stripping ratio for 2004 was 0.1129 (2003: 0.1110, 2002: 0.1094). The deferred stripping balance is expected to be fully amortised in 2040.

Unrealised holding gains and losses
Under SFAS 115, unrealised holding gains and losses on investments classified as 'available for sale' are excluded from earnings and reported within a separate component of shareholders' funds until realised.

The following tables show the investments in debt and equity securities which are held as 'available for sale' in accordance with SFAS 115, for the Rio Tinto Group, Rio Tinto plc part of the Group and Rio Tinto Limited part of the Group.

        Unrealised   Unrealised       Net unrealised  
Rio Tinto Group   Net book   holding   holding   Market   holding  
    value   gains   losses   value   gains/(losses)  
   
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m  
At 1 January 2004   79   19   (6 ) 92   13  
Change   16   35   1   52   36  
   
 
 
 
 
 
At 31 December 2004   95   54   (5 ) 144   49  
   
 
 
 
 
 
                       
        Unrealised   Unrealised       Net unrealised  
Rio Tinto plc - part of the Group   Net book   holding   holding   Market   holding  
    value   gains   losses   value   gains/(losses)  
   
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m  
At 1 January 2004   69   19   -   88   19  
Change   16   34   -   50   34  
   
 
 
 
 
 
At 31 December 2004   85   53   -   138   53  
   
 
 
 
 
 
                       
        Unrealised   Unrealised       Net unrealised  
Rio Tinto Limited - part of the Group   Net book   holding   holding   Market   holding  
    value   gains   losses   value   gains/(losses)  
   
 
 
 
 
 
    US$m   US$m   US$m   US$m   US$m  
At 1 January 2004   10   -   (6 ) 4   (6 )
Change   -   1   1   2   2  
   
 
 
 
 
 
At 31 December 2004   10   1   (5 ) 6   (4 )
   
 
 
 
 
 

Employee share-based payment plans
At 31 December 2004, Rio Tinto plc and Rio Tinto Limited have a number of share-based payment plans, which are described below. Prior to 2002 the Group accounted for share-based payment plans under the recognition and measurement provisions of APB Opinion No. 25, 'Accounting for Stock Issued to Employees', and related interpretations. In 2002, the Group adopted the fair value recognition provisions of SFAS 123, 'Accounting for Stock-Based Compensation', which is considered by the SEC to be a preferable accounting method for share based employee compensation. As permitted by SFAS 148, 'Accounting for Stock-Based Compensation - Transition and Disclosure', all prior periods presented have been restated to reflect the compensation cost that would have been recognised had the recognition provisions of SFAS 123 been applied to all awards granted to employees after 1 January 1995.

The compensation cost that has been recognised in income for Rio Tinto's share-based option plans is set out in the table below.

  Compensation cost  
  recognised (US $m)  
 
 
  2004   2003   2002  
 
 
 
 
Fixed Share Option Plan            
   Rio Tinto plc 2.0   2.5   2.3  
   Rio Tinto Limited 2.3   3.0   1.8  
Performance Based Share Option Plan            
   Rio Tinto plc 11.9   9.1   9.6  
   Rio Tinto Limited 6.9   5.9   3.7  
 
 
 
 
Totals (US$ million) 23.1   20.5   17.4  
 
 
 
 

A-79


<

Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42     Reconciliation to US Accounting Principles (continued)

Lattice-based option valuation model

The fair value of share options is estimated on the date of grant using a lattice-based option valuation model. The significant assumptions used in the valuation model are disclosed below. Expected volatilities are based on the historical volatility of Rio Tinto's stock returns under the UK and Australian listings and other factors. Historical data was used to estimate option exercise and employee termination rates within the valuation model. Under the Fixed Share Option Plan and the Performance Based Share Option Plan it is assumed that after options have vested, 20% of participants will exercise their options each year when the market price is at least 20% above the exercise price of the option. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate used in the valuation model is equal to the yield available on UK and Australian government bonds at the date of grant with a term equal to the expected term of the options.

Fixed Share Option Plans

The Rio Tinto Share Savings Plan is open to all employees. Employees who participate agree to save a fixed amount from monthly pay to a savings account for a term of between 2 and 5 years (depending on their location of employment). At the end of the savings term, the employees have a choice of using the money to buy shares in the relevant company, withdrawing the money, or a combination of both. The option to buy shares is based on a fixed exercise price which is equal to the market price of the relevant company's shares on the date of grant less a 20% discount.

The fair value of each award was estimated on the date of grant using a lattice-based option valuation model, including allowance for the exercise price being at a 20% discount to market price. The key assumptions used in the valuation are noted in the following table.

  2004                  
 
                 
          Risk-free   Expected   Dividend   Turnover   Implied                  
  interest rate   volatility   yield   Rates   Lifetime                  
 
 
 
 
 
                 
             %   %   %   %   years                  
Rio Tinto plc 4.7-4.8   32.0   2.3   10.0   2.2-5.4                  
Rio Tinto Limited 5.3-5.4   26.0   2.3   10.0   3.4-5.4                  
                                   
  2003   2002
 
 
 
          Risk-free   Expected   Dividend   Turnover   Implied   Risk-free   Expected   Dividend   Implied  
       interest rate   volatility   yield   Rates   Lifetime   interest rate   volatility   yield   Lifetime  
 
 
 
 
 
 
 
 
 
 
             %   %   %   %   years   %   %   %   years  
Rio Tinto plc 4.3-4.6   30.0   2.6   10.0   2.2-5.6   4.4-4.5   31.8   4.5   2.2-5.6  
Rio Tinto Limited 5.2-5.4   25.0   2.6   10.0   3.6-5.6   5.4   26.1   2.6   3.6-5.6  
                                   

A summary of the status of the companies’ fixed share option plans as at 31 December 2004, 2003 and 2002, and changes during the years ending on those dates is presented below:

          Rio Tinto plc - Share Savings Plan          
 
 
  2004   2003   2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   exercise price   Number   exercise price   Number   exercise price  
 
 
 
 
 
 
 
      £       £       £  
Options outstanding at 1 January (a) 1,995,504   8.63   2,079,845   8.14   2,010,403   7.74  
Granted 412,785   11.40   390,518   11.21   509,954   8.76  
Forfeited (121,112 ) 9.64   -   -   -   -  
Exercised (527,641 ) 5.74   (367,866 ) 8.47   (278,134 ) 5.96  
Cancellations (b) (15,773 ) 10.09   (182,067 ) 9.06   (162,378 ) 8.85  
Expired (34,694 ) 8.41   -   -   -   -  
 
 
 
 
 
 
 
Options outstanding at 31 December 1,709,069   10.11   1,920,430   8.61   2,079,845   8.14  
 
 
 
 
 
 
 
                         
Weighted-average grant-date fair value of options granted during the year (£):   5.48       4.20       2.78  
                       
(a)    The number of options outstanding as at 1st January 2004 includes the International SAR plan; prior disclosure figures excluded this plan.
(b)    Prior to 2004, expiries and forfeitures were included in cancellations. 
   
  Rio Tinto Limited - Share Savings Plan  
 
 
  2004   2003   2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   exercise price   Number   exercise price   Number   exercise price  
 
 
 
 
 
 
 
      A$       A$       A$  
Options outstanding at 1 January (a) 2,415,421   26.71   2,246,174   26.59   1,380,826   27.86  
Granted 547,052   29.04   384,180   27.48   1,245,639   25.57  
Forfeited (254,478 ) 26.72   -   -   -   -  
Exercised (27,009 ) 27.13   (12,588 ) 27.67   (2,130 ) 27.86  
Cancellations (b) -   -   (232,313 ) 26.76   (378,161 ) 27.86  
Expired -   -   -   -   -   -  
 
 
 
 
 
 
 
Options outstanding at 31 December 2,680,986   27.18   2,385,453   26.71   2,246,174   26.59  
 
 
 
 
 
 
 
                         
Weighted-average grant date fair value of options granted during the year (A$): 14.10       10.90       7.59  
                     
(a)    The number of options outstanding as at 1st January 2004 includes the International SAR plan; previously this plan was excluded from the disclosure.
(b)    Prior to 2004, expiries and forfeitures were included in cancellations. 

A-80


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42     Reconciliation to US Accounting Principles (continued)

  Rio Tinto plc - Share Savings Plan  
 As at 31 December 2004:
 
Options outstanding   Options exercisable  
 
 
 
      Weighted   Weighted       Weighted   Weighted  
 Range of exercise prices     average   average       average   average  
Number   exercise price   contractual life   Number   exercise price   contractual life  
 
 
 
 
 
 
 
      £   years       £   years  
£7.11 - £10.00 917,888   9.09   1.5   2,133   7.11   0.1  
£10.00 - £12.77 791,181   11.30   3.2   455   10.61   0.1  
 
 
 
 
 
 
 
£7.11 - £12.77 1,709,069   10.11   2.3   2,588   7.73   0.1  
 
 
 
 
 
 
 

At 31 December 2003 there were 5,263 (2002: 3,554) options exercisable with a weighted average exercise price of £7.97 (2002: £7.44).

  Rio Tinto Limited - Share Savings Plan  
 
 
 As at 31 December 2004:                        
Options outstanding   Options exercisable  
 
 
 
      Weighted   Weighted       Weighted   Weighted  
 Range of exercise prices     average   average       average   average  
Number   exercise price   contractual life   Number   exercise price   contractual life  
 
 
 
 
 
 
 
      A$   years       A$   years  
A$25 - A$30 2,680,986   27.18   2.6   -   -   -  
 
 
 
 
 
 
 

At 31 December 2003 and 31 December 2002 there were no options exercisable.

Performance Based Share Option Plan

Under its 1998 Executive Share Option Scheme and Share Option Plan, the Company grants selected executives and other key employees share option awards. For pre-2004 awards, vesting is contingent upon achieving increases in the Group's earnings per share above certain predetermined target levels over a three year performance period. There is an annual retest on a three year rolling basis until options fully vest or lapse at the end of the option period. This is a non-market condition under SFAS 123. As such, a best estimate of the service period (over which compensation cost is recognised) is made at the grant date and revised to reflect changes in the Group's earnings per share and market expectations for future earnings per share growth. For awards granted prior to 2004, the fair value is calculated assuming the performance conditions will be achieved. If such conditions are not met, no compensation cost is recognised and previously recognised compensation cost is then reversed.

For awards granted in 2004, vesting is contingent on the Group's Total Shareholder Return equalling or outperforming that of the HSBC Global Mining Index over a three year period. Vesting is based on a sliding scale with zero vesting for performance below the index up to full vesting for performance of 5%pa above the index. A single fixed base retest will be made five years after the date of grant. This "market condition" has been incorporated in the measurement of fair value for 2004 awards by modelling the correlation between Rio Tinto's TSR and that of the index. The relationship between Rio Tinto's TSR and the index was simulated many thousands of times to derive a distribution which, in conjunction with the lattice-based option valuation model, was used to determine the fair value of the options.

The Group has a policy of settling these awards by the issue of equity, although the directors at their discretion can offer a cash alternative.

The exercise price of each option, which has a 10-year life, is equal to the average market price of the Company's shares over a 5 working-day period prior to the date of grant. The fair value of each option grant was estimated on the date of grant using a lattice-based option valuation model. The key assumptions are noted in the following table.

  2004                  
 
                 
  Risk-free   Expected   Dividend   Turnover   Implied                  
  interest rate   volatility   yield   Rates   Lifetime                  
 
 
 
 
 
                 
  %   %   %   %   years                  
Rio Tinto plc 4.9   32.0   3.0   5.0   4.7                  
Rio Tinto Limited 5.7   26.0   2.8   5.0   5.0                  
                                     
    2003   2002  
   
 
 
    Risk-free   Expected   Dividend   Turnover   Implied   Risk-free   Expected   Dividend   Implied  
    interest rate   volatility   yield   Rates   Lifetime   interest rate   volatility   yield   Lifetime  
   
 
 
 
 
 
 
 
 
 
    %   %   %   %   years   %   %   %   years  
Rio Tinto plc   4.3   30.0   3.1   5.0   5.3   5.2   30.8   2.8   10  
Rio Tinto Limited   5.3   25.0   3.1   5.0   5.8   6.5   25.9   2.8   10  
                                       

A-81


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42     Reconciliation to US Accounting Principles (continued)

A summary of the status of each company's performance-based share option plan as of 31 December 2004, 2003 and 2002, and changes during the years ending on those dates, is presented below:

          Rio Tinto plc - Share Option Plan          
 
 
  2004   2003   2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   exercise price   Number   exercise price   Number   exercise price  
 
 
 
 
 
 
 
      £       £       £  
Options outstanding at 1 January 7,662,925   11.93   7,186,254   11.35   5,785,625   9.97  
Granted 1,134,053   13.29   2,305,406   12.63   2,095,314   14.59  
Exercised (584,263 ) 8.69   (1,009,307 ) 8.50   (540,568 ) 8.16  
Forfeited (159,423 ) 13.09   (797,927 ) 13.05   (154,117 ) 14.72  
Expired -   -   (21,501 ) 12.98   -   -  
 
 
 
 
 
 
 
Options outstanding at 31 December 8,053,292   12.33   7,662,925   11.93   7,186,254   11.35  
 
 
 
 
 
 
 
                         
Weighted-average fair value of options granted during the year (£):   2.81       2.97       4.99  
                       
          Rio Tinto Limited - Share Option Plan          
 
 
  2004   2003   2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   exercise price   Number   exercise price   Number   exercise price  
 
 
 
 
 
 
 
      A$       A$       A$  
Options outstanding at 1 January 3,602,137   33.58   2,439,330   33.42   1,694,730   28.09  
Granted 796,683   34.41   1,242,475   33.34   1,003,849   39.87  
Exercised (196,608 ) 22.25   (58,975 ) 22.04   (208,528 ) 20.15  
Forfeited (128,613 ) 34.91   (18,197 ) 33.76   (50,721 ) 37.65  
Expired -   -   (2,496 ) 33.01   -   -  
 
 
 
 
 
 
 
Options outstanding at 31 December 4,073,599   34.24   3,602,137   33.58   2,439,330   33.42  
 
 
 
 
 
 
 
                         
Weighted-average fair value of options granted during the year A$   6.17       6.68       13.71  
                       
          Rio Tinto plc - Share Option Plan          
 As at 31 December 2004:
 
Options outstanding   Options exercisable  
 
 
 
      Weighted   Weighted       Weighted   Weighted  
 Range of exercise prices     average   average       average   average  
Number   exercise price   contractual life   Number   exercise price   contractual life  
 
 
 
 
 
 
 
      £   years       £   years  
£8 - £10 1,742,875   8.95   4.6   1,308,908   8.72   4.4  
£12 - £15 6,310,417   13.27   7.6   1,626,166   12.66   6.2  
 
 
 
 
 
 
 
£8 - £15 8,053,292   12.33   6.9   2,935,074   10.90   5.4  
 
 
 
 
 
 
 

At 31 December 2003 there were 2.3 million (2002: 1.9 million) options exercisable with a weighted average exercise price of £8.89 (2002: £8.13)

          Rio Tinto Limited - Share Option Plan          
 As at 31 December 2004:
 
    Options outstanding       Options exercisable  
 
 
 
      Weighted   Weighted       Weighted   Weighted  
 Range of exercise prices     average   average       average   average  
Number   exercise price   contractual life   Number   exercise price   contractual life  
 
 
 
 
 
 
 
      A$   years       A$   years  
A$20 - A$25 309,660   23.67   4.8   227,337   23.52   4.6  
A$30 - A$40 3,763,939   35.11   7.7   890,338   33.01   6.2  
 
 
 
 
 
 
 
A$20 - A$40 4,073,599   34.24   7.4   1,117,675   31.08   5.9  
 
 
 
 
 
 
 

At 31 December 2003 there were 0.5 million (2002: 0.3 million) options exercisable with a weighted average exercise price of A$23.12 (2002: A$22.18)

A-82


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42 Reconciliation to US Accounting Principles (continued)
   
  Rio Tinto plc - 1985 Executive Share Option Scheme  
 
 
  2004   2003   2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   exercise price   Number   exercise price   Number   exercise price  
 
 
 
 
 
 
 
      £       £       £  
Options outstanding at 1 January 23,000   8.61   62,000   8.49   130,786   8.09  
Exercised (23,000 ) 8.61   (39,000 ) 8.41   (68,786 ) 7.73  
 
 
 
 
 
 
 
Options outstanding at 31 December -   -   23,000   8.61   62,000   8.49  
 
 
 
 
 
 
 
Number of options exercisable at year end -       23,000       62,000      
Weighted-average exercise price of options exercisable at year end
            8.61       8.49  

As at 31 December 2004, Rio Tinto plc has no options outstanding under the 1985 Executive Share Option Scheme.

Employee Stock Purchase Plan
The Rio Tinto Share Ownership Plan is a UK Inland Revenue approved share incentive plan which was approved by shareholders at the 2001 annual general meeting for Rio Tinto plc and introduced in 2002. Under this plan, eligible employees may save up to £125 per month, which the plan administrator invests in Rio Tinto plc shares ("Partnership" shares). Rio Tinto matches these purchases on a one for one basis ("Matching" shares). In addition, eligible employees can receive an annual award of Rio Tinto shares up to a maximum of five per cent of salary, subject to a cap of £3,000 ("Free" Shares).

The fair values of awards of Matching and Free Shares made by Rio Tinto are taken to be the market value of the shares on the date of purchase. The minimum service requirement for employees to benefit from the Matching Shares is one year after they are awarded; there is no minimum service requirement to be able to benefit from the award of Free Shares. For accounting purposes, both Matching and Free Shares are assumed to vest immediately. These awards are settled in equity.

The compensation costs for stocks granted during 2002, 2003 and 2004 were US$0.3 million, US$1.4 million and US$1.6 million respectively.

A summary of the shares awarded under the Company's employee stock purchase plan during the years 2004, 2003 and 2002 is presented below:

  Rio Tinto Share Ownership Plan  
 
 
  2004   2003   2002  
 
 
 
 
    Number of
shares
awarded
     Weighted
average
share price
    Number of
shares
awarded
    Weighted
average
share price
    Number of
shares
awarded
    Weighted
average
share price
  
 

 
 
 
 
 
      £       £       £  
Matching Shares 18,452   13.93   19,385   12.81   16,937   12.30  
Free Shares 49,182   12.53   50,942   11.96   -   -  
 
 
 
 
 
 
 
Total 67,634   12.91   70,327   12.19   16,937   12.30  
 
 
 
 
 
 
 

Performance Based Stock Plan
The Mining Companies Comparative Plan is a long-term performance share incentive plan which was approved by shareholders at the 1998 annual general meeting. Under this plan, eligible senior executives are annually awarded a conditional right to receive shares. These rights only vest if the performance conditions approved by the committee are satisfied. The current performance condition compares Rio Tinto's total shareholder return against a comparator group of 15 other international mining companies over a four year period. Vesting is based on a sliding scale from zero vesting for TSR performance below that of the company ranked 11th in the comparator group, up to 100% vesting for TSR performance above that of the company ranked 5th. (A different scale applies to Directors and Product Group Chief Executives.) Awards are released to participants in the form of shares all an equivalent amount in cash.

A summary of the status of each company's performance-based stock plan as of 31 December 2004, 2003 and 2002, and changes during the years ending on those dates is presented below:

  Rio Tinto plc - Mining Companies Comparative Plan  
 
 
  2004   2003   2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   price at award   Number   price at award   Number   price at award  
 
 
 
 
 
 
 
      £       £       £  
Options outstanding at 1 January 1,198,273   11.55   1,312,121   10.21   1,220,500   9.40  
Awarded 910,170   12.90   349,258   12.52   378,122   12.40  
Forfeited (41,805 ) 12.55   (113,985 ) 11.86   (22,326 ) 12.40  
Vested (170,184 ) 10.26   (349,121 ) 7.39   (264,175 ) 9.39  
Lapsed (102,140 ) 10.26   -   -   -   -  
 
 
 
 
 
 
 
Options outstanding at 31 December 1,794,314   12.41   1,198,273   11.55   1,312,121   10.21  
 
 
 
 
 
 
 

The compensation costs for stocks granted during 2004, 2003 and 2002 were £11.7 million, £4.4 million and £4.7 million respectively.

A-83


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

NOTES TO FINANCIAL STATEMENTS - (continued)

42 Reconciliation to US Accounting Principles (continued)
   
  Rio Tinto Limited - Mining Companies Comparative Plan  
 
 
  2004   2003       2002  
 
 
 
 
      Weighted       Weighted       Weighted  
      average       average       average  
  Number   price at award   Number   price at award   Number   price at award  
 
 
 
 
 
 
 
      A$       A$       A$  
Options outstanding at 1 January 711,683   30.07   774,606   25.56   804,920   22.22  
Awarded 603,686   32.88   183,997   34.95   182,060   33.68  
Forfeited (25,270 ) 32.88   (3,612 ) 34.95   (5,002 ) 33.38  
Vested (103,448 ) 25.10   (243,308 ) 19.32   (207,372 ) 19.55  
Lapsed (62,094 ) 25.10   -   -   -   -  
 
 
 
 
 
 
 
Options outstanding at 31 December 1,124,557   32.25   711,683   30.07   774,606   25.56  
 
 
 
 
 
 
 

The compensation costs for stocks granted during 2004, 2003 and 2002 were A$19.8 million, A$6.4 million and A$6.1 million respectively.

The following supplements segmental information provided elsewhere in this report to provide additional information required under US GAAP.

Property, plant and equipment by location

  Rio Tinto Group  
 
 
  2004   2003   2002   2004   2003   2002  
 
 
 
 
 
 
 
  %   %   %   US$m   US$m   US$m  
North America (a) 35.1   36.2   42.7   5,825   5,504   5,204  
Australia and New Zealand 59.7   54.6   48.5   9,905   8,290   5,912  
South America 0.3   1.1   0.9   53   168   112  
Africa 3.4   5.6   5.0   565   851   608  
Indonesia 0.1   0.2   0.4   18   28   50  
Europe and other countries 1.4   2.3   2.5   239   355   297  
 
 
 
 
 
 
 
  100.0   100.0   100.0   16,605   15,196   12,183  
 
 
 
 
 
 
 
   
(a) North America includes US$3,512 million (2003: US$3,335 million, 2002: US$3,287 million) relating to the United States of America.

Tax charge by product group (UK GAAP)

  Rio Tinto Group  
 
 
  2004   2003   2002  
 
 
 
 
  US$m   US$m   US$m  
Iron Ore (267 ) (226 ) (215 )
Energy (151 ) (96 ) (197 )
Industrial Minerals (88 ) (93 ) (200 )
Aluminium (164 ) (106 ) (107 )
Copper (334 ) (223 ) (126 )
Diamonds (119 ) (76 ) (33 )
Other operations (7 ) (13 ) (16 )
Tax on exploration 14   17   18  
Other items, including tax relief on asset write downs 275   249   168  
 
 
 
 
  (841 ) (567 ) (708 )
 
 
 
 

Covenants
Of the Rio Tinto Group's medium and long term borrowings of US$3.3 billion, some US$0.7 billion relates to the Group's share of non-recourse borrowings which are the subject of various financial and general covenants with which the respective borrowers are in compliance.

Accounting for derivative instruments and hedging activities
During 2004, the following movements, before tax and minorities, took place in Other Comprehensive Income ('OCI') and earnings under US GAAP in relation to derivatives:

  Derivative       Recorded in  
  assets less   Recorded in   retained  
  liabilities   OCI   earnings  
 
 
 
 
  US$m   US$m   US$m  
Net derivative assets on balance sheet at 31 December 2003 267   88   179  
Less: net derivative assets marked to market through OCI at 1 January 2004 relating to contracts maturing in 2004 (a)
(38 ) (38 ) -  
Less: net derivative assets marked to market through retained earnings at 1 January 2004 relating to contracts maturing in 2004 (b)
(95 ) -   (95 )
Add: mark to market of net derivative assets designated as SFAS 133 cash flow hedges at 31 December 2004 (c)
18   18   -  
Add: mark to market of net derivative assets not designated as hedges under SFAS 133 at 31 December 2004 (d)
8   -   8  
 
 
 
 
On balance sheet at 31 December 2004 160   68   92  
 
 
 
 
             
(a) During 2004, net gains of US$38 million relating to derivatives designated as cash flow hedges under SFAS 133 were transferred from accumulated OCI to US GAAP earnings on maturity of the contracts.
(b) During 2004, accrued gains of US$95 million relating to derivatives that were not designated as hedges under SFAS 133 were realised on maturity of the contracts.
(c) The fair value of net derivative assets designated as cash flow hedges under SFAS 133 increased by US$18 million during 2004 resulting in a closing asset balance related to cash flow hedging activities of US$68 million in OCI. These cash flow hedges hedge the Group's exposure to the US dollar in relation to future trading transactions. The Group expects to reclassify US$13 million of this amount as increases in earnings over the next twelve months as these contracts and the transactions which they hedge mature. As at 31 December 2004, the Group had US$144 million of cash flow hedge derivative assets and US$76 million of cash flow hedge derivative liabilities. The cash flow hedges extend to 2010.
(d) Certain of the Group's derivative contracts do not qualify for hedge accounting under SFAS 133, principally because the hedge is not located in the entity with the exposure. The fair value of these net derivative assets increased by US$8 million during 2004. As at 31 December 2004, the Group had US$152 million of assets relating to derivatives which do not qualify for hedge accounting under SFAS 133, and US$60 million of liabilities.

A-84


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7

Reserves have been prepared in accordance with Industry Guide 7 under the United States Securities Act of 1933 and the following definitions:

An ‘Ore Reserve’ means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserves determination. To establish this, studies appropriate to the type of mineral deposit involved have been carried out to estimate the quantity, grade and value of the ore mineral(s) present. In addition, technical studies have been completed to determine realistic assumptions for the extraction of the minerals including estimates of mining, processing, economic, marketing, legal, environmental, social and governmental factors. The degree of these studies is sufficient to demonstrate the technical and economic feasibility of the project and depends on whether or not the project is an extension of an existing project or operation. The estimates of minerals to be produced include allowances for ore losses and the treatment of unmineralised materials which may occur as part of the mining and processing activities. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proven Ore Reserves as defined below.

The term "economically", as used in the definition of reserves, implies that profitable extraction or production under defined investment assumptions has been established through the creation of a mining plan, processing plan and cash flow model. The assumptions made must be reasonable, including costs and operating conditions that will prevail during the life of the project.

Reserves are determined using current prices in accordance with Industry Guide 7. For commodities for which the price is determined on public exchanges, current prices have been determined by using the average spot price for the three years before the date of the reserve estimate. For commodities for which the price is not determined on public exchanges, the average realised price for the previous three years has been used. To the extent that commodities are traded under contract, the contract prices in existence at the date of reserve determination have been used, for the contracted amounts.

The term "legally", as used in the definition of reserves, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for reserves to exist, there is reasonable assurance of the issuance of these permits or resolution of legal issues. Reasonable assurance means that, based on applicable laws and regulations, the issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with the Company’s current mine plans.

The term "proven reserves" means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established. Proven reserves represent that part of an orebody for which there exists the highest level of confidence in data regarding its geology, physical characteristics, chemical composition and probable processing requirements.

The term "probable reserves" means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. This means that probable reserves generally have a wider drill hole spacing than for proven reserves.

The amount of proven and probable reserves shown below does not necessarily represent the amount of material currently scheduled for extraction, because the amount scheduled for extraction may be derived from a life of mine plan predicated on prices and other assumptions which are different to those used in the life of mine plan prepared in accordance with Industry Guide 7.

The estimated ore reserve figures in the following tables are as of 31 December 2004. Metric units are used throughout. The figures used to calculate Rio Tinto's share of reserves are often more precise than the rounded numbers shown in the tables, hence small differences might result if the calculations are repeated using the tabulated figures. Commodity price information is given in footnote (a).

A-85


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

       Type of
mine
(b)
      Total ore reserves at end 2004           Rio Tinto share  
         



 
           Tonnage   Grade       Interest   Recoverable  
                       %   mineral  














 
BAUXITE (d)         millions               millions  
Reserves at operating mine         of tonnes   %Al2O3           of tonnes  
Weipa (Australia) O/P       1,259   53.7       100.0   1,259  














 
                           Marketable  
                           product  














 
BORATES (e)         millions               millions  
Reserves at operating mines         of tonnes               of tonnes  
Boron (US)                            
- open pit O/P       23.1           100.0   23.1  
- stockpiles (q) S/P       2.1           100.0   2.1  














 
Total                         25.2  














 
        Marketable                  
COAL (f)     Coal type   reserves   Marketable coal quality          
         




         
    (g)   Total                  
            (h)   (h)       Marketable  
                        reserves  














 
Reserves at operating mines         millions   Calorific   Sulphur       millions  
        of tonnes   value   content       of tonnes  
            MJ/kg   %          
Coal & Allied Industries                            
Bengalla (Australia) O/C   SC   161   28.30   0.50   30.3   49  
Hunter Valley Operations (Australia) O/C   SC + MC   336   28.94   0.57   75.7   254  
Mount Thorley Operations (Australia) O/C   SC + MC   24   28.20   0.53   60.6   14  
Warkworth (Australia) O/C   SC + MC   246   29.35   0.53   42.1   104  














 
Sub-total                         421  














 
Kennecott Energy                            
Antelope (US) O/C   SC   249   20.59   0.22   100.0   249  
Colowyo (US) (i) O/C   SC   24   24.31   0.40   100.0   24  
Cordero Rojo (US) O/C   SC   365   19.59   0.30   100.0   365  
Decker (US) (j) O/C   SC   25   22.10   0.37   50.0   13  
Jacobs Ranch (US) O/C   SC   500   20.35   0.44   100.0   500  
Spring Creek (US) O/C   SC   225   21.75   0.33   100.0   225  














 
Sub-total                         1,375  














 
Rio Tinto Coal Australia                            
Blair Athol (Australia) O/C   SC   61   27.95   0.32   71.2   43  
Hail Creek (Australia) (k) O/C   MC   190   32.20   0.35   82.0   156  
Kestrel (Australia) U/G   SC + MC   120   32.20   0.65   80.0   96  
Tarong-Meandu (Australia) O/C   SC   93   21.05   0.30   100.0   93  














 
Sub-total                         388  














 
Total reserves at operating mines                         2,184  














 
Undeveloped reserves (l)                            
                           
Coal & Allied Industries                            
Mount Pleasant (Australia) O/C   SC   350   26.73   0.51   75.7   265  














 
Rio Tinto Coal Australia                            
Clermont (Australia) O/C   SC   189   27.90   0.33   50.1   95  
SW Yarraman (Australia) O/C   SC   41   21.05   0.30   100.0   41  
Tarong-Kunioon (Australia) O/C   SC   163   21.05   0.30   100.0   163  














 
Sub-total                         299  














 
Total undeveloped reserves                         564  














 
See Notes on page A-94 and A-95                            

A-86


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

    Type of
mine
(b)
      Total ore reserves at end 2004   Average   Rio Tinto share  
              


  mill  


 
           Tonnage   Grade   recovery   Interest   Recoverable  
                   %   %   metal  














 
COPPER         millions               millions  
Reserves at operating mines         of tonnes   %Cu           of tonnes  
Bingham Canyon (US) (m)                            
- open pit O/P       631   0.58   87   100.0   3.171  
- stockpiles (p) S/P       27   0.39   87   100.0   0.090  
Escondida (Chile) (n)                            
- sulphide (open pit) O/P       1,163   1.23   84   30.0   3.590  
- sulphide leach (open pit) O/P       630   0.54   36   30.0   0.369  
- oxide (open pit) O/P       39.1   0.69   81   30.0   0.065  
- sulphide (stockpiles (p)) S/P       20.1   1.18   84   30.0   0.059  
- sulphide leach (stockpiles (p)) S/P       161   0.68   36   30.0   0.118  
- oxide (stockpiles (p)) S/P       118   0.70   81   30.0   0.198  
Escondida Norte (Chile) (n)                            
- sulphide O/P       535   1.41   88   30.0   1.994  
- sulphide leach O/P       159   0.63   29   30.0   0.087  
- oxide O/P       123   0.78   54   30.0   0.156  
Grasberg (Indonesia) O/P + U/G       2,769   1.09   88   (o)   7.432  
Northparkes (Australia)                            
- open pit O/P       1.8   0.60   78   80.0   0.007  
- stockpiles (p) S/P       2.8   0.65   71   80.0   0.010  
- underground U/G       47.2   1.17   89   80.0   0.392  
Palabora (South Africa)                            
- underground block cave U/G       201   0.68   88   49.2   0.589  














 
Total                         18.327  














 
                           Recoverable  
                           diamonds  














 
DIAMONDS (d)         millions   carats           millions  
Reserves at operating mines         of tonnes   per tonne           of carats  
Argyle (Australia) (q)                            
- AK1 pipe (open pit) O/P + U/G       35.0   2.9       100.0   100.4  
- AK1 pipe (stockpiles (p)) S/P       1.5   2.7       100.0   4.1  
Diavik (Canada) (r) O/P + U/G       29.8   3.2       60.0   57.7  
Murowa (Zimbabwe) O/P       23.0   0.7       77.8   12.3  














 
Total                         174.5  














 
                           Recoverable  
                           metal  














 
GOLD         millions   grammes           millions of  
Reserves at operating mines         of tonnes   per tonne           ounces  
Bingham Canyon (US) (m)                            
- open pit O/P       631   0.32   64   100.0   4.224  
- stockpiles (p) S/P       27   0.22   64   100.0   0.121  
Cortez/Pipeline (US) (s)                            
- open pit O/P       291   1.55   79   40.0   4.555  
- stockpiles (p) S/P       2   5.04   78   40.0   0.077  
Grasberg (Indonesia) O/P + U/G       2,769   0.97   72   (o)   15.208  
Greens Creek (US) U/G       6.0   3.89   68   70.3   0.359  
Kelian (Indonesia) (t) O/P       -   -           -  
Lihir (PNG) (u)                            
- open pit O/P       149   3.69   90   14.5   2.305  
- stockpiles (p) S/P       39   2.66   90   14.5   0.430  
Northparkes (Australia)                            
- open pit O/P       1.8   0.60   57   80.0   0.016  
- stockpiles (p) S/P       2.8   0.48   58   80.0   0.020  
- underground U/G       47.2   0.46   74   80.0   0.416  














 
Total                         27.731  














 
See Notes on page A-94 and A-95                            

A-87


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

       Type of
mine
(b)
      Total ore reserves at end 2004       Rio Tinto share  
         


  Average  


 
                             mill          
           Tonnage   Grade   recovery   Interest   Marketable  
                   %   %   product  














 
IRON ORE (d)                            
Reserves at operating mines         millions                  
and mines under construction         of tonnes   % Fe              
Channar (Australia)                            
- Brockman Ore O/P       120   63.5       60.0   72  
Corumbá (Brazil) O/P       217   67.2       100.0   217  
Eastern Range (Australia)                            
- Brockman Ore O/P       113   62.9       54.0   61  
Hamersley (Australia)                            
- Brockman 2 (Brockman Ore) O/P       24   62.5       100.0   24  
- Marandoo (Marra Mamba Ore) O/P       76   62.4       100.0   76  
- Mt Tom Price (Brockman Ore)                            
   - open pit O/P       154   64.6       100.0   154  
   - stockpiles (p) S/P       14   64.5       100.0   14  
- Paraburdoo (Brockman Ore) O/P       23   63.8       100.0   23  
- Paraburdoo (Marra Mamba Ore) O/P       1   63.1       100.0   1  
- Nammuldi (Marra Mamba Ore) (v) O/P       39   61.4       100.0   39  
- Yandicoogina (w)                            
   - open pit O/P       244   59.7       100.0   244  
   - stockpiles (p) S/P       4   58.5       100.0   4  
Iron Ore Company of Canada                            
   (Canada) (x) O/P       443   65.0       58.7   260  
Robe River (Australia)                            
- Pannawonica (Pisolite Ore)                            
   - open pit O/P       158   57.1       53.0   84  
   - stockpiles (p) S/P       14   57.0       53.0   7  
- West Angelas (Marra Mamba Ore)                            
   - open pit O/P       417   62.2       53.0   221  
   - stockpiles (p) S/P       1   59.7       53.0   1  














 
Total                         1,503  














 
                           Recoverable  
                           metal  














 
LEAD         millions               millions  
Reserves at operating mines         of tonnes   %Pb           of tonnes  
Greens Creek (US) U/G       6.0   4.04   66   70.3   0.113  














 
MOLYBDENUM         millions               millions  
Reserves at operating mine         of tonnes   %Mo           of tonnes  
Bingham Canyon (US) (m)                            
- open pit O/P       631   0.039   66   100.0   0.163  
- stockpiles (p) S/P       27   0.034   66   100.0   0.006  














 
Total                         0.169  














 
SILVER         millions   grammes           millions  
Reserves at operating mines         of tonnes   per tonne           of ounces  
Bingham Canyon (US) (m)                            
- open pit O/P       631   2.68   78   100.0   42.190  
- stockpiles (p) S/P       27   1.92   78   100.0   1.272  
Grasberg (Indonesia) O/P + U/G       2,769   3.84   66   (o)   64.080  
Greens Creek (US) U/G       6.0   528   74   70.3   53.019  














 
Total                         160.562  














 
                           Marketable  
                           product  














 
TALC (e)         millions               millions  
Reserves at operating mines         of tonnes               of tonnes  
Luzenac Group O/P + U/G       50.3           99.9   50.2  
(Europe/North America/Australia)                            














 
See Notes on page A-94 and A-95                            

A-88


Back to Contents

     RIO TINTO PLC – RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

       Type of   Total ore reserves at         Rio Tinto share  
          mine   end 2004     Average          
  (b)  

  mill  
 
                 Tonnage   Grade     recovery   Interest   Marketable  
                 %   %   product  













 
TITANIUM DIOXIDE FEEDSTOCK (e)     millions                 millions  
Reserves at operating mines     of tonnes                 of tonnes  
Rio Tinto Iron & Titanium (y) O/P + D/O   75.3                 75.3  
(Canada/South Africa)                          













 
                         Recoverable  
                         metal  













 
                           
URANIUM     millions                 millions  
Reserves at operating mines     of tonnes   %U308             of tonnes  
Energy Resources of Australia (Australia)                          
- Ranger #3 open pit O/P   11.7   0.26     90   68.4   0.019  
- Ranger #3 stockpiled ore S/P   6.3   0.20     88   68.4   0.008  
Rössing (Namibia)                          
- open pit O/P   21.2   0.039     85   68.6   0.005  
- stockpiles (p)     2.6   0.042     85   68.6   0.001  













 
Total                       0.032  













 
                           
      millions                 millions  
Undeveloped reserves (l)     of tonnes   %U308             of tonnes  
Energy Resources of Australia (Australia)                          
- Jabiluka U/G   13.8   0.51     94   68.4   0.045  













 
                           
ZINC     millions                 millions  
Reserves at operating mines     of tonnes   %Zn             of tonnes  
Greens Creek (US) U/G   6.0   10.2     78   70.3   0.333  













 
See Notes on page A-94 and A-95                          

A-89


Back to Contents

     RIO TINTO PLC – RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

    Type of   Proved ore reserves at end 2004   Probable ore reserves at end 2004  
       mine  
 
 
  (b)           Drill hole           Drill hole  
       Tonnage   Grade   spacing (c)   Tonnage   Grade   spacing (c)  














 
BAUXITE (d)     millions           millions          
Reserves at operating mine     of tonnes   %Al2O3       of tonnes   %Al2O3      
                           
Weipa (Australia) O/P   144   54.3   76 m 1,115   53.6   Max 800m x 400m  














 














 
BORATES (e)     millions           millions          
Reserves at operating mines     of tonnes           of tonnes          
Boron (US)                            
- open pit O/P   22.2       61 m 0.9       61m  
- stockpiles (q) S/P   0.1           1.9          














 
COAL (f)     Recoverable   % Yield to  






 
       reserves   give   Proved       Probable      
       total   marketable       Drill hole       Drill hole  
           reserves       spacing (c)       spacing (c)  














 
Reserves at operating mines     millions       millions       millions      
    of tonnes       of tonnes       of tonnes      
                           
Coal & Allied Industries                            
Bengalla (Australia) O/C   197   81   98   50m to 350m   62   Four holes/km2  
Hunter Valley Operations (Australia) O/C   491   68   262   300m   74   500m  
Mount Thorley Operations (Australia) O/C   37   65   24   125m          
Warkworth (Australia) O/C   386   64   149   450m   97   Max 1000m  














 
Kennecott Energy                            
Antelope (US) O/C   249   100   249   Max 457m          
Colowyo (US) (i) O/C   24   100   24   Max 229m          
Cordero Rojo (US) O/C   365   100   365   Max 457m          
Decker (US) (j) O/C   25   100   25   Max 457m          
Jacobs Ranch (US) O/C   500   100   496   Max 457m   4   Max 760m  
Spring Creek (US) O/C   225   100   225   Max 457m          














 
Rio Tinto Coal Australia                            
Blair Athol (Australia) O/C   62   98   60   150m   1   150m  
Hail Creek (Australia) (k) O/C   301   63   111   300m   80   400m  
Kestrel (Australia) U/G   149   80   57   500m   63   1000m  
Tarong-Meandu (Australia) O/C   136   68   86   200m   7   400m  














 
Undeveloped reserves (l)                            
                           
Coal & Allied Industries                            
Mount Pleasant (Australia) O/C   459   76           350   125m to 500m  














 
Rio Tinto Coal Australia                            
Clermont (Australia) O/C   197   96   163   220m   26   150m to 300m  
SW Yarraman (Australia) O/C   54   76           41   450m  
Tarong-Kunioon (Australia) O/C   257   63           163   400m  














 
See Notes on page A-94 and A-95                            

A-90


Back to Contents

     RIO TINTO PLC – RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

    Type of   Proved ore reserves at end 2004   Probable ore reserves at end 2004  
       mine  
 
 
          (b)           Drill hole           Drill hole  
       Tonnage   Grade   spacing (c)   Tonnage   Grade   spacing (c)  














 
COPPER     millions           millions          
Reserves at operating mines     of tonnes   %Cu       of tonnes   %Cu      
Bingham Canyon (US) (m)                            
- open pit O/P   34.8   0.63   Max 25m   596   0.57   Max 215m  
- stockpiles (p) S/P   1.4   0.40       25   0.39      
Escondida (Chile) (n)                            
- sulphide (open pit) O/P   594   1.40 }     569   1.05 }    
- sulphide leach (open pit) O/P   251   0.53 55m to 60m   379   0.54 60m to 110m  
- oxide (open pit) O/P   19.6   0.72     19.5   0.66    
- sulphide (stockpiles (p)) S/P   20.1   1.18                  
- sulphide leach (stockpiles (p)) S/P   161   0.68                  
- oxide (stockpiles (p)) S/P   118   0.70                  
Escondida Norte (Chile) (n)                            
- sulphide O/P   187   1.65 } 48m to 60m   348   1.28 } 60m to 125m  
- sulphide leach O/P   28.7   0.57   130   0.65  
- oxide O/P               123   0.78  
Grasberg (Indonesia) O/P + U/G   772   1.12   25m to 75m   1,997   1.07   50m to 150m  
Northparkes (Australia)                            
- open pit O/P   1.8   0.60   20m x 40m              
- stockpiles (p) S/P   2.8   0.65                  
- underground U/G               47.2   1.17   20m x 40m  
Palabora (South Africa)                            
- underground block cave U/G   185   0.69   75m   16.0   0.49   75m  














 
DIAMONDS (d)     millions   carats       millions   carats      
Reserves at operating mines     of tonnes   per tonne       of tonnes   per tonne      
Argyle (Australia) (q)                            
- AK1 pipe (open pit) O/P + U/G   25.9   2.9   25m x 50m   9.1   2.9   25m x 50m  
- AK1 pipe (stockpiles (p)) S/P   1.5   2.7                  
Diavik (Canada) (r) O/P + U/G   16.2   3.5   25m to 30m   13.6   2.9   25m to 30m  
Murowa (Zimbabwe) O/P               23.0   0.7   50m  














 
GOLD     millions   grammes       millions   grammes      
Reserves at operating mines     of tonnes   per tonne       of tonnes   per tonne      
Bingham Canyon (US) (m)                            
- open pit O/P   34.8   0.35   Max 25m   596   0.32   Max 215m  
- stockpiles (p) S/P   1.4   0.23       25   0.22      
Cortez/Pipeline (US) (s)                            
- open pit O/P   192   1.74   30.5m to 43m   99.4   1.18   30.5m to 43m  
- stockpiles (p) S/P   2   5.04                  
Grasberg (Indonesia) O/P + U/G   772   1.10   25m to 75m   1,997   0.93   50m to 150m  
Greens Creek (US) U/G               6.0   3.89   15m to 30.5m  
Kelian (Indonesia) (t) O/P           -           -  
Lihir (PNG) (u)                            
- open pit O/P   2.2   3.42   35m   147   3.69   35m to 70m  
- stockpiles (p) S/P   38.7   2.66                  
Northparkes (Australia)                            
- open pit O/P   1.8   0.60   20m x 40m              
- stockpiles (p) S/P   2.8   0.48                  
- underground U/G               47.2   0.46   20m x 40m  














 
See Notes on page A-94 and A-95                            

A-91


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

          % Yield to                  
      Recoverable   give  






 
  Type of   reserves   marketable       Drill hole       Drill hole  
  mine (b)   total   reserves   Proved   spacing (c)   Probable   spacing (c)  














 
IRON ORE (d)     millions           millions          
  of tonnes %Fe of tonnes %Fe
Reserves at operating mines                            
and mines under construction                            
Channar (Australia)                            
– Brockman Ore O/P   107   63.5   60m   13   63.6   Max 120m  
Corumbá (Brazil) O/P   111   67.2   100m to 400m   106   67.2   200m x 400m  
Eastern Range (Australia)                            
– Brockman Ore O/P   90   63.0   60m   23   62.8   Max 120m  
Hamersley (Australia)                            
– Brockman 2 (Brockman Ore) O/P   17   62.5   50m   7   62.7   Max 100m  
– Marandoo (Marra Mamba Ore) O/P   73   62.4   75m   3   62.6   Max 150m  
– Mt Tom Price (Brockman Ore)                            
    – open pit O/P   112   64.5   30m   42   64.8   60m x 30m  
    – stockpiles (p) S/P               14   64.5      
– Paraburdoo (Brockman Ore) O/P   17   63.8   30m   6   63.6   60m x 30m  
– Paraburdoo (Marra Mamba Ore) O/P               1   63.1   60m  
– Nammuldi (Marra Mamba Ore) (v) O/P   11   61.4   50m   28   61.4   100m x 50m  
– Yandicoogina (w)                            
    – open pit O/P   191   58.9   50m   53   62.7   100m x 50m  
    – stockpiles (p) S/P               4   58.5   100m x 50m  
Iron Ore Company of Canada (Canada) (x) O/P   361   65.0   122m x 61m   82   65.0   122m  
Robe River (Australia)                            
– Pannawonica (Pisolite Ore)                            
    – open pit O/P   112   57.0   Max 50m   46   57.1   50m  
    – stockpiles (p) S/P   2   57.0       12   57.0      
– West Angelas (Marra Mamba Ore)                            
    – open pit O/P   141   62.8   Max 50m   276   61.9   200m x 100m  
    – stockpiles (p) S/P   1   59.7                  














 
LEAD     millions           millions          
      of tonnes   %Pb       of tonnes   %Pb      
Reserves at operating mines                            
Greens Creek (US) U/G               6.0   4.04   15m to 30.5m  














 
MOLYBDENUM     millions           millions          
      of tonnes   %Mo       of tonnes   %Mo      
Reserves at operating mine                            
Bingham Canyon (US) (m)                            
– open pit O/P   34.8   0.037   Max 25m   596   0.039   Max 215m  
– stockpiles (p) S/P   1.4   0.031       25   0.034      














 
                           
SILVER     millions   grammes       millions   grammes      
      of tonnes   per tonne       of tonnes   per tonne      
Reserves at operating mines                            
Bingham Canyon (US) (m)                            
– open pit O/P   34.8   3.10   Max 25m   596   2.66   Max 215m  
– stockpiles (p) S/P   1.4   2.33       25   1.90      
Grasberg (Indonesia) O/P + U/G   772   3.80   25m to 75m   1,997   3.86   50m to 150m  
Greens Creek (US) U/G               6.0   528   15m to 30.5m  














 
                           
See Notes on page A-94 and A-95                            

A-92


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

          % Yield to                  
      Recoverable   give  






 
  Type of   reserves   marketable       Drill hole       Drill hole  
  mine (b)   total   reserves   Proved   spacing (c)   Probable   spacing (c)  














 
TALC (e)     millions           millions          
      of tonnes           of tonnes          
Reserves at operating mines                            
Luzenac Group O/P + U/G   32.4       15m to 100m   17.9       15m to 100m  
(Europe/North America/Australia)                            














 
TITANIUM DIOXIDE FEEDSTOCK (e)     millions           millions          
Reserves at operating mines     of tonnes           of tonnes          
Rio Tinto Iron & Titanium (y) O/P + D/O   42.5       Max 60m   32.8       100m x 100m-800m  
(Canada/South Africa)                            














 
URANIUM     millions           millions          
      of tonnes   %U308       of tonnes   %U308      
Reserves at operating mines                            
Energy Resources of Australia (Australia)                            
– Ranger #3 open pit O/P   4.2   0.29   Max 25m grid   7.5   0.25   Max 50m grid  
– Ranger #3 stockpiled ore S/P   6.3   0.20                  
Rössing (Namibia)                            
– open pit O/P   4.8   0.051   15m to 20m   16.4   0.035   60m to 120m  
– stockpiles (p)     2.6   0.042                  














 
        millions          millions        
       of tonnes   %U308        of tonnes   %U308      
Undeveloped reserves (l)                            
Energy Resources of Australia (Australia)                            
– Jabiluka U/G  
6.8
  0.57   Max 30m   7.0   0.45   Max 30m x 60m  














 
ZINC     millions          millions         
      of tonnes    %Zn     of tonnes    %Zn    
Reserves at operating mines                            
Greens Creek (US) U/G               6.0   10.2   15m to 30.5m  














 
                           
See Notes on page A-94 and A-95                            

A-93


Back to Contents

     RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

Notes
(a)   Commodity prices (based on a three year average historical price) used in these reserve estimates include the following exchange quoted prices :

ALUMINIUM     LEAD  
   Weipa (Australia) US$ 0.65/lb      Greens Creek (US) US$ 0.24/lb
         
COPPER     MOLYBDENUM  
   Bingham Canyon (US) US$ 0.82/lb      Bingham Canyon (US) US$ 5.17/lb
   Escondida (Chile)* US$ 0.82/lb      
   Escondida Norte (Chile)* US$ 0.74/lb   SILVER  
   Grasberg (Indonesia)* US$ 0.85/lb      Bingham Canyon (US) US$ 4.95/oz
   Northparkes (Australia) US$ 0.82/lb      Grasberg (Indonesia)* US$ 5.00/oz
   Palabora (South Africa) US$ 0.82/lb      Greens Creek (US) US$ 4.95/oz
         
GOLD     ZINC  
   Bingham Canyon (US) US$ 338/oz      Greens Creek (US) US$ 0.38/lb
   Cortez/Pipeline (US)* US$ 338/oz      
   Grasberg (Indonesia)* US$ 270/oz   (Note * = Non-managed operations)  
   Greens Creek (US) US$ 338/oz      
   Lihir (PNG)* US$ 380/oz      
   Northparkes (Australia) US$ 338/oz      
         
         
(b) Type of mine: O/P = open pit, O/C = open cut, U/G = underground, D/O = dredging operation, S/P = stockpile.
   
(c) Drill hole spacings are either average distances, a specified grid distance (a regular pattern of drill holes - the distance between the drill holes along the two axes of the grid will be aligned to test the size, shape and continuity of the mineral deposit; as such there may be different distances between the drill holes along the two axes of a grid) or the maximum drill hole spacing that is sufficient to determine the reserve category for a particular deposit. As the continuity of mineralisation varies from deposit to deposit, the drill hole spacing required to categorise a reserve varies between and within deposit types.
   
(d) Reserves of iron ore, bauxite and diamonds are shown as recoverable reserves of saleable product after accounting for all mining and processing losses. Mill recoveries are therefore not shown.
   
(e) Reserves of industrial minerals are expressed in terms of marketable product, i.e. after all mining and processing losses. In the case of borates, the saleable product is B2O3.
   
(f) Coal reserves are shown as both recoverable and marketable. The yield factors shown reflect the impact of further processing, where necessary, to provide marketable coal. All reserves at operating mines are assigned, all undeveloped reserves are unassigned. By “assigned” and “unassigned,” we mean the following: Assigned reserves means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. Unassigned reserves represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property.
   
(g) Coal type: SC = steam/thermal coal; MC = metallurgical/coking coal.
   
(h) Analyses of coal from the US were undertaken according to "American Standard Testing Methods" (ASTM) on an "As Received" moisture basis whereas the coals from Australia have been analysed on an "Air Dried" moisture basis according to Australian Standards (AS). MJ/kg = megajoules per kilogramme. 1 MJ/kg = 430.2 Btu/lb.
   
(i) Kennecott Energy has a partnership interest in the Colowyo mine, but, as it is responsible under a management agreement for the operation of the mine, all of Colowyo's reserves are included in Rio Tinto's share shown above.
   
(j) Reserves at Decker have decreased following a reduction of tonnage commitments under a sales contract.
   
(k) Rio Tinto reduced its shareholding in Hail Creek from 92.0 per cent to 82.0 per cent on 15 November 2004.

A-94


Back to Contents

RIO TINTO PLC - RIO TINTO LIMITED

ORE RESERVES UNDER INDUSTRY GUIDE 7 CONTINUED

Notes (Continued)
   
(l) The term 'undeveloped reserves' is used here to describe material that is economically viable on the basis of technical and economic studies but for which construction and commissioning have yet to be commenced.
   
(m) Open pit reserves at Bingham Canyon have increased following revisions to the geological model and development of a revised mine plan.
   
(n) Reserves at Escondida have changed following the development of a new geological model that includes additional drilling and revised cut-off grades. Approval of the Sulphide Leach Project has resulted in a new reserve category, 'Sulphide Leach', that includes material in the previously named 'Low Grade Float' and 'Mixed' categories. The significant increase in the reserve tonnages of this material are a consequence of low grade primary mineralisation now being considered to be processable by the sulphide leach process.
   
(o) Rio Tinto completed the sale of its interest in Freeport-McMoRan-Copper & Gold (FCX) on 30 March 2004. Under the terms of a joint venture agreement between Rio Tinto and FCX, Rio Tinto is entitled to a direct 40 per cent share in reserves discovered after 31 December 1994 and it is this entitlement that is shown.
   
(p) Stockpile components of reserves are shown for all operations, where relevant.
   
(q) Reserves at Argyle have decreased following the development of a new geological model and revised mine plan which has resulted in the reclassification of some reserves as mineralised material.
   
(r) Reserves at Diavik have increased following the development of a new geological model that incorporates additional drilling and a revised diamond valuation.
   
(s) Reserves at Cortez increased as a result of the transfer of mineralised material to reserves at the Cortez Hills and Pediment deposits.
   
(t) At 2004 year end, Kelian was in the process of closing and only minor amounts of stockpiled material remain.
   
(u) Reserves at Lihir increased as a result of additional drilling which has led to significant re-modelling of the Minifie deposit and re-modelling of the Kapit, Coastal and Lienitz deposits and the subsequent development of a new geological model.
   
(v) Reserves of Marra Mamba ore at Nammuldi are included following the completion of a feasibility study.
   
(w) Reserves at Yandicoogina have decreased mainly as a result of production, cut-off grade and recovery factor adjustments.
   
(x) Reserves at IOC have decreased as a result of revisions to the geological model and the pit design.
   
(y) Comprises reserves at QIT Fer et Titane (Rio Tinto 100 per cent) and Richards Bay Minerals (Rio Tinto 50 per cent).
   
(z) The following operations were sold during 2004: Neves Corvo (Portugal), Morro do Ouro (Brazil), Rio Tinto Zimbabwe, Fortaleza (Brazil) and Zinkgruvan (Sweden).
   
(aa) Reserves at the following mines were reclassified as mineralised material during 2004: Maules Creek (Australia), Oaklands (Australia) and Mt Tom Price - Marra Mamba ore (Australia).

A-95


Exhibit 1.1


Back to Contents

No. 719885
The Companies Act 1985

 


MEMORANDUM

AND ARTICLES OF

ASSOCIATION OF

Rio Tinto plc

 

Incorporated 30th March, 1962
(New Articles of Association adopted by Special Resolution
passed on 11th April 2002 and amended on 14 April 2005)

 

RIO
TINTO

 


Back to Contents

No. 719885
The Companies Act 1985

 


MEMORANDUM

AND ARTICLES OF

ASSOCIATION OF

Rio Tinto plc

 

Incorporated 30th March, 1962
(New Articles of Association adopted by Special Resolution
passed on 11th April 2002 and amended on 14 April 2005)

 

 

Linklaters
One Silk Street, London EC2Y 8HQ

 


Back to Contents

Article No.   CONTENTS Page No.
    Certificates of Incorporation
6
    Resolutions 10
    Memorandum of Association 15
    Articles of Association  
    Preliminary  
1   Table A not to apply 20
2   Interpretation 20
3   Income and Capital Rights 30
    Alteration of Share Capital  
4   Increase of share capital 34
5   Consolidation, subdivision and cancellation 34
6   Purchase of own shares 35
7   Reduction of capital 35
    Shares  
8   Rights attaching to shares on issue 35
8A   DLC Dividend Share 36
9   Directors' power to allot 37
10   Commissions on issue of shares 38
11   Renunciation of allotment 38
12   Trust etc. interests not recognised 38
    Share Certificates  
13   Issue of share certificates 38
14   Form of share certificate 39
15   Joint holders 39
16   Replacement of share certificates 39
    Calls on Shares  
17   Power to make calls 39
18   Liability for calls 40
19   Interest on overdue amounts 40
20   Other sums due on shares 40
21   Power to differentiate between holders 40
22   Payment of calls in advance 40
    Forfeiture and Lien  
23   Notice on failure to pay a call 40
24   Forfeiture for non-compliance 41
25   Disposal of forfeited shares 41
26   Holder to remain liable despite forfeiture 41
27   Tax liabilities 41
28   Lien on partly-paid shares 42
29   Sale of shares subject to lien 42
30   Evidence of forfeiture 43
    Variation of Rights  
31   Manner of variation of rights 43
32   Matters not constituting variation of rights 44
33   Separate approvals of Class Rights Actions 44
    Transfer of Shares  
34   Form of transfer 45

2


Back to Contents



Article No.   CONTENTS Page No.
35   Balance certificate 45
36   Right to refuse registration 45
37   Retention of transfers 46
38   No fee on registration 46
39   Closure of Register 46
40   Branch Register 46
    Transmission of Shares  
41   Persons entitled on death 47
42   Election by persons entitled by transmission : 47
43   Rights of persons entitled by transmission 47
44   Share Warrants 47
45   Untraced Shareholders 48
    General Meetings  
46   Annual and Extraordinary General Meetings 48
47   Convening and Location of General Meetings 49
    Notice of General Meetings  
48   Length of notice for General Meetings 49
49   Contents of notice of General Meetings 50
    Proceedings at General Meetings  
50   Chairman 50
51   Quorum 50
52   Lack of quorum 50
53   Conduct of meetings 51
54   Adjournment and notice of adjourned meeting 51
55   Amendments to resolutions 51
    Polls
 
56   Demand for poll 52
57   Procedure on a poll 52
58   Voting on a poll 52
59   Timing of poll 53
    Votes of Members  
60   Votes attaching to shares 53
61   Votes of joint holders 54
62   Chairman's casting vote 54
63   Restriction on voting in particular circumstances 54
64   Change of control 56
65   Voting by guardian 63
66   Validity and result of vote 63
    Proxies  
67   Proxy need not be a member 64
68   Form of proxy 64
69   Deposit of form of proxy 64
70   Rights of proxy 65
71   Revocation of proxy 65
72   Corporations Acting by Representatives 65
    Directors  
73   Number of Directors 66
74   Share qualification 66
75   Directors' fees 66

3


Back to Contents



Article No.   CONTENTS Page No.
76   Other remuneration of Directors 66
77   Directors' expenses 66
78   Directors' pensions and other benefits 66
79   Appointment and powers of executive Directors 67
80   Alternate Directors 67
    Appointment and Retirement of Directors  
81   Age limit 68
82   Retirement by rotation 68
83   Selection of Directors to retire by rotation  68
84   Re-election of retiring Director 69
85   Election of two or more Directors 69
86   Nomination of Director for election 69
87   Period for Nomination of Directors for election 70
88   Election or appointment of additional Director 70
89   Vacation of office 70
90   Removal of Director 71
91   Convening of meetings of Directors 71
92   Quorum 71
93   Chairman 71
94   Casting vote 72
95   Number of Directors below minimum 72
96   Telephone Board Meetings 72
97   Written resolutions 72
98   Validity of proceedings 72
99   Directors may have interests 73
100   Restriction on voting 73
101   Directors' interests – general 74
    Committees of the Directors  
102   Appointment and constitution of committees 75
103   Proceedings of committee meetings 75
    Powers of Directors  
104   General powers 75
105   Powers and obligations in relation to the Sharing Agreement 76
106   Local boards 76
107   Appointment of attorney 76
108   Signature on cheques etc 76
109   Borrowing powers 76
110   Secretary 79
111   The Seal 79
112   Authentication of Documents 80
    Profits and Reserves  
113   Establishment of reserves 80
114   Business bought as from past date 80
    Dividends  
115   Dividends 81
116   Distribution in specie 81
117   No dividend except out of profits 81
118   Ranking of shares for dividend 81
119   Manner of payment of dividends 81

4


Back to Contents



Article No.   CONTENTS Page No.
120   Uncashed dividend cheques 82
121   Joint holders 82
122   Record date for dividends 82
123   No interest on dividends 82
124   Retention of dividends 82
125   Unclaimed dividend 82
126   Waiver of dividend 83
127   Capitalisation of Profits and Reserves 83
128   Scrip Dividends 83
    Accounts  
129   Accounting records 85
130   Copies of accounts for members 85
131   Validity of Auditor's acts 85
132   Auditor's right to attend General Meetings 86
    Notices  
133   Service of notices 86
134   Joint holders 86
135   Deceased and bankrupt members 87
136   Overseas members 87
137   Uncontactable members 87
138   Suspension of postal services 87
138A   Electronic communication 88
139   Statutory requirements as to notices 88
    Winding Up  
140   Directors' power to petition 88
141   Distribution of assets in specie 88
142   Destruction of Documents 89
143   Indemnity 90
144   Further Provision on Shares in Uncertificated Form 90

5


Back to Contents


Back to Contents


Back to Contents


Back to Contents


Back to Contents


RIO TINTO PLC

RESOLUTION
(passed on 11 April 2002)

The following resolution proposed at the fortieth Annual General Meeting of the Company duly convened and held on 11th April 2002 at the Queen Elizabeth II Conference Centre, Broad Sanctuary, London SW1 was duly passed as an Ordinary Resolution on that day by Rio Tinto plc shareholders and became effective on 18th April 2002 following the Annual General Meeting of Rio Tinto Limited held on that date:

Resolution 4

That

(a) subject to the passing of resolution 5, the authorised share capital of the Company be increased from £142,123,283.20 to £142,123,283.30 by the creation of one DLC Dividend Share of 10p, having the rights and subject to the restrictions set out in the new articles of association of the company referred to in paragraph (a) of resolution 5 below; and
   
(b) subject to the passing of resolution 5, Rio Tinto Limited be authorised to create and issue a new class of share, entitled a "DLC Dividend Share", having the rights and subject to the restrictions proposed to be incorporated into the constitution of Rio Tinto Limited referred to in paragraph (b) of resolution 5 below.

 

A V Lawless
Secretary

10


Back to Contents


RIO TINTO PLC

RESOLUTIONS
(passed on 11 April 2002)

The following resolutions proposed at the fortieth Annual General Meeting of the Company duly convened and held on 11th April 2002 at The Queen Elizabeth ll Conference Centre, Broad Sanctuary, London SW1 were duly passed as Special Resolutions on that day by Rio Tinto pic shareholders and became effective on 18th April 2002 following the Annual General Meeting of Rio Tinto Limited held on that date:

Resolution 5

That

(a) subject to the passing of resolution 4, the articles of association contained in the document submitted to the meeting, marked 'B' and initialled by the Chairman for the purpose of identification, be adopted as the articles of association of the Company in substitution for and to the exclusion of the existing articles of association of the Company; and
   
(b) subject to the passing of resolution 4, the amendments to the constitution contained in the document submitted to the meeting, marked 'C' and initialled by the Chairman for the purpose of identification, be approved and such amendments be made to the constitution of Rio Tinto Limited, provided that, if resolution 6 is passed, such new articles of association and amended constitution shall also incorporate the amendments made by resolution 6.

Resolution 6

That

(a) the authority and power conferred on the directors by Article 75 of the Company's articles of association be amended so that, subject to the exceptions set out in that Article, the ordinary remuneration of the directors, shall not (when aggregated with any fees received by the directors in their capacity as directors of Rio Tinto Limited) exceed £750,000 per annum in aggregate and so that Australian dollar amounts shall be converted at the rate of £1=A$2.75; and
   
(b) Rule 89 of the Rio Tinto Limited constitution be amended by deleting the conversion rate "£1=$2.10" and replacing it with "£1=$2.75".

A V Lawless
Secretary

11


Back to Contents


RIO TINTO PLC

RESOLUTIONS
(passed on 14 April 2005)

At the forty-third Annual General Meeting of the Company duly convened and held on 14th April 2005 at The Queen Elizabeth II Conference Centre, Broad Sanctuary, London SW1, the following resolutions were duly passed as Special Resolutions:

Resolution 2

That the authority and power conferred on the directors in relation to rights issues and in relation to the Section 89 Amount by paragraph (B) of Article 9 of the Company's articles of association be renewed for the period ending on the date of the annual general meeting in 2006 or on 13 April 2006, whichever is the later, and for such period the Section 89 Amount shall be £6.90 million.

Resolution 3

(a) That Rio Tinto plc, Rio Tinto Limited and any subsidiaries of Rio Tinto Limited be and are hereby authorised to purchase ordinary shares of 10p each issued by Rio Tinto plc ("RTP Ordinary Shares"), such purchases to be made, in the case of Rio Tinto plc, by way of market purchase (within the meaning of Section 163 of the Companies Act 1985), provided that this authority shall be limited
     
  (i) so as to expire on 13 October 2006;
     
  (ii) so that the number of RTP Ordinary Shares which may be purchased pursuant to this authority shall not exceed 106.8 million RTP Ordinary Shares (representing approximately ten per cent of the issued share capital of the Company as at 14 February 2005);
     
  (iii) so that the maximum price payable for each such RTP Ordinary Share shall be not more than five per cent above the average of the middle market quotations for RTP Ordinary Shares as derived from the London Stock Exchange Daily Official List during the period of five business days immediately prior to such purchase; and
     
  (iv) so that the minimum price payable for each such RTP Ordinary Share shall be 10p;
     
(b) That Rio Tinto plc be and is hereby authorised to purchase off-market from Rio Tinto Limited and any of its subsidiaries any RTP Ordinary Shares acquired under the authority set out under (a) above on the terms set out in the proposed agreement between Rio Tinto plc and Rio Tinto Limited (a draft of which has been produced to the meeting and is for the purpose of identification marked 'A' and initialled by the chairman), such authorisation to expire on 13 October 2006 and such proposed agreement be hereby approved for the purpose of Section 165 of the Companies Act 1985.

A V Lawless
Secretary

12


Back to Contents


RIO TINTO PLC

RESOLUTIONS
(passed on 14 April 2005)

The following resolutions proposed at the forty-third Annual General Meeting of the Company duly convened and held on 14 April 2005 at the Queen Elizabeth II Conference Centre, Broad Sanctuary, London SW1 were duly passed as Special Resolutions on that day by Rio Tinto plc shareholders and became effective on 29 April 2005 following the Annual General Meeting of Rio Tinto Limited held on that date:

Resolution 4

That, subject to the consent in writing of the holder of the Special Voting Share, approval is hereby given to buy-backs by Rio Tinto Limited of fully paid ordinary shares in Rio Tinto Limited ("RTL Ordinary Shares") in the 12 month period following this approval:

(a) under one or more off-market buy-back tender schemes in accordance with the terms described in the Explanatory notes which accompany this Notice ("the Buy-Back Tenders"), but only to the extent that the number of RTL Ordinary Shares bought back under the Buy-Back Tenders, together with the number of RTL Ordinary Shares bought back on-market by Rio Tinto Limited, does not exceed in that 12 month period ten per cent of the minimum number of RTL Ordinary Shares on issue (excluding from the calculation of that minimum number for all purposes those RTL Ordinary Shares held by or on behalf of Tinto Holdings Australia Pty Limited ("THA") or any other subsidiary of Rio Tinto plc during such period; and
   
(b) following any Buy-Back Tender, from THA upon the terms and subject to the conditions set out in the draft buy-back agreement between Rio Tinto Limited and THA (entitled 'THA Matching Buy-Back Agreement'), a draft copy of which has been produced to the meeting and for the purposed of identification, market 'B' and initialled by the Chairman.

Resolution 5

That, subject to the consent in writing of the holder of the Special Voting Share and subject to the passing of resolution 6, Article 33(A)(iii) of the Company's articles of association and Rule 7(a)(iii) of Rio Tinto Limited's constitution each be amended by adding after the words "of its own ordinary shares", the following:

  "(except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation)."

13


Back to Contents

Resolution 6

That, subject to the consent in writing of the holder of the Special Voting Share and subject to the passing of resolution 5, approval is hereby given for the following amendments to the DLC Merger Sharing Agreement dated 21 December 1995 (the "Sharing Agreement") between the Company and Rio Tinto Limited:

(a) adding the following words to the end of Clause 5.1.2 (b) of the Sharing Agreement:
     
    "(except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation)"; and
     
(b) amending paragraph 3 of Schedule 1 of the Sharing Agreement by deleting the words "at or around prevailing market prices" and inserting in their place the words "at, around or below prevailing market prices for the shares being purchased".

A V Lawless
Secretary

14


Back to Contents


MEMORANDUM OF ASSOCIATION

OF THE RTZ CORPORATION PLC

(Reprinted to reflect amendments up to 14 April 2005)
 
(1) The name of the Company is "THE RTZ CORPORATION PLC".1
   
(2) The Company is to be a public company.
   
(3) The Registered Office of the Company will be situated in England.
   
(4)  The objects for which the Company is established are:­

(A)     To enter into, operate and carry into effect an Agreement with CRA Limited ("CRA2") known as the DLC Merger Sharing Agreement and a Deed known as the Rio Tinto Deed Poll Guarantee with full power to:

(i)       agree any amendment or termination of all or any of the terms of that Agreement or Deed in accordance with the terms thereof;

(ii)      enter into, operate and carry into effect any further or other agreements or arrangements with or in connection with CRA2; and

(iii)     do all such things as in the opinion of the Directors of the Company are necessary or desirable for the furtherance of this object or for the furtherance, maintenance or development of the relationship with CRA2 constituted by or arising out of any agreement or arrangement mentioned in or made in accordance with this sub-clause.

(B)     To carry on business as an investment holding company.

(C)     To subscribe for, underwrite, purchase or otherwise acquire shares, stock, debentures, debenture stock, bonds, obligations or other securities or investments of any kind whatsoever and wheresoever created or issued, and to hold the same with a view to investment, or to sell, exchange or otherwise dispose of the same for reinvestment purposes or otherwise in the ordinary course of management of the Company's investments.

(D)     To purchase or otherwise acquire for any estate or interest any property or assets which may appear to be necessary or convenient.

(E)     To borrow and raise money and to secure or discharge any debt or obligation of or binding on the Company in such manner as may be thought fit and in particular by mortgages and charges upon the undertaking and all or any of the property and assets (present and future) and the uncalled Capital of the Company, or by the creation and issue on such terms and conditions as may be thought expedient of debentures, debenture stock or other securities of any description.

(F)     To draw, make, accept, endorse, discount, negotiate, execute, and issue, and to buy, sell and deal with bills of exchange, promissory notes, and other negotiable or transferable instruments.

(G)     To amalgamate with and to co-operate in any way with or assist or subsidise any company, firm, or person, and to purchase or otherwise acquire and undertake all or any part of the business, property and liabilities of any person, body or company carrying on any business which this Company is authorised to carry on or possessed of any property suitable for the purposes of the Company.

15


Back to Contents

(H)     To promote or concur in the promotion of any company, the promotion of which shall be considered desirable.

(I)     To lend money to and guarantee or give security for the performance of the contracts or obligations of any company, firm or person, and the payment and repayment of the capital and principal of, and dividends, interest or premiums payable on, any stock, shares and securities of any company, whether having objects similar to those of this Company or not, and to give all kinds of indemnities.

(J)     To sell, lease, grant licences, easements and other rights over, and in any other manner deal with or dispose of the undertaking, property, assets, rights and effects of the Company or any part thereof for such consideration as may be thought fit, and in particular for stocks, shares or securities of any other company whether fully or partly paid up.

(K)     To procure the registration of the Company in or under the laws of any place outside England.

(L)     To subscribe or guarantee money for any national, charitable, benevolent, public, general or useful object or for any exhibition, or for any purpose which may be considered likely directly or indirectly to further the objects of the Company or the interests of its members.

(M)     To grant pensions or gratuities to any employees or ex-employees and to officers and ex-officers (including Directors and ex-Directors) of the Company or its predecessors in business, or the relations, connections or dependants of any such persons, and to establish or support schemes, associations, institutions, clubs, funds and trusts which may be considered calculated to benefit any such persons (with or without others) or otherwise advance the interests of the Company or of its members, and to establish and contribute to any scheme for the purchase by trustees of shares in the Company to be held for the benefit of the Company's employees, and to lend money to the Company's employees to enable them to purchase shares of the Company and to formulate and carry into effect any scheme for sharing the profits of the Company with its employees or any of them.

(MM) (i)     To purchase and maintain insurance for or for the benefit of any persons who are or were at any time directors, officers, employees or auditors of the Company, or of any other company which is its holding company or in which the Company or such holding company has any interest whether direct or indirect or which is in any way allied to or associated with the Company, or of any subsidiary undertaking of the Company or of any such other company, or who are or were at any time trustees of any pension fund in which any employees of the Company or of any such other company or subsidiary undertaking are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or in the exercise or purported exercise of their powers and/or otherwise in relation to their duties, powers or offices in relation to the Company or any such other company, subsidiary undertaking or pension fund; and
   
  (ii)     To such extent as may be permitted by law otherwise to indemnify or to exempt any such person against or from any such liability. For the purposes of this clause "holding company" and "subsidiary undertaking" shall have the same meanings as in the Companies Act 1989.

16


Back to Contents

(N)     To do all or any of the things and matters aforesaid in any part of the world, and either as principals, agents, contractors, trustees or otherwise, and by or through trustees, agents or otherwise, and either alone or in conjunction with others.

(O)     To do all or any of the things as may be considered to be incidental or conducive to the above objects or any of them.

And it is hereby declared that the objects of the Company as specified in each of the foregoing paragraphs of this clause (except only if and so far as otherwise expressly provided in any paragraph) shall be separate and distinct objects of the Company and shall not be in anywise limited by reference to any other paragraph or the order in which the same occur or the name of the Company.

(5)     The liability of the members is limited.

(6)     The Share Capital of the Company is £l003, divided. into 200 shares of 10s (50p) each.

Notes:­

1: By Special Resolution passed on 21st May, 1997, the name of the Company was changed from "The RTZ Corporation PLC" to "Rio Tinto plc".
   
2: By Special Resolution passed on 21st May, 1997, the name of CRA Limited was changed to Rio Tinto Limited.
   
3: (i)       By Special Resolution passed on 2nd July, 1962, the authorised share capital was increased from £100 to £50,000,000 divided into 7,732,967 4 per cent. 'A' Cumulative Preference Shares of £1 each, 3,143,750 5 per cent. 'B' Cumulative Preference Shares of £1 each and 78,246,566 Ordinary Shares of 10s (50p) each.
   
  (ii)      By Ordinary Resolution passed on 15th May, 1965, the authorised share capital was increased from £50,000,000 to £60,000,000 by the creation of 20,000,000 additional Ordinary Shares of 10s (50p) each.
   
  (iii)     By Ordinary Resolution passed on 16th May, 1968, the authorised share capital was increased from £60,000,000 to £70,000,000 by the creation of 20,000,000 additional Ordinary Shares of 10s (50p) each.
   
  (iv)     By Ordinary Resolutions passed on 20th May, 1970, each of the 118,246,566 Ordinary Shares of 10s (50p) (whether issued or unissued) was sub-divided into two Ordinary Shares of 5s (25p) each and the authorised share capital was increased from £70,000,000 to £75,000,000 by the creation of an additional 20,000,000 Ordinary Shares of 5s (25p) each.
   
  (v)      By Special Resolution passed on 16th May, 1973, the 4 per cent. 'A' Cumulative Preference Shares of £1 each were re-designated as 3.325 per cent. 'A' Cumulative Preference Shares of £1 each and the 5 per cent. 'B' Cumulative Preference Shares of £1 each were re-designated as 3.5 per cent. 'B' Cumulative Preference Shares of £1 each.
   
  (vi)     By Special Resolution passed on 17th October, 1973, each of the unissued Ordinary Shares of 25p each of the Company became Unclassified Shares of 25p each available for issue as either Ordinary Shares or Accumulating Ordinary Shares.

17


Back to Contents

  (vii)    By Ordinary Resolution passed on 21st May, 1975, the authorised share capital was increased from £75,000,000 to £90,000,000 by the creation of 60,000,000 Unclassified Shares of 25p each.
   
  (viii)   By Ordinary Resolution passed on 27th May, 1981, the authorised share capital was increased from £90,000,000 to £100,000,000 by the creation of 40,000,000 Unclassified Shares of 25p each.
   
  (ix)     By Ordinary Resolution passed on 26th May, 1983, the authorised share capital was increased from £100 million to £110 million by the creation of 40 million Unclassified Shares of 25p each.
   
  (x)      By Ordinary Resolution passed on 24th May, 1984, the authorised share capital was increased from £110 million to £125 million by the creation of 60 million Unclassified Shares of 25p each.
   
  (xi)     By Ordinary Resolution passed on 4th June, 1987, the authorised share capital was increased from £125 million to £130 million by the creation of 20 million Unclassified Shares of 25p each.
   
   (xii)   By Special Resolution passed on 22nd October, 1987, each of the Ordinary Shares and Accumulating Ordinary Shares of 25p each was sub-divided into five Ordinary (or, as the case might be, Accumulating Ordinary) Shares of 5p each and every two of the resulting Ordinary Shares or Accumulating Ordinary Shares of 5p each were consolidated into one Ordinary Share or Accumulating Ordinary Share of 10p, and the Unclassified Shares in the unissued capital were similarly sub­divided and consolidated.
   
  (xiii)   By Resolution of the Directors passed on 2nd June, 1988, the whole of the Accumulating Ordinary Shares (being less than 5 per cent. of the number of Ordinary Shares in issue) were converted into Ordinary Shares with effect from 1st July, 1988.
   
  (xiv)   By Ordinary Resolution, passed on 15th June, 1989, the authorised share capital was increased from £130 million to £142 million by the creation of 120 million Ordinary Shares.
   
  (xv)    By Ordinary Resolution passed on 10th May, 1995, the authorised share capital was increased from £142 million to £153 million by the creation of 110 million Ordinary Shares.
   
  (xvi)   By Special Resolution passed on 20th December, 1995 the authorised share capital was increased from £153 million to £153,000,000.20 by the creation of one Equalisation Share of 10p and one Special Voting Share of 10p.
   
  (xvii)  By Special Resolution passed on 12th May, 1999 and confirmed by the High Court on 23rd June, 1999 the authorised share capital was reduced from £153,000,000.20 to £142,123,283.20 by the cancellation and extinguishing of all the 7,732,967 3.325 per cent 'A' Cumulative Preference Shares and all the 3,143,750 3.5 per cent 'B' Cumulative Preference Shares.
   
  (xviii) The capital of Rio Tinto plc was by virtue of a Special Resolution and with the sanction of an Order of the High Court of Justice dated 23rd June 1999 reduced from £153,000,000.20 divided into 7,732,967 3.325 per cent 'A' Cumulative Preference Shares of £1 each, 3,143,750 3.5 per cent 'B' Cumulative Preference Shares of £ 1 each, one Special Voting Share of 10p, one Equalisation Share of 10p and 1,421,232,830 Ordinary Shares of 10p each to £142,123,283.20 divided into one Special Voting Share of 10p, One Equalisation Share of 10p and 1,421,232,830 Ordinary Shares of 10p each. At the date of registration of this Minute the said Special Voting Share and 1,060,962,100 of the said Ordinary Shares have been issued and are deemed to be fully paid up and the Equalisation Share and the remainder of the Ordinary Shares are unissued.

18


Back to Contents

  (xix)    By Ordinary Resolution passed on 11 April, 2002 the authorised share capital was increased from £142,123,283.20 to £142,123,283.30 by the creation of one DLC Dividend Share of 10p.

We, the several persons whose names and addresses are subscribed, are desirous of being formed into a Company, in pursuance of this Memorandum of Association, and we respectively agree to take the number of shares in the Capital of the Company set opposite our respective names.



Names, addresses and descriptions of subscribers Number of Shares
  taken by each
  Subscriber


John W. Mayo, One
   
Barrington House, 59/67 Gresham Street, London EC2  
Solicitor  
   
C. Hilary Scott, One
   
18 Austin Friars, London EC2  
Solicitor  
   
 
Total Shares taken . . . Two


Dated the 22nd day of March, 1962.

Witness to the above Signatures:

F. E. Farres,

Barrington House, 59/67 Gresham Street, London EC2

Clerk

19


Back to Contents

  The Companies Act 1985
 
  ARTICLES OF ASSOCIATION
 
  OF Rio Tinto plc
 
   
  (Adopted by Special Resolution passed on 11th April 2002 and amended
on 14 April 2005)
   
 
  PRELIMINARY
 
1 The regulations in Table A in The Companies (Tables A to F) Regulations 1985 and in any Table A applicable to the Company under any former enactment relating to companies shall not apply to the Company.
   
2 In these Articles (if not inconsistent with the subject or context) the words and expressions set out in the first column below shall bear the meanings set opposite to them respectively:-
   
 
"Act" means the Companies Act 1985;
     
  "Aggregate Publicly-held Ordinary Shares" means all of the Publicly-held Rio Tinto Ordinary Shares and all of the Publicly-held RTL Ordinary Shares from time to time;
     
  "Alternate Director" means a person appointed from time to time as an Alternate Director in accordance with these Articles;
     
  "Applicable" means, in the case of RTL, applicable Australian law and regulations (including listing rules) and, in the case of the Company, applicable English laws and regulations (including listing rules and guidelines with which companies listed on the London Stock Exchange customarily comply), in each case for the time being in force and taking account of all waivers or variations from time to time applicable (in particular situations or generally) to RTL or, as the case may be, the Company;
     
  "Articles" means these Articles of Association as from time to time altered;
     
  "Auditor" means the auditor or auditors appointed by the Company from time to time;
     
  "Australian dollars" means the lawful currency from time to time of Australia;
     
  "Australian Stock Exchange" means the Australian Stock Exchange Limited (ACN 008 624 691) or any successor to that body;
     
  "Board of RTL" means the board of directors of RTL (or a duly appointed committee of that board) from time to time;

20


Back to Contents

  "Business Day" means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays;
     
  "Class Rights Action" means, in relation to the Company or RTL, any of the actions listed in Article 33(A);
     
  "Companies Act Subsidiary" has the meaning ascribed to the term "subsidiary" in Section 736 of the Companies Act 1985 (as in force at the date of adoption of these Articles) and when used in relation to a company means any subsidiary of that company from time to time;
     
  "Corporations Act" means the Corporations Act 2001 (Cth) of Australia;
     
  "Corporations Act Subsidiary" has the meaning given to "subsidiary" in Section 9 of the Corporations Act as at the date of the Sharing Agreement and when used in relation to a body corporate means any subsidiary of that body corporate from time to time;
     
  "Corporations Law" means the Corporations Law as at the date of the Sharing Agreement as defined by Section 13(2) of the Corporations (Victoria) Act 1990 of Victoria, Australia as at that date and includes a reference to the Corporations Regulations referred to in that section as at that date;
     
  "Deed Poll Guarantee" means the deed executed by the Company for the benefit of certain present and future creditors of RTL as amended from time to time;
     
  "Director" means a person appointed or elected from time to time to the office of Director of the Company in accordance with these Articles and includes any Alternate Director duly acting as a Director;
     
  "DLC Dividend Share" means the dividend share of 10p in the Company, issued in accordance with Article 8A, until it is cancelled, redeemed or otherwise ceases to exist or until it converts to an Ordinary Share in accordance with these Articles;
     
  "Equalisation Fraction" means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the RTL Ordinary Shares and the denominator being the number relating to the Ordinary Shares;
     
  "Equalisation Ratio" means the ratio of the dividend, capital and voting rights per RTL Ordinary Share to the dividend, capital and voting rights per Ordinary Share as set out in the Sharing Agreement and as adjusted from time to time in accordance with the Sharing Agreement;
     
  "Equalisation Share" means the equalisation share of l0p in the Company;

21


Back to Contents

  "Excluded RTL Holder" means any person who is a Relevant Person (other than a Permitted Person) both as defined in the RTL Constitution on whom a notice has been served by the Directors of RTL pursuant to Rule 145D of the RTL Constitution which has not been complied with to the satisfaction of the RTL directors or withdrawn;
     
  "in writing" means written or produced by any substitute for writing or partly one and partly another and shall include, except where otherwise expressly specified in these Articles or the context otherwise requires, and subject to any limitations, conditions or restrictions contained in or the provisions of the Statutes, any representation of words in some visible form, whether in a physical document or in an electronic communication or form or otherwise howsoever;
     
  "Joint Decision" means in relation to a General Meeting a resolution put to the vote of the meeting on a Joint Decision Matter;
     
  "Joint Decision Matter" means any of the following:­
       
    (i) the appointment or removal of a Director of the Company and/or a director of RTL;
       
    (ii) the receipt or adoption of the annual accounts of the Company and/or RTL (if shareholders are to be asked to vote on the receipt or adoption of such accounts);
       
    (iii) a change of name by the Company and/or RTL;
       
    (iv) any proposed acquisition or disposal and any proposed transaction with a substantial shareholder, director or other related party which (in any case) is required under Applicable Regulation to be authorised by shareholders;
       
    (v) the appointment or removal of the Auditors of the Company and/or the auditors of RTL;
       
    (vi) the creation of a new class of shares (or securities convertible into, exchangeable for or granting rights to subscribe for or purchase shares of a new class) in the Company or RTL;
       
    (vii) a change of the corporate status of or reregistration of the Company or RTL;
       
    (viii) a matter referred to in Clause 9.2 of the Sharing Agreement; and

22


Back to Contents

    (ix) any other matter which the Directors (or a duly constituted committee of the Directors) of the Company and the Board of RTL agree (generally or in a particular case) should be decided upon by Joint Decision;
       
  "Limiting Restriction" refers to the limit (if any) on offers for cash (otherwise than pro rata by way of rights to existing holders of Ordinary Shares or RTL Ordinary Shares) of shares or other securities existing under restrictions for the time being applicable to RTL or the Company under Applicable Regulation, and for the purpose of ascertaining the most Limiting Restriction at any time in any situation:-
       
    (a) a restriction applicable to RTL shall be treated as also applicable to the Company (converting the restrictions, expressed in terms of a number of RTL shares, into a number of shares in the Company by application of the Equalisation Ratio), and vice versa in relation to a restriction applicable to the Company;
       
    (b) a restriction expressed in terms of a nominal amount of the Company's equity share capital shall be treated as if it related to the number of Ordinary Shares represented by that nominal amount and then converted into a number of RTL Ordinary Shares by application of the Equalisation Ratio and any restriction in relation to RTL shall be similarly treated;
       
    (c) a restriction (when expressed as a number of RTL Ordinary Shares or Ordinary Shares) that, under Applicable Regulation, has been derived by application of a percentage to a number or nominal amount of RTL Ordinary Shares and/or number or nominal amount of Ordinary Shares rather than to the number of the Aggregate Publicly-held Ordinary Shares (taking into account the application of the Equalisation Ratio as described in (a) and (b) above) shall be adjusted to the number that would have been derived from the application of such percentage to the number of the Aggregate Publicly-held Ordinary Shares (after so taking into account the application of Equalisation Ratio); and

23


Back to Contents

    (d) any restriction which under Applicable Regulation comes into force in relation to either RTL or the Company after the date of the Sharing Agreement which does not fall within (a), (b) or (c) above shall be applied to the Aggregate Publicly-held Ordinary Shares in the way which the Directors (or a duly constituted committee of the Directors) and the Board of RTL agree best reflects the rationale underlying paragraphs (a), (b) and (c) of this definition;
     
  "Liquidation Exchange Rate" means, as at any date, the closing mid-point spot Australian dollar-sterling exchange rate on the Business Day before such date (as shown in the London Edition of the Financial Times, or such other point of reference as the liquidator and the auditor (or, as the case may be, liquidator) of RTL may determine);
     
  "London Stock Exchange" means London Stock Exchange Ltd or any successor to that body;
     
  "Market Value" means, in respect of an issue of a relevant share or security, the weighted average sale price derived from the Australian Stock Exchange (in the case of RTL) and the middle market quotation derived from the London Stock Exchange Daily Official List (in the case of the Company) in each case on the dealing day immediately preceding the date on which any such issue is publicly announced except that in the case of an allotment of Ordinary Shares pursuant to Article 128 it shall mean the value of an Ordinary Share as defined in Article 128(D) and in the case of an allotment of RTL Ordinary Shares by way of dividend it shall mean the weighted average sale price of a RTL Ordinary Share derived from the Australian Stock Exchange over the five business days (being trading days on the Australian Stock Exchange) prior to the books closing date in respect of that dividend;
     
  "Matching Offers" means offers by way of rights either by both RTL and the Company to their respective ordinary shareholders or by RTL on its own or by the Company on its own to both the holders of Ordinary Shares and the holders of RTL Ordinary Shares which, so far as is practicable, take place contemporaneously and which the auditors of RTL have certified do not materially disadvantage a holder of a RTL Ordinary Share in comparison with a holder of an Ordinary Share and which the Auditors have certified do not materially disadvantage a holder of an Ordinary Share in comparison with a holder of a RTL Ordinary Share;

24


Back to Contents

  "Month" means calendar month;
     
  "Office" means the registered office of the Company for the time being;
     
  "Operator" means CRESTCo Limited or such other person as may for the time being be approved by H.M. Treasury as Operator under the Regulations;
     
  "Operator-instruction" means a properly authenticated dematerialised instruction attributable to the Operator;
     
  "Ordinary Shares" means the ordinary shares of 10p each in the Company from time to time;
     
  "Paid" means paid or credited as paid;
     
  "participating security" means a security title to units of which is permitted by the Operator to be transferred by means of a relevant system;
     
  "Publicly-held RTL Ordinary Shares" means RTL Ordinary Shares the beneficial owners of which are not members of the Rio Tinto Group;
     
  "Publicly-held Ordinary Shares" means, in relation to the Company, Publicly-held Rio Tinto Ordinary Shares and, in relation to RTL, Publicly-held RTL Ordinary Shares;
     
  "Publicly-held Rio Tinto Ordinary Shares" means Ordinary Shares the beneficial owners of which are not members of the RTL Group;
     
  "Publicly-held Rio Tinto Voting Shares" means Ordinary Shares the beneficial owners of which are not members of the RTL Group;
     
  "Publicly-held Shares" means, in relation to the Company, Publicly-held Rio Tinto Voting Shares and, in relation to RTL, Publicly-held RTL Ordinary Shares;
     
  "relevant period" when used in Article 33 refers to the period by reference to which any Limiting Restriction applies;
     
  "relevant system" means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument pursuant to the Regulations;
     
  "Register" means the register of members of the Company;
     
  "Regulations" means the Uncertificated Securities Regulations 2001 (SI 2001 No.2001/3755);
     
  "Rio Tinto Entrenched Provision" means any of the following provisions:­
     
    (a) Clause 4(A) of the Company's Memorandum of Association as in force at the date of adoption of these Articles;

25


Back to Contents

 

    (b) any of the following provisions of the Company's Articles of Association as in force at the date of adoption of these Articles:- the definitions in this Article 2 of "Aggregate Publicly-held Ordinary Shares", "Applicable Regulation", "Australian dollars", "Board of RTL", "Class Rights Action", "Companies Act Subsidiary", "Corporations Act, "Corporations Act Subsidiary", "RTL", "RTL Deed Poll Guarantee", "RTL Entrenched Provision", "RTL Equalisation Share", "RTL Group", "RTL Constitution", "RTL Ordinary Shares", "RTL Shareholder SVC", "RTL Shareholder Voting Agreement", "RTL Special Voting Share", "Deed Poll Guarantee", "Equalisation Fraction", "Equalisation Ratio", "Equalisation Share", "Excluded RTL Holder", "Joint Decision", "Joint Decision Matter", "Limiting Restriction", "Liquidation Exchange Rate", "Market Value", "Matching Offers", "Ordinary Shares", "Publicly-held RTL Ordinary Shares", "Publicly-held Ordinary Shares", "Publicly-held Rio Tinto Ordinary Shares", "Publicly-held Rio Tinto Voting Shares", "Publicly-held Shares", "relevant period", "Rio Tinto Entrenched Provision", "Rio Tinto Group", "RTP Shareholder SVC", "Rio Tinto Shareholder Voting Agreement", "Sharing Agreement", "Special Voting Share" and "sterling" and the paragraph defining procedural resolutions; the provisions of Article 3 (so far as it relates to the Special Voting Share or the Equalisation Share); Article 9(B)(iv)(a)(iii); Article 31; Article 33; Article 36(C); Article 55; Article 56(A) (so far as it relates to or affects the rights of the holder of the Special Voting Share or the requirement that polls be held on matters on which such holder is entitled to vote); Article 59; Article 60; Article 64; Article 69; the third sentence of Article 80; Article 82; Article 83; paragraph (E) and the following sentence of Article 84; Article 86(B) and the last sentence of Article 86; Article 88; Article 89(vii); the proviso in brackets in Article 90; Article 97 and Article 105;
     
  "Rio Tinto Group" means the Company and its Companies Act Subsidiaries and a member of the Rio Tinto Group means any of them;

26


Back to Contents

  "RTL" means Rio Tinto Limited (ACN 004 458 404), a company incorporated in Victoria, Australia with its registered office at 55 Collins Street, Melbourne, Victoria, Australia;
     
  "RTL Constitution" means the Constitution of RTL as amended from time to time;
     
  "RTL Deed Poll Guarantee" means the deed executed by RTL for the benefit of certain present and future creditors of the Company as amended from time to time;
     
  "RTL Entrenched Provision" has the meaning given to it in the RTL Constitution;
     
  "RTL Equalisation Share" means the equalisation share in RTL;
     
  "RTL Group means RTL and its Corporations Act Subsidiaries;
     
  "RTL Ordinary Shares" means the issued ordinary shares in RTL from time to time;
     
  "RTL Shareholder SVC" means RTL Shareholder SVC Limited, a company incorporated in England with registered number 3115178 whose registered office is at Princes House, 95 Gresham Street, London EC2V 7LY or such other company as replaces RTL Shareholder SVC Limited pursuant to the RTL Shareholder Voting Agreement;
     
  "RTL Shareholder Voting Agreement" means the agreement entered into between RTL Shareholder SVC, The Law Debenture Trust Corporation p.l.c., RTL and the Company relating, inter alia, to how the Special Voting Share is to be voted, as amended from time to time;
     
  "RTL Special Voting Share" means the special voting share in RTL;
     
  "RTP Shareholder SVC" means RTP Shareholder SVC Pty Limited (ACN 070 481 908), a company incorporated in Victoria, Australia, whose registered office is at 27th Floor, 530 Collins Street, Melbourne, 3000, Victoria, Australia or such other company as replaces RTP Shareholder SVC Pty Limited pursuant to the terms of the Rio Tinto Shareholder Voting Agreement;
     
  "RTP Shareholder Voting Agreement" means the Agreement entered into between RTP Shareholder SVC, The Law Debenture Trust Corporation p.l.c., the Company, Rio Tinto Australian Holdings Limited and RTL relating, inter alia, to how the RTL Special Voting Share and the RTL Ordinary Shares held by Tinto Holdings Australia Pty Limited (ACN 004 327 922) or beneficially owned by any other member of the Rio Tinto Group are to be voted, as amended from time to time;

27


Back to Contents

  "Seal" means the Common Seal of the Company;
     
  "Securities Seal" means an official seal kept by the Company by virtue of Section 40 of the Act;
     
  "Share Warrant" means a warrant to bearer issued by the Company in respect of its shares;
     
  "Sharing Agreement" means the agreement entered into between RTL and the Company headed "DLC Merger Sharing Agreement" as amended from time to time;
     
  "Special Voting Share" means the special voting share of 10p in the Company;
     
  "Statutes" means the Act, the Regulations and every other statute for the time being in force applying to or concerning companies and affecting the Company;
     
  "sterling" means the lawful currency from time to time of the United Kingdom;
     
  "Transfer Office" means the place where the Register is situate for the time being;
     
  "UK Listing Authority" means the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000;
     
  "United Kingdom" means Great Britain and Northern Ireland;
     
  "wholly owned subsidiary" in relation to a body corporate, means a body corporate none of whose members is a person other than the first mentioned body corporate, a wholly owned subsidiary of the first mentioned body corporate or a nominee of the first mentioned body corporate or its wholly owned subsidiary; and
     
  "Year" means calendar year.
   
  The expressions "debenture" and "debenture holder" shall respectively include debenture stock and debenture stockholder.
   
  The expressions "notice", "instrument" and "document" and similar terms shall include, except where otherwise expressly specified in these Articles, where the context requires or permits and subject to the provisions of the Statutes, any representation of words in visible form delivered or communicated electronically or by other data transmission process or otherwise howsoever; provided, however, that the Directors may require any evidence they think appropriate to satisfy themselves as to the authenticity of any notice, instrument or document delivered or communicated to them or to the Company in electronic form or by other data transmission process and no provision of these Articles requiring a physical signature or signatures shall, except where otherwise expressly specified in these Articles, apply to any such notice, instrument or document. The expression "in physical form" and similar expressions shall mean that a physical document must be used.

28


Back to Contents

  The expressions "communication" and "electronic communication" shall have the same respective meanings as in the Electronic Communications Act 2000, the latter including, without limitation, e-mail, facsimile, CD-Rom, audio tape and telephone transmission and (in the case of electronic communication by the Company in accordance with Article 138A(A)) publication on a web site.
   
  The expression "address" shall include, in relation to electronic communication, any number or address used for the purposes of such communication.
   
  The expressions "recognised clearing house" and "recognised investment exchange" shall mean any clearing house or investment exchange (as the case may be) granted recognition under the Financial Services and Markets Act 2000.
   
  The expression "Secretary" shall include any person appointed by the Directors to perform any of the duties of the Secretary including, but not limited to, a joint, assistant or deputy Secretary.
   
  The expression "shareholders' meeting" shall include both a General Meeting and a meeting of the holders of any class of shares of the Company.
   
  All such of the provisions of these Articles as are applicable to paid-up shares shall apply to stock, and the words share and shareholder shall be construed accordingly.
   
  Words denoting the singular shall include the plural and vice versa. Words denoting the masculine shall include the feminine. Words denoting persons shall include bodies corporate and unincorporated associations.
   
  References to any statute or statutory provision of the United Kingdom or Australia shall unless the context otherwise requires be construed as relating to any statutory modification or re-enactment thereof for the time being in force (whether coming into force before or after the adoption of these Articles).
   
  Subject as aforesaid any words or expressions defined in the Act or the Regulations shall (if not inconsistent with the subject or context) bear the same meanings in these Articles.
   
  A Special or Extraordinary Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under any provision of these Articles.
   
  In these Articles references to an "equivalent resolution" considered by holders of Publicly-held RTL Ordinary Shares mean the resolution considered at the most nearly contemporaneous general meeting of RTL which bears a close relationship to the relevant resolution being considered at a General Meeting of the Company. For example, but without limitation, a resolution to appoint or remove an individual as a director of RTL, to appoint or remove the auditors of RTL or to receive and adopt the accounts of RTL would, if no resolution considering such matters in relation to the Company were put to the RTL general meeting, be the "equivalent resolution" to a resolution relating to the appointment or removal of the same individual as a Director of the Company, the appointment or removal of the same international firm of auditors as the Company's Auditors or the receipt or adoption of the Company's accounts as the case may be.

29


Back to Contents

  References to procedural resolutions comprise all resolutions put to a General Meeting which were not included in the notice of such meeting but which nevertheless fall to be considered by that meeting.
   
  References to offers by way of rights include offers which are subject to such exclusions or other arrangements as the Directors or (where relevant) the directors of RTL may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in, any territory.
   
  References to a share (or to a holding of shares) being in certificated or uncertificated form are references, respectively, to that share being a certificated or an uncertificated unit of a security.
 
INCOME AND CAPITAL RIGHTS
 
3 (A)     The share capital of the Company is £142,123,283.30 divided into one Special Voting Share of 10p, one Equalisation Share of 10p, one DLC Dividend Share of 10p and 1,421,232,830 Ordinary Shares of 10p each.
   
 

(B)     The rights, as regards participation in the profits of the Company, attaching to the said Shares are as follows:-

   
 

(i)      Subject to the special rights for the time being attached to shares having a preferred right to participate as regards dividends up to but not beyond a specified amount in a distribution, but in priority to the payment of dividends on all other classes of share, the Special Voting Share shall entitle its holder to a fixed dividend of 1p per annum payable annually in arrears on the 1st day of July.

   
  (ii)     Subject to the special rights for the time being attached to shares having a preferred right to participate as regards dividends up to but not beyond a specified amount in a distribution and the Special Voting Share but in priority to the payment of any dividends on all other classes of share, the Equalisation Share shall carry such dividends as are declared or paid on the Equalisation Share in accordance with Schedule 1 and 2 to the Sharing Agreement.
   
  (iii)     Subject to the special rights for the time being attached to other classes of share, the profits of the Company available for distribution and resolved to be distributed shall subject to the provisions of the Statutes be distributed by way of dividend among the holders of the Ordinary Shares and the Equalisation Share.
   
 

(C)     The rights, as regards participation in the assets of the Company, attaching to the said Shares are as follows:-

30


Back to Contents

  Subject to the rights of shares having a preferred right to participate as regards capital up to but not beyond a specified amount in a distribution, on a return of assets on liquidation the assets of the Company remaining available for distribution among the members, after giving effect to such rights and to any provision made under Section 187 of the Insolvency Act 1986, shall be applied first in paying to the holder of the Special Voting Share the nominal amount paid up on such Share and then in paying to the holder of the Equalisation Share the nominal amount paid up thereon and then in paying any amounts standing to the credit of the holder of the Equalisation Share in any reserve set up in the books of the Company pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement and then in paying to the relevant holders of the Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of the Company pursuant to paragraph 3.6.2(b) or (c) of Schedule 2 to the Sharing Agreement and any surplus remaining after application of the assets in accordance with the above shall be applied in making payments to the holder of the Equalisation Share and/or the holders of the Ordinary Shares, in accordance with their entitlements, which shall be determined as follows:-
   
  (a)     The liquidator of the Company shall determine as at the earliest date (the "Reference Date") on which the liquidator is able to make a final distribution to members and creditors of the Company the gross amount which would be available for distribution to the holders of Ordinary Shares on the liquidation of the Company after payment in full of any amount standing to the credit of:-
   
  (I)     the holder of the Equalisation Share in any reserve set up in the books of the Company, pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; and
   
  (II)    holders of Ordinary Shares in any reserve set up in the books of the under Company paragraph, 3.6.1(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement
   
  and to calculate the amount thereof available for distribution to holders of Publicly-held Rio Tinto Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held Rio Tinto Ordinary Shares would receive any payment by way of distribution (in either case the "Company's Own Distribution Amount"), on the assumption that distribution to the Company's creditors and members took place on the Reference Date. The liquidator of the Company shall certify the result of such calculation to RTL.
   
  (b)    Whether or not proceedings have been commenced for the liquidation of RTL, RTL shall be required under the Sharing Agreement to instruct the Relevant Officer for the time being of RTL to draw up accounts as at the Reference Date of all assets (valued as if RTL was in liquidation and those assets were to be realised by a liquidator of RTL in an orderly manner) and liabilities which would be admissible to proof if RTL were in liquidation on the Reference Date (other than the asset or liability represented by any Equalisation Payment as defined in paragraph 4.1 of Schedule 2 to the Sharing Agreement to be made in accordance with the Sharing Agreement or any payment on the RTL Equalisation Share under Rule 143(d)(v) or (vi) of the RTL Constitution) to show the gross amount which would be available for distribution to holders of RTL Ordinary Shares on the liquidation of RTL (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of
   
  (I)     the holder of the RTL Equalisation Share in any reserve set up in the books of RTL pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; or
   
  (II)    the holders of RTL Ordinary Shares in any reserve set up in the books of RTL under paragraph 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement

31


Back to Contents

  and to calculate the amount thereof available for distribution to holders of Publicly-held RTL Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held RTL Ordinary Shares would receive any payment by way of distribution (in either case, the "RTL Own Distribution Amount"), on the assumption that the distribution to RTL's creditors and members on liquidation took place on the Reference Date. RTL is obliged under the Sharing Agreement to instruct the Relevant Officer of RTL to certify the result of such calculation to the Company.
   
  (c)     The liquidator of the Company shall make, and certify to RTL, the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of RTL, which calculation shall be expressed in sterling, with any Australian dollar amounts being converted to sterling at the Liquidation Exchange Rate as at the Reference Date:-
   
  (COD + RTLD) x   COS
 
     
 
  (RTLOS x EF) + COS
   
  where:-
   
 

COD = the Company's Own Distribution Amount;

   
  RTLD = the RTL Own Distribution Amount;
   
 

COS = the number of Publicly-held Rio Tinto Ordinary Shares in issue on the Reference Date;

   
 

RTLOS = the number of Publicly-held RTL Ordinary Shares in issue on the Reference Date; and

   
 

EF = the Equalisation Fraction.

   
 

The result of such calculation is referred to below as the "Adjusted Company Distribution Amount".

   
 

(d)     If the Adjusted Company Distribution Amount is equal to or more than the Company's Own Distribution Amount, then the assets remaining available for distribution (which shall include any distribution made on the RTL Equalisation Share pursuant to Rule 143(d)(v) or (vi) of the RTL Constitution, any amounts paid by RTL under paragraph 4.1.4 of Schedule 2 to the Sharing Agreement and any amounts paid by RTL from reserves set up in the books of RTL under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement) shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them.

   
 

(e)     If the Adjusted Company Distribution Amount is equal to or more than zero, but is less than the Company's Own Distribution Amount, the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share:-

   
 

(I)     apart from in each case any undistributed amounts resulting from the payment by RTL to a member of the Rio Tinto Group or the Company to a member of the RTL Group of any reserves under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement or any amounts credited to any reserve in the books of the Company for the benefit of holders of Ordinary Shares or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares, in each case under paragraphs 3.6.2(b) and 3.6.2(c) of Schedule 2 to the Sharing Agreement; and

32


Back to Contents

  (II)     on the assumption that distribution to the Company's members and creditors and RTL's members and creditors took place on the Reference Date; and
   
  (III)     after taking into account the amounts available for distribution on each Publicly-held RTL Ordinary Share prior to such payment
   
  to the amount available for distribution on each Publicly-held Rio Tinto Ordinary Share (converting Australian dollar amounts to sterling by application of the Liquidation Exchange Rate as at the Reference Date) is equal to the Equalisation Ratio (and the balance of the assets of the Company available for distribution remaining after any such payment on the Equalisation Share shall belong to and be distributed, among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shards held by them).
   
  (f)     If the Adjusted Company Distribution Amount is zero or a negative amount and the Company's Own Distribution Amount is a positive amount then the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held Ordinary Shares, on the assumption that distribution to the Company's members and creditors took place on the Reference Date, is zero.
   
  (g)     If the Company's Own Distribution Amount is zero or a negative amount and the RTL Own Distribution Amount is zero or a negative amount, then no distribution shall be made by the liquidator of the Company on the Equalisation Share or to holders of Ordinary Shares.
   
  (h)     In making the calculations referred to in this paragraph (ii), the Relevant Officer of RTL and the liquidator shall take into account the distributions which fall to be made on those Ordinary Shares and those RTL Ordinary Shares which are not Publicly-held Ordinary Shares it being acknowledged that for each company the per share distributions on the Publicly-held Ordinary Shares will be the same as the distributions on that company's non-Publicly-held Ordinary Shares.
   
  (i)     In this paragraph "Relevant Officer" of RTL means the auditor of RTL or if RTL is in liquidation, the liquidator of RTL.
   
  (j)     In this paragraph "the gross amount which would be available for distribution" to shareholders means such amount ignoring any distribution on the Equalisation Share or RTL Equalisation Share or any Equalisation Payment (as defined in paragraph 4.1 of Schedule 2 to the Sharing Agreement) made in accordance with the Sharing Agreement and any tax payable on the making or receipt of the Equalisation Payment or distribution and both "the gross amount which would be available for distribution" and "the amount available for distribution" refer to such amount before deduction of any amount in respect of tax required to be deducted or withheld from the distribution to ordinary shareholders by or on behalf of the company paying or making the distribution but net of any tax payable by that company on the distribution to its ordinary shareholders.

33


Back to Contents

  (k)     The certificates which the liquidator of the Company and the Relevant Officer of RTL are required to produce under this paragraph (ii) and the Relevant Officer of RTL is required to produce under the Sharing Agreement (the "Certificates") shall be in physical form and shall be produced within 6 weeks after the Reference Date and the Company shall procure that all necessary instructions are given to the liquidator to ensure that such certificates are produced within that time. The liquidator of the Company and the Relevant Officer of RTL shall then agree the calculations in such Certificates within 4 weeks of the date on which all such Certificates are produced. If the liquidator of the Company and the Relevant Officer of RTL are unable to agree to the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the liquidator of the Company with the Relevant Officer of RTL (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either the Company or RTL, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm are to be borne as such firm decides. Once the calculations in the Certificates have been agreed by the liquidator of the Company with the Relevant Officer of RTL or determined by the independent accountants, they shall be conclusive and binding.
   
  (1)     If RTL shall go into liquidation after the Company has gone into liquidation but before the liquidator has made a distribution under any of paragraphs (e), (f) or (g), then the Reference Date shall be the later of (i) the earliest date on which the liquidator of RTL is able to make a final distribution to creditors and the members of RTL, and (ii) the earliest date on which the liquidator of the Company is able to make a final distribution to creditors and members of the Company; and the Relevant Officer of RTL shall be the liquidator of RTL and not the auditor of RTL.
   
 
  ALTERATION OF SHARE CAPITAL
 
4 Increase of share capital
   
  The Company may from time to time by Ordinary Resolution increase its capital by such sum to be divided into shares of such amounts as the resolution shall prescribe. All new shares shall be subject to the provisions of the Statutes and of these Articles with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise.
   
5 Consolidation, subdivision and cancellation
   
  (A) The Company may by Ordinary Resolution:-
     
  (i)

consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

     
  (ii) cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person and diminish the amount of its capital by the amount of the shares so cancelled;

34


Back to Contents

  (iii) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the provisions of the Statutes), and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may, as compared with the others, have any such preferred, deferred or other special rights, or be subject to any such restrictions, as the Company has power to attach to unissued or new shares.
     
  (B) Whenever as a result of a consolidation of shares any members would become entitled to fractions of a share, the Directors may, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to transfer the shares to, or in accordance with the directions of, the purchaser. The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale so far as the Statutes allow, the Directors may treat shares of a member in certificated form and in uncertificated form as separate holdings in giving effect to subdivisions and/or consolidations and may cause any shares arising on consolidation and representing fractional entitlements to be entered in the Register as shares in certificated form where this is desirable to facilitate the sale thereof.
     
6 Purchase of own shares
   
  Subject to the provisions of the Statutes, and the provisions of Article 33, the Company may purchase, or may enter into a contract under which it will or may purchase, any of its own shares of any class (including any redeemable shares) but so that if there shall be in issue any shares convertible into equity share capital of the Company of the class proposed to be purchased, then the Company shall not purchase, or enter into a contract under which it will or may purchase, such equity shares unless either:­
   
  (a)     the terms of issue of such convertible shares include provisions permitting the Company to purchase its own equity shares; or
   
  (b)     the purchase, or the contract, has first been approved by an Extraordinary Resolution passed at a separate meeting of the holders of such convertible shares.
   
7 Reduction of capital
   
  Subject to the provisions of the Act and the provisions of Article 33, the Company may by Special Resolution reduce its share capital or any capital redemption reserve, share premium account or other undistributable reserve in any way.
   
 
  SHARES
 
8 Rights attaching to shares on issue
   
  Without prejudice to any special rights previously conferred on the holders of any shares or class of shares for the time being issued, but subject to the provisions of Article 33 any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to time by Ordinary Resolution determine (or, in the absence of any such determination, as the Directors may determine) and subject to the provisions of the Statutes the Company may issue any shares which are, or at the option of the Company or the holder are liable, to be redeemed.

35


Back to Contents

8A DLC Dividend Share
   
  Without limiting Article 8 but notwithstanding any other provision to the contrary in these Articles, the Directors may issue a DLC Dividend Share in the capital of the Company to RTL or a wholly owned subsidiary of RTL on the following terms:
   
  (a) the DLC Dividend Share does not confer on its holder any right:
     
    (i)     to vote or to attend or be heard at any General Meeting;
     
    (ii)    to redemption or, in a winding-up, to repayment of capital; or
     
    (iii)   subject to Article 8A(b), to participate in assets or profits of the Company; or
     
    (iv)   to receive notices of any General Meeting;
     
  (b) the holder of the DLC Dividend Share shall not be entitled to receive a dividend on the share unless and until the following conditions have been satisfied:
     
    (i)      the Directors in their absolute discretion resolve to pay the dividend on the DLC Dividend Share;
     
    (ii)     the legal and beneficial owner of the DLC Dividend Share at the time of payment and declaration of the dividend is RTL or a wholly owned subsidiary of RTL;
     
    (iii)     in the case of the first dividend to be paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of issue of the DLC Dividend Share;
     
    (iv)     in the case of subsequent dividends paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of payment of the last dividend on the DLC Dividend Share; and
     
    (v)     the amount of the dividend on the DLC Dividend Share shall not exceed the prescribed percentage of the aggregate amount of the last dividend paid on Ordinary Shares.
     
  For the purposes of this Article, the prescribed percentage shall be 100% or such lower percentage as the Board resolves at the date of issue of the DLC Dividend Share; and
     
  (c) upon the earlier of:
     
    (i)     the registration of a transfer of the DLC Dividend Share to a person other than RTL or a wholly owned subsidiary of RTL; and
     
    (ii)     a person other than RTL or a wholly owned subsidiary of RTL becoming the beneficial owner of the DLC Dividend Share,

36


Back to Contents

  the DLC Dividend Share will convert to an Ordinary Share,
   
  and the Directors may, at their absolute discretion, issue such a DLC Dividend Share from time to time provided that, at any one time, there is only one DLC Dividend Share in the capital of the Company in issue.
   
9 Directors' power to allot
   
  (A)     Subject to the provisions of the Statutes relating to authority, pre-emption rights and otherwise and of any resolution of the Company in General Meeting passed pursuant thereto, all unissued shares shall be at the disposal of the Directors and they may allot (with or without conferring a right of renunciation), grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper.
   
  (B)     (i)     The Directors shall be generally and unconditionally authorised pursuant to and in accordance with Section 80 of the Act to exercise for each prescribed period all the powers of the Company to allot relevant securities up to an aggregate nominal amount equal to the Section 80 Amount.
   
  (ii)     During each prescribed period the Directors shall be empowered to allot equity securities wholly for cash pursuant to and within the terms of the said authority:-
   
  (a)     in connection with a rights issue; and
   
  (b)     otherwise than in connection with a rights issue, up to an aggregate nominal amount equal to the Section 89 Amount;
   
  as if Section 89(1) of the Act did not apply to any such allotment.
   
  (iii)     By such authority and power the Directors may during such period make offers or agreements which would or might require the allotment of securities after the expiry of such period.
   
  (iv)     For the purposes of this Article:-
   
  (a)     "rights issue" means an offer of securities open for acceptance for a period fixed by the Directors to (i) holders on a record date fixed by the Directors of registered Ordinary Shares in proportion to their respective holdings and (ii) (if the Directors so decide but not otherwise) holders on a record date fixed by the Directors of RTL Ordinary Shares in proportion to their respective holdings of RTL Ordinary Shares and so that the ratio of the entitlement per RTL Ordinary Share to the entitlement per Ordinary Share shall (as nearly as practicable) equal the Equalisation Ratio and (iii) other persons so entitled by virtue of the rights attaching to any other securities held by them, but subject in all such cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory;
   
  (b)     "prescribed period" means in the first instance the period from the date of the adoption of these Articles to the date of the Annual General Meeting in 2007 or to 10 April 2007, whichever is the earlier, and shall thereafter mean any period (not exceeding 5 years on any occasion) for which the authority and power conferred by sub-paragraphs (i) and (ii) above are renewed by a Special Resolution of the Company stating the Section 80 Amount and Section 89 Amount for such period;

37


Back to Contents

  (c)     "the Section 80 Amount" shall for the first prescribed period be £34.87 million and for any other prescribed period shall be that stated in the relevant Special Resolution or, in either case, any increased amount fixed by Resolution of the Company in General Meeting;
   
  (d)     "the Section 89 Amount" shall for the first prescribed period be £6.87 million and for any other prescribed period shall be that stated in the relevant Special Resolution; and
   
  (e)     the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or to convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights.
   
10 Commissions on issue of shares
   
  The Company may exercise the powers of paying commissions conferred by the Statutes to the full extent thereby permitted. The Company may also on any issue of shares pay such brokerage as may be lawful.
   
11 Renunciation of allotment
   
  The Directors may at any time after the allotment of any share but before any person has been entered in the Register as the holder:–
   
  (A)     recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation and/or
   
  (B)     allow the rights represented thereby to be one or more participating securities in each case upon and subject to such terms and conditions as the Directors may think fit to impose.
   
12 Trust etc. interests not recognised
   
  Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or compelled in any way to recognise any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these Articles or by law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the holder.
   
 
  SHARE CERTIFICATES
 
13 Issue of share certificates
   
  Every person (except a person to whom the Company is not required by law to issue a certificate) whose name is entered in the Register in respect of shares in certificated form shall upon the issue or transfer to him of such shares be entitled without payment to a certificate therefor (in the case of issue) within one month (or such longer period as the terms of issue shall provide) after allotment or (in the case of a transfer of fully-paid shares) within five business days after lodgement of the transfer or (in the case of a transfer of partly-paid shares) within two months after lodgement of the transfer.

38


Back to Contents

14  Form of share certificate
   
  Every share certificate shall be in physical form and shall be executed by the Company in such manner as the Directors may decide (which may include use of the Seal or Securities Seal (or, in the case of shares on a branch register, an official seal for use in the relevant territory) and/or manual or facsimile signatures by one or more Directors) and shall specify the number and class of shares to which it relates and the amount paid up thereon. No certificate shall be issued representing shares of more than one class.
   
15 Joint holders
   
  In the case of a share held jointly by several persons in certificated form the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of the joint holders shall be sufficient delivery to all.
   
16 Replacement of share certificates
   
  (A)     Any two or more certificates representing shares of any one class held by any member may at his request be cancelled and a single new certificate for such shares issued in lieu without charge.
   
  (B)     If any member shall surrender for cancellation a share certificate representing shares held by him and request the Company to issue in lieu two or more share certificates representing such shares in such proportions as he may specify, the Directors may, if they think fit, comply with such request.
   
  (C)     If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the holder upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of any exceptional out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.
   
  (D)     In the case of shares held jointly by several persons any such request may be made by any one of the joint holders.
   
 
  CALLS ON SHARES
 
17 Power to make calls
   
  The Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or, when permitted, by way of premium) but subject always to the terms of allotment of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments.

39


Back to Contents

18 Liability for calls
   
  Each member shall (subject to receiving at least 14 days notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be revoked or postponed as the Directors may determine.
   
19 Interest on overdue amounts
   
  If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding 15 per cent. per annum) as the Directors determine but the Directors shall be at liberty in any case or cases to waive payment of such interest wholly or in part.
   
20 Other sums due on shares
   
  Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of allotment of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of allotment the same becomes payable. In case of non-payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.
   
21 Power to differentiate between holders
   
  The Directors may on the allotment of shares differentiate between the holders as to the amount of calls to be paid and the times of payment.
   
22 Payment of calls in advance
   
  The Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the money so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate as the member paying such sum and the Directors may agree.
   
 
  FORFEITURE AND LIEN
 
   
23 Notice on failure to pay a call
   
  (A)     If a member fails to pay in full any call or instalment of a call on or before the due date for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment.
   

40


Back to Contents

  (B)     The notice shall name a further day (not being less than seven days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call has been made will be liable to be forfeited.
   
24 Forfeiture for non-compliance
   
  If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder.
   
25 Disposal of forfeited shares
   
  A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or, to any other person upon such terms and in such manner as the Directors shall think fit and at any time before a sale, re-allotment or disposal the forfeiture or surrender may be cancelled on such terms as the Directors think fit. The Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such other person as aforesaid.
   
26 Holder to remain liable despite forfeiture
   
  A member whose shares have been forfeited or surrendered shall cease to be a member in respect of the shares (and shall, in the case of shares held in certificated form, surrender to the Company for cancellation the certificate for such shares) but shall notwithstanding the forfeiture or surrender remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable by him to the Company in respect of the shares with interest thereon at 15 per cent. per annum (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment but the Directors may at their absolute discretion waive payment in whole or in part.
   
27 Tax liabilities
   
  Whenever any law for the time being of any country, state or place imposes or purports to impose any immediate or future or possible liability upon the Company to make any payment or empowers any government or taxing authority or government official to require the Company to make any payment in respect of any shares registered in any of the Company’s registers as held either jointly or solely by any member or in respect of any dividends, bonuses or other moneys due or payable or accruing due or which may become due or payable to such member by the Company on or in respect of any shares registered as aforesaid or for or on account or in respect of any member and whether in consequence of:–
     
  (A) the death of such member;
     
  (B) the non-payment of any income tax or other tax by such member;

41


Back to Contents

  (C)     the non-payment of any estate, probate, succession, death, stamp or other duty by the executor or administrator of such member or by or out of his estate;
   
  (D)     any other act or thing;
   
  the Company in every such case:–
   
  (i)     shall be fully indemnified by such member or his executor or administrator from all liability;
   
  (ii)     shall have a lien upon all dividends and other moneys payable in respect of the shares registered in any of the Company’s registers as held either jointly or solely by such member for all moneys paid or payable by the Company in respect of the same shares or in respect of any dividends or other moneys aforesaid thereon or for or on account or in respect of such member under or in consequence of any such law together with interest at the rate of 15 per cent. per annum thereon from date of payment to date of repayment and may deduct or set off against any such dividends or other moneys payable as aforesaid any moneys paid or payable by the Company as aforesaid together with interest as aforesaid;
   
  (iii)     may recover as a debt due from such member or his executor or administrator wherever constituted any moneys paid by the Company under or in consequence of any such law and interest thereon at the rate and for the period aforesaid in excess of any dividends or other moneys as aforesaid then due or payable by the Company;
   
  (iv)     may if any such money is paid or payable by the Company under any such law as aforesaid refuse to register a transfer of any shares by any such member or his executor or administrator until such money and interest as aforesaid is set off or deducted as aforesaid or in case the same exceeds the amount of any such dividends or other moneys as aforesaid then due or payable by the Company until such excess is paid to the Company.
   
  Nothing herein contained shall prejudice or affect any right or remedy which any law may confer or purport to confer on the Company and as between the Company and every such member as aforesaid, his executor, administrator, and estate wheresoever constituted or situate, any right or remedy which such law shall confer or purport to confer on the Company shall be enforceable by the Company.
   
28 Lien on partly-paid shares
   
  The Company shall have a first and paramount lien on every share (not being a fully-paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and the Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article.
   
29 Sale of shares subject to lien
   
  (A)     The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 days after a notice in writing demanding payment of the sum presently payable and giving notice of intention to sell the share in default of payment shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy or otherwise by operation of law.
   

42


Back to Contents

  (B)     The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the amount in respect whereof the lien exists so far as the same is then payable and any residue shall, upon surrender, in the case of shares held in certificated form, to the Company for cancellation of the certificate for the shares sold and subject to a like lien for sums not presently payable as existed upon the shares prior to the sale, be paid to the person entitled to the shares at the time of the sale. For the purpose of giving effect to any such sale the Directors may authorise some person to transfer the shares sold to, or in accordance with the directions of, the purchaser.
   
30 Evidence of forfeiture
   
  A statutory declaration in writing that the declarant is a Director or the Secretary and that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration shall (subject to the relevant share transfer being made if the same be required) constitute a good title to the share and the person to whom the share is sold, re-allotted or disposed of shall not be bound to see to the application of the consideration (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share.
   
 
 
VARIATION OF RIGHTS
 
   
31 Manner of variation of rights
   
  (A)     Whenever the share capital of the Company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of the Statutes and the provisions of Article 33, be varied or abrogated either with the consent in writing of the holders of three-fourths of the issued shares of the class or with the sanction of an Extraordinary Resolution passed at a separate meeting of the holders of the shares of the class (but not otherwise) and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding-up.
   
  (B)     To every such separate meeting all the provisions of these Articles relating to General Meetings and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy at least one-third in nominal amount of the issued shares of the class (but so that if at any adjourned meeting a quorum as above defined is not present, any two holders of shares of the class present in person or by proxy shall be a quorum) and that any holder of shares of the class present in person or by proxy may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him.
   
  (C)     The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if the shares concerned and the remaining shares of such class formed two separate classes the special rights whereof are in each case to be varied.
   

43


Back to Contents

 

32 Matters not constituting variation of rights
   
  The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto.
   
33 Separate approvals of Class Rights Actions
   
  (A)     The following matters shall constitute Class Rights Actions if undertaken by either the Company or RTL:-
   
  (i)      the offer to holders of its existing ordinary shares generally of shares or other securities for subscription or purchase:–
   
  (a)      by way of rights (otherwise than by Matching Offers), where the proposed offer (when aggregated with (I) any previous offers by either company of shares or other securities for cash by way of rights or otherwise but not under Matching Offers, (II) any sales other than intra Rio Tinto Group sales by a member of the Rio Tinto Group of RTL Ordinary Shares and (III) any sales, other than intra RTL Group sales, by a member of the RTL Group of Ordinary Shares, in each case in the relevant period) exceeds the then most Limiting Restriction that for the time being would be applicable were shares or other securities of the description proposed to be offered in fact offered for cash otherwise than pro rata by way of rights to existing shareholders of the relevant class either by RTL or by the Company; or
   
  (b)      otherwise than by way of rights, at below Market Value;
   
  (ii)     the reduction or redemption of the company’s ordinary share capital by way of a capital repayment to holders of its ordinary shares or a cancellation of unpaid ordinary share capital;
   
  (iii)     the purchase by the company of its own ordinary shares (except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation);
   
  (iv)     the voluntary liquidation of the company;
   
  (v)     an adjustment to the Equalisation Ratio otherwise than in accordance with paragraph 5 of Schedule 2 to the Sharing Agreement;
   
  (vi)     the amendment to the terms of, or termination of, the Sharing Agreement, the Rio Tinto Shareholder. Voting Agreement or the RTL Shareholder Voting Agreement other than, in the case of the RTL Shareholder Voting Agreement or the Rio Tinto Shareholder Voting Agreement, an amendment to conform such agreement with the terms of the Sharing Agreement or, in any case, by way of formal or technical amendment which is not materially prejudicial to the interests of the shareholders of either company or is necessary to correct any inconsistency or manifest error or is by way of an amendment agreed between the companies pursuant to Clause 17.6 of the Sharing Agreement or the equivalent provisions of any other such document;
   

44


Back to Contents

  (vii)     any amendment to, or removal of, or, the alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), any Rio Tinto Entrenched Provision;
   
  (viii)     any amendment to, or removal of, or alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), any RTL Entrenched Provision; and
   
  (ix)     the doing of anything which the Directors of the Company (or a duly constituted committee of the Directors) and the Board of RTL agree (either in a particular case or generally) should be treated as a Class Rights Action.
   
  (B)     Any Class Rights Action by the Company (apart from those specified in sub-paragraph (vii) of paragraph (A) of this Article) shall be deemed to be a variation of the rights of the Special Voting Share and shall accordingly be effective only with the consent in writing of the holder of the Special Voting Share and without such consent shall not be done or caused or permitted to be done.
   
  (C)     Any Class Rights Action of a type specified in sub-paragraph (vii) of paragraph (A) of this Article shall be effective only with the approval of a Special Resolution on which the holder of the Special Voting Share shall be entitled, and bound, to vote in accordance with Article 60(B)(i) and the RTL Shareholder Voting Agreement. Any other Class Rights Action by the Company shall (in addition to the consent required under paragraph (B)) be effective only with such approval of the shareholders of the Company (apart from the holder of the Special Voting Share) as is required by Applicable Regulation and the Sharing Agreement.
   
 
  TRANSFER OF SHARES
 
   
34 Form of transfer
   
  (A)     All transfers of shares, which are in certificated form may be effected by transfer in writing (which must be in physical form) in any usual or common form or in any other form acceptable to the Directors and may be under hand only. The instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully-paid shares) by or on behalf of the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register in respect thereof.
   
  (B)     All transfers of shares which are in uncertificated form may be effected by means of a relevant system.
   
35 Balance certificate
   
  Where some only of the shares comprised in a share certificate are transferred the old certificate shall be cancelled and, to the extent that the balance is to be held in certificated form, a new certificate for the balance of such shares issued in lieu without charge.
   
36 Right to refuse registration
   
  (A)     The Directors may decline to recognise any instrument of transfer relating to shares in certificated form unless it is in respect of only one class of share and is lodged (duly stamped if required) at the Transfer Office accompanied by the relevant share certificate(s) and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do). In the case of a transfer of shares in certificated form by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange the lodgment of share certificates will only be necessary if and to the extent that certificates have been issued in respect of the shares in question.
   

45


Back to Contents

  (B)      The Directors may, in the case of securities in certificated form in their absolute discretion and without assigning any reason therefor, refuse to register any transfer of shares (not being fully-paid shares) provided that, where any such shares are admitted to the Official List maintained by the UK Listing Authority, such discretion may not be exercised in such a way, as to prevent dealings in the shares of that class from taking place on an open and proper basis. The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more than four persons jointly. If the Directors refuse to register a transfer they shall within two months after the date on which:
   
  (i)     the instrument of transfer was lodged (in the case of shares held in certificated form); or
   
  (ii)     the Operator-instruction was received by the Company (in the case of shares held in uncertificated form),
   
  send to the transferee notice of the refusal.
   
  (C)     The Directors shall decline to register any transfer of the Special Voting Share unless the transfer is to a new RTL Shareholder SVC in accordance with the RTL Shareholder Voting Agreement. The Directors shall decline to register any transfer of the Equalisation Share unless the transfer is to a member of the RTL Group or a trustee for the benefit of a member or members of the RTL Group.
   
37 Retention of transfers
   
  All instruments of transfer which are registered may be retained by the Company.
   
38 No fee on registration
   
  No fee will be charged by the Company in respect of the registration of any transfer or other document relating to or affecting the title to any shares or otherwise for making any entry in the Register affecting the title to any shares.
   
39 Closure of Register
   
  The registration of transfers may be suspended at such times and for such periods (not exceeding 30 days in any year) as the Directors may from time to time determine and either generally or in respect of any class of shares, except that, in respect of any shares which are participating Securities, the Register of Members shall not be closed without the consent of the Operator.
   
40 Branch Register
   
  Subject to and to the extent permitted by the Statutes, the Company, or the Directors on behalf of the Company, may cause to be kept in any territory a branch register of members resident in such territory, and the Directors may make and vary such regulations as they may think fit respecting the keeping of any such register.
   

46


Back to Contents

 
  TRANSMISSION OF SHARES
 
   
41 Persons entitled on death
   
  In case of the death of a member, the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing in this Article shall release the estate of a deceased member (whether sole or joint) from any liability in respect of any share held by him.
   
42 Election by persons entitled by transmission
   
  A person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law may (subject as hereinafter provided) upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share either be registered himself as holder of the share upon giving to the Company notice in writing to that effect or transfer such share to some other person. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the notice or transfer were a transfer made by the member registered as the holder of any such share.
   
43 Rights of persons entitled by transmission
   
  Save as otherwise provided by or in accordance with these Articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law (upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share) shall be entitled to the same dividends and other advantages as those to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to shareholders’ meetings until he shall have been registered as a member in respect of the share.
   
 
  SHARE WARRANTS
 
   
44 If the Company is required to issue any Share Warrants pursuant to the 1962 Scheme, the Directors shall, from time to time, determine the terms and conditions upon which such Share Warrants shall be issued. For the purposes of this Article, the “1962 Scheme” means the scheme of arrangement entered into by The Consolidated Zinc Corporation Limited and the Rio Tinto Company Limited in 1962 in conjunction with the merger of the two companies.
   

47


Back to Contents

 
  UNTRACED SHAREHOLDERS
 
   
45 (A)     The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale the shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if and provided that:–
   
  (i)     during the period of 12 years prior to the date of the publication of the advertisements referred to in paragraph (ii) below (or, if published on different dates, the first thereof) at least three dividends in respect of the shares have become payable and no dividend in respect of those shares has been claimed; and
   
  (ii)     the Company shall on expiry of such period of 12 years have inserted advertisements in both a national newspaper and in a newspaper circulating in the area in which the last known postal address of the member or the address at which service of notices may be effected under these Articles is located giving notice of its intention to sell the said shares; and
   
  (iii)     during the period of three months following the publication of such advertisements the Company shall have received no communication from or on behalf of such member or person.
   
  (B)     To give effect to any such sale the Company may appoint any person to transfer, as transferor, the said shares and such transfer shall be as effective as if it had been carried out by the registered holder of or person entitled by transmission to such shares and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit.
   
 
  GENERAL MEETINGS
 
   
46 Annual and Extraordinary General Meetings
   
  An Annual General Meeting shall be held once in every year, at such time (within a period of not more than 15 months after the holding of the last preceding Annual General Meeting) and place as may be determined by the Directors. All other General Meetings shall be called Extraordinary General Meetings.

48


Back to Contents

47 Convening and Location of General Meetings
   
  (A)     The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed with proper expedition to convene an Extraordinary General Meeting.
   
  (B)     In the case of any General Meeting the Directors or the chairman of the meeting may, notwithstanding the notice specifying the place of the meeting or adjourned meeting (the “principal place”), make arrangements for simultaneous attendance at and participation in (including by way of video link) the meeting or adjourned meeting at that or any other place by persons entitled to attend the meeting, provided that persons attending at any particular place shall be able to see and hear, and be seen and heard by, persons attending at the other place or places at which the meeting is convened.
   
  (C)     The Directors may, from time to time, make such arrangements for the purpose of ensuring that the level of attendance at any place at which any General Meeting takes place is consistent with the orderly conduct of the meeting as they shall, in their absolute discretion, consider appropriate, and may from time to time vary any such arrangements or make any new arrangements in place of them, provided that the entitlement of a member to attend a meeting or adjourned meeting shall be satisfied by his being given the entitlement to attend at such place (fulfilling the conditions specified in paragraph (B) of this Article) as may be specified by the Directors for the purposes of this Article.
   
  (D)     For the purposes of all other provisions of these Articles any such meeting shall be treated as being held and taking place at the principal place.
   
 
  NOTICE OF GENERAL MEETINGS
 
   
48 Length of notice for General Meetings
   
  An Annual General Meeting and any Extraordinary General Meeting at which it is proposed to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to the Company, shall be called by 21 days' notice in writing at the least and any other Extraordinary General Meeting by 14 days' notice in writing at the least. The period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held and shall be given in manner hereinafter mentioned to all members other than such as are not under the provisions of these Articles entitled to receive such notices from the Company provided that the Company may determine that only those persons entered on the Register at the close of business on a day determined by the Company, such day being no more than 21 days before the day that notice of the meeting is sent, shall be entitled to receive such a notice and provided also that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed:-
   
  (A)     in the case of an Annual General Meeting by all the members entitled to attend and vote thereat; and

49


Back to Contents

  (B)     in the case of an Extraordinary General Meeting by a majority in number of the members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent. in nominal value of the shares giving that right.
   
49 Contents of notice of General Meetings
   
  (A)     Every notice calling a General Meeting shall specify the place and the day and hour of the meeting, and there shall appear with reasonable prominence in every such notice a statement that a member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and, on a poll, vote instead of him and that a proxy need not be a member of the Company.
   
  (B)     The notice shall specify the general nature of the business to be transacted at the meeting; and if any resolution is to be proposed as an Extraordinary Resolution or as a Special Resolution, the notice shall contain a statement to that effect.
   
  (C)     In the case of an Annual General Meeting, the notice shall also specify the meeting as such.
   
  (D)     For the purposes of determining which persons are entitled to attend or vote at a meeting and how many votes such person may cast, the Company may specify in the notice of the meeting a time, not more than 48 hours before the time fixed for the meeting, by which a person must be entered on the Register in order to have the right to attend or vote at the meeting.
   
 
  PROCEEDINGS AT GENERAL MEETINGS
 
   
50 Chairman
   
  The Chairman of the Directors, failing whom a Deputy Chairman, shall preside as chairman at a General Meeting. If there is no such Chairman or Deputy Chairman, or if at any meeting neither is present within five minutes after the time appointed for holding the meeting and willing to act, the Directors present shall choose one of their number (or, if no Director is present or if all the Directors present decline to take the chair, the members present and entitled to vote shall choose one of their number) to be chairman of the meeting.
   
51 Quorum
   
  No business other than the appointment of a chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business. Three members present in person and entitled to vote shall be a quorum for all purposes.
   
52 Lack of quorum
   
  If within five minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for the purpose in the notice convening the meeting or (if not so specified) as the chairman of the meeting may determine, and if at such adjourned

50


Back to Contents

  meeting a quorum is not present within five minutes from the time appointed for holding the meeting, the members present in person or by proxy shall be a quorum.
   
53 Conduct of meetings
   
  The chairman shall take such action as he thinks fit to promote the orderly conduct of the business of any General Meeting as laid down in the notice of the meeting and the chairman's decision, made in good faith, on matters of procedure or arising incidentally from the business of the meeting shall be final as shall be his determination, acting in good faith, as to whether any matter is of such a nature.
   
54 Adjournment and notice of adjourned meeting
   
  (A)     The chairman may at any time without the consent of the meeting adjourn any General Meeting at which a quorum is present either sine die or to another time or place where it appears to him that (a) the members wishing to attend cannot be conveniently accommodated in the place appointed for the meeting, or (b) the conduct of persons present prevents or is likely to prevent the orderly continuation of business, or (c) an adjournment is desirable in view of the timing of a general meeting or adjourned general meeting of RTL, or (d) an adjournment is otherwise necessary so that the business of the meeting may be properly conducted. In addition, the chairman may at any time with the consent of any General Meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting either sine die or to another time and place. When a meeting is adjourned sine die the time and place for the adjourned meeting shall be fixed by the Directors. No business shall be transacted at any adjourned meeting except business which might properly have been transacted at the meeting had the adjournment not taken place.
   
  (B)     When a meeting is adjourned for 30 days or more or sine die, not less than seven days' notice of the adjourned meeting shall be given in like manner as in the case of the original meeting.
   
  (C)     Save as hereinbefore expressly provided, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
   
55 Amendments to resolutions
   
  If an amendment shall be proposed to any resolution under consideration but shall be ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall not be invalidated by any error in the ruling. In the case of a resolution duly proposed as a special or extraordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon. In the case of a resolution duly proposed as an ordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error or an amendment to conform such resolution to a resolution duly proposed at the nearly contemporaneous meeting of RTL) may be considered or voted upon unless written notice (which must be in physical form) of such proposed amendment is given to the Office at least 48 hours prior to the time appointed for holding the relevant meeting or adjourned meeting or (in the absence of any such notice) the chairman of the meeting in his absolute discretion rules that the amendment shall be considered.

51


Back to Contents

 
  POLLS
 
   
56 Demand for poll
   
  (A)     Subject to paragraph (B) of this Article, at any General Meeting a resolution put to the vote of the meeting on which the holder of the Special Voting Share is entitled to vote (other than a resolution of a procedural nature) shall be decided on a poll (although the Chairman may first put the resolution to a show of hands) and any other resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by:-
   
  (i)       the chairman of the meeting;
   
  (ii)      not less than five members present in person or by proxy and entitled to vote;
   
  (iii)     a member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting;
   
  (iv)     a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; or
   
  (v)     the holder of the Special Voting Share.
   
  (B)     On a question of adjournment, a poll may only be demanded by the chairman of the meeting.
   
  (C)     A demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman of the meeting. If a demand for a poll is so withdrawn:-
   
  (i)     before the result of a show of hands is declared, the meeting shall continue as if the demand has not been made; or
   
  (ii)     after the result of a show of hands is declared, the demand shall not be taken to have invalidated the result of that show of hands.
   
57 Procedure on a poll
   
  A poll shall be taken in such manner (including the use of ballot or electronic voting or voting papers or tickets) as the chairman of the meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers (who need not be members) and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll.
   
58 Voting on a poll
   
  On a poll votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

52


Back to Contents

59 Timing of poll
   
  A poll validly demanded on the choice of a chairman or on a question of adjournment shall be taken forthwith. A poll validly demanded on any other question shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the chairman may direct. A poll on a resolution on which the holder of the Special Voting Share is entitled to vote shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the chairman may direct and shall remain open for so long as the chairman may determine. Any poll may as the chairman shall direct close at different times for different classes of shareholder. No notice need be given of a poll not taken immediately. The demand for a poll or requirement that a poll be taken shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded, or is required.
   
 
  VOTES OF MEMBERS
 
   
60 Votes attaching to shares
   
  (A)     Subject to the provisions of these Articles with regard to any special rights or restrictions as to voting attached by or in accordance with these Articles to any class of shares and to Article 49(D), on a show of hands every member who is present in person shall have one vote and on a poll every member who is present in person or by proxy shall have one vote for every Ordinary Share of which he is the holder and the Specified Number (as defined in paragraph (B) below) of votes for the Special Voting Share of which he is the holder. The Equalisation Share shall not entitle its holder to attend or vote at any General Meeting.
   
  (B)     The holder of the Special Voting Share shall be entitled to attend at any General Meeting and, subject to the provisions below, to cast on a poll the Specified Number of votes some of which may be cast for and others against any resolution in such numbers as the holder may determine. The Specified Number of votes in relation to a resolution of the Company on a Joint Decision shall be the total number of votes attaching to Publicly-held RTL Ordinary Shares (excluding any Publicly-held RTL Ordinary Shares which to the Directors' knowledge are held by or on behalf of an Excluded RTL Holder or by or on behalf of a member on whom a notice has been served pursuant to Article 64(E) or on whom a direction notice under Article 63 has been served which in either case has not been complied with to the satisfaction of the Directors or withdrawn) which were cast on the poll on the equivalent resolution at the nearly contemporaneous general meeting of RTL multiplied by the Equalisation Fraction. The Specified Number of votes which may be cast in relation to a resolution of the Company which is not a Joint Decision shall be zero except that (i) on any resolution to approve a Class Rights Action by the Company falling within Article 33(A)(vii) and on any resolution to amend, remove or alter the effect of any provision of the Company's Memorandum of Association or these Articles which the Directors (or a duly constituted committee of the Directors) and the Board of RTL agree should be treated as a Class Rights Action, the Specified Number of votes shall be equal to 34 per cent., rounded up to the next higher whole number, of the aggregate number

53


Back to Contents

  of votes attaching to all other classes of issued shares in the Company which could be cast on such resolution and such votes may only be cast by the holder of the Special Voting Share against such resolution and (ii) on any procedural resolution in relation to the Company put to a General Meeting at which a Joint Decision Matter is to be considered the Specified Number of votes which may be cast shall be the maximum number of votes attached to all Publicly-held RTL Ordinary Shares (excluding any Publicly-held RTL Ordinary Shares which to the Directors' knowledge are held by or on behalf of an Excluded RTL Holder or by or on behalf of a member on whom a notice has been served pursuant to Article 64(E) or on whom a direction notice under Article 63 has been served which in either case has not been complied with to the satisfaction of the Directors or withdrawn) which were cast on any resolution on a Joint Decision Matter at the nearly contemporaneous general meeting of RTL (or, if the nearly contemporaneous general meeting of RTL has not been held and such votes counted by the beginning of the relevant General Meeting of the Company, the maximum number of such votes as are authorised to be so cast upon proxies lodged with RTL by such time as the Chairman may determine) multiplied by the Equalisation Fraction and rounded up to the nearest whole number. The Special Voting Share shall not entitle its holder to vote on any show of hands.
   
61 Votes of joint holders
   
  In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the share.
   
62 Chairman's casting vote
   
  In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote in addition to any other vote he may have.
   
63 Restriction on voting in particular circumstances
   
  (A)     No member shall, unless the Directors otherwise determine, be entitled in respect of any share held by him to vote either personally or by proxy at a shareholders meeting or to exercise any other right conferred by membership in relation to shareholders meetings if any call or other sum presently payable by him to the Company in respect of that share remains unpaid.
   
  (B)     If any member, or any other person appearing to be interested in shares held by such member, has been duly served with a notice under Section 212 of the Act and is in default for a period of 14 days in supplying to the Company the information thereby required, then the Directors may in their absolute discretion by notice (a “direction notice”) to such member direct that in respect of:-
   
  (i)     the shares comprising the shareholding account in the Register which comprises or includes the shares in relation to which the default occurred (all or the relevant number as appropriate of such shares being the “default shares”, which expression shall include any further shares which are issued in respect of such shares); and
   
  (ii)     any other shares held by the member,

54


Back to Contents

  the member shall not (for so long as the default continues) nor shall any transferee to whom any of such shares are transferred other than pursuant to an approved transfer or pursuant to paragraph (C)(ii) below be entitled to attend or vote either personally or by proxy at a shareholders' meeting or to exercise any other right conferred by membership in relation to shareholders' meetings.
   
  (C)     Where the default shares represent 0.25 per cent. or more of the issued shares of the class in question, the direction notice may also direct that:-
   
  (i)     any dividend or part thereof or other money which would otherwise be payable in respect of the default shares shall be retained by the Company without any liability to pay interest thereon when such money is finally paid to the member and the member shall not be entitled to elect to receive shares in lieu of dividend; and/or
   
  (ii)     no transfer of any of the shares held by such member shall be registered unless the transfer is an approved transfer or:-
   
  (a)     the member is not himself in default as regards supplying the information required; and
   
  (b)     the transfer is of part only of the member's holding and, when presented for registration, is accompanied by a certificate by the member in a form satisfactory to the Directors to the effect that after due and careful enquiry the member is satisfied that none of the shares the subject of the transfer are default shares provided that, in the case of shares in uncertificated form, the Directors may only exercise their discretion not to register a transfer if permitted to do so by the Regulations.
   
  Any direction notice may treat shares of a member in certificated and uncertificated form as separate holdings and either apply only to the former or to the latter or make different provision for the former and the latter.
   
  (D)     The Company shall send to each other person appearing to be interested in the shares the subject of any direction notice a copy of the notice, but the failure or omission by the Company to do so shall not invalidate such notice.
   
  (E)     (i)     Save as herein provided any direction notice shall have effect in accordance with its terms for so long as the default in respect of which the direction notice was issued continues and shall cease to have effect thereafter upon the Directors so determining (such determination to be made within a period of one week of the default being duly remedied with written notice thereof being given forthwith to the member).
   
  (ii)     Any direction notice shall cease to have effect in relation to any shares which are transferred by such member by means of an approved transfer or in accordance with paragraph (C)(ii) above.
   
  (F)      For the purposes of this Article:-
   
  (i)     a person shall be treated as appearing to be interested in any shares if the member holding such shares has been served with a notice under the said Section 212 and either (a) the member has named such person as being so interested or (b) (after taking into account the response of the member to the said notice and any other relevant information) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares; and

55


Back to Contents

  (ii)      a transfer of shares is an approved transfer if:-
   
  (a)     it is a transfer of shares to an offeror by way or in pursuance of acceptance of a takeover offer (as defined in Section 428 of the Act); or
   
  (b)     the Directors are satisfied that the transfer is made pursuant to a bona fide sale of the whole of the beneficial ownership of the shares to a party unconnected with the member or with any person appearing to be interested in such shares including any such sale made through the London Stock Exchange or any other stock exchange outside the United Kingdom on which the Company's shares are normally traded. For the purposes of this sub-paragraph any associate (as that term is defined in Section 435 of the Insolvency Act 1986) shall be included amongst the persons who are connected with the member or any person appearing to be interested in such shares.
   
  (G)     The provisions of this Article are in addition and without prejudice to the provisions of the Act.
   
64 Change of control
   
  (A)     The purpose of this Article is to place restrictions upon any person (other than a Permitted Person as defined below) who directly or indirectly owns or controls shares in the Company or RTL or both which would otherwise enable such person to cast on a poll (directly, or indirectly through the Special Voting Share) 20 per cent. or more of the votes generally exercisable on a Joint Decision at general meetings of the Company. If the person is only entitled to or interested in shares of the Company, the restrictions only apply if that person is able to cast on a poll 30 per cent. or more of the votes generally exercisable at General Meetings (excluding any votes attaching to the Special Voting Share).
   
  (B)     In this Article:-
   
  (i)     “Accepting Shareholder” means any person who has, in respect of the whole of that person's Interest in Ordinary Shares or Entitlement to RTL Shares, accepted or given irrevocable undertakings to accept offers made under a takeover offer which complies with the Code or under a takeover scheme or takeover announcement which complies with Chapter 6 of the Corporations Act (or both);
   
  (ii)     “Additional Interest” means any such interest as is referred to in paragraph (ix)(b) below;
   
  (iii)     “ADR Depositary” means a custodian or depositary or his nominee, approved by the Directors, under contractual arrangements with the Company by which he or that nominee holds Ordinary Shares and he or another person issues American Depositary Receipts evidencing rights in relation to those shares or a right to receive them;
   
  (iv)     “Associate” means a person who is for the time being an associate of another person for the purposes of Part 1.2 Division of the Corporations Law;
   
  (v)     “concert parties” means persons for the time being acting in concert within the meaning of the Code;
   
  (vi)     “Code” means The City Code on Takeovers and Mergers as from time to time modified or replaced;

56


Back to Contents

  (vii)     “Entitlement” in relation to shares in RTL means the entitlement in respect of shares resulting through a person being entitled to those shares as that term is defined in Section 609 of the Corporations Law;
   
  (viii)     “Holder” is as defined in paragraph (K) below;
   
  (ix)     “Interest” in relation to shares in the Company, means:-
   
  (a)     any interest in Ordinary Shares which would be taken into account in determining for the purposes of Part VI of the Original Act whether a person has a notifiable interest (including any interest which he would be taken as having for those purposes); and
   
  (b)     any interest in Ordinary Shares (an “Additional Interest”) mentioned in Section 209(1)(a), (b), (c), (d), (e), (f), (g) or (h) of the Original Act (except that of a bare trustee) or mentioned in Section 208(4)(b) of the Original Act (but on the basis that the entitlement there referred to could arise under an agreement within the meaning in Section 204(5) and (6) of that Act),
   
  and “Interested” shall be construed accordingly;
   
  (x)     the “Original Act” means the Companies Act 1985 as in force at the date of adoption of this Article and notwithstanding any repeal, modification or re-enactment thereof after that date (including for the avoidance of doubt, any amendment, replacement or repeal by regulations made by the Secretary of State pursuant to Section 210A of that Act to the definition of relevant share capital in Section 198(2) or to the provisions as to what is taken to be an interest in shares in Section 208 or as to what interests are to be disregarded in Section 209 or the percentage giving rise to a notifiable interest in Section 199(2));
   
  (xi)     “Permitted Holding” means:-
   
  (a)     any Entitlement to RTL Ordinary Shares, arising as a result of two or more persons becoming Associates, in relation to the acquisition of which an exemption or declaration under Section 655A of the Corporations Act is in force, with the effect that the acquisition of such Entitlement would not breach Section 606 of the Corporations Act;
   
  (b)     any Interest in shares in the Company or an Entitlement to RTL Ordinary Shares held solely by a person as a bare trustee or by a person who, if the incidents of that person's Interest or Entitlement were governed by the laws of England, would in the opinion of the Directors be regarded as a bare trustee in respect of that Interest or Entitlement;
   
  (c)     any Interest of a person in shares in the Company or any Entitlement of a person to any RTL Ordinary Shares which under arrangements approved by the Directors and the directors of RTL respectively have been allotted or issued with a view to that person (or purchasers from that person) offering the same to the public within a period not exceeding three months from the date of the relevant allotment or issue;
   
  (d)     any Interest of a person in shares in the Company or any Entitlement of a person to any RTL Ordinary Shares which the Directors are satisfied is held by virtue only of that person being entitled to exercise or control the exercise of 20 per cent. or more of the voting power at general meetings of a company which is a Permitted Person;

57


Back to Contents

  (e)      any Interest or Entitlement of a Permitted Person, other than RTL Shareholder SVC or RTP Shareholder SVC;
   
  (xii)     “Permitted Person” means:-
   
  (a)     any member of the Rio Tinto Group;
   
  (b)     any member of the RTL Group;
   
  (c)     RTL Shareholder SVC;
   
  (d)     RTP Shareholder SVC;
   
  (e)     an ADR Depositary, acting in his capacity as such;
   
  (f)     The Depositary Trust Company or any successor and/or its nominee acting in the capacity of a clearing agency in respect of dealings in American Depositary Receipts;
   
  (g)     a clearing house or a nominee of a recognised clearing house or of a recognised investment exchange who is designated as mentioned in Section 185(4) of the Original Act (a “recognised person”);
   
  (h)     a trustee (acting in that capacity) of any employees' share scheme of the Company or of RTL;
   
  (i)     any person (an “Offeror”) who has made an offer to acquire all the outstanding RTL Ordinary Shares (other than those already owned by the Offeror) which may, if the Offeror so decides, be conditional upon an offer which has been made by the Offeror (or a subsidiary of, a parent company of, or a subsidiary of a parent company of the Offeror) on terms which satisfy each of subparagraphs (I), (II) and (III) of Rule 145(B)(x)(i) of the RTL Constitution) to acquire all the outstanding Ordinary Shares (other than those already owned by the Offeror or such subsidiary, parent company or subsidiary of a parent company) becoming unconditional and shall:-
   
  (I)     be unconditional when made or contain only such conditions as any such offer must contain pursuant to the Corporations Act;
   
  (II)     disclose the highest price paid or value of consideration given for Ordinary Shares by the Offeror or its concert parties and for RTL Ordinary Shares by the Offeror and its Associates since the beginning of the period commencing 12 months before the date on which the Offeror or any of its Associates or concert parties became a Relevant Person and include a cash offer (or an offer with a cash alternative) to acquire all the RTL Ordinary Shares (other than those already directly or indirectly owned by the Offeror) at a price per RTL Ordinary Share which (subject to paragraph (xix) below) is not less than the higher of:-
   
  (aa)     the highest price paid or value of consideration given for Ordinary Shares by the Offeror or its Associates since the beginning of the period commencing 12 months before the date on which the Offeror or any of its concert parties became a Relevant Person multiplied by the Equalisation Fraction as at the date of the offer and converted into Australian dollars. Such conversion shall be made at the closing mid-point spot Australian dollar-sterling exchange rate, on the date on which the Offeror or any of its concert parties became a Relevant Person as published in the Financial Times; and

58


Back to Contents

  (bb)     the highest price paid or value of consideration given for RTL Ordinary Shares by the Offeror (or its Associates) in Australian dollars (or equivalent, converted into Australian dollars by a method comparable to that set out in (aa) above) since the beginning of the period commencing 12 months before the date on which the Offeror or any of its Associates became a Relevant Person;
   
  provided that if no such shares have been acquired by the Offeror or any of its Associates or concert parties during that period the price (subject to paragraph (xix)) shall be not less than the higher of:–
   
  (cc)     the middle market quotation derived from the London Stock Exchange Daily Official List in respect of Ordinary Shares on the dealing day preceding the date on which the offer is announced, multiplied by the Equalisation Ratio as at that day and converted into Australian dollars at the closing mid-point Australian dollar-sterling exchange rate as at such date as published in the Financial Times; and
   
  (dd)     the weighted average sale price derived from the Australian Stock Exchange in respect of RTL Ordinary Shares on the Business Day preceding the date on which the offer is announced; and
   
  (III)     comply with the provisions of the Corporations Act as if it were an offer made under the Corporations Act;
   
  provided that if the terms of any such offer would, at the time it would be required to be made, be illegal or contravene any applicable law or regulatory requirement (including the Corporations Act) then the offer shall be on such terms as may be necessary to comply with such applicable law or regulatory requirement but otherwise shall approximate as far as is possible the requirements set out in (I) to (III) above and provided further that references to the price paid for an Ordinary Share or a RTL Ordinary Share shall be deemed to include the price paid for an interest through an American Depositary Receipt representing such a share converted into sterling or Australian dollars as appropriate at the closing mid-point exchange rate of the purchase currency and sterling or Australian dollars (as appropriate) on the date of acquisition of such interest obtained from the Financial Times (in the case of Ordinary Shares) or from the Australian Financial Review in the case of RTL Ordinary Shares;
   
  (j)     any person who (i) owns directly or indirectly Publicly-held Voting Shares in the Company which carry the right to cast more than 50 per cent. of the total votes attaching to all Publicly-held Voting Shares capable of being cast on a poll at a General Meeting and (ii) owns directly or indirectly Publicly-held RTL Ordinary Shares which carry the right to cast more than 50 per cent, of the total votes attaching to all Publicly-held RTL Ordinary Shares capable of being cast on a poll at a general meeting of RTL, and has reached that level of ownership by receiving acceptances under offers to acquire all the outstanding Ordinary Shares and RTL Ordinary Shares (other than those already owned by that person) or as a result of a scheme of arrangement approved by the High Court or as a result of a compromise or arrangement approved by the relevant court of Australia under Part 5.1 of the Corporations Act or by any combination of these;
   
  (k)      any concert party or Associate of an Offeror;

59


Back to Contents

  (xiii)     "Relevant Holding" means an Interest in shares in the Company or an Entitlement to RTL Ordinary Shares or both (disregarding any part of that Interest or Entitlement which is a Permitted Holding) which together would otherwise entitle their holder to cast on a poll (either directly as a member of the Company or through any votes which may be cast by the holder of the Special Voting Share to reflect votes which the holder of the Relevant Holding is entitled to cast in respect of RTL Ordinary Shares) 20 per cent. or more of the total votes attaching to all share capital of the Company of all classes on a Joint Decision (assuming that all the Publicly-held RTL Ordinary Shares including those comprised in such Entitlement were voted on the equivalent resolution at the nearly contemporaneous general meeting of RTL and counted in calculating the votes attached to the Special Voting Share on such decision) provided that if the Relevant Holding does not include any RTL Ordinary Shares, the Relevant Holding includes an Interest in shares in the Company (other than the Special Voting Share) which carry the right on a poll to cast 30 per cent. or more of the total votes attaching to all share capital of the Company of all Classes (apart from the Special Voting Share) taken as a whole and capable of being cast on a poll at a General Meeting;
   
  (xiv)     "Relevant Person" means any person (whether or not identified) who has, or who appears to the Directors to have, a Relevant Holding or who is deemed for the purposes of this Article to be a Relevant Person;
   
  (xv)     "Relevant Share Capital" means the relevant share capital (as defined in section 198(2) of the Original Act) of the Company;
   
  (xvi)     "Relevant Shares" means all the shares in which a Relevant Person or an Excluded RTL Holder has, or appears to the Directors to have, an Interest or which are deemed for the purposes of this Article to be Relevant Shares;
   
  (xvii)     "Required Disposal" means a disposal or disposals of such a number of Relevant Shares (or interests therein) as will cause a Relevant Person to cease to be a Relevant Person, not being a disposal to another Relevant Person (other than a Permitted Person) or a disposal which constitutes any other person (other than a Permitted Person) a Relevant Person;
   
  (xviii)     references to the Financial Times mean the London Edition, and includes, if that newspaper fails to be published or fails to publish the relevant information any other daily newspaper circulating in London nominated by the Board which does publish the relevant information and references to the Australian Financial Review include, if that newspaper ceases to be published or fails to publish the relevant information, any other daily newspaper circulating in Melbourne nominated by the Board which does publish the relevant information;
   
  (xix)     references in paragraph (xii)(i) to "price" or "value of consideration" mean such price or value:–
   
  (a)     adjusted to reflect the effect of any share consolidation or subdivision, allotment of shares, rights issue, issue of options, issue of convertible securities or reduction of capital which occurred after that price or consideration was paid or given and before the offer to acquire all the RTL Ordinary Shares referred to in that paragraph occurred; and
   
  (b)      adjusted to reflect the net amount of any dividend which had been declared or announced at the time the price or consideration was paid or given if the shares acquired were at that time trading cum-dividend and at the time of the offer the shares are trading ex-dividend or vice versa,

60


Back to Contents

  and the certificate of the Auditors stating the appropriate amount of an adjustment required by (a) or (b) shall be conclusive,
   
  and, for the purposes of this Article, where the Directors resolve in good faith that they have made reasonable enquiries and that they are unable to determine:–
   
  (c)      whether or not a particular person has an Interest in any particular shares; or
   
  (d)      who is Interested in any particular shares,
   
  the shares concerned shall be deemed to be Relevant Shares and all persons interested in them to be Relevant Persons.
   
  (C)     Subject to paragraphs (D), (K) and (L) below and without prejudice to Article 63, the provisions of Part VI of the Original Act shall apply in relation to the Company as if those provisions extended to Additional Interests and accordingly the rights and obligations arising under that Part shall apply in relation to the Company, its members and all persons Interested in Relevant Share Capital, as extended by this paragraph; but so that Additional Interests shall, when disclosed to the Company, be entered in a separate register kept by the Company for that purpose. The rights and obligations created by this paragraph in respect of Interests in shares (including, but not limited to, Additional Interests) are in addition to and separate from those arising under Part VI of the Act.
   
  (D)     Sections 210(3) to (6), 211(10), 213(3) (so far as it relates to Section 211(10)), 214(5), 215(8), 216(1) to (4), 217(7), 218(3), 219(3) and (4), 454, 455, 732 and 733 of the Original Act shall not apply in respect of Additional Interests.
   
  (E)     If, to the knowledge of the Directors, any person other than a Permitted Person is or becomes (or appears to be or to be likely to become) a Relevant Person (including, without limitation, by virtue of being deemed to be one), the Directors shall give notice to that Relevant Person (other than persons referred to in paragraph (H) below) and to any other person who appears to the Directors to have Interests in the Relevant Shares and, if different, to the registered holders of those shares. The notice shall set out the restrictions referred to in paragraph (F) below and specify what conditions are to be satisfied in order for the notice to be withdrawn. If the Relevant Shares are held by the ADR Depositary, the notice shall state that:–
   
  (a)     a specified purchaser or purchasers (the "Relevant Purchasers(s)") (excluding the ADR Depositary itself) or Holder or Holders (the "Relevant Holders(s)"), as the case may be, is or are believed or deemed to be Relevant Persons or is or are believed or deemed to be purchasers or Holders through which a Relevant Person or Relevant Persons has or have Interests in either case as specified in the notice; and
   
  (b)     the Directors believe that each Relevant Purchaser or Relevant Holder or the Relevant Person or Relevant Persons believed or deemed to have Interests through such Relevant Purchaser or Relevant Holder, as the case may be, is or are deemed to be Interested in a specific number of Relevant Shares.

61


Back to Contents

  The Directors may extend the period in which any such notice is required to be complied with and may withdraw any such notice (whether before or after the expiration of the period referred to) if it appears to them that there is no Relevant Person in relation to the shares concerned.
   
  (F)     A holder of a Relevant Share on whom a notice has been served in accordance with paragraph (E) above shall not in respect of that share be entitled, until such time as the notice has been complied with to the satisfaction of the Directors or withdrawn:–
   
  (a)     to attend or vote at any general meeting of the Company or meeting of the holders of Relevant Share Capital or of any class thereof, or to exercise any other right conferred by membership in relation to any such meeting;
   
  (b)     to receive any dividend or other money which would otherwise be payable in respect of a Relevant Share, which shall be retained by the Company without any liability to pay interest when the money is finally paid to the member; or
   
  (c)      to elect to receive shares in lieu of any dividend referred to in (b) above.
   
  If a notice under paragraph (E) is not complied with by the Relevant Person within the time limit specified, the Directors may appoint a person to execute any documents and implement any procedures as may be required to procure a Required Disposal on behalf of the Relevant Person and to receive and give a good discharge for the purchase price. Brokerage, stamp duty and any other costs of the transfer shall be paid out of the sale proceeds. The net proceeds of any sale under this paragraph shall be paid to the registered holder who held the Relevant Shares sold under this paragraph provided that the registered holder has delivered to the Company such documents or information as may be reasonably required by the Directors. Upon the name of the purchaser being entered in the Register in purported exercise of the powers under this paragraph, the validity of the sale by way of a Required Disposal shall not be challenged by any person. The Directors may not authorise a Required Disposal of any Ordinary Shares held by an Accepting Shareholder during a period in which offers for both Ordinary Shares and RTL Ordinary Shares remain open for acceptance.
   
  (G)     Without prejudice to the provisions of the Original Act and subject to paragraph (B)(vii) above, the Directors may assume without enquiry that a person is not a Relevant Person unless the information contained in the registers kept by the Company under Part VI of the Act or under Part VI of the Original Act (as applied and extended by this Article), including the separate register to be kept under paragraph (C) above, appear to the Directors to indicate to the contrary or the Directors have reason to believe otherwise, in which circumstances the Directors shall make reasonable enquiries to discover whether any person is a Relevant Person.
   
  (H)     The Directors shall not be obliged to give any notice required under this Article to be given to any person if they do not know either (i) his identity or (ii) his address. The absence of such a notice in those circumstances and any accidental error in or failure to give any notice to any person to whom notice is required to be given under this Article shall not prevent the implementation of, or invalidate, any procedure under this Article.

62


Back to Contents

  (I)     If any Director has reason to believe that a person (not being a Permitted Person) is a Relevant Person, that Director shall inform the other Directors.
   
  (J)     Any resolution or determination of, or decision or exercise of any discretion or power by, the Directors or any Director or by the chairman of any meeting under or pursuant to the provisions of this Article shall be final and conclusive and anything done, by or on behalf of, or on the authority of, the Directors or any Director pursuant to the foregoing provisions of this Article shall be conclusive and binding on all persons concerned and shall not be open to challenge, whether as to its validity or otherwise on any ground whatsoever. The Directors shall not be required to give any reasons for any decision, determination or declaration taken or made in accordance with this Article.
   
  (K)     Paragraph (C) shall not apply to an ADR Depositary when acting in that capacity. A person (a "Holder") who has an Interest in shares of the Company evidenced by an American Depositary Receipt shall be deemed for the purposes of this Article to have an Interest in the number of shares in the Company in respect of which rights are evidenced by such Receipt and not (in the absence of any other reason why he would be so treated) in the remainder of the shares in the Company held by the ADR Depositary.
   
  (L)     Paragraph (C) of this Article shall not apply to a recognised person acting in its capacity as such. Where in that capacity Interests in shares in the Company are held by a recognised person under arrangements recognised by the Company for the purposes of this Article any person who has rights in relation to shares in the Company in which such a recognised person has an Interest shall be deemed to be Interested in the number of shares in the Company for which such a recognised person is or may become liable to account to him and any Interest which (by virtue of his being a tenant in common in relation to an Interest in shares in the Company so held by such a recognised person) he would otherwise be treated for the purposes of this Article as having in a larger number of shares in the Company shall (in the absence of any other reason why he should be so treated) be disregarded.
   
  (M)     This Article shall apply notwithstanding any provision in any other of these Articles which is inconsistent with or contrary to it.
   
65 Voting by guardian
   
  Where in England or elsewhere a guardian, receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such guardian, receiver or other person on behalf of such member to vote in person or by proxy at any shareholders' meeting or to exercise any other right conferred by membership in relation to shareholders' meetings.
   
66 Validity and result of vote
   
  (A)      If:–
   
  (i)      any objection shall be raised to the qualification of any voter; or

63


Back to Contents

  (ii)     any votes have been counted which ought not to have been counted or which might have been rejected; or
   
  (iii)     any votes are not counted which ought to have been counted,
   
  the objection or error shall not vitiate the decision of the meeting or adjourned meeting on any resolution unless it is raised or pointed out at the meeting or, as the case may be, the adjourned meeting at which the vote objected to is given or tendered or at which the error occurs. Any objection or error shall be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any resolution if the chairman decides that the same may have affected the decision of the meeting. The decision of the chairman on such matters shall be conclusive.
   
  (B)     Unless a poll is taken a declaration by the chairman of the meeting that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or must such resolution.
   
 
  PROXIES
 
   
67 Proxy need not be a member
   
  A proxy need not be a member of the Company.
   
68 Form of proxy
   
  An instrument appointing a proxy shall be in writing in any form which the Directors have approved and which is permitted by the Statutes and:–
   
  (A)      in the case of an individual shall be signed by the appointor or his attorney; and
   
  (B)      in the case of a corporation shall be either given under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation.
   
  The signature on such instrument need not be witnessed. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged in physical form with the instrument of proxy pursuant to the next following Article, failing which the instrument may be treated as invalid.
   
69 Deposit of form of proxy
   
  Subject to the following sentence, an instrument appointing a proxy must be left at or delivered to such place or one of such places (if any) as may be specified for that purpose in or by way of note to or in any document accompanying the notice convening the meeting (or, if no place is so specified, at the Transfer Office) not less than 48 hours (or such lesser time as the Board may decide) before the time appointed for the holding of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the opening of the poll at which it is to be used, and in default shall

 64


Back to Contents

  not be treated as valid. A proxy received from the holder of the Special Voting Share will be valid if it is received before the closing of the poll to which it relates. The instrument shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates. An instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purpose of any meeting shall not require again to be delivered for the purposes of any subsequent meeting to which it relates. When two or more valid but differing instruments of proxy are executed in respect of the same share for use at the same meeting, the one which is last executed shall be treated as replacing and revoking the others as regards that share. If the company is unable to determine which was last executed none of them shall be treated as valid in respect of that share. Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting or poll concerned.
   
70 Rights of proxy
   
  An instrument appointing a proxy shall be deemed to include the right to demand or join in demanding a poll but shall not confer any further right to speak at the meeting, except with the permission of the chairman of the meeting.
   
71 Revocation of proxy
   
  A vote cast or demand for a poll made by proxy shall not be invalidated by the previous death or insanity of the member or by the revocation of the appointment of the proxy or of the authority under which the appointment was made unless written notice of such death, insanity or revocation shall have been received by the Company at the Transfer Office at least one hour before the commencement of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) the time appointed for the taking of the poll at which the vote is cast.
   
 
  CORPORATIONS ACTING BY REPRESENTATIVES
 
   
72 Any corporation which is a member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any shareholders' meeting or in relation to any poll (whether held at a meeting or otherwise). The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual member of the Company and such corporation shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorised is present thereat.

65


Back to Contents

 
  DIRECTORS
 
   
73 Number of Directors
   
  Subject as hereinafter provided the Directors shall not be less than five in number. The Company may by Ordinary Resolution from time to time vary the minimum number and/or fix and from time to time vary a maximum number of Directors.
   
74 Share qualification
   
  A Director shall not be required to hold any shares of the Company by way of qualification. A Director who is not a member of the Company shall nevertheless be entitled to attend and speak at shareholders' meetings.
   
75 Directors' fees
   
  The ordinary remuneration of the Directors shall from time to time be determined by the Directors except that such remuneration shall not (when aggregated with any fees received by the Directors in their capacity as Directors of RTL) exceed £750,000 per annum in aggregate or such higher amount as may from time to time be determined by Ordinary Resolution of the Company and shall (unless such resolution otherwise provides) be divisible among the Directors as they may agree, or, failing agreement, equally, except that any Director who shall hold office for part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for a proportion of remuneration related to the period during which he has held office. For this purpose, Australian dollar amounts shall be converted at the rate of £1=A$2.75.
   
76 Other remuneration of Directors
   
  Any Director who holds any executive office with the Company or RTL (including for this purpose the office of Chairman or Deputy Chairman whether or not such office is held in an executive capacity), or who serves on any committee of the Directors of the Company or RTL, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or otherwise or may receive such other benefits as the Directors may determine.
   
77 Directors' expenses
   
  The Directors may repay to any Director and to any Alternate Director all such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of any committee of the Directors or shareholders' meetings or otherwise in connection with the business of the Company.
   
78 Directors' pensions and other benefits
   
  The Directors shall have power to pay and agree to pay gratuities, pensions or other retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director or ex-Director and for the purpose of providing any such gratuities, pensions or other benefits to contribute to any scheme or fund or to pay premiums.

66


Back to Contents

79 Appointment and powers of executive Directors
   
  (A)     The Directors may from time to time appoint one or more of their body to be the holder of any executive office (including, where considered appropriate, the office of Chairman or Deputy Chairman) on such terms and for such period as they may (subject to the provisions of the Statutes) determine and, without prejudice to the terms of any contract entered into in any particular case, may at any time revoke or vary the terms of any such appointment.
   
  (B)     The appointment of any Director to the office of Chairman or Deputy Chairman or Chief Executive or Deputy Chief Executive or Managing or Joint Managing or Deputy or Assistant Managing Director shall automatically determine if he ceases to be a Director but without prejudice to any claim for damages for breach of any contract of service between him and the Company.
   
  (C)     The appointment of any Director to any other executive office shall not automatically determine if he ceases from any cause to be a Director, unless the contract or resolution under which he holds office shall expressly state otherwise, in which event such determination shall be without prejudice to any claim for damages for breach of any contract of service between him and the Company.
   
  (D)     The Directors may entrust to and confer upon any Director holding any executive office any of the powers exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.
   
80 Alternate Directors
   
  Each Director shall have power from time to time to appoint any person (including another Director) approved by a majority of co-Directors to act as an Alternate Director in the Director's place, whether for a stated period or periods or until the happening of a specified event or from time to time, whenever by absence or illness or otherwise the Director is unable to attend to duties as a Director. The appointment shall be in writing and signed by the Director and a copy of the appointment shall be given by the appointing Director to the Company by forwarding or delivering it to the Office. The appointment shall take effect immediately upon receipt of the appointment at the Office and approval by a majority of co-Directors and upon his appointment by the same person as an alternate director of RTL becoming effective. The following provisions shall apply to any Alternate Director:–
   
  (i)     the Alternate Director may be removed or suspended from office upon receipt at the Office of written notice from the Director by whom the Alternate Director was appointed to the Company;
   
  (ii)     the Alternate Director shall be entitled to receive notice of meetings of the Board and to attend and vote at the meetings if the Director by whom the Alternate Director was appointed is not present;
   
   (iii)     the Alternate Director shall be entitled to exercise all the powers (except the power to appoint an Alternate Director) and perform all the duties of a Director, in so far as the Director by whom the Alternate Director was appointed had not exercised or performed them;

67


Back to Contents

  (iv)     the Alternate Director shall not, unless the Directors otherwise determine, (without prejudice to the right to reimbursement for expenses pursuant to Article 77) be entitled to receive any remuneration as a Director from the Company, and any remuneration (not including remuneration authorised by the Directors or reimbursement for expenses) paid to the Alternate Director by the Company shall be deducted from the remuneration of the Director by whom the Alternate Director was appointed;
   
  (v)     the office of the Alternate Director shall be vacated if the Director by whom the Alternate Director was appointed vacates office or dies;
   
  (vi)     the Alternate Director shall not be taken into account in determining the number of Directors or rotation of Directors; and
   
  (vii)     the Alternate Director shall, while acting as a Director, be responsible to the Company for the Alternate Director's own acts and defaults and shall not be deemed to be the agent of the Director by whom the Alternate Director was appointed.
   
 
  APPOINTMENT AND RETIREMENT OF DIRECTORS
 
   
81 Age limit
   
  Any provision of the Statutes which, subject to the provisions of these Articles, would have the effect of rendering any person ineligible for appointment or election as a Director or liable to vacate office as a Director on account of his having reached any specified age or of requiring special notice or any other special formality in connection with the appointment or election of any Director over a specified age, shall apply to the Company.
   
82 Retirement by rotation
   
  At each Annual General Meeting:
   
(A) any Director who was elected or last re-elected a Director at or before the Annual General Meeting held in the third calendar year before the current year shall retire by rotation; and
   
(B) such further Directors (if any) shall retire by rotation as would bring the number retiring by rotation up to one-third of the number of Directors in office at the date of the notice of meeting (or, if their number is not a multiple of three, the number nearest to but not greater than one-third).
   
83 Selection of Directors to retire by rotation
   
  The further Directors required to retire by rotation in accordance with Article 82(b) shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by the alphabetical order of their names. A retiring Director shall be eligible for re-election.

68


Back to Contents

84 Re-election of retiring Director
   
  The Company at the meeting at which a Director retires under any provision of these Articles may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director or some other person eligible for election. In default the retiring Director shall be deemed to have been re-elected except in any of the following cases:–
   
  (A)     where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost;
   
  (B)     where such Director has given notice in writing to the Company that he is unwilling to be re-elected;
   
  (C)     where the default is due to the moving of a resolution in contravention of the next following Article;
   
  (D)     where such Director has attained any retiring age applicable to him as Director; and
   
  (E)     where such Director has not been, or is not deemed to have been, re-elected as a director of RTL.
   
  The retirement shall not have effect until the conclusion of the meeting (which for these purposes shall be deemed to be the announcement of the result of the poll to re-elect the Director) except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break.
   
85 Election of two or more Directors
   
  A resolution for the election of two or more persons as Directors by a single resolution shall not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it, and any resolution moved in contravention of this provision shall be void.
   
86 Nomination of Director for election
   
  No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any General Meeting unless within the period referred to in Article 87 there has been lodged at the Office:–
   
  (A)     notice in writing signed by some member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election; and
   
  (B)     notice in writing signed by the person to be proposed of his willingness to be elected as a Director of the Company and as a director of RTL.
   
  The Directors shall nominate for election as a Director at a General Meeting of the Company any person duly nominated for election at the nearly contemporaneous General Meeting of RTL.

69


Back to Contents

87  Period for Nomination of Directors for election
   
  The period within which the notices referred to in Article 86 must be lodged at the Office is not less than 35 Business Days nor more than 55 Business Days (inclusive of the date on which the notice is given) before the earlier of the dates appointed for:
   
  (i)     the general meeting of the Company; and
   
  (ii)    the nearly contemporaneous general meeting of RTL,
   
  provided that, if this would result in the latest date for lodgement of the notices being later than the latest date (the "ASX Date") on which, in accordance with the Listing Rules of the Australian Stock Exchange, RTL is required to accept a nomination for election as a director at that general meeting of RTL, the latest time for lodgement of the notices shall be the ASX Date, and in this Article 87 "Business Day" has the same meaning as defined in the Listing Rules of the Australian Stock Exchange.
   
88 Election or appointment of additional Director
   
  The Company may by Ordinary Resolution elect, and without prejudice thereto the Directors shall have power at any time to appoint, any person to be a Director either to fill a casual vacancy or as an additional Director, but so that (i) the total number of Directors shall not thereby exceed the maximum number (if any) fixed by or in accordance with these Articles and (ii) the appointment of such Director shall not take effect before such Director has been duly appointed as a director of RTL. Any person so appointed by the Directors (except for the directors of RTL appointed Directors by the Directors on or about the date of the Sharing Agreement) shall hold office only until the next Annual General Meeting and shall then be eligible for election, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting.
   
89 Vacation of office
   
  The office of a Director shall be vacated in any of the following events, namely:–
   
  (i)    if he shall become prohibited by law from acting as a Director;
   
  (ii)    if he shall resign by writing under his hand left at the Office or if he shall offer to resign by notice in writing in physical form and the Directors shall resolve to accept such offer;
   
  (iii)    if he shall have a bankruptcy order made against him or shall compound with his creditors generally or shall apply to the court for an interim order under Section 253 of the Insolvency Act 1986 in connection with a voluntary arrangement under that Act;
   
   (iv)   if in England or elsewhere an order shall be made by any court claiming jurisdiction in that behalf on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or for the appointment of a receiver or other person (by whatever name called) to exercise powers with respect to his property or affairs;
   
  (v)     if he shall be absent from meetings of the Directors for six months without leave and the Directors shall resolve that his office be vacated;

70


Back to Contents

  (vi)     if a notice in writing in physical form is served upon him, signed by not less than three-quarters of the Directors for the time being, to the effect that his office as Director shall on receipt of such notice ipso facto be vacated, but so that if he holds an appointment to an executive office which thereby automatically determines such removal shall be deemed an act of the Company and shall have effect without prejudice to any claim for damages for breach of any contract of service between him and the Company; and
   
  (vii)    if he shall cease to be a director of RTL.
   
90 Removal of Director
   
  The Company may in accordance with and subject to the provisions of the Statutes by Ordinary Resolution of which special notice has been given remove any Director from office (notwithstanding any provision of these Articles or of any agreement between the Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and elect another person in place of a Director so removed from office (provided that such person is also elected a director of RTL at the same time) and any person so elected shall be treated for the purpose of determining the time at which he or any other Director is to retire by rotation as if he had become a Director on the day on which the Director in whose place he is elected was last elected a Director. In default of such election the vacancy arising upon the removal of a Director from office may be filled as a casual vacancy.
   
91 Convening of meetings of Directors
   
  Subject to the provisions of these Articles the Directors may meet together for the despatch of business, adjourn and otherwise regulate their proceedings as they think fit. At any time any Director may, and the Secretary at the request of a Director shall, summon a meeting of the Directors. It shall not be necessary to give notice of a meeting of Directors to any Director who is for the time being neither in the United Kingdom nor in Australia. Any Director may waive notice of any meeting and any such waiver may be retroactive.
   
92 Quorum
   
  The quorum necessary for the transaction of business of the Directors may be fixed from time to time by the Directors and unless so fixed at any other number (not being less than three) shall be three. A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors.
   
93 Chairman
   
  (A)     The Directors may elect from their number a Chairman and a Deputy Chairman (or two or more Deputy Chairmen) and determine the period for which each is to hold office. If no Chairman or Deputy Chairman shall have been appointed or if at any meeting of the Directors no Chairman or Deputy Chairman shall be present within five minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting.
   
  (B)     If at any time there is more than one Deputy Chairman the right in the absence of the Chairman to preside at a meeting of the Directors or of the Company shall be determined as between the Deputy Chairmen present (if more than one) by seniority in length of appointment or otherwise as resolved by the Directors.

71


Back to Contents

94 Casting vote
   
  Questions arising at any meeting of the Directors shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote.
   
95 Number of Directors below minimum
   
  The continuing Directors may act notwithstanding any vacancies, but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling such vacancies or of summoning General Meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two members may summon a General Meeting for the purpose of appointing Directors.
   
96 Telephone Board Meetings
   
  The Directors, and any committee of the Directors, shall be deemed to meet together if, being in separate locations, they are nonetheless linked by conference telephone or other communication equipment which allows those participating to hear and speak to each other. Such a meeting shall be deemed to take place at the place agreed upon by the Directors attending the meeting provided that at least one of the Directors present at the meeting was at that place for the duration of the meeting.
   
97 Written resolutions
   
  A resolution in writing of which notice has been given to all Directors and which is signed by a majority of the Directors shall be as valid and effectual as a resolution duly passed at a meeting of the Directors and may consist of several documents in the like form each signed by one or more Directors. For the purposes of this Article the references to Directors include any Alternate Director for the time being present in the United Kingdom or Australia who is appointed by a Director not for the time being in the United Kingdom or Australia or who is unable by reason of illness to sign the resolution in question but do not include any other Alternate Director. Any document produced by mechanical or electronic means and bearing a signature of a Director printed with that Director's authority by mechanical or electronic means shall for the purposes of this Article 97 be deemed to be a document in writing signed by the Director.
   
98 Validity of proceedings
   
  All acts done by any meeting of Directors, or of any committee or sub-committee of the Directors, or by any person acting as a Director or as a member of any such committee or sub-committee, shall as regards all persons dealing in good faith with the Company, notwithstanding that there was some defect in the appointment of any of the persons acting as aforesaid, or that any such persons were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of the committee or sub-committee and had been entitled to vote.

72


Back to Contents

99  Directors may have interests
   
  Subject to the provisions of the Statutes, and provided that he has disclosed to the Directors the nature and extent of any interest of his, a Director notwithstanding his office:–
   
  (i)     may be a party to, or otherwise interested in, any contract, transaction or arrangement with the Company or in which the Company is otherwise interested;
   
  (ii)    may be a director or other officer of, or employed by, or a party to any contract, transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested;
   
  (iii)   may (or any firm of which he is a partner, employee or member may) act in a professional capacity for the Company (other than as Auditor) and be remunerated therefor; and
   
  (iv)  shall not, save as otherwise agreed by him, be accountable to the Company for any benefit which he derives from any such contract, transaction or arrangement or from any such office or employment or from any interest in any such body corporate or for such remuneration and no such contract, transaction or arrangement shall be liable to be avoided on the grounds of any such interest or benefit.
   
100 Restriction on voting
   
  (A)     Save as herein provided, a Director shall not vote in respect of any contract or arrangement or any other proposal whatsoever in which he has any material interest otherwise than by virtue of interests in shares or debentures or other securities of, or otherwise in or through, the Company. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is not entitled to vote.
   
  (B)     Subject to the provisions of the Statutes, a Director shall (in the absence of some other material interest than is indicated below) be entitled to vote (and be counted in the quorum) in respect of any resolution concerning any of the following matters, namely:–
   
  (i)     the giving of any security, guarantee or indemnity in respect of:–
   
  (a)    money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings; or
   
  (b)   a debt or other obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;
   
  (ii)   any proposal concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings in which offer he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which offer he is to participate;

73


Back to Contents

  (iii)     any proposal concerning any other body corporate in which he is interested, directly or indirectly and whether as an officer or shareholder or otherwise, provided that he (together with persons connected with him within the meaning of Section 346 of the Act) does not have an interest (as that term is used in Sections 198 to 211 of the Act) in one per cent. or more of the issued equity share capital of any class of such body corporate (or of any third company through which his interest is derived or of the voting rights available to members of the relevant body corporate (any such interest being deemed for the purpose of this Article to be a material interest in all circumstances);
   
  (iv)     any proposal relating to an arrangement for the benefit of the employees of the Company or any of its subsidiary undertakings which does not award him any privilege or benefit not generally awarded to the employees to whom such arrangement relates;
   
  (v)     any proposal concerning insurance which the Company proposes to maintain or purchase for the benefit of Directors or for the benefit of persons who include Directors.
   
  (C)     Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more Directors to offices or employments with the Company or any body corporate in which the Company is interested, the proposals may be divided and considered in relation to each Director separately and in such case each of the Directors concerned (if not debarred from voting under paragraph (B)(iii) of this Article) shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment.
   
  (D)     If a question arises at any time as to the materiality of a Director's interest or as to his entitlement to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive except in a case where the nature or extent of the interest of such Director has not been fairly disclosed.
   
101 Directors' interests – general
   
  For the purposes of the two preceding Articles:–
   
  (i)     a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any contract, transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such contract, transaction or arrangement of the nature and extent so specified;
   
  (ii)    an interest of a person who is connected (within the meaning of Section 346 of the Act) with a Director shall be treated as an interest of the Director; and
   
  (iii)   an interest (whether of his or of such a connected person) of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his.

74


Back to Contents

 
  COMMITTEES OF THE DIRECTORS
 
   
102 Appointment and constitution of committees
   
  The Directors may delegate any of their powers or discretion (including without prejudice to the generality of the foregoing all powers and discretion whose exercise involves or may involve the payment of remuneration to or the conferring of any other benefit on all or any of the Directors) to committees. Any such committee shall, unless the Directors otherwise resolve, have power to sub-delegate to sub-committees any of the powers or discretion delegated to it. Any such committee or sub-committee shall consist of one or more Directors and (if thought fit) one or more other named persons or person to be co-opted as hereinafter provided. Insofar as any such power or discretion is delegated to a committee or sub-committee, any reference in these Articles to the exercise by the Directors of the power or discretion so delegated shall be read and construed as if it were a reference to the exercise thereof by such committee or sub-committee. Any committee or sub-committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee or sub-committee of persons other than Directors and may provide for members who are not Directors to have voting rights as members of the committee or sub-committee but so that (a) the number of members who are not Directors shall be less than one-half of the total number of members of the committee or sub-committee and (b) no resolution of the committee or sub–committee shall be effective unless a majority of the members of the committee or sub-committee present throughout the meeting are Directors.
   
103 Proceedings of committee meetings
   
  The meetings and proceedings of any such committee or sub-committee consisting of two or more persons shall be governed mutatis mutandis by the provision of these Articles regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article.
   
 
  POWERS OF DIRECTORS
 
   
104 General powers
   
  The business and affairs of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Statutes or by these Articles required to be exercised by the Company in General Meeting subject nevertheless to any regulation of these Articles, to the provisions of the Statutes and to such regulations as may be prescribed by Special Resolution of the Company, but no regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article.

75


Back to Contents

105 Powers and obligations in relation to the Sharing Agreement
   
  The Company having entered into the Sharing Agreement and the Deed Poll Guarantee, the Directors are authorised and directed to carry into effect the provisions of the Sharing Agreement and the Deed Poll Guarantee and any further or other agreements or arrangements contemplated by such Agreement and Guarantee and nothing done by any Director in good faith pursuant to such authority and obligation shall constitute a breach of the fiduciary duties of such Director to the Company or to the members of the Company. In particular, but without limitation to the generality of the foregoing (i) the Directors are authorised to provide RTL and any officer, employee or agent of RTL with any information relating to the Company; and (ii) subject to the terms of the Sharing Agreement, the Directors are authorised to do all or any of the matters referred to in sub-paragraphs (A)(ii) and (iii) of Clause 4 of the Memorandum of Association.
   
106 Local boards
   
  The Directors may establish any local boards or agencies for managing any of the affairs of the Company, either in the United Kingdom or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration, and may delegate to any local board, manager or agent any of the powers, authorities and discretion vested in the Directors, with power to sub-delegate, and may authorise the members of any local boards, or any of them, to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors may think fit, and the Directors may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.
   
107 Appointment of attorney
   
  The Directors may from time to time and at any time by power of attorney or otherwise appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretion vested in him.
   
108 Signature on cheques etc.
   
  All cheques, promissory notes, drafts, bills of exchange, and other negotiable or transferable instruments, and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be, in such manner as the Directors shall from time to time by resolution determine.
   
109 Borrowing powers
   
  (A)     Subject as hereinafter provided and to the provisions of the Statutes the Directors may exercise all the powers of the Company to borrow money, and to mortgage or charge its undertaking, property (present or future) and uncalled capital or any part or parts thereof, and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

76


Back to Contents

   (B)     The Directors shall restrict the borrowings of the Company and exercise all voting and other rights and powers of control exercisable by the Company in relation to its subsidiaries so as to secure that the aggregate amount for the time being remaining undischarged of all moneys borrowed by (1) the Company and any of its subsidiaries and (2) RTL and any of its Corporations Act Subsidiaries (exclusive of moneys borrowed by any company in the Rio Tinto Group from and for the time being owing to any other company in the Rio Tinto Group or any company in the RTL Group or by any company in the RTL Group from and for the time being owing to any other company in the RTL Group or any company in the Rio Tinto Group) shall not at any time without the previous sanction of an Ordinary Resolution of the Company exceed one and a half times the Unified Group Share Capital and Reserves.
   
  (C)     No person dealing with the Company shall by reason of the foregoing provision be concerned to see or inquire whether this limit is observed, and no debt incurred or security given in excess of such limit shall be invalid or ineffectual unless the lender or the recipient of the security had at the time when the debt was incurred or security given express notice that the limit hereby imposed had been or would thereby be exceeded.
   
  (D)    For the purposes aforesaid:–
   
  (i)      the expression "Unified Group Share Capital and Reserves" means at any time:–
   
  (a)     the amount standing to the credit of the unified share capital account (by whatever name called) of the Company and RTL; plus
   
   (b)   the aggregate amount standing to the credit of the unified reserves (including any share premium account or capital redemption reserve and the unified profit and loss account of the Company and its subsidiary undertakings and RTL and its controlled entities), all as shown in the latest published audited unified balance sheet of the Company and its subsidiary undertakings and RTL and its controlled entities, which in this Article shall have the meaning given to that expression in the Corporations Act but (i) adjusted as may be necessary and appropriate to take account of any increase in or reduction of the issued and paid-up share capital of the Company or RTL since the date to which the said unified balance sheet shall have been made up and any distributions (other than dividends paid out of profits earned since such date) in cash or in specie made from such reserves or profit and loss account since such date; (ii) excluding any sums set aside for taxation and any share capital or reserves derived from any writing-up by way of revaluation after the date of adoption of these Articles of the Company or any of its subsidiary undertakings or RTL or any of its controlled entities (or, in the case of a company becoming a subsidiary undertaking of the Company or a controlled entity of RTL after that date, the date on which such company became such a subsidiary undertaking or controlled entity) of the book values of any fixed assets; (iii) deducting any amount for goodwill or any other intangible asset shown as an asset in such unified balance sheet; (iv) not including any amounts attributable to minority interests in subsidiary undertakings of the Company or in controlled entities of RTL; and (v) after making such adjustments as the Auditors may consider appropriate (including without prejudice to the generality of the foregoing any adjustments considered appropriate in respect of any shares or other securities or any business or undertaking or part thereof acquired in whole or in part in exchange for or out of the proceeds of issue of any shares of the Company or RTL or in respect of any subsidiary undertaking of the Company or controlled entity of RTL not dealt with by the said unified balance sheet);

77


Back to Contents

  (ii)     moneys borrowed for the purpose of and within four months applied in repaying other borrowed moneys falling to be taken into account shall not themselves be taken into account until such application;
   
  (iii)    there shall be excluded from moneys borrowed by any company in the Rio Tinto Group or any company in the RTL Group any such moneys borrowed which is a Project Finance Borrowing. The expression "Project Finance Borrowing" means moneys borrowed to finance a project:–
   
  (a)    which is borrowed by a single purpose company (being a company in the Rio Tinto Group or the RTL Group) whose principal assets and business are constituted by such project and whose liabilities in respect of such moneys borrowed are not the subject of a guarantee, indemnity or any other form of assurance, undertaking or financial support from another company in the Rio Tinto Group or the RTL Group except as expressly provided for in sub-paragraph (b)(3) below; or
   
  (b)    in respect of and in connection with which the lender or lenders making such moneys borrowed available to the relevant borrower (being a company in the Rio Tinto Group or the RTL Group) have no recourse whatsoever to a company in the Rio Tinto Group or the RTL Group for the repayment of or payment of any sum relating to such moneys borrowed other than:–
   
  (1)    recourse to the borrower for amounts limited to the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow) from such project; and/or
   
  (2)    recourse to the borrower for the purpose only of enabling amounts to be claimed in respect of such moneys borrowed upon an enforcement of a security interest given by the borrower over the assets comprised in such project and/or by any shareholder or the like in the borrower over its shares or the like in the capital of the borrower to secure such moneys borrowed and/or any recourse permitted by (3) below, provided that (A) the extent of such recourse to the borrower is limited solely to the amount of any recoveries made on any such enforcement, and (B) such person or persons are not entitled, by virtue of any right or claim arising out of or in connection with such moneys borrowed, to commence proceedings for the winding-up or dissolution of the borrower or to appoint or procure the appointment of any receiver, trustee or similar person or official in respect of the borrower or any of its assets (save for the assets the subject of such security interest); and/or
   

 

 

(3)    recourse to the borrower, or another company in the Rio Tinto Group or the RTL Group under a guarantee, indemnity or other form of assurance, undertaking or financial support, which in any case (A) is limited to a claim for damages for breach of an obligation (not being a payment obligation) of the person against whom such recourse is available, and/or (B) entitles the creditor for such moneys borrowed, upon default by the borrower, such person or any other person, to require a payment to be made (whether to or for the benefit of such creditor, the borrower or another person) provided that, in the case of (B), where such payment is capable of being for an amount which is material either alone or as a percentage of the moneys borrowed financing the project, such recourse is capable of being called on only during the period prior to practical completion of the project or of that proportion of the project being financed by such moneys borrowed;

78


Back to Contents

  (iv)    the certificate of the Auditors as to the amount of the Unified Group Share Capital and Reserves at any time shall be conclusive and binding on all concerned.
   
 
  SECRETARY
 
   
110 The Secretary shall be appointed by the Directors on such terms and for such period as they may think fit. Any Secretary so appointed may at any time be removed from office by the Directors, but without prejudice to any claim for damages for breach of any contract of service between him and the Company. If thought fit two or more persons may be appointed as Joint Secretaries. The Directors may also appoint from time to time on such terms as they may think fit one or more Deputy and/or Assistant Secretaries.
   
 
  THE SEAL
 
   
111 (A)     The Directors shall provide for the safe custody of the Seal and any Securities Seal and neither shall be used without the authority of the Directors or of a committee authorised by the Directors in that behalf. The Securities Seal shall be used only for sealing securities issued by the Company and documents creating or evidencing securities so issued.
   
  (B)     Every instrument to which the Seal or the Securities Seal shall be affixed (other than a certificate for or evidencing shares, debentures or other securities (including options) issued by the Company) shall be signed autographically by one Director and the Secretary or by two Directors.
   
  (C)     The Company may exercise the powers conferred by the Statutes with regard to having an official seal for use abroad and such powers shall be vested in the Directors.
   
  (D)     Any instrument in physical form signed under hand by one Director and the Secretary or by two Directors and expressed to be executed by the Company shall have the same effect as if executed under the Seal, provided that no instrument which makes it clear on its face that it is intended to have effect as a deed shall be so signed without the authority of the Directors or of a committee authorised by the Directors in that behalf.

79


Back to Contents

 
  AUTHENTICATION OF DOCUMENTS
 
   
112 Any Director or the Secretary or any person appointed by the Directors for the purpose shall have power to authenticate any document affecting the constitution of the Company and any resolution passed at a shareholders meeting or at a meeting of the Directors or any committee, and any book, record, document or account relating to the business of the Company, and to certify copies thereof or extracts therefrom as true copies or extracts; and where any book, record, document or account is elsewhere than at the Office the local manager or other officer of the Company having the custody thereof shall be deemed to be a person appointed by the Directors as aforesaid. A document purporting to be a copy of any such resolution, or an extract from the minutes of any such meeting, which is certified as aforesaid shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be, that any minute so extracted is a true and accurate record of proceedings at a duly constituted meeting.
   
 
  PROFITS AND RESERVES
 
   
113 Establishment of reserves
   
  The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also without placing the same to reserve carry forward any profits. In carrying sums to reserve and in applying the same the Directors shall comply with the provisions of the Statutes.
   
114 Business bought as from past date
   
  Subject to the provisions of the Statutes, where any asset, business or property is bought by the Company as from a past date the profits and losses thereof as from such date may at the discretion of the Directors in whole or in part be carried to revenue account and treated for all purposes as profits or losses of the Company. Subject as aforesaid, if any shares or securities are purchased cum dividend or interest, such dividend or interest may at the discretion of the Directors be treated as revenue, and it shall not be obligatory to capitalise the same or any part thereof.

80


Back to Contents

 
  DIVIDENDS
 
   
115 Dividends
   
  If and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may pay dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit. Provided the Directors act in good faith they shall not incur any liability to the holders of any shares for any loss they may suffer by the lawful payment, on any other class of shares having rights ranking after or pari passu with those shares, of any such dividend as aforesaid.
   
116 Distribution in specie
   
  The Company may upon the recommendation of the Directors by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company) and the Directors shall give effect to such resolution. Where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, may determine that cash shall be paid to any member upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees.
   
117 No dividend except out of profits
   
  No dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes.
   
118 Ranking of shares for dividend
   
  Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on the shares during any portion or portions of the period in respect of which the dividend is paid. For the purposes of this Article no amount paid on a share in advance of calls shall be treated as paid on the share.
   
119 Manner of payment of dividends
   
  (A)     Any dividend or other moneys payable on or in respect of a share shall be paid to the member or to such other person as the member (or, in the case of joint holders of a share, all of them) may in writing direct. Such dividend or other moneys may be paid (i) by cheque sent by post to the payee or, where there is more than one payee, to any one of them, or (ii) by inter-bank transfer to such account as the payee or payees shall in writing direct, or (iii) using the facilities of a relevant system, or (iv) by such other method of payment as the member (or in the case of joint holders of a share, all of them) may agree to. Payment of a cheque by the bank upon whom it is drawn, or any transfer or payment within (ii) or (iii) above, shall be a good discharge to the Company and every such cheque shall be sent at the risk of the person or persons entitled to the money represented thereby.

81


Back to Contents

  (B)      Subject to the provisions of these Articles and to the rights attaching to any shares, any dividend or other moneys payable on or in respect of a share may be paid in such currency as the Directors may determine.
   
120 Uncashed dividend cheques
   
  The Company may cease to send any cheque, warrant or order by post for any dividend on any shares which is normally paid in that manner if in respect of at least two consecutive dividends payable on those shares the cheque, warrant or order has been returned undelivered or remains uncashed but, subject to the provisions of these Articles, shall recommence sending cheques, warrants or orders in respect of the dividends payable on those shares if the holder or person entitled by transmission claims the arrears of dividend and does not instruct the Company to pay future dividends in some other way.
   
121 Joint holders
   
  If two or more persons are registered as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder or otherwise by operation of law, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share.
   
122 Record date for dividends
   
  Any resolution for the declaration or payment of a dividend on shares of any class, whether a resolution of the Company in General Meeting or a resolution of the Directors, may specify that such dividend shall be payable to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares.
   
123 No interest on dividends
   
  No dividend or other moneys payable on or in respect of a share shall bear interest as against the Company.
   
124 Retention of dividends
   
  (A)      The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a lien and may apply the same in or towards satisfaction of the moneys payable to the Company in respect of that share.
   
  (B)     The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a member, or which any person is under those provisions entitled to transfer, until such person shall become a member in respect of such shares or shall transfer the same.
   
125 Unclaimed dividend
   
  The payment by the Directors of any unclaimed dividend or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof and any dividend unclaimed after a period of 12 years from the date on which such dividend was declared or became due for payment shall be forfeited and shall revert to the Company.

82


Back to Contents

126 Waiver of dividend
   
  The waiver in whole or in part of any dividend on any share by any document (whether or not executed as a deed) shall be effective only if such document is in physical form and is signed by the shareholder (or the person entitled to the share in consequence of the death or bankruptcy of the holder or otherwise by operation of law) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Company.
   
 
  CAPITALISATION OF PROFITS AND RESERVES
 
   
127 (A)      Subject to the provisions of Article 33, the Directors may, with the sanction of an Ordinary Resolution of the Company, capitalise any sum standing to the credit of any of the Company's reserve accounts (including any share premium account, capital redemption reserve or other undistributable reserve) or any sum standing to the credit of profit and loss account.
   
  (B)     Such capitalisation shall be effected by appropriating such sum to the holders of Ordinary Shares on the Register at the close of business on the date of the resolution (or such other date as may be specified therein or determined as therein provided) in proportion to their then holdings of Ordinary Shares and applying such sum on their behalf in paying up in full unissued Ordinary Shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid.
   
  (C)     The Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation, with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.
   
 
  SCRIP DIVIDENDS
 
   
128 (A)     Subject to the provisions of Article 33, and as hereinafter provided, the Directors may offer to shareholders the right to receive, in lieu of dividend (or part thereof), an allotment of new Ordinary Shares credited as fully paid.
   
  (B)     The Directors shall not make such an offer unless so authorised by an Ordinary Resolution passed at any General Meeting, which authority may extend to dividends declared or paid prior to the fifth Annual General Meeting of the Company occurring thereafter.

83


Back to Contents

  (C)     The Directors may either offer such rights of election in respect of the next dividend (or part thereof) proposed to be paid; or may offer such rights of election in respect of that dividend and all subsequent dividends, until such time as the election is revoked; or may allow shareholders to make an election in either form.
   
  (D)     The basis of allotment on each occasion shall be determined by the Directors so that, as nearly as may be considered convenient, the value of the Ordinary Shares to be allotted in lieu of any amount of dividend shall equal such amount. For such purpose the value of an Ordinary Share shall be the average of the middle market quotations of an Ordinary Share in registered form on the London Stock Exchange, as derived from the Daily Official List, on each of the first five business days on which such Ordinary Shares are quoted ex the relevant dividend.
   
  (E)     If the Directors determine to offer such rights of election they shall give notice in writing to ordinary shareholders of such rights or shall advertise such offer in one leading daily newspaper published in London, and in such other newspapers (if any) as they shall think fit, and shall specify the procedures to be followed in order to exercise such rights Provided that they need not give such notice to a shareholder who has previously made, and has not revoked, an earlier election to receive Ordinary Shares in lieu of all future dividends, but instead shall send him a reminder that he has made such an election, indicating how that election may be revoked in time for the next dividend proposed to be paid, or shall advertise such reminder in one leading daily newspaper in London, and in such other newspapers (if any) as they shall think fit.
   
  (F)     On each occasion the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable on Ordinary Shares in respect of which an election under this Article has been duly exercised and has not been revoked (the elected Ordinary Shares) and in lieu thereof additional shares (but not any fraction of a share) shall be allotted to the holders of the elected Ordinary Shares on the basis of allotment determined as aforesaid. For such purpose the Directors shall capitalise, out of such of the sums standing to the credit of reserves (including any share premium account or capital redemption reserve fund) or profit and loss account as the Directors may determine, a sum equal to the aggregate nominal amount of additional Ordinary Shares to be allotted on that occasion on such basis and shall apply the same in paying up in full the appropriate number of unissued Ordinary Shares for allotment and distribution to and amongst the holders of the elected Ordinary Shares on such basis.
   
  (G)     The additional Ordinary Shares so allotted on any occasion shall rank pari passu in all respects with the fully-paid Ordinary Shares then in issue save only as regards participation in the relevant dividend.
   
  (H)     Article 127 shall apply (mutatis mutandis) to any capitalisation made pursuant to this Article.
   
  (I)      No fraction of an Ordinary Share shall be allotted. The Directors may make such provisions as they think fit for any fractional entitlements including, without limitation, provisions whereby, in whole or in part, the benefit thereof accrues to the Company and/or under which fractional entitlements are accrued and/or retained and in either case accumulated on behalf of any ordinary shareholder.

84


Back to Contents

  (J)     The Directors may determine that rights of election shall not be made available to any ordinary shareholders with registered addresses in any territory where in the absence of a registration statement or other special formalities the circulation of an offer of rights of election would or might be unlawful, and in such event the provisions aforesaid shall be read and construed subject to such determination.
   
  (K)     In relation to any particular proposed dividend the Directors may in their absolute discretion decide (i) that shareholders shall not be entitled to make any election in respect thereof and that any election previously made shall not extend to such dividend or (ii) at any time prior to the allotment of the Ordinary Shares which would otherwise be allotted in lieu thereof, that all elections to take shares in lieu of such dividend shall be treated as not applying to that dividend, and if so the dividend shall be paid in cash as if no elections had been made in respect of it.
   
 
  ACCOUNTS
 
   
129 Accounting records
   
  Accounting records sufficient to show and explain the Company's transactions and otherwise complying with the Statutes shall be kept at the Office, or at such other place as the Directors think fit, and shall always be open to inspection by the officers of the Company. Subject as aforesaid no member of the Company or other person shall have any right of inspecting any account or book or document of the Company except as conferred by statute or ordered by a court of competent jurisdiction or authorised by the Directors.
   
130 Copies of accounts for members
   
  A copy of every balance sheet and profit and loss account which is to be laid before a General Meeting of the Company (including every document required by law to be comprised therein or attached or annexed thereto) shall not less than 21 days before the date of the meeting be sent to every member of, and every holder of debentures of, the Company and to every other person who is entitled to receive notices of meetings from the Company under the provisions of the Statutes or of these Articles. Provided that this Article shall not require a copy of these documents to be sent to any member to whom a summary financial statement is sent in accordance with the Statutes nor to more than one of joint holders nor to any person of whose postal address the Company is not aware, but any member or holder of debentures to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.
   
131 Validity of Auditor's acts
   
  Subject to the provisions of the Statutes, all acts done by any person acting as an Auditor shall, as regards all persons dealing in good faith with the Company, be valid, notwithstanding that there was some defect in his appointment or that he was at the time of his appointment not qualified for appointment or subsequently became disqualified.

85


Back to Contents

132 Auditor's right to attend General Meetings
   
  An Auditor shall be entitled to attend any General Meeting and to receive all notices of and other communications relating to any General Meeting which any member is entitled to receive and to be heard at any General Meeting on any part of the business of the meeting which concerns him as Auditor.
   
   
 
  NOTICES
 
   
133 Service of notices
   
  (A)     Any notice or document (including a share certificate) may be served on or delivered to any member by the Company either personally or by sending it by post in a pre-paid cover addressed to such member at his registered address, or (if he has no registered address within the United Kingdom or Australia) to the address, if any, within the United Kingdom or Australia supplied by him to the Company as his address for the service of notices, or by delivering it to such address addressed as aforesaid. Any notice or document (excluding a share certificate) may also be served on or delivered to any member by the Company either by facsimile to a facsimile number supplied by him to the Company or by other electronic means determined by the Directors to an electronic address supplied by him to the Company. In the case of a member registered on a branch register any such notice or document may be posted either in the United Kingdom or Australia or in the territory in which such branch register is maintained.
   
  (B)     Where a notice or other document is served or sent by post, service or delivery shall be deemed to be effected at the expiration of 24 hours (or, where second-class mail is employed, 48 hours) after the time when the cover containing the same is posted and in proving such service or delivery it shall be sufficient to prove that such cover was properly addressed, stamped and posted.
   
  (C)     Subject to the Statutes, where a notice or other document is served or sent by facsimile transmission or other electronic means, service or delivery shall be deemed to be effected two hours after the notice or other document is sent and in providing such service or delivery it shall be sufficient to prove that such notice or document was properly sent.
   
  (D)     The accidental failure to send, or the non-receipt by any person entitled to, any notice of or other document relating to any meeting or other proceeding shall not invalidate the relevant meeting or other proceeding.
   
134 Joint holders
   
  Any notice given to that one of the joint holders of a share whose name stands first in the Register in respect of the share shall be sufficient notice to all the joint holders in their capacity as such. For such purpose a joint holder having no registered address in the United Kingdom or Australia and not having supplied an address within the United Kingdom or Australia for the service of notices shall be disregarded.

86


Back to Contents

135 Deceased and bankrupt members
   
  A person entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share, and upon supplying also an address within the United Kingdom or Australia for the service of notices, shall be entitled to have served upon or delivered to him at such address any notice or document to which the said member would have been entitled, and such service or delivery shall for all purposes be deemed a sufficient service or delivery of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share. Save as aforesaid any notice or document delivered or sent by post to or left at the address of any member in pursuance of these Articles shall, notwithstanding that such member be then dead or bankrupt or in liquidation, and whether or not the Company has notice of his death or bankruptcy or liquidation, be deemed to have been duly served or delivered in respect of any share registered in the name of such member as sole or first-named joint holder.
   
136 Overseas members
   
  A member who (having no registered address within the United Kingdom or Australia) has not supplied to the Company an address within the United Kingdom or Australia for the service of notices shall not be entitled to receive notices from the Company.
   
137 Uncontactable members
   
  If on two consecutive occasions notices or other documents have been sent in physical form through the post to any member at his registered address or his address for service of notices but have been returned undelivered, or returned to the Company in circumstances where the Company may reasonably assume that notices and communications sent to the registered address will not be received by the member, such member shall not from then on be entitled to receive notices or other documents from the Company until he shall have communicated with the Company and supplied in writing a new registered address or address within the United Kingdom or Australia for the service of notices.
   
138 Suspension of postal services
   
  If at any time by reason of the suspension or curtailment of postal services within the United Kingdom or Australia the Company is unable effectively to convene a shareholders' meeting by notices sent through the post, such meeting may be convened by a notice advertised on the same date in at least one national newspaper in the United Kingdom and in Australia and such notice shall be deemed to have been duly served on all members entitled thereto on the day when such advertisements appear (or, if they appear on different dates, then on the later of such dates). In any such case the Company may still, where applicable, serve notice by electronic communication and shall send confirmatory copies of the notice by post to members to whom it was not sent by electronic communication if at least seven days prior to the meeting the posting of notices to addresses throughout the United Kingdom or Australia again becomes practicable.

87


Back to Contents

138A Electronic communication
   
  (A)     Any member may notify the Company of an address for the purpose of his receiving electronic communications from the Company, and having done so shall be deemed to have agreed to receive notices and other documents from the Company by electronic communication of the kind to which the address relates. In addition, if a member notifies the Company of his e-mail address, the Company may satisfy its obligation to send him any notice or other document by:
   
  (i)      publishing such notice or document on a web site; and
   
  (ii)     notifying him by e-mail to that e-mail address that such notice or document has been so published, specifying the address of the web site on which it has been published, the place on the web site where it may be accessed, how it may be accessed and (if it is a notice relating to a shareholders' meeting) stating (a) that the notice concerns a notice of a company meeting served in accordance with the Act, (b) the place, date and time of the meeting, (c) whether the meeting is to be an annual or extraordinary general meeting and (d) such other information as the Statutes may prescribe.
   
  (B)     Any amendment or revocation of a notification given to the Company under this Article shall only take effect if in writing, signed by the member and on actual receipt by the Company thereof.
   
  (C)     An electronic communication shall not be treated as received by the Company if it is rejected by computer virus protection arrangements.
   
139 Statutory requirements as to notices
   
  (A)     Any notice required to be given by the Company to members and not expressly provided for by these Articles shall be sufficiently given if given by advertisement. Any notice required to be or which may be given by advertisement shall be advertised once in one leading national daily newspaper in the United Kingdom and in Australia and shall be taken as given on the day on which such advertisements appear (or, if they appear on different dates, then on the later of such dates).
   
  (B)     Nothing in this or any of the preceding seven Articles shall affect any requirement of the Statutes that any particular offer, notice or other document be served in any particular manner.
   
 
  WINDING UP
 
   
140 Directors' power to petition
   
  The Directors shall have power in the name and on behalf of the Company to present a petition to the Court for the Company to be wound up.
   
141 Distribution of assets in specie
   
  Subject to the provisions of Article 3, if the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the Court) the Liquidator may, with the authority of an Extraordinary Resolution, divide among the members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

88


Back to Contents

 
  DESTRUCTION OF DOCUMENTS
 
   
142 Subject to compliance with the requirements of any relevant system applicable to shares of the Company in uncertificated form, the Company shall be entitled to destroy:-
   
  (A)    all instruments of transfer or other documents which have been registered or on the basis of which, registration was made at any time after the expiration of seven years from the date of registration thereof;
   
  (B)    all Share Warrants (including coupons or talons detached therefrom) which shall have been cancelled at any time after the expiration of seven years from the date of cancellation thereof;
   
  (C)    all registered share certificates and dividend mandates which have been cancelled or have ceased to have effect at any time after the expiration of three years from the date of such cancellation or cessation; and
   
  (D)    all notifications of change of name or address after the expiration of one year from the date of recording thereof;
   
  and it shall conclusively be presumed in favour of the Company that every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made and every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered and every share certificate, Share Warrant, coupon or talon so destroyed was a valid and effective document duly and properly cancelled and every other document hereinbefore mentioned so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company. Provided always that:-
   
  (i)     the provisions aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant;
   
  (ii)    nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article;
   
  (iii)   references herein to the destruction of any document include references to the disposal thereof in any manner; and

89


Back to Contents

  (iv)     the provisions aforesaid shall not apply so as to prevent the destruction of a document after the expiration of one year from the relevant date if a complete record of that document has been stored on a data storage medium, from which an exact reproduction of that document may in principle be obtained, and the records so stored are retained by the Company for at least the period imposed by the above provisions in respect of the original document.
   
 
  INDEMNITY
 
   
143 (A)     Subject to the provisions of and so far as may be consistent with the Statutes, every Director, Secretary or other officer of the Company shall be indemnified by the Company out of its own funds against and/or exempted by the Company from all costs, charges, losses, expenses and liabilities incurred by him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office.
   
  (B)     Without prejudice to paragraph (A) of this Article the Directors shall have power to purchase and maintain insurance for or for the benefit of any persons who are or were at any time Directors, officers or employees of any Relevant Company (as defined in paragraph (C) of this Article) or who are or were at any time trustees of any pension fund or employees' share scheme in which employees of any Relevant Company are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or in the exercise or purported exercise of their powers and/or otherwise in relation to their duties, powers or offices in relation to any Relevant Company, or any such pension fiend or employees' share scheme.
   
  (C)     For the purpose of paragraph (B) of this Article Relevant Company shall mean the Company, any holding company of the Company or any other body, whether or not incorporated, in which the Company or such holding company or any of the predecessors of the Company or of such holding company has or had any interest whether direct or indirect or which is in any way allied to or associated with the Company, or any subsidiary undertaking of the Company or of such other body and shall include RTL and any controlled entity of RTL (within the meaning of the Corporations Act).
   
 
  FURTHER PROVISION ON SHARES IN UNCERTIFICATED FORM
 
   
144 (A)     Subject to the statutes and the rules (as defined in the Regulations), the Directors may determine that any class of shares may be held in uncertificated form and that title to such shares may be transferred by means of a relevant system or that shares of any class should cease to be held and transferred as aforesaid.
   
  (B)     The provisions of these Articles shall not apply to shares of any class which are in uncertificated form to the extent that such Articles are inconsistent with:-

90


Back to Contents

  (i)     the holding of shares of that class in uncertificated form;
   
  (ii)    the transfer of title to shares of that class by means of a relevant system; or
   
  (iii)   any provision of the Regulations.

91


 

 

 

 

 

 

 

 

Exhibit 1.2







Constitution of

Rio Tinto Limited

(ACN 004 458 404)


(As adopted by special resolution passed on 24 May 2000 and amended by
special resolutions passed on 18 April 2002 and on 29 April 2005)










Table of Contents
  MEMORANDUM OF ASSOCIATION 1  
  RULES 7  
  PRELIMINARY 7  
1. Replaceable rules do not apply 7  
2.  Interpretation 7  
  BUSINESS 15  
3.      What business may be undertaken 15  
  CAPITAL 15  
4. Share capital 15  
  SHARES 16  
5. Issue of shares with special rights 16  
5A DLC Dividend Share 16  
6. Preference shares 17  
7. Separate Approvals of Class Rights Actions 18  
8. Dividends on Special Voting Share and Equalisation Share 21  
9. Obligation for calls 21  
10. Shares at the disposal of the Board 21  
11. Directors may participate 21  
12. Power to pay commission and brokerage 22  
13. Surrender of shares 22  
14. Joint holders 22  
15. Non-recognition of equitable interests, etc 23  
  MODIFICATION OF RIGHTS 23  
16. How special rights may be varied 23  
  THE SEAL 23  
17. Affixing the Seal 23  
18.      Official Seal 23  
19. Share Seal 24  
  SHARE CERTIFICATES 24  
20. Issue of certificates 24  
21. Contents of certificates 24  
22. Entitlement to certificates 24  


Page i


Back to Contents


23. Delivery of certificates  
24. Renewal of certificates 25  
25. Computerised share transfer system 25  
  CALLS 25  
26. Calls and notice of calls 25  
27. When a call is made 26  
28. Interest on the late payment of calls 26  
29. Instalments 26  
30. Payment in advance of calls 26  
31. Non-receipt of notice of call 26  
  TRANSFER AND TRANSMISSION OF SECURITIES 26  
32. Form of transfer 26  
33. Effecting a transfer 27  
34. Instrument of transfer and certificate to be left at Office or Branch Office 27  
35. Board may refuse to register 27  
36. Company to retain instrument of transfer 28  
37. Closing Register and Branch Register 28  
38. Cancellation of old and issue of new certificate 28  
39. Transmission upon death 28  
40. Transmission by operation of law 29  
41. Board may refuse registration of transmissions 29  
  FORFEITURE AND LIEN 29  
42. Notice requiring payment of sums payable 29  
43. Content of Notice 29  
44. Forfeiture on non-compliance with notice 29  
45. Notice of forfeiture      29  
46. Disposal of forfeited shares 30  
47. Annulment of forfeiture 30  
48. Liability notwithstanding forfeiture 30  
49. Company's lien or charge 30  
50. Sale of shares to enforce lien 30  
51. Title of shares forfeited or sold to enforce lien      31  


Page ii


Back to Contents


  INCREASE AND REDUCTION OF CAPITAL 31  
52. Power to alter share capital 31  
53. Rights attached to subdivided shares 32  
54. Board may give effect to alteration of share capital 32  
55. New Capital subject to same provisions as original capital 32  
56. Power to reduce capital 32  
  GENERAL MEETINGS 32  
57. Annual general meetings 32  
58. Notice of general meeting 32  
59. Omission to give and non-receipt of notice 32  
  PROCEEDINGS OF MEETINGS 32  
60. Business of general meeting 32  
61. Quorum 33  
62. Adjournment in absence of quorum 33  
63. Chairman 33  
64. Acting Chairman 33  
65. General conduct of meeting 33  
66. Amendments to resolutions 34  
67. Adjournment 34  
68. Voting 34  
69. Declaration of vote on a show of hands 35  
70. Demand for poll 35  
71. Taking a poll 35  
72. Continuance of business after demand for poll 36  
73. Notice of adjournment 36  
  VOTES OF MEMBERS 36  
74. Voting rights of members 36  
75. Voting rights of personal representatives, etc 37  
76. How votes may be given 37  
77. Appointment of proxies 38  
78. Form and execution of instrument of proxy 39  
79. Board to issue forms of proxy 39  
80. Attorneys of members 39  
81. Validity of vote 39  
82. Rights of member indebted to Company in respect of other shares 39  

Page iii


Back to Contents


  DIRECTORS 40  
83. Number of Directors 40  
84. Share qualification of Directors 40  
85. Election or appointment of additional Director 40  
86. Continuing Directors to act in certain circumstances   40  
87. Directors who are employees of the Company 40  
88. Company Auditor may not act as Director 41  
89. Remuneration of Directors 41  
90. Remuneration of directors for extra services   41  
91. Retirement benefits 41  
92. Travelling and other expenses 41  
93. Directors may contract with company 41  
94. Director may hold other office under the Company 42  
95. Directors may lend to the Company 42  
  ELECTION OF DIRECTORS 42  
96. Retirement of Directors 42  
  ALTERNATE DIRECTORS 44  
97. Director may appoint Alternate Director 44  
  VACATION OF OFFICE OF DIRECTOR 45  
98. Vacation of office by Director 45  
  PROCEEDINGS OF DIRECTORS 46  
99. Procedures relating to Directors' meetings 46  
100. Meetings by telephone or other means of communication 46  
101. Convening of meetings 46  
102. Votes at meetings 46  
103. Chairman 46  
104. Powers of meetings 47  
105. Delegation of powers to Committees 47  
106. Proceedings of Committees 47  
107. Validity of acts 47  
108. Resolution in writing 47  
109. Directors includes Alternate Directors 48  

Page iv


Back to Contents


  POWERS OF THE BOARD 48  
110. General powers of the Board 48  
111. Powers to give effect to Sharing Agreement 48  
112. Board's power to borrow 48  
113. Power to authorise debenture holders, etc, to make calls 48  
114. Management of the affairs of the Company 49  
  EXECUTIVE OFFICERS 50  
115. Powers of executive officers 50  
116. Delegation to executive director 50  
  MINUTES 51  
117. Minutes 51  
  DIVIDENDS AND RESERVES 51  
118. Declaration of dividend 51  
118A. Waiver of dividend 52  
119. Reserve fund 52  
120. Investment of reserve funds 53  
121. Dividends in specie 53  
122. Share Investment plans 53  
123. Dividend Plans 54  
124. Transfer of shares 55  
125. Retention of dividends 55  
126. Dividends on which a Company has a charge 56  
127. How dividends are payable 56  
128. Notice of dividend 56  
129. Unclaimed dividends 56  
  CAPITALISATION OF PROFITS 56  
130. Power to capitalise profits 56  
131. Employee Share Plan 56  
132. Appropriation and application of amounts to be capitalised 57  
  NOTICES 57  
133. Service of notices 57  
134. Member may notify Company of address for service 57  
135. Member not known at registered address 57  
136. When notice deemed to be served 58  
137. Signature to notice 58  

Page v


Back to Contents


138. Reckoning of period of notice 58  
139. Notice to transferor binds transferee 58  
140. Service on deceased members 58  
  PAYMENTS BY THE COMPANY 58  
141. Payments by the Company 58  
  WINDING UP 60  
142. Distribution in specie 60  
143. Capital rights on a liquidation 60  
  INDEMNITY 65  
144. Indemnity of officers 65  
145. Change of control 66  
146. Restricted securities 74  
147. Unmarketable parcels 75  

Page vi


Back to Contents


Corporations Act

Company Limited by Shares

MEMORANDUM OF ASSOCIATION OF RIO TINTO LIMITED
(ACN 004 458 404)

1.    The name of the Company is Rio Tinto Limited.
     
2.   The objects for which the Company is established are all or any of the following:­
     
(1) To enter into, operate and carry into effect the Agreement with Rio Tinto plc known as the DLC Merger Sharing Agreement and a Deed known as the CRA Deed Poll Guarantee with full power to:
   
  (i) Agree any amendment or termination or abrogation of all or any of the terms of that Agreement or Deed in accordance with the terms thereof;
     
  (ii) Enter into, operate and carry into effect any further or other agreements or arrangements with or in connection with Rio Tinto plc; and
     
  (iii) Do all such things as in the opinion of the Board of Directors of the Company are necessary or desirable for the furtherance of this object or for the furtherance, maintenance or development of the relationship with Rio Tinto plc constituted by or arising out of any agreement or arrangement mentioned in or made in accordance with this sub-clause.
     
(2)  To acquire and hold shares, stocks, debentures, debenture stock, bonds, unsecured notes, obligations and securities of any company incorporated or carrying on business in Australia or in the United Kingdom or in any other place and of any government, sovereign public body or authority supreme, municipal, local or otherwise.
   
(3) To acquire any such shares, stocks, debentures, debenture stocks, bonds, unsecured notes, obligations and securities by original subscription, tender, purchase, exchange or otherwise and to subscribe for the same, either conditionally or otherwise, and hold in trust, sell, mortgage, charge, deal with and otherwise acquire or dispose of the same on commission or otherwise.
   
(4) To apply for, purchase, or otherwise acquire concessions, grants or rights of any kind from any person, firm or corporation or any supreme, municipal, local or other authority and to comply with the conditions of any concession or grant obtained and to sell, lease or otherwise deal with the same or any interest therein and to work, exploit and otherwise turn to account the same or any part thereof.
   
(5) To guarantee the capital dividends or interest of or upon any shares, stocks, debentures, debenture stock, bonds or other securities or any obligation or contract entered into by any company, association, body, person or authority.

Page 1

Back to Contents


(6) To undertake and execute trusts and agencies of all kinds, and to accept money, securities and property of all kinds for safe custody or otherwise, and to undertake any transaction and carry on any business commonly undertaken or carried on by financiers, bankers, brokers, underwriters, concessionaries, contractors, agents, capitalists or merchants and to transact and carry on all kinds of guarantee, agency, commission and mercantile business.
   
(7) To prospect for, explore, quarry, develop, excavate, dredge for, open, work, win, purchase or otherwise obtain, uranium, lead, zinc, copper, sulphur, tin, silver, alumina, zircon, rutile, ilmenite, monazite, ores or aluminium, iron, gold, platinum, coal, precious stones, atomic minerals or deposits, oil, pyrites, asbestos, wolfram and all other minerals, metals and substances and minerals, and other rights, properties and works.
   
(8)   To carry on business as proprietors of and to purchase, take on lease, or in exchange or otherwise acquire, for any estate term or interest therein and to manage supervise and control mineral and other properties, lands and hereditaments of any tenure, mines, mining and other rights or options thereon, and grant, concessions, leases, claims, charters, privileges, licences or authorities of an over lands and mines and mineral, oil-bearing, natural gas-bearing, agricultural and other properties and also mining, dredging, water and other rights.
   
(9) To raise, win, get, quarry, crush, smelt, calcine, refine, dress, amalgamate, manipulate and otherwise treat, prepare for market, sell dispose of and deal in ores, metals, fluxes, tailings, concentrates, slimes, mineral substances and other product of mines either in a manufactured state or otherwise, and any materials or substances resulting from or to be obtained in the process of crushing, smelting, calcining, dressing or amalgamating the same and either free form or in combination with other substances.
   
(10) To apply for, purchase, or otherwise acquire, concessions, grants or rights of any kind from any person, firm or corporation or any supreme, municipal, local or other authority, and to comply with the conditions of any concession or grant obtained, and to sell, lease or otherwise deal with the same or any interest therein and to work, exploit and otherwise turn to account for the same of any part thereof.
   
(11) To carry on business as ship owners, railway proprietors, motor car, lorry and coach proprietors and garage proprietors, carriers and haulers, bankers, storekeepers, wharfingers, cartage and storage contractors, and building and general contractors, and to buy, sell or otherwise deal in real or personal property of any kind.
   
(12) To carry on business as manufacturers of and dealers in and exporters and importers of goods and merchandise of all kinds and merchants generally.
   
(13) To advance, deposit and lend money, securities and property to or with such persons and on such terms as may seem expedient, and to discount, buy, sell and deal in bills, notes, warrants, coupons, and other negotiable or transferable securities or documents.
   
(14) To apply for, purchase or otherwise acquire any patents, brevets d'invention, licences, concessions and the like, conferring any exclusive or non-exclusive or limited right to use, or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit this Company, and to use, exercise, develop or grant licences in respect of, or otherwise turn to account the property, rights or information so acquired, and also to acquire, use and register trade marks, trade names, registered or other designs, rights of copyright or other rights or privileges in relation to any business for the time being carried on by the Company.

Page 2

Back to Contents


(15) To manufacture and deal in all kinds of articles and things required for the purposes of any such business as aforesaid, or commonly dealt in by persons engage in such business.
   
(16) To purchase or otherwise acquire for any estate or interest any property, assets or rights of any kind which may appear to be necessary, or convenient for any business of the Company, and to develop and turn to account and deal with the same in such manner as may be thought expedient.
   
(17) To borrow and raise money and to secure or discharge any debt or obligation or binding on the Company in such manner as may be thought fit, and in particular by mortgages and charges upon the undertaking and all or any of the property and assets (present or future) and the uncalled capital of the Company, or by the creation and issue on such terms as may be thought expedient of debentures, debenture stock or other securities of any description.
   
(18) To purchase with a view to closing or re-selling or otherwise dealing with the whole or in part any business or properties which may be deemed likely to injure by competition or otherwise any business or branch of business which the Company is authorised to carry on.
   
(19) To promote any company whose objects shall include the acquisition of all or any of the assets or liabilities of the Company, or the promotion of which shall be considered to be calculated to advance directly or indirectly the objects of this Company or the interests of its members.
   
(20) To lend money to subsidise and otherwise assist any company, firm or person in any case in which such subsidy, assistance or loan may be considered likely, directly or indirectly, to further the objects of this Company or the interests of its members.
   
(21) To guarantee the payment of premiums on any sinking fund or endowment policy or policies taken out by any company having objects similar to the objects of the Company to secure the discharge of any mortgage charge or debenture of such company and to guarantee the payment of the principal and of any interest in respect of any such mortgage, charge or debenture and to charge the Company's assets accordingly.
   
(22) To sell, lease, grant licences, easements and other rights over an in any other manner deal with or dispose of the undertaking, property, assets, rights and effects of the Company or any part thereof for such consideration as may be thought fit, and in particular for stocks, shares or securities of any other company.
   
(23) To take all necessary or proper steps in Parliament and with the authorities, national, local, municipal or otherwise, of any place in which the Company may have interests, and to carry on any negotiations or operations for the purpose of, directly or indirectly, carrying out the objects of the Company, or effecting any modification in the constitution of the Company, or furthering the interests of its members, and to oppose any such steps taken by any other company, firm or person which may be considered likely, directly or indirectly, to prejudice the interests of the Company or its members.

Page 3

Back to Contents


(24) To subscribe or guarantee money for any national, charitable, benevolent, public, general, commercial or useful object, of for any exhibition, or for any purpose which may be considered likely, directly or indirectly to further the objections of the Company or the interests of any of its members.
   
(25) To grant or otherwise provide or contribute towards the provisions of pensions or other allowances or gratuities to or for the benefit of any Directors, officer, employee or ex-employee of the Company or its predecessors in business, or the relations, connections or dependents of any such persons, and to establish or support associations, institutions, clubs, funds and trusts which may be considered calculated to benefit any such persons or otherwise advance the interests of the Company or its members.
   
(26) To invest any moneys of the Company not for the time being required for the general purposes of the Company in such investments (other than shares in the Company) as may be thought proper, and to hold, sell or otherwise deal with such investments.
   
(27) To carry out and perform as separate and independent objects all or any of the objects set out in the Third Schedule to the Companies Act 1958 AND IT IS HEREBY DECLARED that this paragraph shall operate independently of and without prejudice to the provisions of Section 15 of the Companies Act 1958.
   
(28) To carry out and perform any of the objects of the Company in any part of the world, AND IT IS HEREBY DECLARED that the Company shall have power to carry out and perform any of the matters abovementioned (whether in one or different paragraphs) apart from any other of the said matters and that none of the above descriptions shall be limited or restrained by reference to the name of the Company or to matters of the same or some similar kind elsewhere in this Clause referred to or shall be otherwise limited or restrained by any other part of this Clause nor by any inference to be drawn from such other part and so that wherever such construction is possible the objects specified in this Clause may be construed in as wide a sense as if each of the paragraphs hereof defined the objects of a separate and independent company.
   
3. The share capital of the company may, without limitation, be divided into ordinary shares, one Special Voting Share, one Equalisation Share and one DLC Dividend Share.
   
4. The liability of the members is limited.
   
5. A special resolution altering or amending any of the provisions listed in Rule 7(a)(vii) of the Company's Rules (each a "Rio Tinto Limited Entrenched Provision") does not have any effect unless and until the holder of the Special Voting Share (as defined in the Rules) has consented in writing to the alteration or amendment. A reference in this Clause to a special resolution altering or amending any Rio Tinto Limited Entrenched Provision includes a reference to any resolution of any type which has the effect of altering, adding to or omitting any Rio Tinto Limited Entrenched Provision or any other effect which is equivalent or substantially similar to that effect (which for the avoidance of doubt shall be taken to include ratification of any breach of any such Rio Tinto Limited Entrenched Provision).
 

Page 4

Back to Contents


6. A special resolution altering or amending sub-Clause (1) of Clause 2, Clause 5 or this Clause 6 of this Memorandum (each an "Entrenching Provision") does not have any effect unless and until the holder of the Special Voting Share (as defined in the Rules) has consented in writing to the alteration or amendment. A reference to this Clause to a special resolution altering or amending this Clause includes a reference to any resolution of any type which has the effect of altering, adding to or omitting this Clause or any other effect which is equivalent or substantially similar to that effect (which for the avoidance of doubt shall be taken to include ratification of any breach of any such Entrenching Provision).

WE, the several persons whose names, addresses and occupations are subscribed, are desirous of being formed into a Company in pursuance of this Memorandum of Association and we respectively agree to take the number of shares in the capital of the Company set opposite our respective names.

Names, addresses and occupation of subscribers Signature of subscribers Number of shares taken by each subscriber
     
John Miller Rodd    
360 Collins Street    
Melbourne    
Solicitor John Rodd One
     
Hugh Oliver Clark    
360 Collins Street    
Melbourne    
Solicitor H O Clark One
     
Total Number of Shares   Two

DATED this 16th day of December, 1959.

WITNESS to the above signatures:

G H Fewster, Solicitor

360 Collins Street, Melbourne


Page 5

Back to Contents


Note: The share capital of the Company was:

(1) on incorporation:








Date   Amount   Number of Shares   Par Value







17/12/59   £5,000,000   5,000,000   £1







(2) subsequently increased to:        







Date   Amount   Number of shares   Par Value







27.10.60   £10,000,000   10,000,000   £1
06.01.61   £10,000,000   40,000,000+   5/–
16.07.62   £15,000,000   60,000,000   5/–
31.03.65   £20,000,000   80,000,000   5/–
30.11.66   $60,000,000   120,000,000   50 cents
09.10.70   $125,000,000   250,000,000   50 cents
26.09.73   $225,000,000   450,000,000   50 cents
06.05.80   $300,000,000   600,000,000   50 cents
03.05.83   $1,500,000,000   750,000,000   $2*
02.05.89   $3,000,000,000   1,500,000,000   $2
   
 + Each share subdivided into 4 shares of 5/- each.
       
    * Capital reconstruction on 9.5.83 from 50 cent shares to $2 shares.
       

Page 6

Back to Contents


Corporations Act
Company Limited by Shares
RULES of RIO TINTO LIMITED
ACN 004 458 404

PRELIMINARY

1. The replaceable rules in the Corporations Act shall not apply to the Company.
   
2. Interpretation
   
  (a) In these Rules unless the context requires otherwise:
     
    (i) "Aggregate Publicly-held Ordinary Shares" means all of the Publicly-held Rio Tinto Limited Ordinary Shares and all of the Publicly-held Rio Tinto plc Ordinary Shares;
       
    (ii) "Alternate Director" means a person appointed from time to time as an Alternate Director in accordance with these Rules;
       
    (iii) "Applicable Regulation" means, in the case of the Company, applicable Australian laws and regulations (including listing rules) and, in the case of Rio Tinto plc, applicable English laws and regulations (including listing rules and guidelines with which companies listed on the London Stock Exchange customarily comply), in each case for the time being in force and taking account of all waivers or variations from time to time applicable (in particular situations or generally) to the Company or, as the case may be, Rio Tinto plc;
       
    (iv) "Associate" in relation to
       
      (A) any Interest in Rio Tinto plc shall mean any person acting in concert as defined by the City Code on Takeovers and Mergers; and
         
      (B) the Company is as defined in Part 1.2 Division 2 of the Law;
       
    (v) "Auditor" means the auditor or auditors appointed by the Company from time to time;
       
    (vi) "Australian dollars" means the lawful currency from time to time of Australia;
       
    (vii) "Board" means the board of Directors of the Company (or a duly appointed committee of that board) from time to time;
       
    (viii) "Board of Rio Tinto plc" means the board of directors of Rio Tinto plc (or a duly appointed committee of that board) from time to time;
       
    (ix) "Branch Office" means any office at which a Branch Register is kept;
       
    (x) "Branch Register" means any branch register of members kept pursuant to these Rules;

Page 7

Back to Contents


       
    (xi) "Business Day" when used in the definition of "Liquidation Exchange Rate" means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays but for all other purposes has the meaning ascribed to it in the Listing Rules;
       
    (xii) "call" includes any instalment of a call and any amount due on allotment of any share;
       
    (xiii) "capital" means share capital;
       
    (xiv) "Chairman" includes an Acting Chairman under Rule 64;
       
    (xv) "Class Rights Action" means, in relation to the Company or Rio Tinto plc, any of the actions listed in Rule 7(a);
       
    (xvi) "Committee" means a Committee to which powers have been delegated by the Board pursuant to Rule 105;
       
    (xvii) "Companies Act" means the Companies Act 1985 (United Kingdom);
       
    (xviii) "Companies Act Subsidiary" has the meaning ascribed to the term "subsidiary" in section 736 of the Companies Act as at the date of adoption of these Rules and when used in relation to a company means any such subsidiary of that company from time to time;
       
    (xix) "the Company" means Rio Tinto Limited;
       
    (xx) "Constitution" means these Rules and the Memorandum;
       
    (xxi) "Corporations Act" means the Corporations Act 2001 (Cth);
       
    (xxii) "Corporations Act Subsidiary" has the meaning given to "subsidiary" in section 9 of the Corporations Act as at the date of the Sharing Agreement and when used in relation to a body corporate means any subsidiary of that body corporate from time to time;
       
    (xxiii) "Deed Poll Guarantee" means the deed executed by the Company for the benefit of certain present and future creditors of Rio Tinto plc (as amended from time to time);
       
    (xxiv) "Deputy Chairman" means a person appointed to the Office of Deputy Chairman in accordance with Rule 63;
       
    (xxv) "Director" means a person appointed or elected from time to time to the office of Director of the Company in accordance with these Rules and includes any Alternate Director duly acting as a Director;
       
    (xxvi) "DLC Dividend Share" means the DLC Dividend Share issued in accordance with Rule 5A until it is cancelled, redeemed or otherwise ceases to exist or until it converts to an Ordinary Share in accordance with these Rules or the Corporations Act;
       
    (xxvii) "Entrenching Provision" has the meaning ascribed to that term in Clause 6 of the Company's Memorandum;
 

Page 8

Back to Contents


       
    (xxviii) "Equalisation Fraction" means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the Ordinary Shares of the Company and the denominator being the number relating to the Rio Tinto plc Ordinary Shares;
       
    (xxix) "Equalisation Ratio" means the ratio of the dividend, capital and voting rights per Ordinary Share to the dividend, capital and voting rights per Rio Tinto plc Ordinary Share as set out in the Sharing Agreement and as adjusted from time to time in accordance with the Sharing Agreement;
       
    (xxx) "Equalisation Share" means the equalisation share in the Company;
       
    (xxxi) "Excluded Rio Tinto plc Holder" means any person who is a Relevant Person (other than a Permitted Person) (both as defined in Article 64 of the Rio Tinto plc Articles) on whom a notice has been served under Article 64(E) of the Rio Tinto plc Articles or on whom a direction notice has been served under Article 63 of the Rio Tinto plc Articles which in either case has not been complied with to the satisfaction of the directors of Rio Tinto plc or withdrawn;
       
    (xxxii) "Home Branch" means the state office of Australian Stock Exchange Limited designated to the Company by Australian Stock Exchange Limited as its Home Branch for administrative purposes;
       
    (xxxiii) "Joint Decision" means, in relation to a general meeting, a resolution put to the vote of the meeting on a Joint Decision Matter;
       
    (xxxiv) "Joint Decision Matter" means any of the following:
       
      (A) the appointment or removal of a Director of the Company and/or a director of Rio Tinto plc;
         
      (B) the receipt or adoption of the annual accounts of the Company and/or Rio Tinto plc (if shareholders are to be asked to vote on the receipt or adoption of such accounts);
         
      (C) a change of name by the Company and/or Rio Tinto plc;
         
      (D) any proposed acquisition or disposal and any proposed transaction with a substantial shareholder, director or other related party which (in any case) is required under Applicable Regulation to be authorised by shareholders;
         
      (E) the appointment or removal of the Auditors of the Company and/or the auditors of Rio Tinto plc;
         
      (F) the creation of a new class of shares (or securities convertible into, exchangeable for or granting rights to subscribe for or purchase shares of a new class) in the Company or Rio Tinto plc;
         
      (G) a change in the corporate status or reregistration of the Company or Rio Tinto plc;
         
      (H) a matter referred to in Clause 9.2 of the Sharing Agreement; and
 

Page 9

Back to Contents


         
      (I) any other matter which the Board and the Board of Rio Tinto plc each decide (generally or in a particular case) should be decided upon by Joint Decision;
         
    (xxxv) "Law" means the Corporations Law as at the date of the Sharing Agreement as defined by Section 13(2) of the Corporations (Victoria) Act 1990 as at that date and includes a reference to the Corporations Regulations as at that date;
       
    (xxxvi) "Limiting Restriction" has the meaning ascribed to it in Rule 2(b);
       
    (xxxvii) "Liquidation Exchange Rate" means, as at any date, the closing mid-point spot Australian dollar-sterling exchange rate on the Business Day before such date (as published in the London Edition of the Financial Times, or such other point of reference as the Auditor and the liquidator of Rio Tinto plc (or, as the case may be, the Auditor of Rio Tinto plc and the liquidator of the Company or the liquidators of both the Company and Rio Tinto plc) may determine);
       
    (xxxviii) "the Listing Rules" means the Listing Rules of Australian Stock Exchange Limited;
       
    (xxxix) "London Stock Exchange" means London Stock Exchange Ltd or any successor to that body;
       
    (xl) "Market Value" for the purposes of Rule 7 means, (in the case of the Company) in respect of an issue of a relevant share or security, the weighted average sale price derived from the Australian Stock Exchange and (in the case of Rio Tinto plc) the middle market quotation derived from the London Stock Exchange Daily Official List in each case on the dealing day immediately preceding the date on which any such issue is publicly announced except that in the case of an allotment of Ordinary Shares by way of dividend it shall mean the weighted average sale price of an Ordinary Share derived from the Australian Stock Exchange over the five Business Days prior to the books closing date in respect of that dividend and in the case of an allotment of Rio Tinto plc Ordinary Shares pursuant to Article 128 of the Rio Tinto plc Articles it shall mean the value of a Rio Tinto plc Ordinary Share as defined in Article 128(D) of the Rio Tinto plc Articles;
       
    (xli) "Matching Offers" means offers by way of rights either by both the Company and Rio Tinto plc to their respective holders of ordinary shares or by the Company on its own or by Rio Tinto plc on its own to both the holders of Ordinary Shares and the holders of Rio Tinto plc Ordinary Shares which, so far as is practicable, take place contemporaneously and which the Auditors have certified do not materially disadvantage a holder of an Ordinary Share in comparison with a holder of a Rio Tinto plc Ordinary Share and which the auditors of Rio Tinto plc have certified do not materially disadvantage a holder of a Rio Tinto plc Ordinary Share in comparison with a holder of an Ordinary Share;
 

Page 10

Back to Contents


    (xlii) "member" means a member of the Company in accordance with the Corporations Act;
       
    (xliii) "members present" (or a "member present") means members (or a member) present at a general meeting of the Company in person or by duly appointed representative, proxy or attorney;
       
    (xliv) "Memorandum" means the Company's Memorandum of Association as altered from time to time;
       
    (xlv) "Office" means the registered office from time to time of the Company;
       
    (xlvi) "Ordinary Shares" means the ordinary shares in the Company on issue from time to time;
       
    (xlvii) "person" and words importing persons shall include partnerships, associations and corporations, unincorporated and incorporated by Ordinance, Act of Parliament or registration as well as individuals;
       
    (xlviii) "procedural resolution" comprises any resolution put to a general meeting which was not included in the notice of such meeting but nevertheless falls to be considered by that meeting;
       
    (xlix) "proper SCH transfer" has the meaning given to that term in Section 9 of the Corporations Act;
       
    (l) "Publicly-held Rio Tinto Limited Ordinary Shares" means Ordinary Shares the beneficial owners of which are not members of the Rio Tinto plc Group;`
       
    (li) "Publicly-held Ordinary Shares" means, in relation to the Company, Publicly-held Rio Tinto Limited Ordinary Shares and, in relation to Rio Tinto plc, Publicly-held Rio Tinto plc Ordinary Shares;
       
    (lii) "Publicly-held Rio Tinto plc Ordinary Shares" means Rio Tinto plc Ordinary Shares the beneficial owners of which are not members of the Rio Tinto Limited Group;
       
    (liii) "Publicly-held Rio Tinto plc Voting Shares" means Rio Tinto plc Ordinary Shares the beneficial owners of which are not members of the Rio Tinto Limited Group;
       
    (liv) "Publicly-held Shares" means, in relation to the Company, Publicly-held Ordinary Shares and, in relation to Rio Tinto plc, Publicly-held Rio Tinto plc Voting Shares;
       
    (lv) "Register" means the Register of members of the Company to be kept pursuant to the Corporations Act;
       
    (lvi) "Rio Tinto Limited Entrenched Provision" has the meaning ascribed to that term in Clause 5 of the Company's Memorandum;
 

Page 11

Back to Contents


       
    (lvii) "Rio Tinto Limited Group" means the Company and its Corporations Act Subsidiaries from time to time and a member of the Rio Tinto Limited Group means any one of them;
       
    (lviii) "RTL Shareholder SVC" means RTL Shareholder SVC Limited, a company incorporated in England with registered number 3115178 whose registered office is at Princes House, 95 Gresham Street, London EC2V 7LY or such other company which replaces RTL Shareholder SVC Limited pursuant to the terms of the Rio Tinto Limited Shareholder Voting Agreement;
       
    (lix) "Rio Tinto Limited Shareholder Voting Agreement" means the agreement entered into between RTL Shareholder SVC, The Law Debenture Trust Corporation p.l.c., Rio Tinto plc and the Company relating, amongst other things, to how the Rio Tinto plc Special Voting Share is to be voted (as amended from time to time);
       
    (lx) "Rio Tinto plc" means Rio Tinto plc, a company incorporated in the United Kingdom with its registered office at 6 St James's Square, London SW1Y 4LD, England;
       
    (lxi) "Rio Tinto plc Articles" means the Articles of Association of Rio Tinto plc as amended from time to time;
       
    (lxii) "Rio Tinto plc Deed Poll Guarantee" means the deed executed by Rio Tinto plc for the benefit of certain present and future creditors of the Company (as amended from time to time);
       
    (lxiii) "Rio Tinto plc Entrenched Provision" has the meaning ascribed to that term in the Rio Tinto plc Articles;
       
    (lxiv) "Rio Tinto plc Equalisation Share" means the equalisation share of 10p in the capital of Rio Tinto plc the rights attaching to which are set out, inter alia, in Articles 3 and 60 of the Rio Tinto plc Articles;
       
    (lxv) "Rio Tinto plc Group" means Rio Tinto plc and its Companies Act Subsidiaries from time to time and a member of the Rio Tinto plc Group means any of them;
       
    (lxvi) "Rio Tinto plc Ordinary Shares" means the ordinary shares of 10p each in Rio Tinto plc on issue from time to time;
       
    (lxvii) "RTP Shareholder SVC" means RTP Shareholder SVC Pty Limited (ACN 070 481 908) a company incorporated in Victoria with its registered office at 27th Floor, 530 Collins Street, Melbourne, Victoria, Australia or such other company which replaces RTP Shareholder SVC Pty Limited pursuant to the terms of the Rio Tinto plc Shareholder Voting Agreement;
       
    (lxviii) "Rio Tinto plc Shareholder Voting Agreement" means the agreement between the RTP Shareholder SVC, The Law Debenture Trust Corporation p.l.c., the Company, RTP Australian Holdings Limited and Rio Tinto plc relating, amongst other things, to how the Special Voting Share and the Ordinary Shares held by Tinto Holdings Australia Pty Limited (ACN 004 327 922) or beneficially owned by any other member of the Rio Tinto plc Group are to be voted (as amended from time to time);
 

Page 12

Back to Contents


 

    (lxix) "Rio Tinto plc Special Voting Share" means the special voting share of 10p in Rio Tinto plc;
       
    (lxx) "Rio Tinto plc Voting Shares" means Rio Tinto plc Ordinary Shares and any shares issued by Rio Tinto plc from time to time (other than the Rio Tinto plc Special Voting Share) where, in relation to any matter or at any time the holders of those shares would, if that matter were to be considered at a general meeting of Rio Tinto plc at that time, be entitled to vote on that matter;
       
    (lxxi) "SCH" means the securities clearing house as referred to in the Corporations Act;
       
    (lxxii) "SCH business rules" has the meaning given to that term in Section 9 of the Corporations Act;
       
    (lxxiii) "Seal" means the common seal of the Company;
       
    (lxxiv) "Secretary" means a person appointed as Secretary of the Company and includes any person appointed to perform the duties of Secretary;
       
    (lxxv) "securities" includes shares, rights to shares or stock, options to acquire shares and other securities with rights of conversion to equity and debentures, debenture stock, notes and other like obligations;
       
    (lxxvi) "Sharing Agreement" means the agreement entered into between the Company and Rio Tinto plc entitled "DLC Merger Sharing Agreement" (as amended from time to time);
       
    (lxxvii) "special resolution" means a special resolution of the Company in accordance with the Corporations Act;
       
    (lxxviii) "Special Voting Share" means the special voting share in the Company described in Rules 7, 8 and 74;
       
    (lxxix) "sterling" means the lawful currency from time to time of the United Kingdom;
       
    (lxxx) "these Rules" means these Rules as altered or added to from time to time and any reference to a Rule by number is a reference to the Rule of that number in these Rules;
       
    (lxxxi) "Trustee" means a person or persons appointed to perform the duties of a trustee for the holders of debentures or debenture stock issued by the Company;
       
    (lxxxii) "wholly owned subsidiary", in relation to a body corporate, means a body corporate none of whose members is a person other than the first mentioned body corporate, a wholly owned subsidiary of the first mentioned body corporate or a nominee of the first mentioned body corporate or its wholly owned subsidiary;
 

Page 13

Back to Contents


    (lxxxiii) "writing" and "written" includes printing, typing, lithography and other modes of reproducing words in a visible form including, without limitation, any representation of words in a physical document or in an electronic communication or form or otherwise.
       
  (b) A reference to "Limiting Restriction" refers to the limit (if any) on offers for cash (otherwise than pro-rata by way of rights to existing holders of Ordinary Shares or holders of Rio Tinto plc Ordinary Shares) of shares or other securities existing under restrictions for the time being applicable to the Company or Rio Tinto plc under Applicable Regulation, and for the purpose of ascertaining the most Limiting Restriction at any time in any situation:
       
    (i) a restriction applicable to the Company shall be treated as also applicable to Rio Tinto plc (converting the restrictions, expressed in terms of a number of shares in the Company, into a number of Rio Tinto plc shares by application of the Equalisation Ratio), and vice versa in relation to a restriction applicable to Rio Tinto plc;
       
    (ii) a restriction expressed in terms of a nominal amount of Rio Tinto plc's equity share capital shall be treated as if it related to the number of Rio Tinto plc Ordinary Shares represented by that nominal amount and then converted into a number of Ordinary Shares by application of the Equalisation Ratio and any restriction in relation to the Company shall be similarly treated;
       
    (iii) a restriction (when expressed as a number of Ordinary Shares or Rio Tinto plc Ordinary Shares) that, under Applicable Regulation, has been derived by application of a percentage to a number or nominal amount of Ordinary Shares and/or number or nominal amount of Rio Tinto plc Ordinary Shares rather than to the number of the Aggregate Publicly-held Ordinary Shares (taking into account the application of the Equalisation Ratio as described in paragraphs (i) and (ii) above) shall be adjusted to the number that would have been derived from the application of such percentage to the number of the Aggregate Publicly-held Ordinary Shares (after so taking into account the application of the Equalisation Ratio); and
       
    (iv) any restriction under Applicable Regulation which comes into force in relation to either the Company or Rio Tinto plc after the date of the Sharing Agreement which does not fall within (i), (ii) or (iii) above shall be applied to the Aggregate Publicly-held Ordinary Shares in the way in which the Board and the Board of Rio Tinto plc agree best reflects the rationale underlying paragraphs (i), (ii) and (iii) above.
       
  (c) Any reference to an "equivalent resolution" considered by holders of Publicly-held Rio Tinto plc Voting Shares means the resolution considered at the most nearly contemporaneous general meeting of Rio Tinto plc which bears a close relationship to the relevant resolution being considered at a general meeting of the Company. For example, but without limitation, a resolution to appoint or remove an individual as a director of Rio Tinto plc, to appoint or remove the auditors of Rio Tinto plc or to receive and adopt the accounts of Rio Tinto plc would, if no resolution considering such matters in relation to the Company were put to the Rio Tinto plc general meeting, be the "equivalent resolution" to a resolution relating to the appointment or removal of the same individual as a Director of the Company, the appointment or removal of the same international firm of auditors as the Auditors or the receipt or adoption of the Company's accounts as the case may be.
 

Page 14

Back to Contents


     
  (d) References to offers by way of rights include offers which are subject to such exclusions or other arrangements as the Board or (where relevant) the Board of Rio Tinto plc may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory.
     
  (e) A reference to the Corporations Act or any other statute or regulations or to the City Code on Takeovers and Mergers is to be read as though the words "as modified or substituted" were added to the reference unless the context otherwise requires.
     
  (f) A reference to the Listing Rules or to the SCH business rules is to the Listing Rules or to the SCH business rules (as the case may be) as are in force from time to time in relation to the Company after taking into account any waiver or exemption which is in force either generally or in relation to the Company.
     
  (g) Unless otherwise defined in these Rules, words which are given a special meaning by the Corporations Act have the same meaning in these Rules.
     
  (h) Except where the contrary intention appears, words in the singular include the plural and vice versa.
     
  (i) Except where the contrary intention appears, words importing one gender include any other gender.
     
  (j) The references to notices in Rules 133 to 140 (both inclusive) include not only formal notices of meeting but also all documents and other communications from the Company to the members but do not include cheques.
     
  (k) A special resolution shall be effective for any purpose for which an ordinary resolution is expressed to be required under any provision of these Rules.
     
  (l) The headings and sidenotes do not affect the construction of these Rules.
     
BUSINESS
     
3.  What business may be undertaken
   
  At any time it thinks fit the Company may undertake any kind of business which it is either expressly or by implication authorised to undertake by the Memorandum or these Rules.
   
CAPITAL
   
4.  Share capital
   
  The share capital of the Company may, without limitation, be divided into ordinary shares, one Special Voting Share, one Equalisation Share and one DLC Dividend Share.
 

Page 15

Back to Contents


 
SHARES
         
5. Issue of shares with special rights
         
  Without prejudice to any special rights previously conferred on the holders of existing shares and subject to Rule 7, any shares in the capital of the Company (whether forming part of the original capital or not) may be issued with preferred, deferred or other special rights or restrictions, whether in regard to dividends, voting, return of share capital, payment of calls or otherwise, as the Board may from time to time determine provided that the rights attaching to shares of a class other than Ordinary Shares shall be expressed at the date of issue.
         
5A DLC Dividend Share
         
  (a) Without limiting Rule 5, but notwithstanding anything else in this Constitution, the Board may issue a share (a "DLC Dividend Share") in the capital of the Company to Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc on the following terms:
         
    (i) the DLC Dividend Share does not confer on its holder any right:
         
      (A) to vote or to attend or be heard at any general meeting;
         
      (B) to redemption or, in a winding-up, to repayment of capital; or
         
      (C) subject to Rule 5A(a)(ii), to participate in assets or profits of the Company; or
         
      (D) to receive notices, reports, profit and loss accounts or balance sheets;
         
    (ii) the holder of the DLC Dividend Share shall not be entitled to receive a dividend on the share unless and until the following conditions have been satisfied:
         
      (A) the Board in its absolute discretion resolves to pay the dividend on the DLC Dividend Share;
         
      (B) the legal and beneficial owner of the DLC Dividend Share at the time of declaration and payment of the dividend is Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc;
         
      (C) in the case of the first dividend to be paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of issue of the DLC Dividend Share;
         
      (D) in the case of subsequent dividends paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of payment of the last dividend on the DLC Dividend Share;
         
      (E) the amount of the dividend on the DLC Dividend Share shall not exceed the prescribed percentage of the aggregate amount of the last dividend paid on Ordinary Shares; and
         

Page 16

Back to Contents


         
      (F) in the Company's financial year in which the dividend is to be paid, at least one dividend has been paid on Ordinary Shares, and
         
    (iii) upon the earlier of:
         
      (A) the registration of a transfer of the DLC Dividend Share to a person other than Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc; and
         
      (B) a person other than Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc becoming the beneficial owner of the DLC Dividend Share,
         
      the DLC Dividend Share will convert to an Ordinary Share,
         
    and the Board may, at its absolute discretion, issue such a DLC Dividend Share from time to time provided that, at any one time, there is only one DLC Dividend Share in the capital of the Company on issue.
         
  (b) For the purposes of this Rule, the prescribed percentage shall be 100% or such lower percentage as the Board resolves at the date of issue of the DLC Dividend Share.
         
6. Preference shares
         
  If the Company at any time proposes to create and issue any preference shares:
         
  (a) the preference shares may be issued on the terms that they are, or at the option of the Company are, liable to be redeemed whether out of profits or otherwise;
         
  (b) the preference shares confer on the holders the right to convert the preference shares into Ordinary Shares if and on the basis the Board determines at the time of issue of the preference shares;
         
  (c) (i) the preference shares confer on the holders a right to receive out of the profits of the Company available for dividend a preferential dividend at the rate (which may be subject to an index) and on the basis determined by the Board at the time of issue of the preference shares;
         
    (ii) in addition to the preferential dividend, the preference shares may participate with the Ordinary Shares in dividends declared by the Board if and to the extent the Board determines at the time of issue of the preference shares; and
         
    (iii) the preferential dividend may be cumulative if and to the extent the Board determines at the time of issue of the preference shares;
         
  (d) the preference shares are to confer on the holders:
         
    (i) the right on redemption and in a winding up to payment in cash in priority to any other class of shares of:
         
      (A) the amount paid or agreed to be considered as paid on each share; and
         

Page 17

Back to Contents


         
      (B) the amount (if any) equal to the aggregate of any dividend accrued (whether declared or not) but unpaid and of any arrears of dividends; and
         
    (ii) the right, in priority to any payment of dividend on any other class of shares, to the preferential dividend;
         
  (e) the preference shares do not confer on the holders any further rights to participate in assets or profits of the Company;
         
  (f) the holders of the preference shares have the same rights as the holders of Ordinary Shares to receive notices, reports, profit and loss accounts and balance sheets and to attend and be heard at all general meetings, but are not to have the right to vote at general meetings except as follows:
         
    (i) on any question considered at a general meeting if, at the date of the meeting, the dividend on the preference shares is in arrears;
         
    (ii) at a general meeting on a proposal:
         
      (A) to reduce the share capital of the Company;
         
      (B) that affects rights attached to the preference shares;
         
      (C) to wind up the Company;
         
      (D) for the disposal of the whole of the property, business and undertaking of the Company;
         
    (iii) on a resolution to approve the terms of a buy-back agreement; and
         
    (iv) on any question considered at a general meeting held during the winding up of the Company; and
         
  (g) the Company may issue further preference shares ranking pari passu in all respects with (but not in priority to) other preference shares already issued and the rights of the issued preference shares are not to be deemed to have been varied by the further issue.
         
7. Separate Approvals of Class Rights Actions
         
  (a) The following matters shall constitute Class Rights Actions if undertaken by either the Company or Rio Tinto plc:
         
    (i) the offer to the holders of its existing ordinary shares generally of shares or other securities for subscription or purchase:
         
      (A) by way of rights (otherwise than by Matching Offers), where the proposed offer (when aggregated with (1) any previous offers by either the Company or Rio Tinto plc of shares or other securities for cash by way of rights or otherwise, but not under Matching Offers, (2) any sales, other than intra Rio Tinto plc Group sales, by a member of the Rio Tinto plc Group of Ordinary Shares, and (3) any sales, other than intra Rio Tinto Limited Group sales, by a member of the Rio Tinto Limited Group of Rio Tinto plc Ordinary
         

Page 18

Back to Contents


         
        Shares, in each case in the relevant period) exceeds the then most Limiting Restriction that for the time being would be applicable were shares or other securities of the relevant description proposed to be offered in fact offered for cash otherwise than pro-rata by way of rights to existing shareholders of the relevant class either by the Company or by Rio Tinto plc; or
         
      (B) otherwise than by way of rights, at below Market Value;
         
    (ii) the reduction or, if permitted by law, redemption of the company's ordinary share capital by way of a capital repayment to holders of its ordinary shares or a cancellation of unpaid ordinary share capital;
         
    (iii) the purchase by the company of its own ordinary shares (except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation);
         
    (iv) the voluntary liquidation of the company;
         
    (v) an adjustment to the Equalisation Ratio otherwise than in accordance with paragraph 5 of Schedule 2 to the Sharing Agreement;
         
    (vi) the amendment to the terms of, or termination of, the Sharing Agreement, the Rio Tinto Limited Shareholder Voting Agreement or the Rio Tinto plc Shareholder Voting Agreement other than, in the case of the Rio Tinto Limited Shareholder Voting Agreement or the Rio Tinto plc Shareholder Voting Agreement, to conform such agreement with the terms of the Sharing Agreement or in any case, by way of formal or technical amendment which is not materially prejudicial to the interests of the shareholders of the Company or Rio Tinto plc or is necessary to correct any inconsistency or manifest error or is by way of an amendment agreed between the Company and Rio Tinto plc pursuant to Clause 17.6 of the Sharing Agreement or the equivalent provision of any such document;
         
    (vii) any amendment to, or removal of, or the alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), all or any of the following (each of which is a Rio Tinto Limited Entrenched Provision):
         
      (A) any of sub-clause (2)(1), clause 5 or clause 6 of the Memorandum;
         
      (B) the definitions in Rule 2(a) of "Aggregate Publicly-held Ordinary Shares", "Applicable Regulation", "Associate", "Australian dollars", "Board of Rio Tinto plc", "Class Rights Action", "Companies Act Subsidiary", "Corporations Act Subsidiary", "Rio Tinto Limited Entrenched Provision", "Rio Tinto Limited Group", "RTL Shareholder SVC", "Rio Tinto Limited Shareholder Voting Agreement", "Deed Poll Guarantee", "Entrenching Provision", "Equalisation Fraction", "Equalisation Ratio", "Equalisation Share", "Excluded Rio Tinto plc Holder", "Joint Decision", "Joint Decision Matter", "Limiting Restriction", "Liquidation Exchange Rate",
         

Page 19

Back to Contents


         
        "Market Value", "Matching Offers", "Ordinary Shares", "procedural resolution", "Publicly-held Rio Tinto Limited Ordinary Shares", "Publicly-held Ordinary Shares", "Publicly-held Rio Tinto plc Ordinary Shares", "Publicly-held Rio Tinto plc Voting Shares", "Publicly-held Shares", "Rio Tinto plc", "Rio Tinto plc Articles", "Rio Tinto plc Equalisation Share", "Rio Tinto plc Deed Poll Guarantee", "Rio Tinto plc Entrenched Provision", "Rio Tinto plc Group", "Rio Tinto plc Ordinary Shares", "Rio Tinto plc Special Voting Share", "RTP Shareholder SVC", "Rio Tinto plc Shareholder Voting Agreement", "Sharing Agreement", "Special Voting Share", and "sterling";
         
      (C) this Rule 7 (class rights actions);
         
      (D) Rule 8 (dividends on Special Voting Share and Equalisation Share);
         
      (E) Rule 16 (variation of class rights);
         
      (F) Rule 35(c) (Refusal to register transfer of Special Voting Share and Equalisation Share);
         
      (G) Rule 66 (amendments to resolutions);
         
      (H) Rule 70 (demand for poll);
         
      (I) Rule 71 (taking a poll);
         
      (J) Rule 74 (voting rights of members);
         
      (K) Rule 77 (appointment of proxies);
         
      (L) Rule 85 (election or appointment of additional Director);
         
      (M) Rule 96(a), (b), (c), the proviso in brackets in (d), (e)(ii), (g) and (h) (retirement and nomination of Directors);
         
      (N) Rule 97, third sentence only (Alternate Directors);
         
      (O) Rule 98(f) (vacation of office of Directors if ceasing to be a Rio Tinto plc director);
         
      (P) Rule 108 (resolution of Directors in writing);
         
      (Q) Rule 111 (giving effect to Sharing Agreement);
         
      (R) Rule 143 (capital rights on a liquidation); and
         
      (S) Rule 145 (change of control);
         
    (viii) any amendment to, or removal of, or alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), any Rio Tinto plc Entrenched Provision; and
         
    (ix) the doing of anything which the Board and the Board of Rio Tinto plc each decide (either in a particular case or generally) should be treated as a Class Rights Action.
         

Page 20

Back to Contents


         
  (b) Any Class Rights Action by the Company (apart from those specified in sub-paragraph (vii) of paragraph (a) of this Rule) shall be deemed to be a variation of the rights of the Special Voting Share and shall accordingly be effective only with the consent in writing of the holder of the Special Voting Share and without such consent shall not be done or caused or permitted to be done.
         
  (c) Any Class Rights Action by the Company comprising or including an amendment to any Rio Tinto Limited Entrenched Provision shall be effective only with the approval of a special resolution on which the holder of the Special Voting Share shall be entitled to vote but only in accordance with Rule 74(c)(î) and the Rio Tinto plc Shareholder Voting Agreement. Any other Class Rights Action by the Company shall (in addition to the consent required under paragraph (b) of this Rule) be effective only with such approval of the shareholders of the Company (apart from the holder of the Special Voting Share) as is required by Applicable Regulation and the Sharing Agreement.
         
8. Dividends on Special Voting Share and Equalisation Share
         
  (a) The Special Voting Share does not entitle its holder to any dividends.
         
  (b) Subject to the special rights attached to any preference shares having a preferred right to participate as regards dividends up to but not beyond a specified amount in a distribution (but in priority to the payment of any dividends on other classes of share), the Equalisation Share shall carry such dividends as are declared or paid on the Equalisation Share in accordance with Schedule 1 and Schedule 2 to the Sharing Agreement.
         
  (c) Subject to the special rights for the time being attached to other classes of share, the profits of the Company available for distribution and resolved to be distributed shall subject to the Corporations Act be distributed by way of dividend among the holders of Ordinary Shares.
         
9. Obligation for calls
         
  Without limiting the generality of Rule 5, the Board may make arrangements on the issue of shares for a difference between the holders of those shares in the amount of calls to be paid and the time of payment of those calls.
         
10. Shares at the disposal of the Board
         
  Except as provided by contract or these Rules to the contrary, all unissued shares shall be under the control of the Board which may grant calls or options on those shares, issue option certificates in respect of those shares, allot or otherwise dispose of those shares on the terms and conditions and for the consideration and for or at the time it thinks fit.
         
11.  Directors may participate
         
  Any Director or any person who is an associate of a Director for the purposes of the Listing Rules may participate in any issue by the Company of shares, rights to shares or options to acquire shares or other securities unless the Director is precluded from participating by the Listing Rules.
         

Page 21

Back to Contents


         
12. Power to pay commission and brokerage
         
  The Company may at any time pay a commission to any person in consideration of that person subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the Company or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the Company. The commission may be paid or satisfied in cash or in shares, debentures or debenture stock of the Company or otherwise. The Company may in addition to or instead of commission pay any brokerage permitted by law.
         
13. Surrender of shares
         
  The Board may, in its discretion, accept a surrender of shares by way of compromise of any question as to whether or not those shares have been validly issued or in any other case where the surrender is within the powers of the Company. Any shares surrendered may be sold or re-issued in the same manner as forfeited shares.
         
14. Joint holders
         
  Where two or more persons are registered as the holders of any shares, they shall be deemed to hold the shares as joint tenants with benefits of survivorship subject to the following provisions:
         
  Number of Holders:
         
  (a) the Company is not bound to register more than three persons as the holders of the shares (except in the case of trustees executors or administrators of a deceased shareholder);
         
  Liability for payments:
         
  (b) the joint holders of the shares shall be liable severally as well as jointly in respect of all payments which ought to be made in respect of the shares;
         
  Death of joint holder:
         
  (c) on the death of any one of the joint holders, the survivor shall be the only person recognised by the Company as having any title to the shares but the Board may require evidence of death;
         
  Power to give receipt:
         
  (d) any one of the joint holders may give a receipt for any dividend, bonus or return of capital payable to the joint holders;
         
  Notices to joint holders:
         
  (e) only the person whose name stands first in the Register or Branch Register as one of the joint holders of the shares shall be entitled, if the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares, to delivery of a certificate relating to the shares or to receive notices from the Company and any notice given to that person shall be deemed notice to all the joint holders; and
         
  Votes of joint holders:
         
  (f) any one of the joint holders may vote at any meeting of the Company either personally or by duly authorised representative, proxy or attorney, in respect of the
         

Page 22

Back to Contents


     
    shares as if that joint holder was solely entitled to the shares. If more than one of the joint holders are present at any meeting personally or by duly authorised representative, proxy or attorney, the joint holder who is present whose name stands first in the Register or Branch Register in respect of the shares shall alone be entitled to vote in respect of the shares.
     
15. Non-recognition of equitable interests, etc
     
  Except as otherwise provided in these Rules, the Company shall be entitled to treat the registered holder of any share as the absolute owner of the share and accordingly shall not, except as ordered by a Court of competent jurisdiction or as required by statute, be bound to recognise (even when having notice) any equitable or other claim to or interest in the share on the part of any other person.
     
MODIFICATION OF RIGHTS
     
16.  How special rights may be varied
     
  Subject to Rule 7, whenever the capital of the Company is divided into different classes of shares, all or any of the rights and privileges attached to any class may be varied or abrogated, and any repayment of capital in respect of any class of shares may be effected by a special resolution approving the proposed variation, abrogation or repayment passed at a special meeting of the holders of the issued shares of the class affected by a majority of not less than three-fourths of the holders present and voting either in person or by representative proxy or attorney or (if a quorum is not present at the special meeting or if the resolution is not passed by the necessary majority) by consent in writing signed by the holders of at least three-fourths of the issued shares of the class within two calendar months from the date of the special meeting; provided that no approval or consent shall be required in respect of the redemption of any redeemable preference shares in accordance with the relevant terms of issue. All the provisions in these Rules as to general meetings shall apply to the special meeting. For the purposes of this Rule, any member who on a poll personally or by representative, proxy or attorney votes at a special meeting in favour of a resolution approving a proposed variation, abrogation or repayment shall be deemed to have consented in writing to the variation, abrogation or repayment.
     
THE SEAL
     
17. Affixing the Seal
     
  The Board shall provide for the safe custody of the Seal, which may only be used by the authority of the Board. Every instrument to which the Seal is affixed shall be signed by a Director and countersigned by the Secretary or by a second Director or by another person appointed by the Board for the purpose. The Board may determine either generally or in any particular case that a signature may be affixed by a mechanical means specified in the determination.
     
18.  Official Seal
     
  The Company may from time to time exercise the powers conferred by the Corporations Act in relation to Official Seals and those powers shall be vested in the Board. The Directors may from time to time appoint persons to affix any Official Seal and to sign and date any instrument to which an Official Seal has been affixed.
     

    Page 23

Back to Contents


     
19. Share Seal
     
  The Company may have one or more duplicates of the Seal which shall be facsimiles of the Seal with the addition on their faces of the words "Share Seal" and which shall be known as Share Seals. Any certificate for shares issued under a Share Seal shall be deemed to be sealed with the Seal.
     
SHARE CERTIFICATES
     
20. Issue of certificates
     
  (a) If the Board wishes to issue certificates for shares or where the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares, share certificates shall be issued under the Seal or a Share Seal or, in the case of shares on any Branch Register, under the Seal, a Share Seal or the Official Seal of the Company for use in the place in which the Branch Register is kept.
     
  (b) Certificates issued with a printed facsimile of the Seal, the Official Seal or a Share Seal shall be deemed to have been duly issued under the Seal or the Official Seal or a Share Seal (as the case may be).
     
  (c) Subject to paragraph (d) of this Rule, each certificate for shares shall bear the autographic signatures of one Director and of the Secretary or some other person appointed by the Board for that purpose, provided that in the case of a certificate issued under an Official Seal the certificate may alternatively bear the autographic signature of at least one person appointed by the Board for that purpose.
     
  (d) Notwithstanding anything contained in this Rule, the Board may resolve either generally or in a particular case or cases that any signature need not be autographic but may be affixed by some mechanical means specified in the resolution.
     
21. Contents of certificates
     
  Where the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares, every share certificate shall be in the form and state those matters which the Board may from time to time determine.
     
22. Entitlement to certificates
     
  Subject to paragraph (e) of Rule 14, where the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares, every member shall be entitled, without payment, to one certificate for the shares registered in that member's name or to several certificates in reasonable denominations, each for a part of the shares.
     
23.  Delivery of certificates
     
  The Company may send any certificate to a member by prepaid post addressed to the member at that member's registered address or as is otherwise directed by the member, and a statement signed by the Secretary or another officer of the Company appointed by the Board as to the due posting of the certificate shall be conclusive evidence of delivery.
     

    Page 24

Back to Contents


       
24. Renewal of certificates
       
  Where the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares:
       
  (a) and a certificate is worn out or defaced, upon production of the certificate the Board may order it to be cancelled and may issue a new certificate;
       
  (b) and a certificate is lost, stolen or destroyed, upon the giving of any indemnity and any evidence that the certificate has been lost, stolen or destroyed which the Board may require and upon the payment of any fee the Board may from time to time determine, a new certificate may be issued in lieu of the lost, stolen or destroyed certificate. A certificate issued to replace a certificate which has been lost, stolen or destroyed shall be endorsed as having been issued in replacement for a lost, stolen or destroyed certificate. Where a certificate is treated under the Corporations Act as though it were destroyed, the certificate will be treated as though it were destroyed for the purposes of these Rules.
       
25. Computerised share transfer system
       
  If the Company participates, or to enable the Company to participate, in any computerised or electronic share transfer system introduced by or acceptable to Australian Stock Exchange Limited, the Board may:
       
  (a) subject to the Corporations Act, the Listing Rules and the SCH business rules:
       
    (i) provide that shares may be held in certificated or uncertificated form and make any provision it thinks fit, including for the issue or cancellation of certificates, to enable shareholders to hold shares in uncertificated form and to convert between certificated and uncertificated holdings;
       
    (ii) provide that some or all members shall not receive or shall not be entitled to receive a share certificate in respect of some or all of the shares which the member holds in the Company;
       
    (iii) accept any instrument of transfer or transfer document in accordance with the requirements of the share transfer system; and
       
  (b) notwithstanding any other provision in these Rules, do all things necessary, required or authorised by the Corporations Act, the Listing Rules or the SCH business rules in connection with the share transfer system.
       
CALLS
       
26.  Calls and notice of calls
       
  Subject to the terms upon which any shares may have been issued, the Board may, from time to time, makes calls as it thinks fit upon the members in respect of all moneys unpaid on their shares. Each member shall be liable to pay the amount of each call in the manner specified and at the time and place appointed by the Board. Calls may be made payable by instalments.
       

      Page 25

Back to Contents


   
27. When a call is made
   
  A call shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed. Subject to the Listing Rules, the call may be revoked at the discretion of the Board at any time prior to the date on which payment in respect of any call is due.
   
28. Interest on the late payment of calls
   
  If any sum (or part of any sum) payable in respect of a call is not paid on or before the date appointed for payment, the member from whom the sum is due shall pay interest on the unpaid amount from the due date to the date of payment at the rate the Board from time to time determines. The Board may waive the whole or part of any interest paid or payable under this Rule.
   
29. Instalments
   
  If, by the terms of an issue of shares, any amount is payable in respect of any shares by instalments, every instalment shall be payable as if it were a call duly made by the Board of which due notice had been given, and all provisions of these Rules with respect to the payment of calls and of interest or to the forfeiture of shares for non-payment of calls or with respect to liens or charges shall apply to the instalment and to the shares in respect of which it is payable.
   
30. Payment in advance of calls
   
  The Board may, if it thinks fit, receive from any member all or any part of the moneys unpaid on all or any of the shares held by that member beyond the sums actually called up and then due and payable either as a loan repayable or as a payment in advance of calls. If it so elects the Company may pay interest on the moneys advanced at the rate and on the terms agreed by the Board and the member paying the sum in advance.
   
31. Non-receipt of notice of call
   
  The non-receipt of a notice of any call by, or the accidental omission to give notice of any call to, any member shall not invalidate the call.
   
  TRANSFER AND TRANSMISSION OF SECURITIES
   
32. Form of transfer
   
  No transfer of any shares rights to shares or options to acquire shares shall be registered unless:
   
  (a) a proper instrument of transfer, in writing in the usual or common form or in any form the Board may from time to time prescribe or in a particular case accept, duly stamped (if necessary), is delivered to the Company;
     
  (b) the transfer is a proper SCH transfer, which is to be in the form required or permitted by the Corporations Act or the SCH business rules; or
     
  (c) the transfer has been effected by any other electronic system established or recognised by the Listing Rules in which the Company participates in accordance with the rules of that system.
     

    Page 26

Back to Contents


   
33.  Effecting a transfer
       
  If required by the Corporations Act, the Listing Rules or the Board, an instrument of transfer shall be signed by or on behalf of the transferor and the transferee. Except in the case of a proper SCH transfer, the transferor shall be deemed to remain the holder of the securities transferred until the name of the transferee is entered in the Register. A proper SCH transfer is taken to be recorded in the appropriate register, and the name of the transferee to be registered as the holder of the securities comprised in the proper SCH transfer, at the time provided for in the SCH business rules.
       
34. Instrument of transfer and certificate to be left at Office or Branch Office
       
  Every instrument of transfer shall be left for registration at the Office (or in the case of shares on a Branch Register, at the Office or the relevant Branch Office) or any other place the Board determines from time to time. The instrument of transfer shall be accompanied by the certificate (if any) for the securities to be transferred and any other evidence which the Board may require to prove the title of the transferor, the transferor's right to transfer the securities, due execution of the transfer or due compliance with the provisions of any law relating to stamp duty. The Board may waive the production of the certificate (if any) in any case which it considers appropriate. The preceding requirements of this Rule do not apply in respect of a proper SCH transfer.
       
35. Board may refuse to register
       
  (a) Subject to the Corporations Act, the Listing Rules and the SCH business rules, the Board may refuse to register any transfer of securities:
       
    (i) if the Company has a lien on the securities in accordance with the Listing Rules;
       
    (ii) where it is permitted to do so by the Listing Rules;
       
    (iii) where it is required to do so in accordance with a law related to stamp duty; or
       
    (iv) where it is required to do so pursuant to a court order; or
       
    (v) if the registration of the transfer would result in a contravention of, or failure to observe the provisions of, any applicable law or the Listing Rules.
       
  Notice of refusal of transfer
       
  (b) Notwithstanding the preceding paragraph, the Board may not refuse to register any proper SCH transfer except as permitted by the Corporations Act, the Listing Rules or the SCH business rules. Subject to the Corporations Act and the Listing Rules, the decision of the Board relating to the registration of a transfer is absolute. If the Board refuses to register a transfer, the Board shall give the lodging party written notice of the refusal and the precise reasons for the refusal within the maximum period permitted by the Listing Rules. Failure to give notice of refusal to register any transfer as may be required under the Corporations Act or the Listing Rules does not invalidate the decision of the Board.
       

      Page 27

Back to Contents


     
  (c) The Board shall refuse to register any transfer of:
       
    (i) the Special Voting Share unless the transfer is to a new RTP Shareholder SVC in accordance with the terms of the Rio Tinto plc Shareholder Voting Agreement; or
       
    (ii) the Equalisation Share unless the transfer is to a member of the Rio Tinto plc Group or a trustee for the benefit of a member or members of the Rio Tinto plc Group.
       
  (d) The decision of the Board relating to the registration of such a transfer shall be absolute.
       
36. Company to retain instrument of transfer
       
  Every instrument of transfer which is registered shall, for any period determined by the Board, be retained by the Company after which, the Company may destroy it, provided that any instrument of transfer which the Board refuses to register shall (except in the case of fraud) be returned on demand to the person depositing it or to the transferee provided the demand is made within twelve calendar months after the giving of notice by the Company of its refusal to register the instrument of transfer. The preceding requirements of this Rule do not apply in respect of a proper SCH transfer.
       
37. Closing Register and Branch Register
       
  Subject to the Corporations Act, the Listing Rules and the SCH business rules, the transfer books and the Register and each Branch Register may be closed during such time as the Board thinks fit and the Board may specify a time by reference to which the entitlement of persons to vote at any general meeting of the Company is to be determined.
       
38. Cancellation of old and issue of new certificate
       
  Subject to Rule 34, and to the Corporations Act, the Listing Rules and the SCH business rules, on every application to register the transfer of any shares or to register any person as a member in respect of any shares transmitted to that person by operation of law or otherwise, the certificate (if any) specifying the shares in respect of which registration is required shall be delivered up to the Company for cancellation and upon registration the certificate shall be cancelled and if the Company is required by the Corporations Act, the Listing Rules or the SCH business rules to issue certificates for shares a new certificate specifying the shares transferred or transmitted shall be issued and sent to the transferee or transmittee. If the registration of any transfer is required in respect of some only of the shares specified in the certificate (if any) delivered up to the Company and if the Company is required by the Corporations Act, the Listing Rules or the SCH business rules to issue certificates for shares a new certificate specifying the remaining untransferred shares shall be issued and sent to the transferor.
       
39. Transmission upon death
       
  Subject to the Corporations Act, the Listing Rules and the SCH business rules, the trustee, executor or administrator of a deceased member (who is not one of several joint holders) shall be the only person recognised by the Company as having any title to the shares registered in the name of the deceased member, provided that if the member; having sold
       

      Page 28

Back to Contents


   
  some or all of those shares, has delivered a signed transfer of the shares sold to the transferee or to a member of a stock exchange acting in connection with that sale, and the transfer is not registered before the death of the member, the Board may, subject to compliance by the transferee with these Rules, register the transfer notwithstanding that the Company has notice of the member's death.
   
40. Transmission by operation of law
   
  Subject to the Corporations Act, the Listing Rules and the SCH business rules, a person to whom the right to any shares has devolved by will or by operation of law, upon producing the certificate for shares (if any) and any other evidence the Board may require of title or that the person sustains the character in respect of which the person proposes to act under this Rule, may be registered as a member in respect of the shares or may (subject to the provisions in these Rules relating to transfers) transfer the shares.
   
41. Board may refuse registration of transmissions
   
  The Board shall have the same right to refuse to register a person entitled by transmission to any shares or the person's nominee as if the person or the person's nominee were the transferee named in an ordinary transfer presented for registration.
   
  FORFEITURE AND LIEN
   
42. Notice requiring payment of sums payable
   
  If any member fails to pay any sum payable on or in respect of any shares, either for allotment money, calls or instalments, on or before the day appointed for payment, the Board may, at any time after the day specified for payment whilst any part of the sum remains unpaid, serve a notice on the member requiring that member to pay the sum or so much of the sum as remains unpaid together with interest accrued and all expenses incurred by the Company by reason of the non-payment.
   
43. Content of Notice
   
  The notice shall name a day on or before which the sum, interest and expenses (if any) are to be paid and the place or places where payment is to be made. The notice shall also state that, in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the sum is payable will be liable to be forfeited, and such other information as required by the Corporations Act, the Listing Rules and SCH business rules.
   
44. Forfeiture on non-compliance with notice
   
  If there is non-compliance with the requirements of any notice given pursuant to Rule 42, any shares in respect of which notice has been given may, at any time after the day specified in the notice for payment whilst any part of allotment moneys, calls, instalments, interest and expenses (if any) remains unpaid, be forfeited by a resolution of the Board to that effect. The forfeiture shall include all dividends, interest and other moneys payable by the Company in respect of the forfeited shares and not actually paid before the forfeiture.
   
45. Notice of forfeiture
   
  When any share is forfeited, notice of the resolution of the Board shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture and the date of forfeiture shall be made in the Register or Branch Register as the case may be. Failure to give notice or make the entry as required by this Rule shall not invalidate the forfeiture.
   

  Page 29

Back to Contents


   
46. Disposal of forfeited shares
       
  Any forfeited share shall be deemed to be the property of the Company and the Board may sell, re-allot or otherwise dispose of or deal with the share in any manner it thinks fit and, in the case of re-allotment, with or without any money paid on the share by any former holder being credited as paid up.
       
47. Annulment of forfeiture
       
  The Board may, at any time before any forfeited share is sold, re-allotted or otherwise disposed of, annul the forfeiture of the share upon any condition it thinks fit.
       
48. Liability notwithstanding forfeiture
       
  Any member whose shares have been forfeited shall, notwithstanding the forfeiture, be liable to pay and shall forthwith pay to the Company all sums of money owing upon or in respect of the forfeited shares at the time of forfeiture, together with interest from that time until payment at the rate the Board from time to time determines and expenses. The Board may enforce the payment or waive the whole or part of any sum paid or payable under this Rule as it thinks fit.
       
49. Company's lien or charge
       
  The Company shall have a first and paramount lien or charge for unpaid calls, instalments and any amounts the Company is called upon by law to pay in respect of the shares of a member upon shares registered in the name of the member or joint members in respect of which the calls or instalments are due and unpaid (whether presently payable or not) or in respect of which the amounts are paid and upon the proceeds of sale of the shares.
       
  The lien or charge shall extend to all dividends and bonuses from time to time declared in respect of the shares; provided that if the Company registers a transfer of any shares upon which it has a lien or charge without giving the transferee notice of its claim, the shares shall be freed and discharged from the lien or charge of the Company. The Company may do all things necessary or appropriate under the SCH business rules to protect or enforce any lien or charge.
       
50. Sale of shares to enforce lien
       
  (a) Subject to paragraph (b), for the purpose of enforcing a lien or charge, the Board may sell the shares which are subject to the lien or charge in any manner it thinks fit, but no sale shall be made:
       
    (i) until notice in writing of the intention to sell has been served on the member in whose name the shares are registered or the member's representatives; and
       
    (ii) default has been made in payment of the part of the amount in respect of which the lien exists as is presently payable for fourteen days after the giving of notice.
       

      Page 30

Back to Contents


     
   (b) In respect of any shares which are CHESS approved securities, for the purpose of enforcing a lien or charge, the Board may sell the shares which are subject to the lien or charge in accordance with the SCH business rules.
     
51. Title of shares forfeited or sold to enforce lien
     
  (a) In the case of a sale or a re-allotment of forfeited shares or of the sale of shares to enforce a lien or charge, an entry in the minute book of the Board that the shares have been forfeited, sold or re-allotted in accordance with these Rules shall be sufficient evidence of that fact as against all persons entitled to the shares immediately before the forfeiture, sale or re-allotment of the shares. The Company may receive the purchase money or consideration (if any) given for the shares on any sale or re-allotment.
     
  (b) In the case of re-allotment, a certificate signed by a Director or the Secretary to the effect that the shares have been forfeited and the receipt of the Company for the price of the shares shall constitute a good title to them.
     
  (c) In the case of a sale, the Company may appoint a person to execute, or may otherwise effect, a transfer in favour of the person to whom the shares are sold.
     
  (d) Upon the issue of the receipt or the transfer being executed or otherwise effected the person to whom the shares have been re-allotted or sold shall be registered as the holder of the shares, discharged from all calls or other money due in respect of the shares prior to the re-allotment or purchase and the person shall not be bound to see to the regularity of the proceedings or to the application of the purchase money or consideration; nor shall the person's title to the shares be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, sale or re-allotment.
     
  (e) The net proceeds of any sale or re-allotment shall be applied first in payment of all costs of or in relation to the enforcement of the lien or charge or the forfeiture (as the case may be) and of the sale or re-allotment, next in satisfaction of the amount in respect of which the lien exists as is then payable to the Company (including interest) and the residue (if any) paid to the person registered as the holder of the shares immediately prior to the sale or re-allotment or to the person's executors, administrators or assigns as the person or the person's executors, administrators or assigns shall direct upon the production of any evidence as to title required by the Board.
     
  (f) If a certificate for the shares is not produced to the Company, the Board may, where the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares, issue a new certificate distinguishing it from the certificate (if any) which was not produced.
     
    INCREASE AND REDUCTION OF CAPITAL
     
52. Power to alter share capital
     
  The Company in general meeting may from time to time alter its share capital in any one or more of the ways provided for, and in the manner prescribed, by the Corporations Act.
     

    Page 31

Back to Contents


   
53. Rights attached to subdivided shares
   
  Whenever any shares are subdivided, the Company may by special resolution determine that as between the holders of the shares resulting from the subdivision one or more of the shares shall have some preference or special advantage as regards dividends, capital, voting or otherwise as compared with the other shares.
   
54. Board may give effect to alteration of share capital
   
  The Board may do all acts and things required to give effect to any resolution authorising alteration of the share capital of the Company and, without limitation, may make provision for the issue of fractional certificates or sale of fractions of shares and distribution of net proceeds as it thinks fit.
   
55. New Capital subject to same provisions as original capital
   
  Except so far as otherwise provided by the conditions of issue or by these Rules, any capital raised by the creation and issue of new shares shall be considered part of the original capital and shall be subject to the provisions of these Rules and the Listing Rules.
   
56. Power to reduce capital
   
  Subject to Rule 7, the Company may from time to time reduce its capital (including, without limitation, any capital redemption reserve fund or fund representing moneys paid upon the issue of options) in any manner allowed by law and the Listing Rules.
   
  GENERAL MEETINGS
   
57. Annual general meetings
   
  General meetings of the Company may be convened and held at the times and places and in the manner determined by the Board and in accordance with the requirements of the Corporations Act. The general meetings before which the annual accounts of the Company are to be laid shall be called annual general meetings.
   
58. Notice of general meeting
   
  Notice of a general meeting may be given by the Board in the form and in the manner the Board thinks fit.
   
59. Omission to give and non-receipt of notice
   
  The non-receipt of a notice of any general meeting by, or the accidental omission to give notice to, any person entitled to notice shall not invalidate any resolution passed at that meeting.
   
  PROCEEDINGS OF MEETINGS
   
60. Business of general meeting
   
  The business of an annual general meeting shall be to receive and consider the accounts and reports required by the Corporations Act to be laid before each annual general meeting, to elect Directors in the place of those retiring under these Rules, when relevant to appoint an Auditor, and to transact any other business which, under these Rules, is required to be transacted at any annual general meeting. All other business transacted at an annual general meeting and all business transacted at other general meetings shall be deemed special. The Auditor shall be entitled to attend and be heard on any part of the business of a meeting which concerns the Auditor.
   

  Page 32

Back to Contents


     
61. Quorum
     
  The quorum for a general meeting shall be two members present. No business shall be transacted at any general meeting (other than an adjourned meeting under Rule 62) except the election of a chairman and the adjournment of the meeting unless the requisite quorum is present at the commencement of business.
     
62. Adjournment in absence of quorum
     
  If, within 5 minutes from the time appointed for a general meeting (or such longer interval as the chairman of the meeting may think fit to allow), a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for that purpose in the notice convening the meeting or (if none was specified) as the chairman of the meeting may determine. If at such adjourned meeting a quorum is not present within 5 minutes from the time appointed for holding the meeting, the members present in person or by proxy shall be a quorum.
     
63. Chairman
     
  (a) The person entitled to take the chair at any general meeting shall be the person who immediately before the general meeting is the Chairman of the Board or failing that person, a Deputy Chairman.
     
  (b) If there is no such Chairman or Deputy Chairman, or if at any meeting neither is present within 5 minutes after the time appointed for holding the meeting and willing to act, the Directors present shall choose one of their number to be chairman of the meeting. If no Director is present or if all Directors present decline to take the chair, the members present and entitled to vote shall choose one of their number to be chairman of the meeting.
     
64. Acting Chairman
     
  If during any general meeting the chairman appointed pursuant to Rule 63 is unwilling to act as chairman for any part of the proceedings, the chairman may withdraw as chairman during the relevant part of the proceedings and may nominate any person who immediately before the general meeting was a Director or who has been nominated for election as a Director at the meeting to be Acting Chairman of the meeting during the relevant part of the proceedings. Upon the conclusion of the relevant part of the proceedings the Acting Chairman shall withdraw and the chairman shall resume acting as chairman of the meeting.
     
65. General conduct of meeting
     
  The chairman of any general meeting shall be responsible for the general conduct of meetings of the Company and for the procedures to be adopted at those meetings. Except as otherwise required by the Corporations Act or by these Rules, the chairman of any
     

    Page 33

Back to Contents


     
  general meeting may at any time the chairman considers it necessary or desirable for the proper and orderly conduct of the meeting demand the cessation of debate or discussion on any business, question, motion or resolution being considered by the meeting and require the business, question, motion or resolution to be put to a vote of the members present. The chairman may require the adoption of any procedures which are in the chairman's opinion necessary or desirable for the proper and orderly casting or recording of votes at any general meeting of the Company, whether on a show of hands or on a poll.
     
66. Amendments to resolutions
     
  (a) If an amendment is proposed to any resolution under consideration but is, in good faith, ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall be not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a special resolution, no amendment to that resolution (other than a mere clerical amendment to correct a patent error) may be considered or voted upon.
     
  (b) In the case of any resolution duly proposed as an ordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error or an amendment to conform such resolution to a resolution duly proposed at the nearly contemporaneous general meeting of Rio Tinto plc) may be considered or voted upon unless written notice (in a physical document) of the proposed amendment is received by the Company at least 48 hours prior to the time appointed for holding the relevant meeting or adjourned meeting or (in the absence of any such notice) the chairman of the meeting in the chairman's absolute discretion rules that the amendment shall be considered.
     
67. Adjournment
     
  The Chairman of a general meeting or of an adjourned meeting may at any time during the course of the meeting adjourn from time to time and place to place the meeting or any business, motion, question or resolution being considered or remaining to be considered by the meeting or any debate or discussion and may adjourn any business, motion, question, resolution, debate or discussion either to a later time at the same meeting or to an adjourned meeting. If the Chairman exercises a right of adjournment of a meeting pursuant to this Rule, the Chairman shall have the sole discretion to decide whether to seek the approval of the members present to the adjournment and, unless the Chairman exercises that discretion, no vote shall be taken by the members present in respect of the adjournment. No business shall be transacted at any adjourned meeting other than the business which might properly have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors.
     
68. Voting
     
  Every question submitted to a general meeting shall be decided in the first instance by a show of hands of the members present and entitled to vote unless prior to that time a poll is properly demanded or required pursuant to Rule 70. In the case of an equality of votes, the Chairman shall, both on a show of hands and at a poll, have a casting vote in addition to the vote or votes to which the Chairman may be entitled as a member or as a proxy, attorney or duly appointed representative of a member.
     

    Page 34

Back to Contents


       
69. Declaration of vote on a show of hands
       
  At any meeting, unless a poll is demanded, a declaration by the Chairman that a resolution has been passed or lost, having regard to the majority required, and an entry to that effect in the book to be kept of the proceedings of the Company, signed by the Chairman of that or the next succeeding meeting, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the resolution.
       
70. Demand for poll
       
  Subject to Rule 71 at any general meeting, a resolution (other than a procedural resolution) put to the vote of the meeting on which the holder of the Special Voting Share is entitled to vote shall be decided on a poll. A poll may be demanded by:
       
  (i)   the chairman of the meeting;
       
  (ii)   shareholders in accordance with the Corporations Act; or
       
  (iii)   the holder of the Special Voting Share.
       
71. Taking a poll
       
  (a) A poll on a resolution on which the holder of the Special Voting Share is entitled to vote shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the Chairman may direct and may remain open for so long as the Chairman may determine. Any poll may close at different times for different classes of shareholder or for different shareholders of the same class entitled to vote on the relevant resolution.
       
  (b) A poll validly demanded on the choice of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the Chairman may direct. No notice need be given of a poll not taken immediately. The demand for a poll or requirement that a poll be taken shall not prevent the continuance of the meeting for the transaction of any business other than the business on which the poll has been demanded, or is required.
       
  (c) On a question of adjournment, a poll may only be demanded by the chairman of the meeting.
       
  (d) A demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman of the meeting. If a demand for a poll is so withdrawn:-
       
    (i) before the result of a show of hands is declared, the meeting shall continue as if the demand was not made; or
       
    (ii) after the result of a show of hands is declared, the demand shall not be taken to have invalidated the result of that show of hands.
       

      Page 35

Back to Contents


     
  (e) In the case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the dispute and the Chairman's determination made in good faith shall be final and conclusive.
     
  (f) On a poll, a person entitled to more than one vote need not use all that person's votes or cast all the votes that person has or uses in the same way.
     
72. Continuance of business after demand for poll
     
  A demand for a poll or requirement that a poll be taken shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded or is required.
     
73. Notice of adjournment
     
  When a meeting is adjourned for 30 days or more or sine die, not less than seven days' notice of the adjourned meeting shall be given in like manner as in the case of the original meeting.

VOTES OF MEMBERS

74. Voting rights of members
       
  (a) (i) Subject to the Listing Rules and provisions of these Rules with regard to any special rights or restrictions as to voting attached by or in accordance with these Rules to any class of shares, and subject to Rules 14 and 82, on a show of hands every member who is entitled to vote and is present in person shall have one vote and on a poll every member who is present in person or by proxy shall have one vote for every Ordinary Share of the Company of which that person is the holder and the Specified Number (as defined in paragraph (b) or (c) below) of votes for the Special Voting Share of which that person is the holder.
       
    (ii) The Equalisation Share does not entitle its holder to attend or vote at any general meeting.
       
  (b) The holder of the Special Voting Share shall be entitled to attend at any general meeting and, subject to the provisions below, to cast on a poll the Specified Number of votes (some of which may be cast for and others against any resolution in such numbers as the holder may determine). The Specified Number of votes in relation to a resolution of the Company on a Joint Decision shall be the total number of votes attaching to Publicly-held Rio Tinto plc Voting Shares which were cast on the poll on the equivalent resolution at the nearly contemporaneous general meeting of Rio Tinto plc (other than those cast by or on behalf of any Excluded Rio Tinto plc Holder or by any person on whom a notice pursuant to Rule 145(D) has been served and not withdrawn or complied with in accordance with these Rules) divided by the Equalisation Fraction, minus the number of votes attached to the Ordinary Shares which are not Publicly-held Rio Tinto Limited Ordinary Shares and which are validly cast in accordance with the Rio Tinto plc Shareholder Voting Agreement.
 

Page 36

Back to Contents


       
  (c) The Specified Number of votes which may be cast in relation to a resolution of the Company which is not a Joint Decision shall be zero except that:
       
    (i) on any resolution to amend, remove or otherwise alter any Rio Tinto Limited Entrenched Provision, any Entrenching Provision or on any resolution to amend, remove or otherwise alter the effect of any provision in the Memorandum or these Rules which the Board and the Board of Rio Tinto plc agree should be treated as a Class Rights Action, the Specified Number of votes shall be equal to 34% (rounded up to the next highest whole number) of the aggregate number of votes attaching to all other classes of issued shares in the Company which could be cast on such resolution, and such votes (if cast) may only be cast against such resolution; and
       
    (ii) on any procedural resolution put to a general meeting at which a Joint Decision Matter is to be considered, the Specified Number of votes which may be cast shall be the maximum number of votes attached to the Publicly-held Rio Tinto plc Voting Shares (excluding any Publicly-held Rio Tinto plc Voting Shares which are held by or on behalf of any Excluded Rio Tinto plc Holder or by or on behalf of any person on whom a notice has been served pursuant to Rule 145(D) and not withdrawn or complied with in accordance with these Rules which was cast on a resolution on a Joint Decision Matter at the nearly contemporaneous general meeting of Rio Tinto plc (or, if the nearly contemporaneous general meeting of Rio Tinto plc has not been held and such votes counted by the beginning of the relevant general meeting of the Company, the maximum number of such votes as are authorised to be so cast upon proxies lodged with Rio Tinto plc) by such time as the Chairman may determine divided by the Equalisation Fraction and rounded up to the nearest whole number, minus the number of votes attached to the Ordinary Shares which are not Publicly-held Rio Tinto Limited Ordinary Shares and which are validly cast in accordance with the Rio Tinto plc Shareholder Voting Agreement.
       
  (d) The Special Voting Share shall not entitle its holder to vote on any show of hands.
       
75. Voting rights of personal representatives, etc.
       
  Any person entitled under Rules 39 or 40 to transfer any shares may vote at any general meeting in the same manner as if the person were the registered holder of the shares; provided that at least twenty-four hours before the time of holding the meeting at which the person proposes to vote the person has satisfied the Board of the person's right to transfer the shares, unless the Board has previously admitted the person's right to vote at the meeting in respect of the shares.
       
76. How votes may be given
       
  Votes at a general meeting may be given personally or by representative, proxy or attorney, as provided in these Rules.
       

Page 37

Back to Contents


     
77. Appointment of proxies
     
  (a) Any member may appoint not more than two proxies to vote at a general meeting on that member's behalf and may direct the proxy or proxies to vote either for or against each or any resolution.
     
  (b) A proxy need not be a member of the Company.
     
  (c) Where a member appoints two proxies, the appointment shall be of no effect unless each proxy is appointed to represent a specified proportion of the member's voting rights.
     
  (d) Except in relation to a proxy deposited by the holder of the Special Voting Share, the instrument appointing a proxy (and the power of attorney, if any, under which it is signed or proof of the power of attorney to the satisfaction of the Board) shall, as regards shares on the Register, be deposited duly stamped (if necessary) at the Office or any other place the Board may determine or lodged by any electronic means authorised by the Board and permitted by the Corporations Act and, as regards shares on a Branch Register, be deposited duly stamped (if necessary) at the Office or Branch Office or any other place the Board may determine or lodged by any electronic means authorised by the Board and permitted by the Corporations Act, not later than forty-eight hours (or such lesser period as the Directors may determine and stipulate in the notice of meeting) before the poll at which the person named in the instrument proposes to vote.
     
  (e) The Directors may determine and stipulate that the latest time by which a proxy may be validly deposited differs in relation to holders of the same class of share.
     
  (f) No instrument appointing a proxy shall, except as provided in this Rule, be valid after the expiration of twelve months after the date of its execution.
     
  (g) Any member who is or who intends to be absent or resident abroad may deposit at the Office an instrument duly stamped (if necessary) appointing a proxy and that appointment shall be valid for all meetings during the member's absence or residence abroad and until revocation.
     
  (h) A proxy received from the holder of the Special Voting Share will be valid if it is received before the close of the poll to which it relates.
     
  (i) An instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purpose of any meeting shall not require again to be delivered for the purposes of any subsequent meeting to which it relates.
     
  (j) When two or more valid but differing instruments of proxy are executed in respect of the same share for use at the same meeting, the one which is last executed shall be treated as replacing and revoking the others as regards that share. If the Company is unable to determine which was last executed none of them shall be treated as valid in respect of that share.
     

Page 38

Back to Contents


   
78. Form and execution of instrument of proxy
   
  An instrument appointing a proxy shall be in writing under the hand of the appointor or the attorney of the appointor or, if the appointor is a corporation, under its common seal or under the hand of a duly authorised officer or may be signed by any method authorised by the Board and permitted by the Corporations Act and may be in the usual or common form or in such other form as the Board may from time to time prescribe or accept. The instrument of proxy shall be deemed to include the right to demand or join in demanding a poll and shall (except to the extent to which the proxy is specially directed to vote for or against any proposal) include power to the proxy to act generally at the meeting for the person giving the proxy. An instrument appointing a proxy shall, unless the contrary is stated, be valid for any adjournment of the meeting as well as for the meeting to which it relates and need not be witnessed.
   
79. Board to issue forms of proxy
   
  The Board shall, at the cost of the Company, issue with every notice of general meeting of members or any class of members forms of proxy for use by the members. Each form shall leave blank the name of the first proxy to be appointed but may include the names of any of the Directors or of any other persons as suggested proxies. The forms may be worded so that a proxy may be directed to vote either for or against each or any of the resolutions to be proposed.
   
80. Attorneys of members
   
  Any member may, by duly executed power of attorney, appoint an attorney to act on that member's behalf at all or certain specified meetings of the Company. Before the attorney is entitled to act under the power of attorney, the power of attorney or proof of the power of attorney to the satisfaction of the Board shall, as regards shares on the Register, be produced for inspection at the Office or such other place as the Board may determine from time to time and, as regards shares on a Branch Register, be produced for inspection at the Office or Branch Office or such other place as the Board may determine from time to time together, in each case, with evidence of the due execution of the power of attorney as required by the Board. The attorney may be authorised to appoint a proxy for the member granting the power of attorney.
   
81.  Validity of vote
   
  A vote given in accordance with the terms of an instrument of proxy or power of attorney shall be valid notwithstanding the previous death or unsoundness of mind of the principal or revocation of the instrument of proxy or power of attorney or transfer of the shares in respect of which the vote is given, provided no notice in writing of the death, unsoundness of mind, revocation or transfer has been received at the Office before the meeting. A proxy shall not be revoked by the principal attending and taking part in the meeting, unless the principal actually votes at the meeting on the resolution for which the proxy is proposed to be used.
   
82. Rights of member indebted to Company in respect of other shares
   
  Subject to any restrictions from time to time affecting the right of any member or class of members to attend any meeting, a member holding a share or shares in respect of which for the time being no moneys are due and payable to the Company shall be entitled to be present at any general meeting and to vote and be reckoned in a quorum notwithstanding that moneys are then due and payable to the Company by that member in respect of other shares held by that member; provided that, upon a poll, a member shall only be entitled to vote in respect of shares held by the member upon which, at the time when the poll is taken, no moneys are due and payable to the Company.
   

Page 39

Back to Contents


DIRECTORS

83. Number of Directors
     
  The number of Directors (not including Alternate Directors) shall not be less than three nor more than the number the Board may from time to time determine. All Directors shall be natural persons.
     
84.  Share qualification of Directors
     
  Unless otherwise determined by the Company in general meeting, a Director shall not be required to hold any share qualification. A Director who is not a member of the Company shall nevertheless be entitled to attend and speak at general meetings.
     
85. Election or appointment of additional Director 
     
  The Company may by ordinary resolution elect (and the Directors shall also have power at any time to appoint) any person to be a Director either to fill a casual vacancy or as an additional Director, but so that:
     
  (i) the total number of Directors shall not as a result of such appointment exceed the maximum number (if any) fixed by or in accordance with these Rules; and
     
  (ii) the appointment of such Director shall not take effect before such Director has been duly appointed as a director of Rio Tinto plc.
     
  Any person so appointed by the Directors shall hold office only until the next annual general meeting and shall then be eligible for election, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting.
     
86. Continuing Directors to act in certain circumstances
     
  If at any time the number of Directors falls below the minimum number fixed by these Rules, the continuing Directors may, except in an emergency, only act for the purpose of increasing the number of Directors to the minimum number or of calling a general meeting of the Company.
     
87. Directors who are employees of the Company
     
  The office of a Director who is an employee of the Company or of any related corporation shall become vacant upon that Director ceasing to be an employee of the Company or any related corporation provided that any such person shall be eligible for reappointment or re-election as a Director of the Company.
     

Page 40

Back to Contents


     
88.  Company Auditor may not act as Director
     
  No person may be appointed as a Director or Alternate Director if the appointment would result in a person who, or a firm which, is then the Auditor becoming prohibited by the Corporations Act from acting as an Auditor of the Company.
     
89. Remuneration of Directors
     
  As remuneration for their services the Directors shall be paid out of the funds of the Company a sum determined by the Board payable at the time and in the manner determined by the Board but the aggregate remuneration paid to all the non-executive Directors in any year together with remuneration paid to those Directors by Rio Tinto plc or by any subsidiary of the Company or of Rio Tinto plc for their services as a non-executive director of that entity may not exceed $2,000,000 per annum. For the purposes of this Rule, any remuneration paid in sterling shall count towards the $2,000,000 limit as if £1 = $2.75. The Company may in general meeting from time to time fix any other amount as the maximum aggregate remuneration to be paid to all the non-executive Directors in any year. The expression "remuneration" where used in this Rule does not include the remuneration which may otherwise be payable to a Director pursuant to Rules 90, 91 or 92. Any payment made to a Director pursuant to Rule 144 and any amount paid by the Company by way of premium in respect of a contract insuring a Director against liability incurred by that person as a Director of the Company or of a wholly owned subsidiary shall not constitute remuneration for the purposes of this Rule.
     
90. Remuneration of directors for extra services
     
  Any Director who serves on any committee, or who devotes special attention to the business of the Company, or who otherwise performs services which in the opinion of the Board are outside the scope of the ordinary duties of a Director, or who at the request of the Board engages in any journey on the business of the Company, may be paid extra remuneration as determined by the Board.
     
91. Retirement benefits
     
  Any Director may be paid a retirement benefit, as determined by the Board, in accordance with the Corporations Act. The Board is authorised to make arrangements with any Director with respect to the payment of a retirement benefit in accordance with this Rule.
     
92. Travelling and other expenses
     
  Every Director shall, in addition to any other remuneration provided for in these Rules, be entitled to be paid from Company funds all reasonable travel, accommodation and other expenses incurred by the Director in attending meetings of the Company or of the Board or of any Committees or while engaged on the business of the Company or in the execution of any other duties as Director.
     
93. Directors may contract with company
     
  (a) A Director shall not be disqualified by the office of Director from contracting or entering into any arrangement with the Company either as vendor, purchaser or otherwise and no contract or arrangement entered into with the Company by a Director nor any contract or arrangement entered into by or on behalf of the Company in which a Director is in any way interested shall be avoided for that reason. A Director shall not be liable to account to the Company for any profit realised by any contract or arrangement, by reason of holding the office of Director or of the fiduciary relationship established by the office.
     

Page 41

Back to Contents


     
  (b) Except where a Director is constrained by the Corporations Act, a Director may be present at a meeting of the Board while a matter in which the Director has a material personal interest is being considered and may vote in respect of that matter.
     
  (c) A Director who is interested in any contract or arrangement may, notwithstanding the interest, participate in the execution of any document evidencing or otherwise connected with the contract or arrangement.
     
94. Director may hold other office under the Company
     
  (a) A Director may hold any other office or position under the Company (except that of Auditor) in conjunction with the office of Director, on terms and at a remuneration in addition to remuneration (if any) as a Director, as the Board shall approve. A Director may be or become a director of or hold any other office or position under any corporation promoted by the Company, or in which it may be interested, whether as a vendor or shareholder or otherwise, and the Director shall not be accountable for any benefits received as a Director or member of or holder of any other office or position under that corporation. The Board may exercise the voting power conferred by the shares in any corporation held or owned by the Company as the Board thinks fit (including the exercise of the voting power in favour of any resolution appointing the Directors or any of the directors of that corporation or voting or providing for the payment of remuneration to the directors of that corporation) and a Director of the Company may vote in favour of the exercise of those voting rights notwithstanding that the Director is, or may be about to be appointed, a director of that other corporation and may be interested in the exercise of those voting rights.
     
95. Directors may lend to the Company
     
  Any Director may lend money to the Company at interest with or without security or may, for a commission or profit, guarantee the repayment of any money borrowed by the Company and underwrite or guarantee the subscription of shares or securities of the Company or of any corporation in which the Company may be interested without being disqualified in respect of the office of Director and without being liable to account to the Company for the commission or profit.

ELECTION OF DIRECTORS

  Subject to Rule 85 the following provisions shall apply to all the Directors:
     
96. Retirement of Directors:
     
  (a) At each annual general meeting,
     

Page 42

Back to Contents


     
  (i) any Director who was elected or last re-elected a Director at or before the annual general meeting held in the third calendar year before the current year shall retire by rotation; and
       
  (ii) such further Directors (if any) shall retire by rotation as would bring the number retiring by rotation up to one-third of the number of Directors in office at the date of the notice of meeting (or, if their number is not a multiple of three, then the number nearest but not greater than one-third).
       
  A retiring Director who stands for re-election shall retain office until the announcement of the result of the poll on the resolution to reappoint that Director.
       
  Selection of Directors to retire by rotation
       
  (b) The further Directors required to retire by rotation in accordance with Rule 96(a)(ii) shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election and so that as between persons who became or were last re-elected Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by the alphabetical order of their names. A retiring Director shall be eligible for re-election.
       
  Who must retire:
       
  (c) The length of time a Director has been in office shall be computed from the Director's last election or appointment. A retiring Director who was previously elected shall be eligible for re-election. A retiring Director who was previously appointed under Rule 85 or Rule 86 shall be eligible for election. Notwithstanding anything contained elsewhere in these Rules, a Director shall retire from office at the conclusion of the third annual general meeting after which the Director was elected or re-elected except that where a Director stands for re-election, that Director shall retain office until the announcement of the poll on the resolution to reappoint that Director.
       
  Removal of Director whilst in office
       
  (d) The Company in general meeting may at any time by resolution remove any appointed or elected Director before the expiration of that Director's period of office and, if desired, elect another person by way of replacement (provided that such person is also elected as a director of Rio Tinto plc at the same time).
       
  Nomination of Directors:
       
  (e) No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting unless within the period referred to in paragraph (f) of this Rule 96 there has been lodged at the Office, notices in writing:
       
    (i) signed by a member, other than the person to be proposed, duly qualified to attend and vote at the relevant meeting of that member's intention to propose a person for election; and
       

Page 43

Back to Contents


       
    (ii) signed by the person to be proposed of that person's willingness to be elected as a Director of the Company and as a director of Rio Tinto plc.
       
  (f) The period within which the notices referred to in paragraph (e) of this Rule 96 must be lodged at the Office is not less than 35 Business Days nor more than 55 Business Days (inclusive of the date on which the notice is given) before the earlier of the dates appointed for:
       
    (i) the general meeting of the Company; and
       
    (ii) the nearly contemporaneous general meeting of Rio Tinto plc,
       
    provided that, if this would result in the latest date for lodgement of the notices being later than the latest date (the "ASX Date") on which, in accordance with the Listing Rules, the Company must accept a nomination for election as a director at that general meeting of the Company, the latest time for lodgement of the notices shall be the ASX Date.
       
  (g) The Directors shall nominate for election as a Director at a general meeting of the Company any person duly nominated for election at the nearly contemporaneous general meeting of Rio Tinto plc.
       
  (h) The Company at the meeting at which a Director retires under any provision of these Rules may by ordinary resolution fill the office being vacated by electing the retiring Director or some other person eligible for election. In default the retiring Director shall be deemed to have been re-elected except in any of the following cases:
       
    A where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost;
       
    B where such Director has given notice in writing to the Company that such Director is unwilling to be re-elected;
       
    C where the default is due to the moving of a resolution in contravention of the next following Rule;
       
    D where such Director has attained the retiring age specified in section 201C of the Corporations Act;
       
    E where such Director has not been, or is not deemed to have been, re-elected as a director of Rio Tinto plc.

ALTERNATE DIRECTORS

97. Director may appoint Alternate Director
   
  Subject to Rule 88, each Director shall have power from time to time to appoint any person (including any other Director) approved by a majority of co-Directors to act as an Alternate Director in the Director's place, whether for a stated period or periods or until the happening of a specified event or from time to time, whenever by absence or illness or otherwise the Director is unable to attend to duties as a Director. The appointment shall be in writing and signed by the Director and a copy of the appointment shall be given by the appointing Director to the Company by forwarding or delivering it to the Office. The appointment shall take effect immediately upon receipt of the appointment at the Office and approval by a majority of co-Directors and upon that same person's appointment as an alternate director of Rio Tinto plc. The following provisions shall apply to any Alternate Director:
   

Page 44

Back to Contents


     
  (a) the Alternate Director may be removed or suspended from office upon receipt at the Office of a notice in writing (including, without limitation, a letter, telegram, telex, facsimile transmission or other form of visible communication) from the Director by whom the Alternate Director was appointed to the Company;
     
  (b) the Alternate Director shall be entitled to receive notice of meetings of the Board and to attend and vote at the meetings if the Director by whom the Alternate Director was appointed is not present;
     
  (c) the Alternate Director shall be entitled to exercise all the powers (except the power to appoint an Alternate Director) and perform all the duties of a Director, in so far as the Director by whom the Alternate Director was appointed had not exercised or performed them;
     
  (d) the Alternate Director shall not be required to hold any share qualification in the Company;
     
  (e) the Alternate Director shall not, unless the Board otherwise determines, (without prejudice to the right to reimbursement for expenses pursuant to Rule 92) be entitled to receive any remuneration as a Director from the Company, and any remuneration (not including remuneration authorised by the Board or reimbursement for expenses) paid to the Alternate Director by the Company shall be deducted from the remuneration of the Director by whom the Alternate Director was appointed;
     
  (f) the office of the Alternate Director shall be vacated if the Director by whom the Alternate Director was appointed vacates office or dies;
     
  (g) the Alternate Director shall not be taken into account in determining the number of Directors or rotation of Directors; and
     
  (h) the Alternate Director shall, while acting as a Director, be responsible to the Company for the Alternate Director's own acts and defaults and shall not be deemed to be the agent of the Director by whom the Alternate Director was appointed.

VACATION OF OFFICE OF DIRECTOR

98. Vacation of office by Director
     
  The office of a Director shall be vacated:
     
  (a) if the Director becomes an insolvent under administration, suspends payment generally to creditors or compounds with or assigns the Director's estate for the benefit of creditors;
     
  (b) if the Director becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the laws relating to mental health;
     

Page 45

Back to Contents


     
  (c) if the Director resigns office by notice in writing to the Company addressed to it at the Office;
     
  (d) if the Director is removed from office pursuant to paragraph (d) of Rule 96;
     
  (e) if the Director is removed from office pursuant to the Corporations Act;
     
  (f) if the Director ceases to be a director of Rio Tinto plc;
     
  (g) if Director is prohibited from being a Director by reason of the operation of the Corporations Act; or
     
  (h) if without the approval of the Board, neither the Director nor any Alternate Director appointed by that Director is present at meetings of the Board for six consecutive months and the remaining Directors for the time being in Australia have not within seven days of having been personally served by the Secretary with a notice giving particulars of the absence resolved that special leave of absence be granted.

PROCEEDINGS OF DIRECTORS

99.  Procedures relating to Directors' meetings
     
  Subject to the provisions of these Rules, the Board may meet together for the dispatch of business, adjourn and otherwise regulate its meetings as it thinks fit. Until otherwise determined by the Board, three Directors shall form a quorum. It shall not be necessary to give notice of a meeting of Directors to any Director who is for the time being neither in Australia nor in the United Kingdom. Any Director may waive notice of any meeting and any such waiver may be retroactive.
     
100. Meetings by telephone or other means of communication
     
  The Directors may meet either in person or by telephone or by other means of communication by which all persons participating in the meeting are able to hear the entire meeting and to be heard by all other persons attending the meeting. A meeting conducted by telephone or other means of communication shall be deemed to be held at the place agreed upon by the Directors attending the meeting, provided that at least one of the Directors present at the meeting was at that place for the duration of the meeting.
     
101. Convening of meetings
     
  The Board may at any time and the Secretary, upon the request of a Director, shall, convene a meeting of the Board.
     
102. Votes at meetings
     
  Questions arising at any meeting of the Board shall be decided by a majority of votes, and, in the case of an equality of votes, the Chairman shall (except when only two Directors are competent to vote on the question then at issue) have a second or casting vote.
     
103. Chairman
     
  (a) The Board may elect from their number a Chairman and a Deputy Chairman (or two or more Deputy Chairmen) and determine the period for which each is to hold office. If no Chairman or Deputy Chairman shall have been appointed or if at any meeting of the Directors, no Chairman or Deputy Chairman is present within 5 minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be the Chairman of the meeting.
     

Page 46

Back to Contents


     
  (b) If at any time there is more than one Deputy Chairman the right in the absence of the Chairman to preside at a meeting of the Board or of the Company shall be determined as between the Deputy Chairmen present (if more than one) by seniority in length of appointment or otherwise as resolved by the Board.
     
104. Powers of meetings
     
  A meeting of the Board at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions for the time being vested in or exercisable by the Board generally by or under these Rules.
     
105. Delegation of powers to Committees
     
  The Board may, by resolution or by power of attorney or writing under the Seal, delegate any of its powers to Committees consisting of Directors or any other person or persons as the Board thinks fit to act either in Australia or elsewhere. Any Committee formed or person or persons appointed to the Committee shall, in the exercise of the powers delegated, conform to any regulations that may from time to time be imposed by the Board. A delegate of the Board may be authorised to sub-delegate any of the powers for the time being vested in the delegate.
     
106. Proceedings of Committees
     
  The meetings and proceedings of any Committee shall be governed by the provisions of these Rules for regulating the meetings and proceedings of the Board so far as they are applicable and are not superseded by any regulations made by the Board under Rule 105.
     
107. Validity of acts
     
  All acts done at any meeting of the Board or by a Committee or by any person acting as a Director shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of the Directors or the Committee or the person acting as a Director or that they or any of them were disqualified, be as valid as if every person had been duly appointed and was qualified, and continued to be a Director or a member of the Committee (as the case may be).
     
108.  Resolution in writing
     
  A resolution in writing of which notice has been given to all Directors and which is signed by a majority of the Directors shall be as valid and effectual as a resolution duly passed at a meeting of the Directors and may consist of several documents in the like form each signed by one or more Directors. A telegram, telex, facsimile transmission or other document produced by mechanical or electronic means and bearing a signature of a Director printed with that Director's authority by mechanical or electronic means shall for the purposes of this Rule 108 be deemed to be a document in writing signed by the Director.
   

Page 47

Back to Contents


   
109. Directors includes Alternate Directors
   
  For the purposes of Rule 108 the references to "Directors" include any Alternate Director for the time being present in Australia or the United Kingdom who is appointed by a Director not for the time being present in Australia or the United Kingdom or who is unable by reason of illness to sign the resolution in question but do not include any other Alternate Director.
   
POWERS OF THE BOARD
110. General powers of the Board
   
  The management and control of the business and affairs of the Company shall be vested in the Board, which (in addition to the powers and authorities conferred upon them by these Rules) may exercise all powers and do all acts and things as are within the scope of the Memorandum and are not by these Rules or by law directed or required to be exercised or done by the Company in general meeting.
   
111. Powers to give effect to Sharing Agreement
   
  The Company having entered into the Sharing Agreement and the Deed Poll Guarantee, the Directors are authorised and directed to carry into effect the provisions of the Sharing Agreement, the Deed Poll Guarantee and any further or other agreements or arrangements mentioned in or contemplated by such agreements. Subject to the Corporations Act, nothing done by any Director in good faith pursuant to such authority and obligations shall constitute a breach of the fiduciary duties of such Director to the Company or members of the Company. In particular, but without limitation:
   
  (i) the Directors are authorised to agree to enter into a guarantee on behalf of the Company in relation to indebtedness of any member of the Rio Tinto plc Group;
     
  (ii) the Directors are authorised to provide Rio Tinto plc and any officer, employee or agent of Rio Tinto plc with any information relating to the Company; and
     
  (iii) subject to the terms of the Sharing Agreement, the Directors are authorised to do all or any of those matters referred to in Clause 2(1)(ii) and (iii) of the Memorandum.
     
112. Board's power to borrow
     
  Without limiting the generality of Rule 110, the Board may exercise all the powers of the Company to borrow money, to charge any property or business of the Company or all or any of its uncalled capital and to issue debentures or give any other security for a debt, liability or obligation of the Company or of any other person.
     
113. Power to authorise debenture holders, etc, to make calls
     
  Without limiting the generality of Rule 110, if any uncalled capital of the Company is included in or charged by any debenture, mortgage or other security, the Board may, by instrument under the Seal, authorise the person in whose favour the debenture, mortgage or other security is executed or any other person in trust for that person to make calls on the members in respect of that uncalled capital and to sue in the name of the Company or otherwise for the recovery of moneys becoming due in respect of calls made and to give valid receipts for those moneys, and that authority shall subsist during the continuance of the debenture, mortgage or other security, notwithstanding any change in the Directors,and shall be assignable if expressed to be.

Page 48

Back to Contents

114. Management of the affairs of the Company
  (a) The Board may from time to time provide for the management of the affairs of the Company in the manner it thinks fit and the provisions contained in paragraphs (b), (c), (d) and (e) of this Rule shall be without prejudice to the general powers conferred by this paragraph.
     
  Powers of attorney:
     
  (b) The Board may at any time by power of attorney under the Seal appoint any persons to be attorneys of the Company for the purposes and with the powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Rules) and for the period and subject to the conditions the Board thinks fit, and any appointment may (if the Board thinks fit) be made in favour of the members or any of the members of any Local Board, Committee or agency established or in favour of any company or of the members, directors, nominees or managers of any company or firm or otherwise in favour of any fluctuating body of persons whether nominated directly or indirectly by the Board. Any power of attorney may contain provisions for the protection or convenience of persons dealing with the attorneys as the Board thinks fit.
     
  Sub-delegation:
     
  (c) A delegate or attorney may be authorised by the Board to sub-delegate all or any of the powers, authorities and discretions for the time being vested in that delegate or attorney.
     
  Branch Register:
     
  (d)    The Company may, in the exercise of the powers conferred by the Corporations Act, cause to be kept in any place outside Victoria a Branch Register of members. Subject to the Corporations Act, the Listing Rules and the SCH business rules, the Board may from time to time determine which members or class of members may be registered on any Branch Register and appoint an authority in any place in which a Branch Register is kept to keep the Branch Register and enter and remove particulars of shares transferred from or to the Register or any other Branch Register and approve or reject transfers in the Branch Register, and every authority if authorised by the Board may, in respect of transfers or other entries proposed to be registered in the Branch Register for which the authority is appointed, exercise all the powers of the Board in the same manner and to the same extent and effect as if the Board was actually present and exercised those powers.
     

Page 49

Back to Contents


  Local boards
       
  (e) (i) The Board may establish any local boards or agencies for managing any of the affairs of the Company, either in the United Kingdom, Australia or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration.
       
    (ii) The Board may delegate to any local board, manager or agent any of the powers, authorities and discretions vested in the Directors, with power to sub-delegate, and may authorise the members of any local boards, or any of them, to fill any vacancies in that board and to act despite vacancies. Any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors think fit.
       
    (iii) The Board may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected by it.
       
EXECUTIVE OFFICERS
       
115. Powers of executive officers
       
  (a) Subject to the Corporations Act, the Directors may from time to time appoint any one or more of their body to be the holder of any executive office (including, where considered appropriate, the office of Chairman or Deputy Chairman) on such terms and for such period as they may determine. Subject to the terms of any contract entered into in any particular case, the Directors may at any time revoke or vary the terms of any such appointment.
       
  (b) The appointment of any Director to the office of Chairman or Deputy Chairman or Chief Executive or Deputy Chief Executive or Managing or Joint Managing or Deputy or Assistant Managing Director shall automatically determine if that person ceases to be a Director (but without prejudice to any claim for damages for breach of any contract of service between that person and the Company).
       
  (c) The appointment of any Director to any other executive office shall not automatically determine if that person ceases from any cause to be a Director, unless the contract or resolution under which that person holds office shall expressly state otherwise, in which case that determination shall be without prejudice to any claim for damages for breach of any contract of service between that person and the Company.
       
116.   Delegation to executive director
       
  The Directors may delegate to any Director holding any executive office any of the powers exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.
       

Page 50

Back to Contents


     
MINUTES
117. Minutes
     
  The Board shall cause minutes to be duly entered in books provided for that purpose or (provided reasonable precautions are taken for guarding against falsification and for facilitating its discovery) to be duly recorded in any other manner:
     
  (a) of the names of the Directors present at each meeting of the Board and of any Committees;
     
  (b) of all orders made by the Board and any Committees; and
     
  (c) of all resolutions and proceedings of general meetings of the Company and of meetings of the Board and any Committees;
     
  and the minutes of any meeting of the Board or of any Committee or of the Company, if purporting to be signed by the chairman of the meeting or by the chairman of the next succeeding meeting, shall be prima facie evidence of the matters stated in the minutes.
     
DIVIDENDS AND RESERVES
     
118. Declaration of dividend
     
  (a) The Board may from time to time declare dividends to be paid to the members and the Board may fix the time for payment of any dividend. No dividend shall carry interest as against the Company. No dividend shall (unless permitted by the Corporations Act) be payable otherwise than out of profits and a declaration by the Board as to the amount of the profits available for dividend shall be conclusive.
     
  (b)  The dividend declared shall (subject to the Listing Rules, Rule 118A, Rule 123(a)(iii) and the rights of or any restrictions on the holders of the Equalisation Share and any other shares created or raised under any special arrangements as to dividend) be payable on all shares in proportion to the amount of capital for the time being and from time to time paid up in respect of the shares and may be declared at a rate per annum in respect of a specified period; provided that (for the purposes of this Rule only) no amount paid on a share in advance of calls or the due date for the payment of any instalment shall be treated as paid on that share. The Board may declare one dividend on all shares of any one class or may declare at any one meeting of the Board two or more dividends so that each dividend is declared on any shares of that class to the exclusion of any other shares but so that the amount payable (out of the total of the amount of all dividends declared at that meeting) on all shares of the relevant class is (subject as mentioned above) in the proportions specified above.
     
  (c) Dividends shall be declared in Australian currency, but the Board may determine that any dividend payable to some or all of the members shall be paid in a currency or currencies other than Australian currency and for that purpose the Board may (in its absolute discretion) at the time of declaration of the dividend stipulate a date on which it shall determine the rate or rates at which the amount of dividend in Australian currency shall be converted into the other currency or currencies for the purpose of the payment. Payment in another currency or currencies of the amount of any declared dividend converted pursuant to this Rule shall be deemed as between the Company and any member to whom payment is made, and as against all other members, to be an adequate and proper payment of the amount of the dividend.

Page 51

Back to Contents

 
       
  (d) Provided the Directors act in good faith they shall not incur any liability to the holders of any shares of any class for any loss they may suffer by the lawful payment, on any other class of shares having rights ranking after or pari passu with those shares, of any such dividend as aforesaid.
       
118A. Waiver of dividend
       
  (a) A member may request prior to the declaration of a dividend by the Company (Relevant Dividend) that the Relevant Dividend should not be declared and paid in respect of all or any of the shares registered in the name of the member (Relevant Shares).
       
  (b) No such request shall be effective in relation to a Relevant Dividend unless:
       
    (i) the request is in writing signed by or on behalf of the member;
       
    (ii) the request specifies the shares to which it shall apply;
       
    (iii) the request is delivered to the Company and approved by the Board prior to (and not after) declaration of the Relevant Dividend,
       
    and the Board may give or withhold approval in its absolute discretion.
       
  (c) Subject to paragraph (d) of this Rule 118A, if a request is effective in relation to a Relevant Dividend then, notwithstanding any other Rule, the Relevant Dividend shall not be declared and shall not be payable in respect of the Relevant Shares to which the request applies, and the member shall not be entitled to have the Relevant Dividend declared and paid on those shares, and in respect of those shares the member shall have no debt or claim or other right or entitlement of any kind whatsoever to the Relevant Dividend against the Company.
       
  (d) If prior to transfer books close for the Relevant Dividend any shares to which an effective request applies are sold or transferred by a member to another person, or otherwise become registered in the name of another person, the request shall cease to apply upon the earlier of:
       
    (A) the Company receiving notice in writing of the sale; or
       
    (B) the other person being registered as the new holder of the shares
       
    to the intent that the transferee of such shares shall be entitled to the declaration and payment of such Relevant Dividend.
       
119. Reserve fund
   
  The Board may create a reserve or reserves out of profits of the Company or may create any reserve or reserves contemplated by the Sharing Agreement by setting aside, in priority to any dividend, any sum it thinks fit for the purpose of meeting contingencies, equalising dividends and providing a reserve for any purpose for which the profits of the Company may be applied, and may divide any of the sums set aside into special accounts as it thinks fit and may (subject to the Sharing Agreement) at any time resort to that reserve for dividends or bonuses.

Page 52

Back to Contents


       
120. Investment of reserve funds:
       
  (a) The Board may invest any sums representing the whole or any part of any reserve as a fund in shares or securities or other investments as in its absolute discretion it thinks fit and may from time to time deal with, vary or dispose of the whole or any part of the investment for the benefit of the Company. Any income derived from or accretions to those shares, securities or other investments may either be carried to the credit of the reserve fund represented by those shares, securities or other investments or be dealt with as profits arising from the business of the Company.
       
  (b) The Board shall have full power to employ in the business of the Company the whole or part of any reserve not invested as a fund and without being bound to, keep the representative assets separate from other assets of the Company.
       
121. Dividends in specie
       
  When declaring a dividend, the Board may:
       
  (a) direct payment of the dividend wholly or in part by the distribution of specific assets or documents of title and, in particular, of fully paid up shares, debentures or debenture stock of the Company or any other corporation. Where any difficulty arises in regard to the distribution, the Board may settle that difficulty as it thinks expedient and in particular may issue fractional certificates and may fix the value for distribution of those specific assets and may determine that cash payments shall be made to any members upon the basis of the value fixed in order to adjust the rights of all parties and may vest any specific assets in trustees upon trusts for the persons entitled to the dividend as the Board considers expedient; or
       
  (b) direct that the dividend be payable to particular shareholders wholly or partly out of any particular fund or reserve or out of profits derived from any particular source and to the remaining shareholders wholly or partly out of any other particular fund or reserve or out of profits derived from any other particular source and may make the direction notwithstanding that by doing so the dividend will form part of the assessable income for taxation purposes of some shareholders and will not form part of the assessable income of others; or
       
  (c) where the Company in general meeting has approved the adoption of a dividend reinvestment plan, determine and announce that each member entitled to participate in the dividend may elect to have the payment of the dividend applied and satisfied in respect of all, or a number of shares less than all, of the shares held by the member by the subscription for and allotment of fully paid up shares in accordance with the dividend reinvestment plan.
       
122. Share Investment plans
       
  (a) A general meeting of the Company may resolve to authorise the Directors to establish and maintain a plan (including the establishment of rules) for the issue and allotment of fully paid ordinary shares as an alternative to a cash dividend to be known as the Share Investment Plan (in this Rule, a "SIP").

Page 53

Back to Contents


       
  (b) Pursuant to a SIP established under this Rule, any member may elect for a specified period or for a period to be determined by specified notice (in either case determined by the Directors and prescribed in the rules of the SIP) that cash dividends shall not be paid on all or some of the Ordinary Shares held by that member designated by the member in accordance with the rules of the SIP (in this Rule, "SIP shares") and that the member's dividend entitlement and be satisfied by the allotment of shares paid up from the Company's share premium account. During that period SIP shares will be entitled to participate in the SIP subject to the rules of the SIP. The SIP and the rules of the SIP shall not be inconsistent with these Rules and in the event of an inconsistency these Rules shall prevail.
       
  (c) The Directors are authorised to vary the rules of the SIP established in accordance with paragraph (a) of this Rule at their discretion and to suspend or terminate the SIP at their discretion. The SIP may also be suspended, terminated or varied by resolution of a general meeting of the Company.
       
  (d) The Directors shall allot and issue shares in accordance with the SIP to any member who makes it a valid election in respect of the designated shares entitled to participate in the SIP. The Directors shall, and are authorised to, allot and issue the shares in such manner as may be required by the rules of the SIP from time to time. However, unless and until otherwise required by the rules of the SIP:
       
    (i) the shares shall be issued directly to the members participating in the SIP as fully paid ordinary shares for whose issue no consideration is payable to the Company, and
       
    (ii) no amount shall be credited to the capital account of the Company in connection with the issue of the shares.
       
123. Dividend Plans
       
  (a) The Board may establish and maintain one or more dividend plans (including the establishment of rules) pursuant to which members may elect with respect to some or all of their shares (subject to the rules of the relevant plan):
       
    (i) to reinvest either in whole or in part dividends paid or payable or which may become payable by the Company to the member in cash by subscribing for shares in the capital of the Company;
       
    (ii) to receive a dividend from the company by way of the allotment of shares paid up from the Company's capital account or by way of the allotment of shares issued directly to members as fully paid ordinary shares for whose issue no consideration is payable to the Company;
       
    (iii) that the dividends from the Company not be declared or paid and that instead a payment or distribution other than a dividend be made by the Company;

      Page 54

Back to Contents


       
    (iv) that the cash dividends from the Company not be paid and that instead a cash dividend be received from a related corporation nominated by the Board;
       
    (v) to participate in a dividend selection plan, including not limited to a plan pursuant to which members may elect to receive a dividend from the Company or any related corporation which is less in amount but franked to a greater extent than the ordinary cash dividend declared by the Company or any related corporation or to receive a dividend from the Company or any related corporation which is greater in amount but franked to a lesser extent than the ordinary cash dividend declared by the Company or any related corporation.
     
  (b) Pursuant to a dividend plan established in accordance with paragraph (a) of this Rule, any member may elect for a specified period or for a period to be determined by specified notice (in either case determined by the Directors and prescribed in the rules of the plan) that all or some of the Ordinary Shares held by that member and designated by the member in accordance with the rules of the plan (the "designated shares") will participate in the dividend plan. During that period the designated shares will be entitled to participate in the dividend plan subject to the rules of the dividend plan.
       
  (c) In the event of any inconsistency between any dividend plan established in accordance with paragraph (a) of this Rule or the rules of any dividend plan and these Rules these Rules shall prevail.
       
  (d) The Directors are authorised to do all things which they consider to be desirable or necessary for the purpose of implementing every dividend plan established in accordance with paragraph (a) of this Rule.
       
  (e) The Directors are authorised to vary the rules of any dividend plan established in accordance with paragraph (a) of this Rule at their discretion and to suspend or terminate any dividend plan at their discretion. Any dividend plan may also be suspended, terminated or varied by resolution of a general meeting of the Company.
       
124. Transfer of shares
   
  Subject to the Corporations Act and the SCH business rules, a transfer of shares which is registered after the transfer books close for dividend purposes but before a dividend is payable shall not pass the right to any dividend declared before the books are closed.
       
125.  Retention of dividends
       
  The Board may retain the dividends payable on shares which any person is under Rules 39 or 40 entitled to transfer until that person becomes registered as a member in respect of those shares or duly transfers them.
       

Page 55

Back to Contents


   
126. Dividends on which a Company has a charge
       
  The Board may retain any dividends payable on shares over which the Company has a lien or charge and may apply the dividend in or towards satisfaction of the calls, instalments or sums owing in respect of the shares over which the lien or charge exists.
       
127. How dividends are payable
       
  Payment of any dividend may be made in any manner and by any means as determined by the Board. Without prejudice to any other method of payment which the Board may adopt any dividend may be paid by cheque or warrant made payable to the member entitled to the dividend or in the case of joint holders to the member whose name stands first in the Register in respect of the joint holding. Payment of any dividend may be made by sending the cheque, warrant or other means of payment to the member entitled to the dividend through the post to the address of the member in the Register, and upon posting every payment of any dividend shall be at the risk of the member.
       
128. Notice of dividend
       
  Notice of the declaration of any dividend shall be given to members in any manner the Board may determine.
       
129. Unclaimed dividends
       
  All unclaimed dividends may be invested or otherwise made use of by the Board for the benefit of the Company until claimed or otherwise disposed of according to law.
       
CAPITALISATION OF PROFITS
       
130. Power to capitalise profits
       
  The Board may, subject to Rule 7, resolve that the whole or any portion of any sum forming part of the undivided profits of the Company or standing to the credit of any reserve or other account (including without limitation any capital account) and available for distribution or capitalisation be capitalised and that the amount capitalised be appropriated to the members (subject to Rule 141 and Rule 143) in the respective proportions in which they would be entitled to receive if it distributed by way of dividend and be applied on their behalf either in paying up the amounts for the time being unpaid on any issued shares held by them, or in paying up in full unissued shares or other securities of the Company (of an aggregate nominal amount equal to the amount capitalised) to be issued to them accordingly, or partly in one way and partly in the other.
       
131. Employee Share Plan
       
  The Board may, in addition to its powers under Rule 130, resolve to apply the whole or a portion of any sum, standing to the credit of any reserve or other account in paying up in full unissued shares of the Company to be issued to holders of shares, options or other securities of the Company in accordance with, or to give effect to, the terms of any plan for the issue of shares, rights to shares or options to acquire shares to or for the benefit of employees which has been approved by the Company by special resolution in general meeting.
       

Page 56

Back to Contents


       
132. Appropriation and application of amounts to be capitalised
       
  The Board may specify the manner in which any fractional entitlements and any difficulties relating to distribution are to be dealt with and, without limiting the generality of the foregoing, may specify that fractions are to be disregarded or that any fractional entitlements are to be increased to the next whole number or that payments in cash in lieu of fractional entitlements be made. The Board shall make all necessary appropriations and applications of the amount to be capitalised pursuant to Rules 130 and 131 and all necessary allotments and issues of fully paid up shares or debentures. Where required, the Board may appoint a person to sign a contract on behalf of the members entitled upon a capitalisation to any shares or debentures, which provides for the issue to them, credited as fully paid up of any further shares or debentures, or for the payment up by the Company on their behalf of the amounts or any part of the amounts remaining unpaid on their existing shares by the application of their respective proportions of the sum resolved to be capitalised.
       
NOTICES
       
133. Service of notices
       
  A notice may be given by the Company to any member, or in the case of joint holders to the member whose name stands first in the Register, personally, by leaving it at the member's registered address or by sending it by prepaid post or facsimile transmission addressed to the member's registered address or, in any case, by other electronic means determined by the Board.
       
134. Member may notify Company of address for service
       
  A registered holder of shares may notify the Company of an address in Australia or in the United Kingdom or, in the case of a registered holder of shares on a Branch Register situated outside Australia or the United Kingdom, in the country, state or place where that Branch Register is kept (as the case may be) as a place at which the member will accept service of notices, which shall be deemed to be the member's registered place of address.
       
135. Member not known at registered address
       
  Where a member does not have a registered place of address or where the Company has a bona fide reason to believe that a member is not known at the member's registered address and the Company has subsequently made an enquiry at the registered address of the member as to the whereabouts of the member, and the enquiry either elicits no response or a response indicating that the member or the member's present whereabouts are unknown, all future notices shall be deemed to be given to the member if the notice is exhibited in the Office for a period (not including weekends and public holidays) of forty-eight hours (and shall be deemed to be duly served at the commencement of that period) unless and until the member informs the Company of a registered place of address or that the member has resumed residence at the member's registered place of address or notifies the Company of a new address to which the Company may send the member notices (which new address shall be deemed to be the member's registered place of address).
       

Page 57

Back to Contents


   
136. When notice deemed to be served
   
  Any notice sent by post shall be deemed to have been served at the expiration of twenty-four hours after the envelope containing the notice is posted and, in proving service, it shall be sufficient to prove that the envelope containing the notice was properly addressed and posted. Any notice served on a member personally or left at the member's registered place of address shall be deemed to have been served at the time of service. Any notice served on a member by telex is deemed to have been served on receipt by the Company of the answerback code of the recipient at the end of the transmission. Any notice served on a member by facsimile transmission is deemed to have been served when the transmission is sent.
   
137. Signature to notice
   
  The signature to any notice to be given by the Company may be written or printed.
   
138. Reckoning of period of notice
   
  Where a given number of days' notice or notice extending over any other period is required to be given, the period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held.
   
139. Notice to transferor binds transferee
   
  Every person who, by operation of law, transfer or any other means becomes entitled to be registered as the holder of any shares shall be bound by every notice which, prior to the person's name and address being entered in the Register in respect of those shares, was duly given to the person from whom the person derives title to those shares.
   
140. Service on deceased members
   
  A notice delivered or sent by post to the registered place of address of a member pursuant to these Rules shall (notwithstanding that the member be then dead and whether or not the Company has notice of the member's death) be deemed to have been duly served in respect of any registered shares, whether held solely of jointly with other persons by that member, until some other person is registered in the member's stead as the holder or joint holder and the service shall for all purposes be deemed to be sufficient service of the notice or document on the member's heirs, executors or administrators and all persons (if any) jointly interested with the member in the shares.
   
  PAYMENTS BY THE COMPANY
   
141. Payments by the Company
   
  Whenever any law for the time being of any country, state, territory or place imposes or purports to impose any immediate or future or possible liability on the Company to make any payment or empowers any government or taxing authority or government official to require the Company to make any payment in respect of any shares, rights to shares or options to acquire shares registered in the Register or a Branch Register as held either jointly or solely by any member or in respect of any transfer of those shares, rights to shares or options to acquire shares or in respect of any interest, dividends, bonuses or other moneys due or payable or accruing due or which may become due or payable to that member by the Company on or in respect of any shares, rights to shares or options to acquire shares or for or on account or in respect of any member, whether in consequence of:
 

Page 58

Back to Contents


     
  (a) the death of that member;
     
  (b) the non-payment of any income tax or other tax by that member;
     
  (c) the non-payment of any estate, probate, succession, death, stamp or other duty by the member or the trustee, executor or administrator of that member or by or out of the member's estate;
     
  (d) any assessment of income tax against the Company in respect of interest or dividends paid or payable to that member;
     
  (e) or any other act or thing, the Company in every case:
     
    (i) shall be fully indemnified from all liability by that member or that member's trustee, executor or administrator and by any person who becomes registered as the holder of the shares on the distribution of the deceased member's estate;
       
    (ii) shall have a lien or charge upon the shares for all moneys paid by the Company in respect of the shares under or in consequence of any law;
       
    (iii) shall have a lien upon all dividends, bonuses and other moneys payable in respect of the shares registered in the Register or a Branch Register as held either jointly or solely by that member for all moneys paid or payable by the Company in respect of the shares under or in consequence of any law, together with interest at a rate the Board may determine from time to time from the date of payment to the date of repayment, and may deduct or set off against any dividend, bonus or other moneys payable any moneys paid or payable by the Company together with interest;
       
    (iv) may recover as a debt due from that member or that member's trustee, executor or administrator or any person who becomes registered as the holder of the shares on the distribution of the deceased member's estate wherever constituted or situated, any moneys paid by the Company under or in consequence of any law which exceed any dividend, bonus or other money then due or payable by the Company to that member together with interest at a rate the Board may determine from time to time from the date of payment to the date of repayment; and
       
    (v) except in the case of a proper SCH transfer, may, if any money is paid or payable by the Company under any law, refuse to register a transfer of any securities by the holder or the holder's trustee, executor or administrator until the money and interest is set off or deducted or, in case the money and interest exceeds the amount of any dividend, bonus or other money then due or payable by the Company to the holder, until the excess is paid to the Company but notwithstanding the foregoing the Company may not refuse to register any proper SCH transfer except as permitted by the Corporations Act, the Listing Rules or the SCH business rules.
       

Page 59

Back to Contents


     
  Nothing contained in this Rule shall prejudice or affect any right or remedy which any law confers or purports to confer on the Company, and, as between the Company and every member, every member's trustee, executor, administrator and estate, wheresoever constituted or situated, any right or remedy which that law confers or purports to confer on the Company shall be enforceable by the Company.
     
    WINDING UP
     
142. Distribution in specie
     
  (a) If the Company is wound up, whether voluntarily or otherwise, with the sanction of a special resolution, the liquidators may divide among the contributories in specie or kind any part of the assets of the Company, and may vest any part of the assets of the Company in trustees upon any trusts for the benefit of the contributories or any of them as the liquidators shall think fit.
     
  Liability to calls:
     
  (b) If any shares to be divided in accordance with Rule 142(a) involve a liability to calls or otherwise, any person entitled under the division to any of the shares may by notice in writing within ten days after the passing of the special resolution, direct the liquidators to sell that person's proportion and pay that person the net proceeds and the liquidators shall, if practicable, act accordingly.
     
  Ratification of payment of fee to liquidators:
     
  (c) No commission or fee shall be payable to the liquidators in a voluntary liquidation, unless the payment of the commission or fee has been ratified by a general meeting of the Company and the amount of the proposed payment has been specified in the notice calling the meeting.
     
143. Capital rights on a liquidation
     
  On a return of assets on liquidation, the assets of the Company remaining available for distribution among members, after giving effect to preferential rights attached to any preference shares issued by the Company and to the rights of other shares having a preferred right to participate as regards capital up to but not beyond a specified amount in a distribution, and to any provision of the Corporations Act, shall be applied:
     
  (a) first in paying to the holder of the Equalisation Share (if any) the nominal amount paid up on such share and then in paying amounts (if any) standing to the credit of the holder of the Equalisation Share in any reserve set up in the books of the Company pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; and
     
  (b) then in paying to relevant holders of the Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of the Company pursuant to paragraphs 3.6.2(b) or (c) of Schedule 2 of the Sharing Agreement; and
     

    Page 60

Back to Contents


     
  (c) then in paying to the holder of the Special Voting Share the nominal amount paid up on such share; and
     
  (d) any surplus remaining after application of the assets in accordance with the preceding paragraphs shall be applied in making payments to the holder of the Equalisation Share and/or the holders of Ordinary Shares in accordance with their entitlements, which shall be determined as follows:­
     
    (i) The liquidator of the Company shall draw up accounts as at earliest date (the "Reference Date") on which the liquidator is able to make a final distribution to creditors and members of the Company to show the gross amount which would be available for distribution to the holders of Ordinary Shares on the liquidation of the Company after payment in full of any amount standing to the credit of:
       
      (A) the holder of the Equalisation Share in any reserve set up in the books of the Company pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; and
         
      (B) the holders of Ordinary Shares in any reserve set up in the books of the Company under paragraphs 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement
         
      and to calculate the amount thereof available for distribution to holders of Publicly-held Rio Tinto Limited Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held Rio Tinto Limited Ordinary Shares would receive any payment by way of distribution (in either case the "Company's Own Distribution Amount"), on the assumption that distribution to the Company's creditors and members on liquidation took place on the Reference Date. The liquidator of the Company shall certify the result of such calculation to Rio Tinto plc.
         
    (ii) Whether or not proceedings have been commenced for the liquidation of Rio Tinto plc, Rio Tinto plc shall be required under the Sharing Agreement to instruct the Relevant Officer for the time being of Rio Tinto plc to draw up accounts as at the Reference Date of all assets (valued as if Rio Tinto plc was in liquidation and those assets were to be realised by a liquidator of Rio Tinto plc in an orderly manner) and liabilities which would be admissible to proof if Rio Tinto plc was in liquidation at the Reference Date (other than the asset or liability represented by any Equalisation Payment (as defined in paragraph 4.2 of Schedule 2 to the Sharing Agreement) to be made in accordance with the Sharing Agreement or any payment on the Rio Tinto plc Equalisation Share under Article 3(C)(e) or 3(C)(f) of the Rio Tinto plc Articles) to show the gross amount which would be available for distribution to holders of Rio Tinto plc Ordinary Shares on the liquidation of Rio Tinto plc (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of:
       

      Page 61

Back to Contents


         
      (A) the holder of the Rio Tinto plc Equalisation Share in any reserve set up in the books of Rio Tinto plc pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; or
       
      (B) the holders of Rio Tinto plc Ordinary Shares in any reserve set up in the books of Rio Tinto plc under paragraphs 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement
       
      and to calculate the amount thereof available for distribution to holders of Publicly-held Rio Tinto plc Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held Rio Tinto plc Ordinary Shares would receive any payment by way of distribution (in either case, the "Rio Tinto plc Own Distribution Amount") on the assumption that the distribution to Rio Tinto plc's creditors and members on liquidation took place on the Reference Date. Rio Tinto plc is obliged under the Sharing Agreement to instruct the Relevant Officer of Rio Tinto plc to certify the result of such calculation to the Company.
       
    (iii) The liquidator of the Company shall make and certify to Rio Tinto plc the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of Rio Tinto plc, which calculation shall be expressed in Australian dollars, with any sterling amounts being converted to Australian dollars at the Liquidation Exchange Rate as at the Reference Date:
       
  (COD + Rio Tinto plcOD) x
COS
 
   
 
   
(Rio Tinto plcOS ÷ EF) + COS
 
       
      where:
       
      COD = the Company's Own Distribution Amount;
       
      COS = the number of Publicly-held Rio Tinto Limited Ordinary Shares in issue on the Reference Date;
       
      EF = the Equalisation Fraction;
       
      Rio Tinto plcOD = the Rio Tinto plc Own Distribution Amount; and
       
      Rio Tinto plcOS = the number of Publicly-held Rio Tinto plc Ordinary Shares in issue on the Reference Date.
       
      The result of such calculation is referred to below as the "Adjusted Company Distribution Amount".
       
    (iv) If the Adjusted Company Distribution Amount is equal to or more than the Company's Own Distribution Amount then the assets remaining available for distribution (which shall include any distribution made on the Rio Tinto plc Equalisation Share pursuant to Article 3(C)(e) or 3(C)(f) of the Rio Tinto plc Articles, any amounts paid by Rio Tinto plc under paragraph 4.2.4 of Schedule 2 to the Sharing Agreement and any amounts paid by Rio Tinto plc from reserves set up in the books of Rio Tinto plc under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement) shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them.
       

     
Page 62

Back to Contents


       
    (v) If the Adjusted Company Distribution Amount is equal to or more than zero, but is less than the Company's Own Distribution Amount, the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held Rio Tinto Limited Ordinary Share:
       
      (1) apart from in each case any undistributed amounts resulting from the payment by Rio Tinto plc to a member of the Rio Tinto Limited Group or the Company to a member of the Rio Tinto plc Group of any reserves under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement or any amounts credited to any reserve in the books of the Company for the benefit of holders of Ordinary Shares or any amounts credited to any reserve in the books of Rio Tinto plc for the benefit of holders of Rio Tinto plc Ordinary Shares, in each case under paragraphs 3.6.2(b) and 3.6.2(c) of Schedule 2 to the Sharing Agreement; and
       
      (2) on the assumption that distribution to the Company's members and creditors and Rio Tinto plc's members and creditors took place on the Reference Date; and
         
      (3) after taking into account the amounts available for distribution on each Publicly-held Rio Tinto plc Ordinary Share prior to such payment
         
      to the amount available for distribution on each Publicly-held Rio Tinto plc Ordinary Share (converting sterling amounts to Australian dollar amounts by application of the Liquidation Exchange Rate as at the Reference Date) is equal to the Equalisation Ratio (and the balance of the assets of the Company available for distribution remaining after any such payment on the Equalisation Share, shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them).
         
    (vi) If the Adjusted Company Distribution Amount is zero or a negative amount and the Company's Own Distribution Amount is a positive amount then the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount, after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held Rio Tinto Limited Ordinary Shares on the assumption that distribution to the Company's members and creditors took place on the Reference Date, is zero.
         

       
Page 63

Back to Contents


       
    (vii) If the Company's Own Distribution Amount is zero or a negative amount and the Rio Tinto plc Own Distribution Amount is zero or a negative amount, then no distribution shall be made by the liquidator of the Company on the Equalisation Share or to holders of Ordinary Shares.
       
    (viii) In making the calculations referred to in this paragraph (d), the Relevant Officer of Rio Tinto plc and the liquidator of the Company shall:
       
      (A) in relation to the Company, take into account the distributions which fall to be made on Ordinary Shares which are not Publicly-held Rio Tinto Limited Ordinary Shares it being acknowledged that the per share distributions on the Publicly-held Rio Tinto Limited Ordinary Shares will be the same as the distributions on the non Publicly-held Rio Tinto Limited Ordinary Shares;
         
      (B) in relation to Rio Tinto plc, take into account the distributions which fall to be made on Rio Tinto plc Ordinary Shares which are not Publicly-held Rio Tinto plc Ordinary Shares it being acknowledged that the per share distributions on the Publicly-held Rio Tinto plc Ordinary Shares will be the same as the distributions on the non Publicly-held Rio Tinto plc Ordinary Shares.
         
    (ix) In this paragraph (d) "Relevant Officer" of Rio Tinto plc shall mean the auditor of Rio Tinto plc or if Rio Tinto plc is in liquidation, the liquidator of Rio Tinto plc.
       
    (x) In this paragraph (d) "the gross amount which would be available for distribution" to shareholders means such amount ignoring any distribution on the Equalisation Share or Rio Tinto plc Equalisation Share or any Equalisation Payment (as defined in paragraph 4.2 of Schedule 2 to the Sharing Agreement) made in accordance with the Sharing Agreement and any tax payable on the making of the Equalisation Payment or distribution and both "the gross amount which would be available for distribution" and "the amount available for distribution" refer to such amount before deduction of any amount in respect of tax required to be deducted or withheld from the distribution to ordinary shareholders by or on behalf of the company paying or making the distribution but net of any tax payable by that company on the distribution to its ordinary shareholders.
       
    (xi) The certificates which the liquidator of the Company is required to produce under this paragraph (d) and the Relevant Officer of Rio Tinto plc is required to produce under the Sharing Agreement (the "Certificates") shall be produced within 6 weeks after the Reference Date and the Company
       

     
Page 64

Back to Contents


       
      shall procure that all necessary instructions are given to the liquidator of the Company to ensure that such certificates are produced within that time. The liquidator of the Company and the Relevant Officer of Rio Tinto plc shall then agree the calculations in such Certificates within 4 weeks of the date on which all such Certificates are produced. If the liquidator of the Company and the Relevant Officer of Rio Tinto plc are unable to agree to the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the liquidator of the Company with the Relevant Officer of Rio Tinto plc (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either the Company or Rio Tinto plc, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm are to be borne as such firm decides. Once the calculations in the Certificates have been agreed by the liquidator of the Company with the Relevant Officer of Rio Tinto plc or determined by the independent accountants, they shall be conclusive and binding.
       
    (xii) If Rio Tinto plc goes into liquidation after the Company has gone into liquidation but before the liquidator of the Company has made a distribution under any of paragraphs (v) or (vi) then the Reference Date shall be the later of:
       
      (A) the earliest date on which the liquidator of Rio Tinto plc is able to make a final distribution to creditors and members of Rio Tinto plc; or
         
      (B) the earliest date on which the liquidator of the Company is able to make a final distribution to creditors and members of the Company;
         
      and the Relevant Officer of Rio Tinto plc shall be the liquidator of Rio Tinto plc and not the auditor of Rio Tinto plc.
       
      INDEMNITY
       
144. Indemnity of officers
       
  (1) The Company shall indemnify each officer of the Company and each officer of each wholly owned subsidiary of the Company out of the assets of the Company to the relevant extent against any liability incurred by the officer in the conduct of the business of the Company or in the conduct of the business of such wholly owned subsidiary of the Company (as the case may be) or in the actual or purported execution or discharge of the duties of the officer.
       
  (2) To the extent permitted by law, the Company may pay amounts by way of premium in respect of any contract effecting insurance on behalf or in respect of an officer or employee of any relevant company, including (without limitation) insurance against liability incurred by the officer or employee in the conduct of the business of the relevant company, or in the actual or purported execution or discharge of the duties of the officer or employee.
     

   
Page 65

Back to Contents


     
  (3) In this Rule:
       
  (a) "officer" means:
       
    (i) a director, secretary or executive officer, or
       
    (ii) a person appointed as a trustee by, or acting as a trustee at the express request of, the Company or a wholly owned subsidiary of the Company.
       
  (b) "duties " includes duties and powers arising by reason of, or otherwise in connection with the appointment or nomination of the person by the Company or any relevant company to any other corporation.
       
  (c) "liability" means all costs, charges, losses, damages, expenses, penalties and liabilities.
     
  (d) "to the relevant extent" means:
     
    (i)  to the extent the Company is not precluded by law from doing so;
       
    (ii) where the liability is incurred in the conduct of the business of another corporation or in the discharge of the duties of the officer in relation to another corporation, to the extent and for the amount that the officer is not entitled to be indemnified and is not actually indemnified out of the assets of that corporation; and
       
    (iii) to the extent and for the amount that the officer is not otherwise entitled to be indemnified and is not otherwise actually indemnified.
       
  (e) "relevant company" means the Company, any holding company of the Company, any body (whether or not incorporated) in which the Company or such holding company (or any predecessors of the Company or such holding company of the Company) has or had any interest (whether direct or indirect), any body that is in any way allied to or associated with the Company, and Rio Tinto plc and any of its subsidiaries.
       
145. Change of control
       
A. The purpose of this Rule is to place restrictions upon any person (other than a Permitted Person as defined below) who is entitled to or interested in shares in the Company or Rio Tinto plc or both which would otherwise enable such person to cast on a poll (directly, or indirectly through the Special Voting Share and Ordinary Shares held by any member of the Rio Tinto plc Group) 20 per cent or more of the votes generally exercisable on a Joint Decision at general meetings of the Company. If the person is only entitled to or interested in shares of one of Rio Tinto plc or Rio Tinto Limited, the restrictions only apply if that person is able to cast on a poll 30 per cent or more of the votes generally exercisable at general meetings of that company (excluding any votes attaching to the Special Voting Share or the Rio Tinto plc Special Voting Share).
   

 
Page 66

Back to Contents


   
  The restrictions include suspension of rights to attend and vote at general meetings, and suspension of the right to receive dividends and distributions. In certain circumstances the Board can compel divestment of the shares.
         
B. In this Rule:
         
  (i) "Accepting Shareholder" means any person who has, in respect of the whole of that person's Entitlement to Ordinary Shares or Interest in Rio Tinto plc Voting Shares or both, accepted or given irrevocable undertakings to accept offers made under a takeover bid which complies with Chapter 6 of the Corporations Act or under a takeover offer which complies with the City Code on Takeovers and Mergers (or both);
         
  (ii) "Additional Entitlement" means any Relevant Interest which would, but for sections 38, 39, 40, 41, 42 and 43 of the Law, result in a person having an Entitlement;
         
  (iii) "ADR Depositary" means a custodian or depositary or that person's nominee, approved by the Directors, under contractual arrangements with the Company by which such person or nominee holds Ordinary Shares and such person or another person issues American Depositary Receipts evidencing rights in relation to those shares or a right to receive them;
         
  (iv) "concert parties" means persons acting in concert within the meaning of the City Code on Takeovers and Mergers from time to time;
         
  (v) "Entitlement" means the entitlement in respect of shares resulting through a person being entitled to those shares as that term is defined in section 609 of the Law;
         
  (vi) "Holder" is as defined in paragraph (I) below;
         
  (vii) "Interest" in relation to shares in Rio Tinto plc, means:
         
      (a) any interest in Rio Tinto plc Voting Shares which would be taken into account in determining for the purposes of Part VI of the Original Act whether a person has a notifiable interest (including any interest which that person would be taken as having for those purposes); and
         
      (b) any interest in Rio Tinto plc Voting Shares mentioned in Section 209(1)(a), (b), (c), (d), (e), (f), (g) or (h) of the Original Act (except that of a bare trustee) or mentioned in section 208(4)(b) of the Original Act (but on the basis that the entitlement there referred to could arise under an agreement within the meaning in section 204(5) and (6) of that Act),
         
    and "Interested" shall be construed accordingly;
         
  (viii) the "Original Act" means the Companies Act 1985 of the United Kingdom as in force at the date of adoption of this Rule and notwithstanding any repeal, modification or re-enactment thereof after that date including for the avoidance of doubt, any amendment, replacement or repeal by regulations made by the Secretary of State pursuant to section 210A of that Act to the definition of relevant share capital in section 198(2) or to the provisions as to what is taken to be an interest in shares in section 208 or as to what interests are to be disregarded in section 209 or the percentage giving rise to a notifiable interest in section 199(2);
     

    Page 67

Back to Contents


     
       
  (ix) "Permitted Holding" means:
       
    (a) any Entitlement to Ordinary Shares, arising as a result of two or more persons becoming Associates, in relation to the acquisition of which an exemption or declaration under section 655A of the Corporations Act is in force, with the effect that the acquisition of such Entitlement would not breach section 606 of the Corporations Act;
       
    (b) any Entitlement to shares in the Company or any Interest in Rio Tinto plc Voting Shares held solely by a person as a bare trustee or by a person who, if the incidents of that person's Entitlement or Interest were governed by the laws of Australia, would in the opinion of the Directors be regarded as a bare trustee in respect of that Entitlement or Interest;
       
    (c) any Entitlement of a person to shares in the Company or any Interest of a person in any Rio Tinto plc Voting Shares which under arrangements approved by the Directors of the Company and directors of Rio Tinto plc respectively have been allotted or issued with a view to that person (or purchasers from that person) offering the same to the public within a period not exceeding three months from the date of the relevant allotment or issue;
       
    (d) any Entitlement of a person to shares in the Company or any Interest of a person in any Rio Tinto plc Voting Shares which the Directors are satisfied is held by virtue only of that person being entitled to exercise or control the exercise of 20% or more of the voting power at general meetings of a company which is a Permitted Person; and
       
    (e) any Entitlement or Interest of a Permitted Person, other than RTL Shareholder SVC or RTP Shareholder SVC;
       
  (x) "Permitted Person" means:
       
    (a) any member of the Rio Tinto Limited Group;
       
    (b)  any member of the Rio Tinto plc Group;
       
    (c) RTL Shareholder SVC;
       
    (d) RTP Shareholder SVC;
       
    (e) an ADR Depositary, acting in that capacity;
       
    (f) The Depositary Trust Company or any successor and/or the nominee of either of them acting in the capacity of a clearing agency in respect of dealings in American Depositary Receipts;
       
    (g) a Recognised Person;
       
    (h) a trustee (acting in that capacity) of any employee incentive scheme of the Company or of Rio Tinto plc;
       

     
Page 68

Back to Contents


    (i) any person (an "Offeror") who has made an offer to acquire all the outstanding Rio Tinto plc Ordinary Shares (other than those already owned by the Offeror) which may, if the Offeror so decides, be conditional upon an offer which has been made by the Offeror or by a related entity (as defined in the Law) of the Offeror (on terms which satisfy each of sub-paragraphs (I), (II) and (III) of Article 64(B)(xii)(i) of the Rio Tinto plc Articles) to acquire all the outstanding Ordinary Shares (other than those already owned by the Offeror) becoming unconditional and shall:
           
      (I) be unconditional when made or contain only such conditions as are mandatory under the City Code on Takeovers and Mergers;
           
      (II) disclose the highest price or value of consideration given for Ordinary Shares by the Offeror or its Associates and for Rio Tinto plc Ordinary Shares by the Offeror and its concert parties since the beginning of the period commencing 12 months before the date on which the Offeror became a Relevant Person and include a cash offer (or an offer with a cash alternative) to acquire all the Rio Tinto plc Ordinary Shares (other than those already directly or indirectly owned by the Offeror) at a price per Rio Tinto plc Ordinary Share which (subject to paragraph (xviii)) is not less than the higher of:
           
        (aa) the highest price or value of consideration paid or given for Ordinary Shares by the Offeror or its Associates since the beginning of the period commencing 12 months before the date on which the Offeror became a Relevant Person divided by the Equalisation Fraction as at the date of the offer and converted into sterling. Such conversion shall be made at the closing mid-point spot sterling-Australian dollars exchange rate on the date on which the Offeror became a Relevant Person as published in the Financial Times; and
           
        (bb) the highest price or value of consideration paid or given for Rio Tinto plc Ordinary Shares by the Offeror or its concert parties in sterling (or equivalent, converted into sterling by a method comparable to that set out in sub-paragraph (aa)) since the beginning of the period commencing 12 months before the date on which the Offeror or any of its Associates or concert parties became a Relevant Person,
           
      provided that if no such shares have been acquired by the Offeror or any of its Associates or concert parties during that period the price (subject to paragraph (xviii)) shall be not less than the higher of:
           
           
        (cc) the weighted average sale price derived from the Australian Stock Exchange in respect of Ordinary Shares on the Business Day preceding the date on which the offer is announced divided by the Equalisation Ratio as at that Business Day and converted into sterling at the closing mid-point spot sterling-Australian dollar exchange rate as at such date as published in the Financial Times; and
           

Page 69

Back to Contents


           
        (dd) the middle market quotation derived from the London Stock Exchange Daily Official List in respect of an Rio Tinto plc Ordinary Share on the dealing day preceding the date on which the offer is announced; and
           
      (III) comply with the provisions of the City Code on Takeovers and Mergers as if it were an offer made under Rule 9 of that Code;
           
      provided that if the terms of any such offer would, at the time it would be required to be made, be illegal or contravene any applicable law or regulatory requirements (including the Corporations Act) then the offer shall be on such terms as may be necessary to comply with such applicable law or regulatory requirement but otherwise shall approximate as far as is possible the requirements set out in (I) to (III) above and provided further that references to the price paid for an Ordinary Share or a Rio Tinto plc Ordinary Share shall be deemed to include the price paid for an interest through an American Depositary Receipt representing such a share converted into sterling or Australian dollars as appropriate at the closing mid point exchange rate of the purchase currency and sterling or Australian dollars (as appropriate) on the date of acquisition of such interest obtained from the Financial Times (in the case of Rio Tinto plc Ordinary Shares) or from the Australian Financial Review (in the case of Ordinary Shares);
           
    (j)  any person who:
           
      (I) owns directly or indirectly Publicly-held Rio Tinto Limited Ordinary Shares which carry the right to cast more than 50 per cent of the total votes attaching to all Publicly-held Rio Tinto Limited Ordinary Shares capable of being cast on a poll at a General Meeting; and
           
      (II) owns directly or indirectly Publicly-held Rio Tinto plc Voting Shares which carry the right to cast more than 50 per cent of the total votes attaching to all Publicly-held Rio Tinto plc Voting Shares capable of being cast on a poll at a general meeting of Rio Tinto plc,
           
      and has reached that level of ownership either by receiving acceptances under an offer to acquire all the outstanding Ordinary Shares and Rio Tinto plc Ordinary Shares (other than those already owned by that person) or as a result of a compromise or arrangement approved by the Court under Part 5.1 of the Corporations Act or a scheme of arrangement approved by the High Court of England or by any combination of these;
           
    (k) any concert party or Associate of an Offeror;
       

      Page 70

Back to Contents


     
  (xi) "Recognised Person" means a clearing house or a nominee of a recognised clearing house or of a recognised investment exchanges who is designated as mentioned in section 185(4) of the Original Act;
       
  (xii) "Relevant Holding" means an Interest in Rio Tinto plc Voting Shares or an Entitlement to Ordinary Shares or both (disregarding any part of that Interest or Entitlement which is a Permitted Holding) which together would otherwise enable its holder to cast on a poll (either directly as a member of the Company or through any votes which may be cast by the holder of the Special Voting Share to reflect votes which such holder is entitled to cast at a general meeting of Rio Tinto plc in respect of Rio Tinto plc Voting Shares) 20 per cent or more of the total votes attaching to all share capital of the Company of all classes on a Joint Decision (assuming that all the Publicly-held Rio Tinto plc Ordinary Shares including those comprised in such Interest were voted on the equivalent resolution at the nearly contemporaneous general meeting of Rio Tinto plc and counted in calculating the votes attached to the Special Voting Share on such decision), AND IN ADDITION if the Interest or Entitlement is in one company only then
       
    (a) if it does not include any Interest in Rio Tinto plc Voting Shares, the Entitlement to Ordinary Shares or other shares of the Company (other than the Special Voting Share) carry the right on a poll to cast 30 per cent or more of the total votes attaching to all share capital of the Company of all classes (apart from the Special Voting Share) taken as a whole and capable of being cast on a poll at a general meeting of the Company; or
       
    (b) if it does not include any Entitlement to Ordinary Shares, the Interest in Rio Tinto plc Voting Shares (other than the Rio Tinto plc Special Voting Share) carry the right on a poll to cast 30 per cent or more of the total votes attaching to all share capital of Rio Tinto plc of all classes (apart from the Rio Tinto plc Special Voting Share) taken as a whole and capable of being cast at a general meeting of Rio Tinto plc;
       
  (xiii) "Relevant Interest" means a relevant interest in respect of a share as that term is defined by the Law;
       
  (xiv) "Relevant Person" means any person (whether or not identified) who has a Relevant Holding or any Excluded Rio Tinto plc Holder;
       
  (xv) "Relevant Shares" means all the Ordinary Shares to which a Relevant Person or an Excluded Rio Tinto plc Holder has an Entitlement;
       
  (xvi) "Required Disposal" means a disposal or disposals of such a number of Relevant Shares (or interests therein) as will cause a Relevant Person to cease to be a Relevant Person, not being a disposal to another Relevant Person (other than a Permitted Person) or a disposal which constitutes any other person (other than a Permitted Person) a Relevant Person;
       
  (xvii) references to the Australian Financial Review include, if that newspaper ceases to be published or fails to publish the relevant information, any other daily newspaper circulating in Melbourne nominated by the Board which does publish the relevant information, and references to the Financial Times means the London Edition and includes, if that newspaper ceases to be published or fails to publish the relevant information, any other daily newspaper circulating in London nominated by the Board which does publish the relevant information;
     

    Page 71

Back to Contents


     
  (xviii) references in paragraphs (aa), (bb), (cc) and (dd) of paragraph (B)(x)(i)(Il) to "price" or "value of consideration" mean such price or value:
       
    (a) adjusted to reflect the effect of any share consolidation or subdivision, allotment of shares, rights issue, issue of options, issue of convertible securities or reduction of capital which occurred after that price or consideration was paid or given and before the offer to acquire all the Rio Tinto plc Ordinary Shares referred to in paragraph (B)(x)(i)(II) occurred; and
       
    (b) adjusted to reflect the net amount of any dividend which had been declared or announced at the time the price or consideration was paid or given if the shares acquired were at that time trading cum-dividend and at the time of the offer the shares are trading ex-dividend or vice versa,
       
    and the certificate of the Auditor stating the appropriate amount of an adjustment required by (a) or (b) shall be conclusive.
       
C. Subject to paragraphs (I) and (J) below, the provisions of Part 6.7 of Chapter 6 of the Law other than section 716 shall apply in relation to the Company as if those provisions extended to Additional Entitlements and accordingly the rights and obligations arising under that Part shall apply in relation to the Company, its members and all persons having an Entitlement, as extended by this paragraph; but so that Additional Entitlements shall, when disclosed to the Company, be entered in a separate register kept by the Company for that purpose. The rights and obligations created by this paragraph in respect of any Entitlement (including, but not limited to, Additional Entitlements) are in addition to and separate from those arising under Chapter 6C of the Corporations Act.
       
D. If, to the knowledge of the Directors, any person other than a Permitted Person is or becomes a Relevant Person (including, without limitation, by virtue of being deemed to be one), the Directors shall give notice to that Relevant Person (other than a person referred to in paragraph (G) below) and to any other person who appears to the Directors to have Entitlements to the Relevant Shares and, if different, to the registered holders of those shares. The notice shall set out the restrictions referred to in paragraph (E) below and state that within a time specified in the notice the Relevant Person shall either take such action as may be required to enable the Relevant Person to become a Permitted Person or otherwise cease to be a Relevant Person. If the Relevant Shares are held by an ADR Depositary, the notice shall also state that:
       
  (a) a specified purchaser or purchasers (the "Relevant Purchaser(s)") (excluding the ADR Depositary itself) or Holder or Holders (the "Relevant Holder(s)"), as the case may be, is or are believed or deemed to be Relevant Persons or is or are believed or deemed to be purchasers or Holders through which a Relevant Person or Relevant Persons has or have an Entitlement in either case as specified in the notice; and
     

    Page 72

Back to Contents


     
  (b) the Directors believe that each Relevant Purchaser or Relevant Holder or the Relevant Person or Relevant Persons believed or deemed to have an Entitlement through such Relevant Purchaser or Relevant Holder, as the case may be, is or are deemed to have an Entitlement in a specific number of Relevant Shares.
       
    The Directors may extend the period in which any such notice is required to be complied with and may withdraw any such. notice (whether before or after the expiration of the period referred to) if it appears to them that there is no Relevant Person in relation to the shares concerned.
       
E. A holder of a Relevant Share on whom a notice has been served in accordance with paragraph (D) above shall not in respect of that share be entitled, until such time as the Directors are satisfied that no Relevant Person has an Entitlement to that share or the notice has been withdrawn:
       
  (a) to attend or vote at any general meeting of the Company or meeting of any class of shares of the Company, or to exercise any other right conferred by membership in relation to any such meeting (this restriction being in addition to the provisions of Rule 74(b));
       
  (b) to receive any dividend or other distribution which would otherwise be payable in respect of a Relevant Share, which shall be retained by the Company without any liability to pay interest when the money or distribution is finally paid or given to the member; or
       
  (c) to elect to receive shares in lieu of any dividend or distribution referred to in (b) above.
       
  If a Relevant Person continues to have an Entitlement to Relevant Shares after the time limit specified in a notice served under paragraph (D), the Directors may appoint a person to execute any documents and implement any procedures as may be required to procure a Required Disposal on behalf of the Relevant Person and to receive and give a good discharge for the purchase price. Brokerage, stamp duty and any other costs of the transfer shall be paid out of the sale proceeds. The net proceeds of any sale under this paragraph shall be paid to the shareholder who held the Relevant Shares sold under this paragraph provided that the shareholder has delivered to the Company such documents or information as may be reasonably required by the Directors. Upon the name of the purchaser being entered in the Register in purported exercise of the powers under this paragraph, the validity of the sale by way of a Required Disposal shall not be challenged by any person. The Directors may not authorise a Required Disposal of any Ordinary Shares held by an Accepting Shareholder during a period in which offers for both Ordinary Shares and Rio Tinto plc Voting Shares remain open for acceptance.
       
F. Without prejudice to the provisions of the Law or the Corporations Act, the Directors may assume without enquiry that a person is not a Relevant Person unless the information contained in the registers kept by the Company under the Corporations Act or under the Law (as applied and extended by this Rule), including the separate register to be kept under paragraph (C) above, appear to the Directors to indicate to the contrary or the Directors have reason to believe otherwise, in which circumstances the Directors shall make reasonable enquiries to discover whether any person is a Relevant Person.
   

  Page 73

Back to Contents


   
G. The Directors shall not be obliged to give any notice required under this Rule to be given to any person if they do not know either that person's identity or address. The absence of such a notice in those circumstances and any accidental error in or failure to give any notice to any person to whom notice is required to be given under this Rule shall not prevent the implementation of, or invalidate, any procedure under this Rule.
       
H. If any Director has reason to believe that a person (not being a Permitted Person) is a Relevant Person, the Director shall inform the other Directors.
       
I. Paragraph (C) shall not apply to an ADR Depositary when acting in that capacity. A person (a "Holder") who has an Entitlement evidenced by an American Depositary Receipt shall be deemed for the purposes of this Rule to have an Entitlement to the number of shares in the Company in respect of which rights are evidenced by such Receipt and not (in the absence of any other reason why the Holder would be so treated) in the remainder of the shares in the Company held by the ADR Depositary.
       
J. Paragraph (C) of this Rule shall not apply to a Recognised Person acting in its capacity as such. Where a Recognised Person has an Entitlement in that capacity under arrangements recognised by the Company for the purposes of this Rule any person who has rights in relation to shares in the Company in which such a Recognised Person has an Entitlement shall be deemed to have an Entitlement in the number of shares in the Company for which such a Recognised Person is or may become liable to account to that person and any Entitlement which (by virtue of being a tenant in common in relation to an interest in shares in the Company so held by such a Recognised Person) that person would otherwise be treated for the purposes of this Rule as having in a larger number of shares in the Company shall (in the absence of any other reason) be disregarded.
       
K. This Rule shall apply notwithstanding any provision in any other of these Rules which is inconsistent with or contrary to it.
       
146. Restricted securities
       
  (a) If the Company at any time has on issue share capital classified by the Home Branch as restricted securities, the Company must refuse to acknowledge, deal with, accept or register any sale, assignment or transfer of those restricted securities which is or might be in breach of the Listing Rules or any escrow agreement entered into by the Company under the Listing Rules in relation to those restricted securities.
       
  (b) If there is a breach of any escrow agreement entered into by the Company under the Listing Rules in relation to shares classified by the Home Branch as restricted securities, the holder of the shares in question ceases to be entitled to any dividends and to any voting rights in respect of those shares for so long as the breach subsists, despite any rights attached to those shares.
       
  (c) The holders of shares which are classified by the Home Branch as restricted securities and which are subject to escrow restrictions at the commencement of the winding up of the Company rank on a return of capital behind all other shares in the Company.
     

    Page 74

Back to Contents


   
147. Unmarketable parcels
       
147.1 Application of this Rule
       
  The provisions of this Rule 147 have effect notwithstanding any provision in this Constitution to the contrary.
       
147.2 Definitions
       
  For the purposes of this Rule 147 the following definitions apply, unless the context requires otherwise:
       
  (a)  Divestment Notice has the meaning set out in Rule 147.3.
       
  (b) Notified Member means a member who has been sent a Divestment Notice.
       
  (c) Prescribed Member means a member who holds less than a Marketable Parcel of shares in the Company but does not include a Prescribed New Member.
       
  (d) Prescribed New Member means a member who holds less than a Marketable Parcel of shares in the Company where:
       
    (i) that holding is a new holding created by the transfer of a parcel of shares that was less than a Marketable Parcel at the time a proper SCH transfer was initiated or a paper based transfer was lodged; and
       
    (ii) the transfer referred to in paragraph (i) occurred after the date on which this Rule came into effect.
       
  (e) Specified Period has the meaning set out in Rule 147.3.
       
  (f) The terms 'Marketable Parcel' and 'Takeover' have the same meaning as they are given in the Listing Rules and the terms 'Certificated Holding', 'CHESS Holding', 'Holding Adjustment' and 'Issuer Sponsored Holding' have the same meaning as they are given in the SCH business rules.
       
  (g) Where, under this Rule 147, powers are conferred on the Secretary, such powers may be exercised either by the Secretary or by any person nominated by the Secretary.
       
147.3 Service of a Divestment Notice
       
  (a) If the Secretary determines that a member is a Prescribed Member or a Prescribed New Member, the Secretary may, by notice in writing (a Divestment Notice), notify the member that the member is a Prescribed New Member or a Prescribed Member (as the case may be).
       
  (b) A Divestment Notice must state that the Company intends to dispose of the Notified Member's shares in accordance with this Rule 147 after the expiry of the time period specified in the Divestment Notice (the Specified Period). The Specified Period must be:
     

    Page 75

Back to Contents


       
    (i) in the case of a Divestment Notice notifying the member that the member is a Prescribed Member – at least six weeks from the date the Divestment Notice was sent; and
       
    (ii) in the case of a Divestment Notice notifying the member that the member is a Prescribed New Member – at least seven days from the date the Divestment Notice was sent.
       
  (c) Subject to 147.3(d), each Notified Member is deemed irrevocably to have appointed the Company as the member's agent to sell all of their shares to an arm's length purchaser, following the end of the Specified Period in the relevant Divestment Notice, and to receive the sale proceeds on behalf of the member, though nothing in this Rule obliges the Company to sell those shares. For the purposes of such a sale, the Company may initiate a Holding Adjustment to move all shares held by a member from a CHESS Holding to an Issuer Sponsored Holding or a Certificated Holding or take any other action the Company considers necessary or desirable to effect the sale and transfer of the shares.
       
  (d) Where a Prescribed Member gives written notice to the Company before the end of the Specified Period in the relevant Divestment Notice that the member desires its shareholding to be exempted from this Rule 147, the Company must not sell that shareholding as a result of that Divestment Notice.
       
  (e) The Secretary may, in respect of any sale of a member's shares in the Company under this Rule 147:
       
    (i) execute on behalf of such member an instrument of transfer of all of the member's shares in the Company in such manner and form as the Secretary considers necessary and to deliver such share transfer to the purchaser; and
       
    (ii) take any other action on behalf of any such member or the Company as the Secretary considers necessary to effect the sale and transfer of those shares.
       
  (f) Notwithstanding any other provision of this Rule 147, none of the provisions of this Rule 147 shall apply in respect of any of the Equalisation Share, the Special Voting Share or the DLC Dividend Share.
       
147.4 Rights of purchaser
       
  (a) A certificate under the hand of the Secretary to the effect that shares sold under this Rule 147 have been duly sold will discharge the purchaser from all liability in respect of the purchase of those shares.
       
  (b) A purchaser of shares sold under this Rule 147 will, upon being entered in the Register as the holder of the shares, have title to the shares which is not affected by any irregularity or invalidity in the actions of the Company pursuant to this Rule 147 and will not be bound to see to the application of the purchase money or other consideration.
     

    Page 76

Back to Contents


   
147.5 Sale Proceeds to members
       
  (a) Subject to paragraph 147.5 (b), if:
       
    (i) a member's shares in the Company are sold by the Company on the member's behalf under this Rule 147; and
       
    (ii) any certificate relating to the shares the subject of the sale has been received by the Company (or the Company is satisfied that the certificate has been lost or destroyed),
       
    the Company must, within 60 days after completion of the sale, cause the proceeds of sale to be sent to the member entitled to those proceeds by sending a cheque made payable to the member through the post to the address of that member in the Register (or, in the case of joint holders, to that one whose name stands first in the Register in respect of the joint holding). Payment of any money under this Rule 147 is at the risk of the member to whom it is sent.
       
  (b) In the case of a sale of Prescribed New Member's shares in accordance with this Rule 147, the Company is entitled to deduct (and keep) from the proceeds of sale, the costs of the sale as determined by the Company. In any other case, the Company or a purchaser must bear the costs of sale. The costs of sale include all stamp duty, brokerage and government taxes and charges (except for tax on income or capital gains of the member) payable by the transferor.
       
147.6 Member's remedy
       
  The remedy of any member to whom this Rule 147 applies in respect of the sale of that member's shares is hereby expressly limited to a right of action in damages against the Company to the exclusion of any other right, remedy or relief against any other person.
       
147.7 Suspension of rights
       
  Unless the Directors determine otherwise, where a Divestment Notice is sent to a Prescribed New Member in accordance with Rule 147.3, then, notwithstanding any other provision in this Constitution, the rights to receive dividend and to vote attaching to the shares of the member the subject of the Divestment Notice are suspended until the shares are transferred to a new holder or the member ceases to be a Prescribed New Member. Any dividends that would, but for this Rule 147.7, have been paid to a member must be held by the Company and paid to the member within 60 days after the later of the date the shares of the member are transferred or the date the member ceases to be a Prescribed New Member.
       
147.8 Determination binding
       
  Any determination made by or on behalf of the Company (including any determination made by the Secretary) under this Rule 147, shall be binding on, and conclusive against (in the absence of a manifest error), a member.
   

  Page 77

Back to Contents


   
147.9 Company's power to sell
     
  Notwithstanding anything else:
     
  (a)  subject to paragraph 147.9(b), the provisions of this Rule 147 may be invoked in respect of Prescribed Members only once in any 12 month period; and
     
  (b) from the date on which there is publicly announced a Takeover in respect of the Company's shares until the close of the offers under that Takeover, the Company's powers under this Rule 147 to sell the shares of a Prescribed Member cease to have any force or effect.
     

    Page 78

Exhibit 3.2


CONFORMED COPY

Dated 21 December 1995
As amended by an Agreement dated 2 April1998 pursuant to Special Resolutions passed on 13 February 1998 and 16 February 1998

As amended pursuant to Special Resolutions dated 14 April 2005 and 29 April 2005

 

RIO TINTO LIMITED

and

RIO TINTO PLC

 

DLC MERGER SHARING AGREEMENT

 

One Silk Street
London EC2Y 8HQ

Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222

Ref

 


This Agreement is made on 21 December 1995 between:

(1) Rio Tinto Limited (ACN 004 458 404), formerly CRA Limited1, a company incorporated in Victoria, Australia whose registered office is at 55 Collins Street, Melbourne, 3000, Victoria, Australia (“RTL”); and
   
(2) Rio Tinto plc, formerly The RTZ Corporation plc1, a company incorporated in England with registered number 719885 whose registered office is at 6 St James’s Square, London SW1Y 4LD, England (“RTP”).

Whereas:

(A) Following announcements made on 9 October 1995, RTL and RTP entered into an Implementation Agreement on 3 November 1995 pursuant to which RTL and RTP have agreed to do certain acts and things to implement the DLC Merger of RTL and RTP.
   
(B) RTL Shareholder SVC has agreed to exercise the voting rights attached to the RTP Special Voting Share in accordance with the RTL Shareholder Voting Agreement and RTP Shareholder SVC and RTAH have agreed that RTAH shall procure that Tinto Holdings Australia Pty Limited shall vote its RTL Ordinary Shares and that RTP Shareholder SVC shall vote the RTL Special Voting Share in accordance with the RTP Shareholder Voting Agreement.
   
(C) RTL and RTP wish to agree upon the terms of the ongoing relationship between them following the DLC Merger, including the implementation of the principles relating to distributions to be made by RTL and RTP in accordance with Schedules 1 and 2 to this Agreement.
   
1 Interpretation

The headings shall not affect the interpretation of this Agreement, and in this Agreement, unless the context otherwise requires:

1.1 Definitions

Aggregate Publicly-held Ordinary Shares” means all of the Publicly-held RTL Ordinary Shares and all of the Publicly-held RTP Ordinary Shares from time to time;

Applicable Exchange Rate” means, in relation to any proposed dividend or other distribution by RTL or RTP, the closing mid-point spot Australian dollar-sterling exchange rate on the Business Day before the Dividend Determination Date relating to the dividends or other distributions to be paid or made by RTL and RTP (as shown in the London Edition of the Financial Times, or such other point of reference as the parties shall agree), or such other spot Australian dollar-sterling exchange rate or average Australian dollar-sterling exchange rate as at such other date (or over such period) before a Dividend Determination Date as the Board of RTL and the Board of RTP shall agree;

Applicable Regulation” means, in the case of RTL, applicable Australian law and regulations (including listing rules) and, in the case of RTP, applicable English law and regulations (including listing rules and guidelines with which companies listed on the London Stock Exchange customarily comply), in each case for the time being in force and taking account of all waivers or variations from time to time applicable (in particular situations or generally) to RTL or, as the case may be, RTP;


1

The RTZ Corporation PLC changed its name to Rio Tinto plc and CRA Limited changed its name to Rio Tinto Limited in each case with effect from 2 June 1997.

   
1
 

Associate” has the meaning given to it in Section 9 of the Corporations Law (as amended from time to time);

Associated Tax Credit” means, in relation to any dividend or other distribution payable or proposed to be paid by either RTL or RTP, the amount of any imputed or associated tax credit or rebate or exemption (or the value of any other similar associated tax benefit including but not limited to Australian Franking Credits) which would be available to a shareholder receiving or entitled to receive the dividend together with the amount of any credit or benefit in respect of any tax required to be deducted or withheld from the dividend or other distribution by or on behalf of the paying company;

Australian dollars” means the lawful currency from time to time of Australia;

Australian Franking Credits” means the franking rebate which certain non-corporate Australian resident recipients of franked dividends or other distributions paid by RTL may be entitled to claim pursuant to Part IIIAA of the Income Tax Assessment Act 1936 of Australia, as amended or re-enacted from time to time;

Australian Stock Exchange” means the Australian Stock Exchange Limited (ACN 008 624 691) or any successor to that body;

Board” means the Board of RTL or the Board of RTP as the case may require;

Board of RTL” means the board of directors of RTL (or a duly appointed committee of that board) from time to time;

Board of RTP” means the board of directors of RTP (or a duly appointed committee of that board) from time to time;

Business Day” means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays;

Class Rights Action” means any of the actions listed in Clause 5.1;

Companies Act Subsidiary” has the meaning ascribed to the term “subsidiary” in Section 736 of the Companies Act 1985 and shall mean when used in reference to a company any subsidiary of that company from time to time;

Completion” means the time at which the steps set out in Clause 5 of the Implementation Agreement have been completed;

Corporations Law” has the meaning given to it by Section 13(2) of the Corporations (Victoria) Act 1990 of Victoria, Australia and includes a reference to the Corporations Regulations referred to in that section;

Corporations Law Subsidiary” has the meaning given to “subsidiary” in Section 9 of the Corporations Law and when used in relation to a body corporate means any subsidiary of that body corporate from time to time;

Current Market Price” has the meaning given to it in paragraph 5.1.6 of Schedule 2;

Dividend Determination Date” means the date on which the Board of RTL and the Board of RTP resolve to pay any dividend or to make any other distribution (or if they resolve on different dates to pay or make parallel dividends or other distributions, the later of those dates);

2
 

DLC Merger” means the merger of RTL and RTP so that, inter alia, RTL and RTP have a unified management structure and so that the businesses of both the RTL Group and the RTP Group are run on a unified basis;

Equalisation Fraction” means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the RTL Ordinary Shares and the denominator being the number relating to the RTP Ordinary Shares;

Equalisation Ratio” means the ratio of the dividend, capital and voting rights per RTL Ordinary Share to the dividend, capital and voting rights per RTP Ordinary Share (which shall be 1:1 immediately following the RTL Bonus Issue), which shall be subject to adjustment in accordance with Clause 5.1.2(d) and paragraph 5 of Schedule 2;

Equalisation Share” means, in relation to RTL, the RTL Equalisation Share and, in relation to RTP, the RTP Equalisation Share;

Financial Period” means a financial year of either RTL or RTP or any other period for which both of their accounts may by mutual agreement be made up;

Group” means, in relation to RTL, the RTL Group and, in relation to RTP, the RTP Group as the context requires;

Implementation Agreement” means the Agreement headed “DLC Merger Implementation Agreement” entered into between RTL and RTP on 3 November 1995;

Intellectual Property” means trade marks, service marks, trade names, business names, logos, get-up, patents, inventions, registered and unregistered design rights, copyrights, rights of extraction relating to databases, and all other similar proprietary rights which may subsist in any part of the world, including, where such rights are obtained or enhanced by registration, any registration of such rights and applications and rights to apply for such registrations;

Joint Decision” means the approval of any Joint Decision Matter in accordance with Clause 6;

Joint Decision Matter” means any of the matters listed in Clause 6.1;

Limiting Restriction” has the meaning given to it in Clause 5.1.1;

Liquidation Exchange Rate” means, as at any date, the closing mid-point spot Australian dollar-sterling exchange rate on the Business Day before such date (as shown in the London Edition of the Financial Times, or such other point of reference as the auditors of RTL and the liquidators of RTP or the auditors of RTP and the liquidators of RTL or the liquidators of both RTL and RTP, as the case may be, may determine or, where Clause 11 applies, as the merchant banks agree or the third party merchant bank determines);

London Stock Exchange” means London Stock Exchange Ltd. or any successor to that body;

Market Value” means, in respect of an issue of a relevant share or security, the weighted average sale price derived from the Australian Stock Exchange (in the case of RTL) and the middle market quotation derived from the London Stock Exchange Daily Official List (in the case of RTP) in each case on the dealing day immediately preceding the date on which any such issue is publicly announced except that in the case of an allotment of RTP Ordinary Shares pursuant to Article 127 of the RTP Memorandum and Articles it shall mean the value of an RTP Ordinary Share as defined in paragraph (D) of that Article and in the case of an allotment of RTL Ordinary Shares by way of dividend it shall mean the weighted average sale price of an RTL Ordinary Share derived from the Australian Stock Exchange over the five business days (being trading days of the Australian Stock Exchange) prior to the books closing date in respect of that dividend;

3
 

Matching Offers” means offers by way of rights either by both RTL and RTP to their respective holders of Ordinary Shares or by RTL on its own or by RTP on its own to both the holders of RTL Ordinary Shares and the holders of RTP Ordinary Shares which, so far as is practicable, take place contemporaneously and which the auditors of RTL have certified do not materially disadvantage a holder of a RTL Ordinary Share in comparison with a holder of a RTP Ordinary Share and which the auditors of RTP have certified do not materially disadvantage a holder of a RTP Ordinary Share in comparison with a holder of an RTL Ordinary Share;

Net Dividend Amount” means, in relation to either RTL or RTP, the amount of the dividend or other distribution payable or proposed to be paid or made by the relevant company at any particular time on its Ordinary Shares, before deduction of any amount in respect of tax required to be deducted or withheld from the dividend or other distribution by or on behalf of the company paying or making the same and excluding the amount of any Associated Tax Credit, all such amounts being expressed in the currency of payment and on a per share basis;

Ordinary Shares” means, in relation to RTL, the RTL Ordinary Shares and, in relation to RTP, the RTP Ordinary Shares;

Publicly-held RTL Ordinary Shares” means RTL Ordinary Shares the beneficial owners of which are not members of the RTP Group;

Publicly-held Ordinary Shares” means, in relation to RTL, Publicly-held RTL Ordinary Shares and, in relation to RTP, Publicly-held RTP Ordinary Shares;

Publicly-held RTP Ordinary Shares” means RTP Ordinary Shares the beneficial owners of which are not members of the RTL Group;

Publicly-held RTP Voting Shares” means RTP Ordinary Shares and RTP Voting Preference Shares, the beneficial owners of which in each case are not members of the RTL Group;

Publicly-held Shares” means, in relation to RTL, Publicly-held RTL Ordinary Shares and, in relation to RTP, Publicly-held RTP Voting Shares;

RTAH” means Rio Tinto Australian Holdings Limited, formerly RTZ Australian Holdings Limited, a company incorporated in England with registered number 464176, whose registered office is at 6 St James’s Square, London SW1Y 4LD;

RTL Bonus Issue” means the bonus issue of 7.5 RTL Ordinary Shares for each 100 RTL Ordinary Shares to take place following Completion;

RTL Deed Poll Guarantee” means the deed of even date herewith whereby RTL guarantees the obligations of RTP for the benefit of certain present and future creditors of RTP, as amended from time to time;

RTL Entrenched Provision” has the meaning given to it in the RTL Memorandum and Articles;

RTL Equalisation Share” means the equalisation share of A$2 in RTL;

RTL Group” means RTL and its Subsidiaries from time to time and a member of the RTL Group means any one of them;

RTL Memorandum and Articles” means the Memorandum and Articles of Association of RTL which will be in effect immediately following Completion, as amended from time to time;

RTL Ordinary Shares” means the issued ordinary shares of A$2 each in RTL from time to time;

4
 

RTL Shareholder SVC” means RTL Shareholder SVC Limited, a company incorporated in England with registered number 3115178 whose registered office is at Princes House, 95 Gresham Street, London EC2V 7LY or such other company as replaces RTL Shareholder SVC Limited pursuant to the terms of the RTL Shareholder Voting Agreement;

RTL Shareholder Voting Agreement” means the agreement of even date herewith entered into between RTL Shareholder SVC, The Law Debenture Trust Corporation p.l.c., RTL and RTP relating, inter alia, to how the RTP Special Voting Share is to be voted, as amended from time to time;

RTL Special Voting Share” means the special voting share of A$2 in RTL;

RTP Deed Poll Guarantee” means the deed of even date herewith whereby RTP guarantees the obligations of RTL for the benefit of certain present and future creditors of RTL, as amended from time to time;

RTP Entrenched Provision” has the meaning given to it in the RTP Memorandum and Articles;

RTP Equalisation Share” means the equalisation share of 10p in RTP;

RTP Group” means RTP and its Subsidiaries from time to time and a member of the RTP Group means any one of them;

RTP Memorandum and Articles” means the Memorandum and Articles of Association of RTP which will be in effect immediately following Completion, as amended from time to time;

RTP Ordinary Shares” means the issued ordinary shares of 10p each in RTP from time to time;

RTP Shareholder SVC” means RTP Shareholder SVC Pty Limited (ACN 070 481 908), a company incorporated in Victoria, Australia, whose registered office is at 27th Floor, 530 Collins Street, Melbourne, 3000, Victoria, Australia or such other company as replaces RTP Shareholder SVC Pty Limited pursuant to the terms of the RTP Shareholder Voting Agreement;

RTP Shareholder Voting Agreement” means the Agreement of even date herewith entered into between RTP Shareholder SVC, The Law Debenture Trust Corporation p.l.c., RTP, RTAH and RTL relating, inter alia, to how the RTL Special Voting Share and the RTL Ordinary Shares held at the date of this Agreement by Tinto Holdings Australia Pty Limited are to be voted, as amended from time to time;

RTP Special Voting Share” means the special voting share of 10p in RTP;

RTP Voting Preference Shares” means, in relation to any matter at any time, the Preference Shares (as defined in the RTP Memorandum and Articles) the holders of which would, if that matter were being considered at a general meeting of the shareholders of RTP at that time, be entitled to vote thereon;

Special Voting Share” means, in relation to RTP, the RTP Special Voting Share and, in relation to RTL, the RTL Special Voting Share;

sterling” means the lawful currency from time to time of the United Kingdom;

Subsidiary” means, in the case of RTL, a Corporations Law Subsidiary and, in the case of RTP, a Companies Act Subsidiary.

5
 

1.2 This Agreement

References to this Agreement are to this Agreement as amended from time to time and shall include its Schedules; references to Clauses and Schedules are to Clauses of, and Schedules to, this Agreement.

1.3 Currencies

References in this Agreement to “A$” and “cents” are to Australian dollars and cents and to “£” and “p” are to pounds sterling and to pence sterling or to such other currencies for the time being of Australia and the United Kingdom respectively.

1.4 Genders etc.

Words denoting the singular number only shall include the plural number also and vice versa; words denoting one gender shall include the other genders; and words denoting individuals only shall include firms and corporations and vice versa.

1.5 Statutory References

References in this Agreement to any statute are, except where otherwise expressly provided and without prejudice to Clause 17.5 or the definition of “Applicable Regulation”, to that statute as in force at the date of this Agreement (and not to that statute as amended from time to time).

1.6 Resolutions

References to resolutions of the holders of Publicly-held Shares of either party shall be deemed to include resolutions of the members or the relevant class of members of the party concerned on which only holders of Publicly-held Shares have cast their votes or resolutions which would have been duly passed (or not passed as the case may be) if the votes attaching to the non Publicly-held Shares had not been cast, and references to votes being disregarded shall be construed accordingly. References to procedural resolutions comprise all resolutions put to a general meeting of shareholders which were not included in the notice of such meeting but nevertheless fall to be considered by that meeting. References to an “equivalent resolution” mean a resolution considered at the most nearly contemporaneous general meeting of the shareholders of the other company which bears a close relationship to the relevant resolution being considered at a general meeting of the shareholders of the first company, so that for example (but without limitation) a resolution to appoint or remove an individual as a director of RTP, to appoint or remove the auditors of RTP or to receive and adopt the accounts of RTP would, if no resolution considering such matters in relation to RTL were put to the RTL general meeting, be the “equivalent resolution” to a resolution relating to the appointment or removal of the same individual as a director of RTL, the appointment or removal of the same international firm of auditors as RTL’s auditors or the receipt or adoption of RTL’s accounts as the case may be and vice versa.

1.7 Rights Issues

References to offers by way of rights include offers which are subject to such exclusions or other arrangements as the Board of RTL or the Board of RTP, as the case may be, may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory.

2 Management of the Businesses

Each party will do, and agrees to procure that each of its Subsidiaries will do, all acts and things which may be necessary or desirable to ensure that the businesses of the RTL Group and the RTP Group are managed on a unified basis for the benefit of the shareholders of RTL and RTP as a combined group and that full effect is given to this Agreement.

6
 

3 Boards of RTL and RTP

Each party will do all acts and things necessary and within their respective powers to ensure that the board of directors of RTL and the board of directors of RTP comprise the same individuals.

4 Equalisation of Distributions

The parties will give effect to the provisions of Schedules 1 and 2.

5 Separate Approvals of Class Rights Actions
   
5.1 Restriction on certain actions
   
  5.1.1 If either RTL or RTP proposes to take any of the following actions:
     
    (a) to offer to the holders of its existing Ordinary Shares generally shares or other securities for subscription or purchase:
       
      (i) by way of rights (otherwise than by Matching Offers), where the proposed offer (when aggregated with (A) any previous offers by either company of shares or other securities for cash by way of rights or otherwise, but not under Matching Offers, (B) any sales, other than intra RTP Group sales, by a member of the RTP Group of RTL Ordinary Shares, and (C) any sales, other than intra RTL Group sales, by a member of the RTL Group of RTP Ordinary Shares, in each case in the relevant period) exceeds the then most Limiting Restriction that for the time being would be applicable were shares or other securities of the relevant description proposed to be offered in fact offered for cash otherwise than pro-rata by way of rights to existing shareholders of the relevant class either by RTL or by RTP; or
         
      (ii) otherwise than by way of rights, at below Market Value; or
         
    (b) to do anything, other than actions listed in Clause 5.1.2, 5.1.3 or 5.1.4, which the Board of RTL and the Board of RTP agree (either in a particular case or generally) should be treated as a Class Rights Action under this Clause 5.1.1,
       
      each of them agrees with the other that it shall only take such action after it has been approved by:
       
(i) the consent in writing of the holder of the Special Voting Share in the company proposing the action, which consent shall only be given following the passing of an ordinary resolution approving the action by the holders of Publicly-held Shares of the other company; and
   
(ii) such ordinary or special resolutions (if any) as are required by Applicable Regulation of the company proposing to take such action on which only holders of Publicly-held Shares in that company have voted.
   
7
 

    In this Clause 5.1.1 the term “Limiting Restriction” refers to the limit (if any) on offers for cash (otherwise than pro-rata by way of rights to existing holders of Ordinary Shares) of shares or other securities existing under restrictions for the time being applicable to RTL or RTP under Applicable Regulation, and for the purpose of ascertaining the most Limiting Restriction at any time in any situation:
     
(a) a restriction applicable to RTL shall be treated as also applicable to RTP (converting the restrictions, expressed in terms of a number of RTL shares, into a number of RTP shares by application of the Equalisation Ratio), and vice versa in relation to a restriction applicable to RTP;
   
(b) a restriction expressed in terms of a nominal amount of RTP’s equity share capital shall be treated as if it related to the number of RTP Ordinary Shares represented by that nominal amount and then converted into a number of RTL Ordinary Shares by application of the Equalisation Ratio and any restriction in relation to RTL shall be similarly treated;
   
(c) a restriction (when expressed as a number of RTL Ordinary Shares or RTP Ordinary Shares) that, under Applicable Regulation, has been derived by application of a percentage to a number or nominal amount of RTL Ordinary Shares and/or number or nominal amount of RTP Ordinary Shares rather than to the number of the Aggregate Publicly-held Ordinary Shares (taking into account the application of the Equalisation Ratio as described in paragraphs (a) and (b) above) shall be adjusted to the number that would have been derived from the application of such percentage to the number of the Aggregate Publicly-held Ordinary Shares (after so taking into account the application of the Equalisation Ratio); and
   
(d) any restriction under Applicable Regulation which comes into force in relation to either RTL or RTP after the date hereof which does not fall within (a), (b) or (c) above shall be applied to the Aggregate Publicly-held Ordinary Shares in the way in which the Board of RTL and the Board of RTP agree best reflects the rationale underlying paragraphs (a), (b) and (c) above,
   
    and the term “relevant period” refers to the period by reference to which any limitation imposed by Applicable Regulation applies.
     
5.1.2 If either RTL or RTP proposes to take any of the following actions:
   
(a) to reduce or redeem its own Ordinary Share capital by way of a capital repayment to the holders of its Ordinary Shares or a cancellation of unpaid Ordinary Share capital;
   
(b) to purchase its own Ordinary Shares (except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation);2
   
(c) to go into voluntary liquidation;

2 At the Annual General Meetings of RTP and RTL held on 13 May and 27 May 1998 respectively special resolutions were passed providing that any future purchases of shares in either company by itself and any purchases of shares in RTP by RTL (or any of its subsidiaries) will require no future renewal of shareholder approval (for the purposes of the Sharing Agreement and the Articles of Association of RTP and RTL) except to the extent required by relevant UK or Australian law and Stock Exchange Rules and provided that such purchases are made at or around the prevailing market price.
   
8
 

(d) to adjust the Equalisation Ratio otherwise than in accordance with paragraph 5 of Schedule 2;
   
(e) to amend the terms of, or terminate, this Agreement, the RTL Shareholder Voting Agreement or the RTP Shareholder Voting Agreement other than, in the case of the RTL Shareholder Voting Agreement or the RTP Shareholder Voting Agreement an amendment to conform such agreement with the terms of this Agreement or, in any case, by way of formal or technical amendment which is not materially prejudicial to the interests of the shareholders of either party or is necessary to correct any inconsistency or manifest error or is by way of an amendment agreed between the parties pursuant to Clause 17.6 or the equivalent provision of any other such document;
   
(f) to do anything, other than actions listed in Clause 5.1.3 or 5.1.4, which the Board of RTL and the Board of RTP agree (either in a particular case or generally) should be treated as a Class Rights Action under this Clause 5.1.2
   
    each of them agrees with the other that it shall only take such action after it has been approved by:
     
1. the consent in writing of the holder of the Special Voting Share in the company proposing the action, which consent shall only be given following the passing of a special resolution approving the action by the holders of Publicly-held Shares of the other company; and
   
2. a special resolution of the holders of Publicly-held Shares in the company proposing the action.
   
  5.1.3 If it is proposed to amend, remove or alter the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of) any RTP Entrenched Provision or to amend, remove or alter the effect of any other provision of the RTP Memorandum and Articles which amendment, removal or alteration the Board of RTL and the Board of RTP agree should be treated as subject to this Clause 5.1.3, then such action shall require approval by a special resolution of the shareholders of RTP (on which no member of the RTL Group has cast a vote or on which any votes cast by a member of the RTL Group have been disregarded) on which, if the proposed amendment, removal or alteration has not, by the time of the closing of the poll on such resolution, been approved by a special resolution of the holders of Publicly-held RTL Ordinary Shares, the voting rights of the RTP Special Voting Share shall be increased to such extent as is necessary to defeat the resolution (and in that event the holder of the RTP Special Voting Share shall be bound to vote such Share to defeat the resolution). The holder of the RTP Special Voting Share shall otherwise not be entitled to vote on such a resolution.
     
  5.1.4 If it is proposed to amend, remove or alter the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of) any RTL Entrenched Provision or to amend, remove or alter the effect of any other provision of the RTL Memorandum and Articles which amendment, removal or alteration the Board of RTL and the Board of RTP agree should be treated as subject to this Clause 5.1.4, then such action shall require:
     
9
 

(a) the consent in writing of the holder of the RTL Special Voting Share (which shall be given if the proposed amendment, removal or alteration has been approved by a special resolution of the holders of Publicly-held RTP Voting Shares, and otherwise shall be withheld); and
   
(b) approval by a special resolution of the shareholders of RTL (on which no member of the RTP Group has cast a vote or on which any votes cast by a member of the RTP Group have been disregarded) on which, if the proposed amendment, removal or alteration has not, by the time of the closing of the poll on such resolution, been approved by a special resolution of the holders of Publicly-held RTP Voting Shares, the voting rights of the RTL Special Voting Share shall be increased to such extent as is necessary to defeat the resolution (and in that event the holder of the RTL Special Voting Share shall be bound to vote such share to defeat the resolution). The holder of the RTL Special Voting Share shall otherwise not be entitled to vote on such a resolution.
   
5.2 Obligations to convene meetings
   
  Each party agrees that, if the other so requests, in relation to a proposal by the other to effect a Class Rights Action, its Board will as soon as practicable convene a general meeting of shareholders to consider and, if thought fit, pass the necessary resolutions approving such matter.
   
6 Joint Decisions, Polls and Discretionary Matters
   
6.1 Submission of Joint Decisions to meetings of both companies
   
  Each of the following matters shall be submitted for approval by a resolution of the company affected by the matter and by an equivalent resolution in the other company, each by the same majority (i.e. both by ordinary or both by special resolution) to separate meetings of the shareholders of both RTL and RTP (including, for the avoidance of doubt, the holders of the Special Voting Shares), whether or not such approval is required by Applicable Regulation or otherwise:
   
(a) the appointment or removal of a director of RTL and/or RTP;
   
(b) the receipt or adoption of the annual accounts of RTL and/or RTP (if shareholders are to be asked to vote on the receipt or adoption of such accounts);
   
(c) a change of name by RTL and/or RTP;
   
(d) any proposed acquisition or disposal and any proposed transaction with a substantial shareholder, director or other related party which (in any case) is required under Applicable Regulation to be authorised by shareholders;
   
(e) the appointment or removal of the auditors of RTL and/or RTP;
   
(f) the creation of a new class of shares (or securities convertible into, exchangeable for or granting rights to subscribe for or purchase shares of a new class) in RTL or RTP;
   
(g) a change of the corporate status or reregistration of RTL or RTP;
   
(h)

a matter referred to in Clause 9.2; and

   
10
 

(i) any other matter which both the Board of RTL and the Board of RTP decide (either in a particular case or generally) should be decided upon by Joint Decision.
   
  If a particular matter would otherwise fall both within Clause 5.1 and within Clause 6.1, then it shall be treated as falling within Clause 5.1.
   
6.2 Timing of meetings
   
  If a matter requires a Joint Decision, each party shall do all such acts and things as may be necessary to ensure that the relevant annual or extraordinary general meetings, as appropriate, are held on the same day, or as closely in time to each other as practicable (taking into account the fact that some or all of the directors of RTL and RTP may wish to attend both meetings).
   
6.3 Poll
   
  Each of RTL and RTP agrees with the other that any resolution put to its general meeting in relation to which the RTL Special Voting Share or the RTP Special Voting Share is or may be entitled to vote pursuant to Clause 5.1 or Clause 6.1 shall be decided on by a poll.
   
6.4 Timing of Poll
   
  6.4.1 RTL agrees with RTP that any poll on which the RTL Special Voting Share is or may be entitled to vote shall (as regards the RTL Special Voting Share and the RTL Ordinary Shares held by any member of the RTP Group) be kept open for such time as to allow a general meeting of RTP to be held and for the votes attaching to the RTL Ordinary Shares held by any member of the RTP Group and the RTL Special Voting Share to be calculated and cast on such poll, although such poll may be closed earlier in respect of shares of other classes and/or RTL Ordinary Shares held by persons other than any member of the RTP Group.
     
  6.4.2 RTP agrees with RTL that any poll on which the RTP Special Voting Share is entitled to vote shall (as regards the RTP Special Voting Share) be kept open for such time as to allow a general meeting of RTL to be held and for the votes attaching to the RTP Special Voting Share to be cast on such poll, although such poll may be closed earlier in respect of shares of other classes.
     
6.5 Discretionary Matters
   
  The parties agree that:
   
(a) the Board of RTL and the Board of RTP may by agreement decide to seek the approval of such majority of the shareholders (or any class of shareholders) of either or both of RTL and RTP on any matter which would not otherwise require such an approval (or such a high approval threshold); and
   
(b) on any matter which by Applicable Regulation or by virtue of the provisions of the RTL Memorandum and Articles or the RTP Memorandum and Articles requires approval of the shareholders of either or both of RTL and RTP (apart from those matters for which express provision is made in this Agreement), the Board of RTL and the Board of RTP may by agreement decide that such matter shall be deemed to be a Class Rights Action requiring approval in accordance with Clause 5.1.1 or Clause 5.1.2 or a Joint Decision Matter requiring approval as a Joint Decision or whether the matter requires only the approval of the holders of Publicly-held RTL Ordinary Shares or of the holders of Publicly-held RTP Voting Shares provided
   
11
 

    that, on any procedural resolution to be voted on at a meeting of shareholders of RTL at which a Joint Decision Matter is to be considered, such procedural resolution may be voted on by the holder of the RTL Special Voting Share and by any member of the RTP Group that holds beneficially any RTL Ordinary Shares and on any procedural resolution to be voted on at a meeting of shareholders of RTP at which a Joint Decision Matter is to be considered, such procedural resolution may be voted on by the holder of the RTP Special Voting Share.
     
7 Voting Restrictions
   
7.1 RTL
   
  RTL shall procure that no voting rights for the time being attaching to any RTP Ordinary Shares or RTP Voting Preference Shares beneficially owned by any member of the RTL Group are exercised on any resolution put to a shareholders meeting of RTP.
   
7.2 RTP
   
  RTP shall procure that no voting rights for the time being attaching to any RTL Ordinary Shares beneficially owned by any member of the RTP Group are exercised on any resolution put to a shareholders meeting of RTL except a resolution approving a Joint Decision or a procedural resolution at a meeting at which a Joint Decision Matter is considered.
   
8 Information and Intellectual Property
   
8.1 Disclosure
   
  Subject to any relevant obligation owed to a third party and to Clause 8.4, each party shall disclose, and agrees to procure that each of its Subsidiaries shall disclose, to the other all information (including Intellectual Property rights) from time to time relating to their respective businesses and agrees to use, and to procure that its Subsidiaries shall use, all reasonable endeavours either:
   
(a) to obtain a waiver of any relevant obligation owed to a third party to the extent that such obligation would prevent disclosure to the other of any information; or
   
(b) to obtain the third party’s acceptance that members of the RTL Group or members of the RTP Group, as the case may be, are to be treated as permitted recipients under the terms of the relevant confidentiality agreement.
   
8.2 Confidentiality
   
  Each party undertakes to treat as confidential in accordance with the terms of any relevant confidentiality agreement, and procure that each of its Subsidiaries shall so treat as confidential, any confidential information disclosed to it or to its Subsidiaries pursuant to Clause 8.1.
   
8.3 Intellectual Property
   
  To the extent to which it has the right to do so and subject to Clause 8.4, each party (the “first party”) shall permit members of the Group of the other to use, in the course of their respective businesses, the Intellectual Property which the first party or its Subsidiaries is entitled to use in the course of its or their respective businesses. Any such permission shall be on such terms as may reasonably be required to protect the rights subsisting in such
   
12
 

  Intellectual Property. To the extent that RTL and RTP and their respective Subsidiaries do not have the right to permit members of the Group of the other to use their Intellectual Property, each of RTL and RTP shall use, and procure that its Subsidiaries shall use, all reasonable endeavours to obtain such permission whenever requested by the other to do so.
   
8.4 Payment of Fees
   
  Each party acknowledges that it may be necessary or desirable for fees to be charged in respect of the supply or provision of information or Intellectual Property or other services or benefits pursuant to this Agreement, including without limit in circumstances where relevant tax laws in force from time to time require determination of an arm’s length consideration in respect of transactions between associated enterprises. If either or both of the parties determine it is necessary or desirable that a fee should be charged in respect of a transaction, the parties shall as soon as practicable negotiate in good faith and agree a reasonable arm’s length fee appropriate for the transaction concerned provided that this Clause shall not apply to the parties’ obligations to make any equalisation payments, including without limitation any obligation under Clause 4, Clause 11, Schedule 1 or Schedule 2.
   
9 Change of Control of Either RTL or RTP
   
9.1 Enforcement of Articles
   
  RTP and RTL shall co-operate with each other in the enforcement of the provisions of Article 64 of the RTP Memorandum and Articles and Article 145 of the RTL Memorandum and Articles.
   
9.2 Acceptance of a takeover offer for RTL
   
  RTP agrees with RTL that if a third party (either alone or with its Associates) has made an offer to shareholders generally to acquire RTL Ordinary Shares, RTP shall procure that while such offer remains open for acceptance no member of the RTP Group which holds RTL Ordinary Shares beneficially or on behalf of another member of the RTP Group shall accept such offer in respect of, or otherwise dispose of, any RTL Ordinary Shares or any interest therein without the approval of an ordinary resolution by Joint Decision on which any votes of the offeror or its Associates (apart from persons who are Associates by virtue of having accepted, or submitted forms of acceptance or irrevocable undertakings to accept, an offer for their RTL Ordinary Shares or RTP Ordinary Shares) shall be disregarded.
   
10 Accounting Matters
   
  The parties agree:
   
(a) so far as may be permitted by law, to adopt the same accounting policies and apply the same accounting practices;
   
(b) to ensure that each of their Financial Periods ends on the same date; and
   
(c) unless and until the shareholders decide otherwise by Joint Decision, that each of their auditors shall be part of the same international accounting firm.
   
13
 

11 Equalisation of Assets on Termination
   
11.1 On the termination of this Agreement howsoever arising (otherwise than on the final winding up of RTL or RTP), each party will instruct a merchant bank of international repute to certify, within 6 weeks after being instructed to do so, the value of the net assets of such party as at the date of termination, and within a further 4 weeks thereafter to approve the value of the net assets of the other party as so certified. The Board of RTL and the Board of RTP shall ensure that the same principles of valuation are adopted in respect of the valuation of each company by such merchant banks. If within such 4 week period such merchant banks are unable to agree the value of the net assets of either or both parties, then the dispute shall be referred to a third merchant bank of international repute (which shall act as expert and not as arbitrator) appointed by agreement between the parties, or failing such agreement within 7 days of the end of that 4 week period by the President for the time being of the Law Society in England and Wales, and such third merchant bank will be instructed by the parties to finish its determination within a further 4 weeks of being appointed (or such longer period as the parties may agree). The agreement of the merchant banks appointed by the parties, or as the case may be the decision of the third merchant bank, shall be final and binding on the parties.
   
11.2 If the ratio of the values determined in accordance with Clause 11.1 (applying the Liquidation Exchange Rate or such other rate as such merchant bank or banks shall determine or agree) of the net assets per Publicly-held RTL Ordinary Share to the net assets per Publicly-held RTP Ordinary Share does not equal the Equalisation Ratio at the date of termination of this Agreement, then a payment will be made by one party to the other of such amount as will result in that ratio after such payment (and after making provision for any tax in respect of the receipt or making of such payment and after taking account of any offsetting tax credits or losses having regard to the proposed method of making the payment) being equal to the Equalisation Ratio at such date.
   
11.3 Termination of this Agreement shall be without prejudice to the rights and obligations of the parties under this Clause 11.
   
11.4 The costs of any third merchant bank appointed pursuant to Clause 11.1 are to be borne as it decides.
   
12 Stock Exchange Obligations
   
  Each of RTL and RTP will, and so far as it is able will ensure that each of its Subsidiaries will, ensure that it is in a position to comply with obligations imposed on it by all stock exchanges on which either or both of their shares are from time to time listed, quoted or traded. In particular, each party will provide to the other party all information reasonably required by the other party for the purpose of making announcements to any such stock exchange and will use all reasonable endeavours to ensure, as far as practicable, that they co-ordinate the content and timing of release of announcements required by each such stock exchange.
   
13 Issue of Equalisation Shares
   
  The parties agree that the Board of RTL and the Board of RTP may agree to the simultaneous issue of the RTL Equalisation Share to a member of the RTP Group and of the RTP Equalisation Share to a member of the RTL Group in each case against payment of the nominal value thereof and that neither RTP nor RTL shall issue its Equalisation Share unless the Board of RTP and the Board of RTL shall have agreed to such issue and to the simultaneous issue of the Equalisation Share in the other company.
   
14
 

14 Relationship with other Documents
   
  In the event of any conflict between this Agreement on the one hand and on the other hand either of the RTL Memorandum and Articles or the RTP Memorandum and Articles the parties shall use all reasonable endeavours to ensure that any required amendment to the RTL Memorandum and Articles or the RTP Memorandum and Articles, as is appropriate, is proposed at general meetings of RTL and/or as the case may be RTP in order to conform it or them with the provisions of this Agreement.
   
15 Restrictions on Share Dealing
   
15.1 Limits on dealings
   
  Subject to Clause 15.2, each party (the “first party”) agrees that it will not, and agrees to procure that its Subsidiaries will not:
   
(a) sell, dispose, purchase or otherwise deal in shares or other equity securities of the other party; or
   
(b) take any action which will result in a change to the number of shares or other equity securities of the other party held by the first party’s Group,
   
  unless and until the Board of the other company has resolved to consent to such sale, disposal, purchase, dealing or other action.
   
15.2 Exceptions
   
  The restrictions in Clause 15.1 shall not apply to:
   
(a) any sale or disposal by either party to its Subsidiary or by a Subsidiary of either party to that party or to another Subsidiary of that party, to any disposal permitted by Clause 9.2 or to any purchase or other dealing between either party and its Subsidiary or between Subsidiaries of a party;
   
(b) taking up all or any part of an entitlement on a rights issue by the other party, receiving any bonus issue by the other party or taking up shares under a dividend re-investment plan of the other party; and
   
(c) the purchase by either party and/or any of its Subsidiaries of any Ordinary Shares in the other party which would have been permitted under this Agreement if such purchase had been made by the other party itself.
   
15.3 RTP Shareholder Voting Agreement
   
  RTP shall procure that, if any member of the RTP Group including Tinto Holdings Australia Pty Limited at any time owns any RTL Ordinary Shares, either such member, or a parent company of such member, enters into an agreement having the like effect in respect of such shares as does the RTP Shareholder Voting Agreement in respect of the RTL Ordinary Shares owned by Tinto Holdings Australia Pty Limited.
   
15.4 Disposals treated as issues
   
  Each party will, in observing any limitation placed on it under Applicable Regulation on offers of Ordinary Shares for cash (otherwise than pro-rata by way of rights to existing
   
15
 

  holders of Ordinary Shares) and in applying Clause 5.1.1(a)(i) and paragraph 5 of Schedule 2, treat sales of Ordinary Shares owned in it by the other or any of the other’s Subsidiaries (except sales to another member of the other’s Group) as though such sales were issues of unissued Ordinary Shares in its capital.
   
16 Other Transactions
   
  Subject to Clause 2 and Clause 8.4, each party will enter into such further transactions or arrangements, and do such acts and things, as the other may require from time to time in the furtherance of the common interests of the shareholders of RTL and RTP as a combined group.
   
17 Miscellaneous
   
17.1 Regulatory
   
  The parties will co-operate with each other from time to time to ensure that all information necessary or desirable for the making of (or responding to any requests for further information consequent upon) any notifications or filings made in respect of this Agreement, or the transactions contemplated hereunder, is supplied to the party dealing with such notification and filings and that they are properly, accurately and promptly made.
   
17.2 No assignment
   
  Neither of the parties may assign any of its rights or obligations under this Agreement in whole or in part without the approval of the other party.
   
17.3 No waiver
   
  No waiver by a party of a failure or failures by the other party to perform any provision of this Agreement shall operate or be construed as a waiver in respect of any other or further failure whether of a like or different character.
   
17.4 No partnership or agency
   
  Nothing in this Agreement (or in any of the arrangements contemplated hereby) shall be deemed to constitute a partnership between RTL and RTP, nor constitute either party as agent of the other party for any purpose.
   
17.5 Applicable Laws
   
  Each of the obligations of the parties hereto shall be subject to any applicable law and regulation of any relevant regulatory body as in force from time to time.
   
17.6 Severance
   
  If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable under any relevant law, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired. Notwithstanding the foregoing, the parties shall thereupon negotiate in good faith in order to agree the terms of a mutually satisfactory provision, achieving as nearly as possible the same commercial effect, to be substituted for the provision found to be invalid, illegal or unenforceable.
   
16
 

17.7 Amendment
   
  Any amendment to or termination of this Agreement shall be made in writing signed by duly authorised representatives of RTL and RTP. Any amendments to this Agreement which are formal or technical in nature and which are not materially prejudicial to the interests of the shareholders of either party or are necessary to correct any inconsistency or manifest error may be agreed between the Board of RTL and the Board of RTP.
   
18 Notices
   
  Any notice, demand, consent or other communication to the parties hereto required to be given, made or served for any purposes under this Agreement shall be given to, made to or served on a party by hand or by facsimile transmission as follows:
   
  to RTL: 33rd Floor 55 Collins Street
    Melbourne 3000
    Victoria, Australia
    Tel: (613) 9283 3288
    Fax: (613) 9283 3151
     
    Attention: The Company Secretary
     
  to RTP: 6 St James’s Square
    London SWIY 4LD
    England
    Tel: (44) 171 930 2399
    Fax: (44) 171 930 3249
    Attention: The Company Secretary
     
  or to such other address or facsimile number as shall have been notified (in accordance with this Clause) to the other party hereto and if sent by facsimile transmission as aforesaid shall be deemed to have been given, made or served on receipt of a transmission record indicating successful transmission provided that the same shall forthwith be confirmed by post and if delivered by hand shall be deemed to have been given, made or served at the time of delivery. The failure of the addressee to receive such confirmation shall not invalidate the relevant notice, demand, consent or other communication given by facsimile transmission.
   
19 Counterparts
   
  This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Either party may enter into this Agreement by signing any such counterpart.
   
20 Process Agent
   
  RTL irrevocably appoints Trusec Limited of 35 Basinghall Street, London EC2V 5DB as its agent to accept service of process in England in any legal action or proceedings arising out of or in connection with this Agreement, service upon whom shall be deemed complete whether or not forwarded to or received by RTL. RTP irrevocably appoints AA&H Enterprises Pty Limited (ACN 001 314 512) of 17th Floor, The Chifley Tower, 2 Chifley Square, Sydney, NSW 2000, Australia as its agent to accept service of process in Australia in any legal action or proceedings arising out of or in connection with this Agreement,
   
17
 

  service upon whom shall be deemed completed whether or not forwarded to or received by RTP. Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law. Each party agrees that should its process agent cease to act or cease to have an address in the relevant jurisdiction it shall immediately appoint a new process agent in the relevant jurisdiction and notify the other party of such appointment within 14 days of such appointment.
   
21 Governing Law
   
  This Agreement shall be governed by and construed in accordance with English law.
   
22 Jurisdiction
   
  RTL irrevocably agrees that the courts of England are to have non-exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement. RTP irrevocably agrees that the courts of Australia are to have non-exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement. Each party irrevocably submits to the jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that the proceedings have been brought in an inappropriate forum.
   
  In witness whereof this Agreement has been executed on the date first written above.
   
   
THE COMMON SEAL of CRA LIMITED3
(CAN 004 458 404 was hereunto affixed
in the presence of:
   
     
Leon A Davis
Director
   
     

IAN LESLIE FALCONER
Secretary


3

Now called Rio Tinto Limited

   
18
 

SIGNED by CRH Bull for and on behalf
of THE RTZ CORPORATION PLC4

in the presence of:
 
   
PDS KING
Solicitor
 
   
   

4

Now called Rio Tinto Limited

   
19
 

Schedule 1
Principles of Equalisation

1 Dividends
   
1.1 Except in relation to dividends in respect of 1995 and except in the circumstances set out in paragraphs 3.3 and 3.4 of Schedule 2, dividends and other distributions will be paid or made on the Ordinary Shares of RTL and RTP on the basis that the ratio of the Net Dividend Amount on one RTL Ordinary Share, to the Net Dividend Amount on one RTP Ordinary Share converted using the Applicable Exchange Rate, will be the Equalisation Ratio or as close to the Equalisation Ratio as is reasonably practicable. In this regard, a Net Dividend Amount may be rounded provided the Net Dividend Amount as rounded is within a 2% tolerance of the exact Net Dividend Amount that would result from the ratio of the Net Dividend Amount on one RTL Ordinary Share to the Net Dividend Amount on one RTP Ordinary Share converted using the Applicable Exchange Rate being exactly equal to the Equalisation Ratio. For the avoidance of any doubt and by way of example using a notional exchange rate of A$2:£1 and an Equalisation Ratio of 1:1 (and, with the exception of (g) below, under Applicable Regulations as in force at the date of this Agreement), it is agreed that:
   
  (a) where RTP pays a dividend of 15 pence per share, whether this is a dividend in respect of which advance corporation tax of 3.75 pence is due under the Income and Corporation Taxes Act 1988 of the United Kingdom (“ICTA”) or the dividend is a “foreign income dividend”, as defined in ICTA or a combination of the two, then the Net Dividend Amount is 15 pence per share; and
     
  (b) where RTL pays a franked dividend of 30 cents per share carrying under Australian law an Australian Franking Credit of 16.875 cents per share, then the Net Dividend Amount is 30 cents per share; or
     
  (c) where RTL pays an unfranked dividend of 30 cents per share carrying no Australian Franking Credit, then the Net Dividend Amount is 30 cents per share; or
     
  (d) where RTL pays an unfranked dividend of 30 cents per share to a non-resident and dividend withholding tax is deducted at 15 per cent (that is, 4.5 cents is deducted from the 30 cents so that the shareholder receives a cash amount of 25.5 cents per share), then the Net Dividend Amount is 30 cents per share; or
     
  (e) where RTL pays an unfranked dividend of 30 cents per share to a non-resident which is exempt from dividend withholding tax, because the foreign dividend declaration amount in respect of the dividend is 30 cents per share under Section 128TC of the Income Tax Assessment Act, then the Net Dividend Amount is 30 cents per share; or
     
  (f) where RTL pays a dividend (franked or unfranked) of 30 cents per share to another Australian company which is eligible for a rebate of tax under Section 46 of the Income Tax Assessment Act, then the Net Dividend Amount is 30 cents per share; or
     
  (g) where RTL pays a dividend to an Australian resident of 30 cents per share and, because of a change in Australian law subsequent to the date of this Agreement, the dividend does not carry any Australian Franking Credit but RTL is required by law to withhold 10 per cent of the amount of the dividend (so that the shareholder
     
20
 

    receives a cash amount of 27 cents per share) then, whether or not the shareholder is entitled to recover or obtain credit for the amount withheld, the Net Dividend Amount is 30 cents per share.
     
1.2 If either party (the “first party”) does not have sufficient distributable reserves to pay or make any dividend or other distribution as resolved by its directors, the other party (to the extent that it has sufficient distributable reserves after making allowance for the dividend or other distribution to be made to its own shareholders and after making provision for any tax in respect of the making of such payment or distribution (taking into account any offsetting tax credits, losses or deductions)) will make a payment to the first party or a distribution on its Equalisation Share (if it has been issued and if its Board so decides), so far as it is practicable to do so, in order to ensure that the first party’s distributable reserves are sufficient to pay or make such dividend or other distribution (and account for any tax payable, after taking into account any offsetting tax credits, losses or deductions with respect to the receipt of the payment or distribution or the payment of such dividend or the making of such other distribution) as will satisfy the provisions of paragraph 1.1.
   
2 Distributions of Capital
   
  On the bases and assumptions and subject to the exceptions set out or referred to in Schedule 2, distributions of capital by each party will be made on the principle that the ratio of the interests of the holders of Publicly-held RTL Ordinary Shares on a per share basis in the aggregate underlying capital of RTL and RTP taken as a whole (the “Aggregate Capital”) to the interests of the holders of the Publicly-held RTP Ordinary Shares on a per share basis in the Aggregate Capital will equal the Equalisation Ratio.
   
3 Purchases of Ordinary Shares
   
  For the avoidance of doubt, but without prejudice to Clauses 5 and 15 of this Agreement, nothing in this Agreement shall operate:
   
(a) to require that any purchase by either party (the “first party”) of Ordinary Shares or other shares in itself shall be accompanied by or imply any obligation to make a purchase of Ordinary Shares or other shares in the other party either by the first party or by the other party or any of its Subsidiaries;
   
(b) to require that any purchase by either party (the “first party”) and/or any of its Subsidiaries of Ordinary Shares or other shares in the other party shall be accompanied by or imply any obligation to make a purchase of Ordinary Shares or other shares in the first party by the first party or by the other party or any of its Subsidiaries;
   
(c) to restrict in any way the purchase by either party or any of its Subsidiaries of Ordinary Shares or other shares in itself or in the other party
   
and no purchase made in accordance with this paragraph 3 at around or below prevailing market prices for the shares being purchased shall require any adjustment to the
 
21
 

  Equalisation Ratio providing that the price paid shall not exceed the maximum from time to time specified by Applicable Regulation.5
   
   

5

At the Annual General Meetings of RTP and RTL held on 13 May and 27 May 1998 respectively special resolutions were passed providing that any future purchases of shares in either company by itself and any purchases of shares in RTP by RTL (or any of its subsidiaries) will require no future renewal of shareholder approval (for the purposes of the Sharing Agreement and the Articles of Association of RTP and RTL) except to the extent required by relevant UK or Australian law and Stock Exchange Rules and provided that such purchases are made at or around the prevailing market price.

   
22
 

Schedule 2
Operation of Principles

1 General
   
  The parties will keep under review (and amend, or propose to amend, where necessary) the detailed arrangements for equalisation embodied in this Schedule 2 and the RTL Memorandum and Articles and the RTP Memorandum and Articles with a view to ensuring that such arrangements work in conformity with the principles stated in Schedule 1.
   
2 Timing of Distributions
   
  The parties agree:
   
2.1 that the Boards of RTL and RTP shall resolve to pay dividends or make other distributions at Board meetings, summoned so that they are held as close in time to each other as is practicable;
   
2.2 to co-operate with a view to announcing their dividends and any other distributions, as far as practicable, simultaneously; and
   
2.3 to co-operate so far as practicable in co-ordinating the timing of all other aspects of dividend payment or the making of other distributions.
   
3 Equalisation of Net Distributions
   
  The parties agree to procure that their respective Boards observe the following provisions:
   
3.1 In relation to each proposed dividend payment or other distribution the Board of RTL and the Board of RTP shall agree at the Board meetings referred to in paragraph 2.1 the Net Dividend Amount in respect of the dividends or other distributions to be paid or made by them respectively.
   
3.2 Subject (in the case of dividends) to paragraphs 3.3 and 3.4, the Board of RTL and the Board of RTP shall resolve to pay dividends or make distributions of such an amount that, in relation to any proposed dividend payment or the making of any distribution, the ratio of the Net Dividend Amount in respect of one RTL Ordinary Share to the Net Dividend Amount in respect of one RTP Ordinary Share, calculated using the Applicable Exchange Rate, is the Equalisation Ratio.
   
3.3 Notwithstanding paragraph 3.2, either the Board of RTL or the Board of RTP may, after consulting the other Board, resolve to pay a dividend which is lower than the amount that would be implied by the Equalisation Ratio if it considers that payment of a dividend by RTL or RTP, as appropriate, according to the Equalisation Ratio would result in the payment of a dividend which it would be contrary to Applicable Regulation to pay.
   
3.4 In addition, RTL and RTP acknowledge that, in relation to any proposed dividend payment, the amounts resolved to be paid by the Board of RTL or the Board of RTP may not reflect the Equalisation Ratio where, following the reduction by one party of its dividend payment to shareholders in accordance with paragraph 3.3, subsequent compensatory payments are to be made to the relevant shareholders in respect of the relevant shares as contemplated in paragraph 3.6.
   
3.5 Where, for any of the reasons stated in paragraphs 3.3 or 3.4, either the Board of RTL or the Board of RTP decides not to pay a dividend according to the Equalisation Ratio, RTL
   
23
 

  and RTP shall make available to their shareholders, together with and in the same manner as the announcement of the dividend, a statement explaining why dividends have been or will be paid which are not in accordance with the Equalisation Ratio and the implications of that fact for future dividends (in so far as they are known).
   
3.6 RTL and RTP agree that:
   
  3.6.1 Where, in accordance with paragraph 3.3, the Board of RTL or the Board of RTP has resolved to pay a dividend lower than the amount that would be implied by the Equalisation Ratio, any future compensatory dividends may be paid at the same time as routine dividend payments by RTL and RTP.
     
  3.6.2 In the following circumstances, the following reserves shall be established:
     
(a) Inability to equalise in whole or in part
   
      If the whole or any part of the amount that would otherwise be payable to one party in accordance with paragraph 1.2 of Schedule 1 or distributable in accordance with that paragraph on the RTL Equalisation Share or the RTP Equalisation Share held by the party entitled to the relevant dividend payment (in either case the “affected party”) cannot be paid for any reason, then an amount equal to the difference between (i) the amount which should have been paid in accordance with paragraph 1.2 of Schedule 1 and (ii) the amount actually paid shall be credited to a separate reserve in the books of the other party (in sterling if the other party is RTP or in Australian dollars if the other party is RTL) and shall be preserved by such party so as to be available for payment to the affected party when circumstances permit such payment to be made and RTL and RTP shall agree arrangements to protect their respective shareholders against significant prejudice caused by currency fluctuations affecting the value of the separate reserve measured in terms of the currency in which payment of the compensatory payment or dividend will be made or paid. This reserve will be recorded in the books of the relevant company as a reserve for the benefit of the holder of the Equalisation Share (if it has been issued) and shall otherwise be recorded as a debt due to the party entitled to the payment under paragraph 1.2 of Schedule 1;
       
(b) Cap on own distributions notwithstanding equalisation
   
      If the whole or any part of the relevant amount payable in accordance with paragraph 1.2 of Schedule 1 or distributable in accordance with that paragraph on either the RTP Equalisation Share or the RTL Equalisation Share to the affected party is paid or distributed notwithstanding the fact that the affected party (or if the affected party is not RTP or RTL, whichever of RTP or RTL is the ultimate parent of the affected party) will (for any of the reasons specified in sub-paragraph (c) below) pay a lesser Net Dividend Amount to its shareholders than the amount which will be paid by the other party (taking into account the Equalisation Ratio), the affected party (or if the affected party is not RTP or RTL, whichever of RTP or RTL is the ultimate parent of the affected party) shall, for the benefit of the holders from time to time of its Ordinary Shares (the “Reserve Shares”) in issue at the time that the inability to pay occurs, establish a reserve in its own books of the amount so received which it is unable to distribute to its shareholders (which, in the case of RTL, will be in Australian dollars and, in the case of RTP, will be in sterling); and
       
24
 

(c) Cap on own distributions when no equalisation required
   
      A reserve shall be established for the benefit of the holders of the Reserve Shares of either party in the books of that party representing any amounts which, although available to that party (out of the accumulated distributable reserves of that party), are by reason of Applicable Regulation not permitted to be paid to the holders of Reserve Shares of that party and which should have been paid to the holders of Reserve Shares of that party in order to satisfy the requirements of paragraph 1.2 of Schedule 1.
       
3.6.3 The reserves established pursuant to paragraph 3.6.2 shall be:
   
(a) reduced proportionately to any decrease in the issued share capital of the affected party (or if the affected party is not RTP or RTL, whichever of RTP or RTL is the ultimate parent of the affected party); and
   
(b) adjusted to compensate for changes in the taxation regime applicable to the affected party or the party establishing the relevant reserve in either case under paragraph 3.6.2(a) so as to ensure that the same net amount is received by the affected party which would have been received had the circumstances in paragraph 3.3 not arisen.
   
3.6.4

There shall be added to the reserves established pursuant to paragraph 3.6.2 such amount of notional interest or other compensation to reflect the delay in receipt as RTL and RTP may agree.

     
3.6.5 Any amounts standing to the credit of any reserve established pursuant to paragraph 3.6.2 shall be paid to the persons entitled to them as soon as Applicable Regulation so permits.
     
3.7 For the purposes of Article 3(B) of the RTP Memorandum and Articles, Article 8 of the RTL Memorandum and Articles and paragraph 1.2 of Schedule 1 the dividends to be paid or distributions made to shareholders and the payments to be made under paragraph 1.2 of Schedule 1 or distributions to be made on the RTL Equalisation Share or on the RTP Equalisation Share under that paragraph shall be calculated ignoring the possibility of any requirement or decision to pay a different amount by reason of any of the circumstances described in paragraph 3.3.
   
4 Capital
   
4.1 Liquidation of RTP
     
  The parties agree that, if RTP shall go into liquidation whether compulsory or voluntary and whether or not proceedings have been commenced for the liquidation of RTL, then, unless the relevant party has issued an Equalisation Share and pursuant to the terms of issue thereof is required or elects to make a distribution on its Equalisation Share of an equivalent amount, a payment (the “Equalisation Payment”) shall be made by RTL to RTP or, as the case may be, by RTP to RTL if either party would have surplus assets available for distribution to the holders of its Ordinary Shares after the payment to all creditors and holders of prior ranking classes of share of the amounts due to them and the ratio of the surplus (if any) attributable to each Publicly-held RTL Ordinary Share to the surplus (if any) attributable to each Publicly-held RTP Ordinary Share would otherwise not equal the
   
25
 

  Equalisation Ratio. The amount of the Equalisation Payment shall be calculated as set out in paragraphs 4.1.1 to 4.1.10. In making such calculation a reserve shall be made for the following amounts due in respect of shares in or reserves of the relevant party, so that the Equalisation Payment shall not be made by the party from which it would otherwise be due unless after making such payment there will remain available to such party sufficient funds to pay the following amounts due on a return of assets on a liquidation:
   
I. In the case of RTP:
   
  (a) in respect of any statutory entitlements ranking ahead of the entitlements of the shareholders on a liquidation of RTP, the amounts due in accordance with the relevant statute;
     
  (b) to the holders of the Preference Shares (as defined in the RTP Memorandum and Articles) and to the holders of all other classes of share (apart from those listed below) having rights to participate on a return of capital in priority to the RTP Ordinary Shares, the amount payable on a return of capital on such shares;
     
  (c) to the holder of the RTP Special Voting Share, the nominal amount paid up on such Share;
     
  (d) to:
     
    (i) the holder of the RTP Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and
       
    (ii) RTL, any amount standing to the credit of RTL,
       
  in either case in any reserve set up in the books of RTP pursuant to paragraph 3.6.2(a); and
   
(e) to holders of RTP Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTP pursuant to paragraph 3.6.2(b) or 3.6.2(c).
   
II.   In the case of RTL:
   
(a) In respect of any statutory entitlements ranking ahead of the entitlements of the shareholders of RTL on a liquidation of RTL, the amounts due in accordance with the relevant statute;
   
(b) to the holders of all classes of share (apart from those listed below) having rights to participate on a return of capital in priority to the RTL Ordinary Shares, the amount payable on a return of capital on such shares;
   
(c) to:
   
  (i) the holder of the RTL Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and
       
  (ii) RTP, any amount standing to the credit of RTP,
       
  in either case in any reserve in the books of RTL pursuant to paragraph 3.6.2(a);
   
26
 

(d) to holders of RTL Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTL pursuant to paragraph 3.6.2(b) or 3.6.2(c); and
   
(e) to the holder of the RTL Special Voting Share, the nominal amount paid up on such share.
   
4.1.1 For the purpose of calculating the Equalisation Payment, the liquidator of RTP shall draw up accounts as at the earliest date (the “Reference Date”) on which the liquidator is able to make a final distribution to creditors and members of RTP to show the gross amount which would be available for distribution to the holders of RTP Ordinary Shares on the liquidation of RTP after payment in full of any amount standing to the credit of:
       
(a) any member of the RTL Group in any reserve set up in the books of RTP pursuant to paragraph 3.6.2(a); and
   
(b) the holders of RTP Ordinary Shares in any reserve set up in the books of RTP under paragraph 3.6.2(b) or 3.6.2(c)
   
    and to calculate the amount thereof available for distribution to holders of Publicly-held RTP Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held RTP Ordinary Shares would receive any payment by way of distribution (in either case, the “RTP Own Distribution Amount”), on the assumption that distribution to RTP’s creditors and members took place on the Reference Date. The liquidator of RTP shall certify the result of such calculation to RTL.
     
4.1.2 Unless RTL is in liquidation at the Reference Date (in which case paragraph 4.2.1 shall apply instead of this paragraph 4.1.2), for the purpose of calculating the Equalisation Payment, the Relevant Officer (as defined in paragraph 4.5) for the time being of RTL shall draw up accounts as at the Reference Date of all assets (valued as if RTL was in liquidation and those assets were to be realised by a liquidator of RTL in an orderly manner) and liabilities which would be admissible to proof if RTL was in liquidation at the Reference Date (other than the asset or liability represented by the Equalisation Payment) to show the gross amount which would be available for distribution to holders of RTL Ordinary Shares on the liquidation of RTL (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of:
   
(a) any member of the RTP Group in any reserve set up in the books of RTL pursuant to paragraph 3.6.2 (a); and
   
(b) the holders of RTL Ordinary Shares in any reserve set up in the books of RTL under paragraph 3.6.2(b) or 3.6.2(c)
   
    and to calculate the amount thereof available for distribution to holders of Publicly-held RTL Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of the Publicly-held RTL Ordinary Shares would receive any payment by way of distribution (in either case, the “RTL Own Distribution Amount”), on the assumption that the distribution to RTL’s creditors and members on liquidation took place on the Reference Date. The Relevant Officer of RTL shall certify the result of such calculation to RTP.
     
27
 

4.1.3 The liquidator of RTP for the time being shall make, and certify to RTL, the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of RTL, which calculation will be expressed in sterling, with any Australian dollar amounts being converted to sterling at the Liquidation Exchange Rate as at the Reference Date:
   
  (RTPOD + RTLOD)   x     RTPOS
                   (RTLOS x EF) + RTPOS
           
    where:    
           
    RTPOD = the RTP Own Distribution Amount;
     
    RTLOD = the RTL Own Distribution Amount;
       
    RTPOS = the number of Publicly-held RTP Ordinary Shares in issue on the Reference Date;
     
    RTLOS = the number of Publicly-held RTL Ordinary Shares in issue on the Reference Date; and
     
    EF = the Equalisation Fraction on the Reference Date.
     
    The result of such calculation is referred to below as the “Adjusted RTP Distribution Amount”.
     
4.1.4 If the Adjusted RTP Distribution Amount is equal to or more than the RTP Own Distribution Amount, then (a) if the RTL Own Distribution Amount is a positive amount, RTL shall pay, out of the assets otherwise available to holders of RTL Ordinary Shares, an amount to RTP being the lesser of an amount equal to the value of those assets and an amount such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share to the amount available for distribution on each Publicly-held RTP Ordinary Share:
   
(i) apart from any undistributed amounts resulting from the payment by RTL to a member of the RTP Group, or by RTP to a member of the RTL Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares, in either case under paragraphs 3.6.2(b) or 3.6.2(c); and
   
(ii) on the assumption that such distribution to RTP’s members and creditors and RTL’s members and creditors took place on the Reference Date; and
   
(iii) after taking into account the amount available for distribution on each Publicly-held RTP Ordinary Share prior to such payment,
   
    is equal to the Equalisation Ratio, converting Australian dollar amounts to sterling by application of the Liquidiation Exhange Rate at the Reference Date and (b) in any case, the assets of RTP available for distribution, which shall include any distribution made on the RTL Equalisation Share or any other payment pursuant to this Agreement or the RTL Memorandum and Articles, shall belong to and be distributed among the holders of RTP Ordinary Shares rateably according to the numbers of RTP Ordinary Shares held by them.
     
28
 

4.1.5 If the Adjusted RTP Distribution Amount is equal to or more than zero, but is less than the RTP Own Distribution Amount, the liquidator of RTP shall pay out of the assets otherwise available for distribution to holders of RTP Ordinary Shares an amount to RTL such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share:
   
(i) apart from any undistributed amounts resulting from the payment by RTP to a member of the RTL Group or by RTL to a member of the RTP Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares, in either case under paragraphs 3.6.2 (b) or 3.6.2(c); and
   
(ii) on the assumption that such distribution to RTP’s members and creditors and RTL’s members and creditors took place on the Reference Date; and
   
(iii) after taking into account the amount available for distribution on each Publicly-held RTL Ordinary Share prior to such payment
   
    to the amount available for distribution on each Publicly-held RTP Ordinary Share converting sterling amounts to Australian dollars by application of the Liquidation Exchange Rate on the Reference Date is equal to the Equalisation Ratio (and the balance of the assets (if any) of RTP available for distribution to the holders of RTP Ordinary Shares remaining after any such payment to RTL shall belong to and be distributed among the holders of RTP Ordinary Shares rateably according to the numbers of RTP Ordinary Shares held by them).
     
4.1.6 If the Adjusted RTP Distribution Amount is zero or a negative amount and the RTP Own Distribution Amount is a positive amount then the liquidator of RTP shall pay out of the assets otherwise available for distribution to the holders of RTP Ordinary Shares an amount to RTL such that (taking account of any tax payable on the making of that payment, after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held RTP Ordinary Shares on the assumption that distribution to RTP’s members and creditors took place on the Reference Date is zero.
   
4.1.7 If the RTP Own Distribution Amount is zero or a negative amount and the RTL Own Distribution Amount is zero or a negative amount, then no payment is required to be made by the liquidator of RTP to RTL or by RTL to RTP and the amount available for distribution to holders of Publicly-held RTP Ordinary Shares is zero.
   
4.1.8 In making the calculations referred to in this paragraph 4.1, the Relevant Officer of RTL and the liquidator of RTP shall take into account the distributions which fall to be made on those RTP Ordinary Shares which are not Publicly-held RTP Ordinary Shares and those RTL Ordinary Shares which are not Publicly-held RTL Ordinary Shares, it being acknowledged that for each company the per share distributions on its Publicly-held Ordinary Shares and its non Publicly-held Ordinary Shares will be the same.
   
29
 

4.1.9 The certificates which the Relevant Officers of RTL and RTP are required to produce under paragraphs 4.1.1, 4.1.2 and 4.1.3 (the “Certificates”) shall be produced within 6 weeks after the Reference Date and the parties shall procure that all necessary instructions are given to the Relevant Officers of each company to ensure that such certificates are produced within that time. The Relevant Officers of each company shall then agree the calculations in such Certificates within 4 weeks of the date on which all such Certificates are produced. If they are unable to agree the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the parties (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either party, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm are to be borne as such firm decides. Once the calculations in the Certificates have been agreed by the Relevant Officers of the parties or determined by the independent accountants, they shall be conclusive and binding on the parties.
   
4.1.10 The parties shall jointly give such instructions as may be necessary to procure the making of any calculations or certifications required by this Clause 4.1.
   
4.2 Liquidation of RTL
   
  The parties agree that, if RTL shall go into liquidation whether compulsory or voluntary and whether or not proceedings have been commenced for the liquidation of RTP, then, unless the relevant party has issued an Equalisation Share and pursuant to the terms of issue thereof is required or elects to make a distribution on its Equalisation Share of an equivalent amount, a payment (the “Equalisation Payment”) shall be made by RTP to RTL or, as the case may be, by RTL to RTP if either party would have surplus assets available for distribution to the holders of its Ordinary Shares after the payment to all creditors and holders of prior ranking classes of share of the amounts due to them and the ratio of the surplus (if any) attributable to each Publicly-held RTL Ordinary Share to the surplus (if any) attributable to each Publicly-held RTP Ordinary Share would otherwise not equal the Equalisation Ratio. The amount of the Equalisation Payment shall be calculated as set out in paragraphs 4.2.1 to 4.2.10. In making such calculation a reserve shall be made for the following amounts due in respect of shares in or reserves of the relevant party, so that the Equalisation Payment shall not be made by the party from which it would otherwise be due unless after making such payment there will remain available to such party sufficient funds to pay the following amounts due on a return of assets on a liquidation:
   
I. In the case of RTL:
   
  (a) In respect of any statutory entitlements ranking ahead of the entitlements of the shareholders of RTL on a liquidation of RTL, the amounts due in accordance with the relevant statute;
     
  (b) to the holders of all classes of shares (apart from those listed below) having rights to participate on a return of capital in priority to the RTL Ordinary Shares, the amount payable on a return of capital on such shares;
     
30
 

(c) to:
   
    (i) the holder of the RTL Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and
       
    (ii) RTP, any amount standing to the credit of RTP,
       
  in either case in any reserve in the books of RTL pursuant to paragraph 3.6.2(a);
   
(d) to holders of RTL Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTL pursuant to paragraph 3.6.2(b) or 3.6.2(c); and
   
(e) to the holder of the RTL Special Voting Share, the nominal amount paid up on such share.
   
II.   In the case of RTP:
   
(a) In respect of any statutory entitlements ranking ahead of the entitlements of the shareholders of RTP on a liquidation of RTP, the amounts due in accordance with the relevant statute;
   
(b) to the holders of the Preference Shares (as defined in the RTP Memorandum and Articles) and to the holders of all other classes of share (apart from those listed below) having rights to participate on a return of capital in priority to the RTP Ordinary Shares, the amount payable on a return of capital on such shares;
   
(c) to the holder of the RTP Special Voting Share, the nominal amount paid up on such share;
   
(d) to:
   
    (i) the holder of the RTP Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and
       
    (ii) RTL, any amount standing to the credit of RTL,
       
  in either case in any reserve set up in the books of RTP pursuant to paragraph 3.6.2(a); and
   
(e) to holders of RTP Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTP pursuant to paragraph 3.6.2(b) or 3.6.2(c).
   
4.2.1 For the purpose of calculating the Equalisation Payment, the liquidator of RTL shall draw up accounts as at the earliest date (the “Reference Date”) on which the liquidator is able to make a final distribution to creditors and members of RTL to show the gross amount which would be available for distribution to the holders of RTL Ordinary Shares on the liquidation of RTL after payment in full of any amount standing to the credit of:
       
    (a) any member of the RTP Group in any reserve set up in the books of RTL pursuant to paragraph 3.6.2(a); and
       
    (b) the holders of RTL Ordinary Shares in any reserve set up in the books of RTL under paragraph 3.6.2(b) or 3.6.2(c)
       
31
 

    and to calculate the amount thereof available for distribution to holders of Publicly-held RTL Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of the Publicly-held RTL Ordinary Shares would receive any payment by way of distribution (in either case, the “RTL Own Distribution Amount”), on the assumption that distribution to RTL’s creditors and members took place on the Reference Date. The liquidator of RTL shall certify the result of such calculation to RTP.
     
4.2.2 Unless RTP is in liquidation at the Reference Date (in which case paragraph 4.1.1 shall apply instead of this paragraph 4.2.2), for the purpose of calculating the Equalisation Payment, the Relevant Officer (as defined in paragraph 4.5) for the time being of RTP shall draw up accounts as at the Reference Date of all assets (valued as if RTP was in liquidation and those assets were to be realised by a liquidator of RTP in an orderly manner) and liabilities which would be admissible to proof if RTP was in liquidation at the Reference Date (other than the asset or liability represented by the Equalisation Payment) to show the gross amount which would be available for distribution to holders of RTP Ordinary Shares on the liquidation of RTP (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of:
   
(a) any member of the RTL Group in any reserve set up in the books of RTP pursuant to paragraph 3.6.2 (a); and
   
(b) the holders of RTP Ordinary Shares in any reserve set up in the books of RTP under paragraph 3.6.2(b) or 3.6.2(c)
   
    and to calculate the amount thereof available for distribution to holders of Publicly-held RTP Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of the Publicly-held RTP Ordinary Shares would receive any payment by way of distribution (in either case, the “RTP Own Distribution Amount”), on the assumption that the distribution to RTP’s creditors and members on liquidation took place on the Reference Date. The Relevant Officer of RTP shall certify the result of such calculation to RTL.
     
4.2.3 The liquidator of RTL for the time being shall make, and certify, the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of RTP, which calculation will be expressed in Australian dollars, with any sterling amounts being converted to Australian dollars at the Liquidation Exchange Rate as at the Reference Date:
   
    (RTLOD + RTPOD) x RTLOS
            (RTPOS 3 EF) + RTLOS

where:

    RTLOD = the RTL Own Distribution Amount;
     
    RTPOD = the RTP Own Distribution Amount;
     
    RTLOS = the number of Publicly-held RTL Ordinary Shares in issue on the Reference Date;
     
    RTPOS = the number of Publicly-held RTP Ordinary Shares in issue on the Reference Date; and
     
    EF = the Equalisation Fraction on the Reference Date.
     
32
 

  The result of such calculation is referred to below as the “Adjusted RTL Distribution Amount”.
   
4.2.4 If the Adjusted RTL Distribution Amount is equal to or more than the RTL Own Distribution Amount, then (a) if the RTP Own Distribution Amount is a positive amount, RTP shall pay, out of the assets otherwise available to holders of RTP Ordinary Shares, an amount to RTL being the lesser of an amount equal to the value of those assets and an amount such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share to the amount available for distribution on each Publicly-held RTP Ordinary Share:
   
(i) apart from any undistributed amounts resulting from the payment by RTP to a member of the RTL Group, or from RTL to a member of the RTP Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares, in either case under paragraphs 3.6.2(b) or 3.6.2(c); and
   
(ii) on the assumption that distribution to RTL’s members and creditors and RTP’s members and creditors took place on the Reference Date; and
   
(iii) after taking into account the amount available for distribution on each Publicly-held RTL Ordinary Share prior to such payment,
   
    is equal to the Equalisation Ratio, converting Australian dollar amounts to sterling by application of the Liquidiation Exhange Rate at the Reference Date and (b) in any case, the assets of RTP available for distribution, which shall include any distribution made on the RTL Equalisation Share or any other payment pursuant to this Agreement or the RTL Memorandum and Articles, shall belong to and be distributed among the holders of RTP Ordinary Shares rateably according to the numbers of RTP Ordinary Shares held by them.
     
4.2.5 If the Adjusted RTL Distribution Amount is equal to or more than zero, but is less than the RTL Own Distribution Amount, the liquidator of RTL shall pay out of the assets otherwise available for distribution to holders of RTL Ordinary Shares an amount to RTP such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share,
   
(i) apart from any undistributed amounts resulting from the payment by RTL to a member of the RTP Group or RTP to a member of the RTL Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares or any amounts credited to any reserves in the books of RTL for the benefit of holders of RTL Ordinary Shares, in either case under paragraphs 3.6.2(b) or 3.6.2(c); and
   
(ii) on the assumption that such distribution to RTL’s members and creditors and RTP’s members and creditors took place on the Reference Date; and
   
33
 

(iii) after taking into account the amount available for distribution on each Publicly-held RTP Ordinary Share prior to such payment,
   
    to the amount available for distribution on each Publicly-held RTP Ordinary Share, converting Australian dollar amounts to sterling by application of the Liquidation Exchange Rate on the Reference Date, is the Equalisation Ratio (and the balance of the assets (if any) of RTL available for distribution to the holders of RTL Ordinary Shares remaining after any such payment to RTP shall belong to and be distributed among the holders of RTL Ordinary Shares rateably according to the numbers of RTL Ordinary Shares held by them).
     
4.2.6 If the Adjusted RTL Distribution Amount is zero or a negative amount and the RTL Own Distribution Amount is a positive amount then the liquidator of RTL shall pay out of the assets otherwise available for distribution to the holders of RTL Ordinary Shares an amount to RTP such that (taking account of any tax payable on the making of that payment, after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held RTL Ordinary Shares on the assumption that distribution to RTL’s members and creditors took place on the Reference Date is zero.
   
4.2.7 If the RTL Own Distribution Amount is zero or a negative amount and the RTP Own Distribution Amount is zero or a negative amount, then no payment is required to be made by the liquidator of RTL to RTP or by RTP to RTL and the amount available for distribution to holders of Publicly-held RTL Ordinary Shares is zero.
   
4.2.8 In making the calculations referred to in this paragraph 4.2, the Relevant Officer of RTP and the liquidator of RTL shall take into account the distributions which fall to be made on those RTL Ordinary Shares which are not Publicly-held RTL Ordinary Shares and those RTP Ordinary Shares which are not Publicly-held RTP Ordinary Shares it being acknowledged that for each company the per share distributions on the Publicly-held Ordinary Shares and the non Publicly-held Ordinary Shares will be the same.
   
4.2.9 The certificates which the Relevant Officers of RTL and RTP are required to produce under paragraphs 4.2.1, 4.2.2 and 4.2.3 (the “Certificates”) shall be produced within 6 weeks after the Reference Date and the parties shall procure that all necessary instructions are given to the Relevant Officers of each company to ensure that such certificates are produced within that time. The Relevant Officers of each company shall then agree the calculations in such Certificates within 4 weeks of the date on which the Certificates are produced. If they are unable to agree the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the parties (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either party, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm shall be borne by the parties as such firm decides. Once the calculations in the Certificates have been agreed by the Relevant Officers of the parties or determined by the independent accountants, they shall be conclusive and binding on the parties.
   
   
34
 

4.2.10 The parties shall jointly give such instructions as may be necessary to procure the making of any calculations or certifications required by this paragraph 4.2.
   
4.3 To the extent that the provisions of this Schedule constitute either party (the “first party”) a creditor of the other party (where the other party is in liquidation), the first party will be fully subordinated to all other creditors of the other party and to the holders of shares in the other party which rank in priority to the Ordinary Shares in the other party.
   
4.4 In this Schedule, “the gross amount which would be available for distribution” to shareholders means such amount ignoring any Equalisation Payment or distribution on the Equalisation Share and any tax payable on the making of the Equalisation Payment or distribution, and both “the gross amount which would be available for distribution” and “the amount available for distribution” refer to such amount before deduction of any amount in respect of tax required to be deducted or withheld from the distribution to holders of Ordinary Shares by or on behalf of the company paying or making the distribution but net of any tax payable by that company on the distribution to holders of its Ordinary Shares.
   
4.5 In this Schedule, “Relevant Officer” of a company shall mean the auditor of that company or, if that company is in liquidation, the liquidator of that company.
   
4.6 The parties will co-operate to ensure that any calculation or certificate required under the Articles of Association of either party in connection with a distribution on the Equalisation Share shall promptly be produced and agreed in accordance with the relevant article.
   
4.7 If either party (the “second liquidating party”) shall go into liquidation during the period between the other party (the “first liquidating party”) going into liquidation and the making of the Equalisation Payment pursuant to paragraph 4.1 (if the first liquidating party is RTP) or paragraph 4.2 (if the first liquidating party is RTL) then the Reference Date for both parties shall be delayed until the later of the Reference Date of the first liquidating party and the Reference Date of the second liquidating party and the Relevant Officer of the second liquidating party shall be that party’s liquidator (and not its auditor).
   
5 Adjustments to the Equalisation Ratio
   
5.1   Agreed Adjustments
     
  RTL and RTP agree with each other as follows:
   
5.1.1 Rights Issues of Ordinary Shares
   
    If either RTL or RTP shall offer its Ordinary Shares to the holders of its Ordinary Shares as a class by way of rights or to the holders of its Publicly-held Ordinary Shares by way of rights (whether or not in any of such cases by way of Matching Offers), the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the issuing company by the following fraction:
     
    X + Z
     
    X + Y
     
    where:
     
    X is the number of Ordinary Shares of the issuing company which rank for the relevant offer;
     
35
 

    Y is the number of Ordinary Shares being offered to the holders of Ordinary Shares or the holders of Publicly-held Ordinary Shares (as the case may be) of the issuing company; and
     
    Z is the number of Ordinary Shares of the issuing company which the aggregate amount (if any) payable for the Ordinary Shares offered by way of rights would purchase at the Current Market Price per Ordinary Share determined on the dealing day last preceding the date on which such shares are first traded ex-rights.
     
    Such adjustment shall become effective from the time at which the Ordinary Shares of the issuing company are first traded ex-rights.
     
    For the purpose of this paragraph an offer by a member of the RTP Group of RTL Ordinary Shares owned by it to holders of Publicly-held RTL Ordinary Shares by way of rights shall be treated as an offer and issue by RTL of such shares.
     
5.1.2 Rights Issues of other securities
   
    If either RTL or RTP shall offer any securities (other than an offer falling within paragraph 5.1.1) to the holders of its Ordinary Shares, or to the holders of the Ordinary Shares of the other, as a class by way of rights, or to the holders of its Publicly-held Ordinary Shares, or those of the other, by way of rights (whether or not in any of such cases by way of Matching Offers), or grant to such holders of Ordinary Shares, or to such holders of Publicly-held Ordinary Shares, as a class by way of rights (whether or not in any of such cases by way of Matching Offers) any options, warrants or other rights to subscribe for or purchase any securities, the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the company the shareholders of which are to receive such offer or grant (the “Relevant Company”) by the following fraction:
     
    X – Y
     
    X
     
    where:
     
    X is the Current Market Price of one Ordinary Share of the Relevant Company determined on the dealing day last preceding the date such shares are first traded ex-rights; and
     
    Y is the average fair market value of the portion of the rights attributable to one Ordinary Share of the Relevant Company over the five dealing days last preceding the date on which such shares are first traded ex-rights as determined by a merchant bank of international repute appointed by agreement between the Board of RTP and the Board of RTL, acting as expert and not as arbitrator and whose determination shall be final and binding on the parties and on all others affected thereby.
     
    Such adjustment shall become effective from the time at which the Ordinary Shares of the Relevant Company are first traded ex-rights, ex-options or ex-warrants.
     
5.1.3 Alternative adjustment
   
    If the Board of RTL and the Board of RTP agree that an adjustment in accordance with paragraph 5.1.1 or 5.1.2 would be inequitable as between the holders of RTL
     
36
 

    Ordinary Shares and the holders of RTP Ordinary Shares, then they may calculate the adjustment on some other basis which they agree to be appropriate. In these circumstances the calculation shall be referred to the auditors of RTL and the auditors of RTP for them jointly to certify that the adjustment so calculated means that the relevant offer does not materially disadvantage a holder of a RTL Ordinary Share in comparison with a holder of an RTP Ordinary Share and vice versa. In making such certification the auditors of RTL and the auditors of RTP shall act as experts and not as arbitrators and their certificate shall be final and binding on the parties and on all others affected thereby.
     
5.1.4 Subdivisions and Consolidations of Shares
   
    If there shall be an alteration to the nominal value of the Ordinary Shares of either RTL or RTP as a result of a consolidation or subdivision, the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the company the nominal value of the Ordinary Shares of which has altered by the following fraction (or number):
     
    X
     
    Y
     
    where:
     
    X is the nominal amount of one Ordinary Share of such company immediately after such alteration; and
     
    Y is the nominal amount of one Ordinary Share of such company immediately before such alteration.
     
    Such adjustment shall become effective immediately after the alteration takes effect.
     
5.1.5 Bonus Issues
   
    If either RTL or RTP shall issue any Ordinary Shares credited as fully paid to ordinary shareholders by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve) other than by way of a scrip dividend, the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the issuing company by the following fraction:
     
    X
     
    Y
     
    where:
     
    X is the aggregate nominal amount of the issued Ordinary Shares of the issuing company immediately before the issue; and
     
    Y is the aggregate nominal amount of the issued Ordinary Shares of the issuing company immediately after such issue.
     
    Such adjustment shall become effective from the time of issue of such Ordinary Shares.
     
37
 

5.1.6 Definition
   
(a) For the purposes of this paragraph 5.1 “Current Market Price” means, in respect of an Ordinary Share in RTL or RTP at a particular date, the average value of one such Ordinary Share (being an Ordinary Share carrying full entitlement to dividend) for or by reference to the period of 5 consecutive dealing days ending on such date determined on such basis as the Board of RTP and the Board of RTL agree to be appropriate.
   
(b) For the purposes of the definition of “Y” in paragraph 5.1.2 the fair market value of the portion of the rights attributable to one Ordinary Share shall be calculated on a basis consistent with the calculation of the Current Market Price in the definition of “X” in the same paragraph.
   
5.2   Certification
   
    The auditors for the time being of RTL and RTP shall jointly certify the arithmetical adjustment to be made to the Equalisation Ratio in the circumstances set out in this paragraph 5.1 and in any other circumstances where an adjustment is made to such Equalisation Ratio and any adjustments so certified shall, in the absence of manifest error, be final and binding on the parties and on all others affected thereby. RTL and RTP agree with each other to make and co-ordinate such public announcements as are appropriate in relation to any such adjustments, subject to any regulatory requirements.
     
38
 

Exhibit 4.07


THIS AGREEMENT is made on 30 March 2004

BETWEEN

(1) Rio Tinto Limited (ACN 004 458 404) of 55 Collins Street, Melbourne, Victoria 3000 (“the Company”); and
   
(2)  Richard Leigh Clifford of 43 Markham Square, Chelsea, London SW3 4XA (the “Director")

WHEREBY IT IS AGREED as follows:-

INTERPRETATION

1.  In this Agreement:- 
     
  (A)  the headings are for ease of reference only and should be ignored when construing the terms of this Agreement; 
     
  (B) the following words have the respective meanings set alongside them:-
     
    "Board of Directors" means the Boards of Directors of the Company and Rio Tinto plc as the same may be constituted from time to time or such other person or persons as such Boards of Directors may nominate as its representative for the purpose of this Agreement;
       
    "Employment" means the employment established by this Agreement;
       
    "Rio Tinto" means the Company and Rio Tinto plc or either of them as the context permits;
       
    "Group" means Rio Tinto and all their subsidiaries from time to time, together with all other companies in which from time to time Rio Tinto owns directly or indirectly at least 20% of the equity share capital;
       
    "holding company" has the meaning given in Section 736 of the Companies Act 1985;
       
    "subsidiary" has the meaning given in Section 736 of the Companies Act 1985;
       

       
    “confidential information” means any manufacturing process, formula, design, programme, calculation, method, specification or any other trade secret of the Company or any associated company either during or at any time after the Employment; and any other confidential information not comprising a trade secret but relating to the business of the Company or any associated company including but not limited to their plans, procedures, products, equipment, sales, prices, contractual terms, trade connections, transactions, accounts, finances, reports, papers, data and other information prepared for the Company or acquired by the Company, and affairs of the Company (except where necessary for carrying out your duties as a Director) either during or at any time after the Employment; and
       
    “associated company” is defined as “any company in which Rio Tinto has an interest”.
       
  (C)  reference to an Act shall be deemed to include any statutory modification or re-enactment whenever made; and 
     
  (D)  where the context so admits the masculine shall include the feminine and the singular shall include the plural and vice versa. 

THE EMPLOYMENT

2. The Company agrees to employ the Director and the Director agrees to serve as Chief Executive and an Executive Director of Rio Tinto (or in such other capacity as the parties may agree from time to time) subject to and in accordance with the terms of this Agreement. This Agreement is in substitution for all (if any) previous contracts of service between the parties. 

DURATION OF EMPLOYMENT

3. (A) This Agreement and the Employment shall continue subject as hereinafter mentioned until terminated by either party giving to the other not less than one year’s previous notice.
     
  (B) The Company may at its sole discretion pay salary at the rate set out in Clause 6A (or such other rate as has been agreed between the parties) in lieu of any required period of notice (less any deductions the Company is required by law to make).
     

- 2 -


     
  (C) Unless otherwise expressly agreed in writing, this Agreement and the Employment shall, notwithstanding sub-clause (A) above, automatically terminate (if not already terminated) on 30 September 2007.

DUTIES OF THE DIRECTOR

4. (A) The Director shall during the Employment:-
       
    (i)  unless prevented by ill health or accident and except during holidays permitted by this Agreement devote the whole of his time, attention and skill to the duties of his Employment;
       
    (ii)  faithfully and diligently perform such duties and exercise such powers as may from time to time be assigned to or vested in him; 
       
    (iii) comply with all rules and regulations from time to time issued by the Company to its employees;
       
    (iv)  obey all reasonable and lawful directions given to him by or under the authority of the Board of Directors provided that such rules, regulations and directions are compatible with the Director's status as an Executive Director of Rio Tinto; 
       
    (v)  conform to such hours of work as may from time to time reasonably be required of him to carry out his duties to the satisfaction of the Boards of Directors and shall not be entitled to receive any additional remuneration for work outside normal business hours; 
       
    (vi) use his best endeavours to promote the interests and reputation of the Group; and 
       
    (vii) not do anything which is harmful to the Group.
       
  (B)  The Director shall disclose promptly in writing to the Board of Directors all his interests in any business other than that of any other member of the Group. The Director shall not during the continuance of the Employment (except as a representative of Rio Tinto or with the prior consent in writing of the Boards of Directors) be directly or indirectly engaged or concerned in the conduct of any business, trade, profession or other occupation (whether as an employee, consultant, agent, director or otherwise) nor shall the Director be directly or indirectly financially interested in any such business save through his holding or being interested in investments not representing more than five per cent of the issued investments of any class of any one company which are listed on any recognised Stock Exchange.
       

- 3 -


     
  (C)  The Director shall be required to work at the Headquarters of the Group in London, United Kingdom or, subject to consultation with the Director, at such other location in the UK or elsewhere as the Board of Directors shall from time to time direct and he shall be required to travel outside the United Kingdom as directed by the Board of Directors from time to time.
     
  (D)  While the director is based in London, the Company agrees to provide to the Director rent free residential accommodation to enable him more effectively to perform his duties under this Agreement. The quality and location of the accommodation shall be determined by the Company in its absolute discretion. 
     
  (E)  The Director shall (and shall procure that his wife and dependent children) comply with Part V of the Criminal Justice Act 1993 and he shall not (and shall procure that his spouse and dependent children do not) deal or become or cease to be interested (within the meaning of Part I of Schedule 13 of the Companies Act 1985) in any shares or debentures of Rio Tinto or any other member of the Group except in accordance with and rules or policies issued by the Company from time to time in relation to the holding or trading of securities. 

CONFIDENTIALITY

5. (A) Without prejudice to any other duty owed to the Company or any other member of the Group under which the Director has to keep secret information received or obtained by him in confidence, the Director agrees that he shall not use, divulge or communicate to any person, firm or organisation (other than in the course of properly performing his duties or with the consent of the Board of Directors or as required by law) any Confidential Information which he may have received or obtained while in the services of the Company. This restriction shall continue to apply after the termination of the Employment without limit in point of time but will not apply to Confidential Information which becomes public other than through unauthorized disclosure by the Director. The Director shall also use his best endeavours to prevent the unauthorized use, publication or disclosure of any such Confidential Information.
     
  (B)  Since the Director is likely to obtain in the course of the Employment information disclosed in confidence from other members of the Group and other persons, firms or organisations, the provisions of sub-Clause  (A) of this Clause shall apply mutatis mutandis to such information. The Director shall, at the request of the Company, enter into an agreement or undertaking with other members of the Group and such other persons, firms or organisations in the same terms mutatis mutandis as sub-Clause (A).
     

- 4 -


REMUNERATION OF THE DIRECTOR, BENEFITS, HOLIDAYS AND EXPENSES

6. (A) The Company shall pay to the Director during the continuance of the Employment a salary at the rate of £780,000 per annum. The salary less deductions shall be payable by equal monthly payments in arrears by bank credit transfer on or before the twenty-fifth day of each month. Salary shall be reviewed from time to time at the discretion of the Company.
     
  (B) To the extent that the Director is entitled to receive any Director's fees or other remuneration in respect of services performed for other companies in the Group he shall account for the same to the Company. However, the Director may, at his request, be permitted by the Company to receive and retain such fees or other remuneration, in which event his basic remuneration from the Company shall be reduced pro tanto. For such purpose, sums paid in a foreign currency shall be converted into pounds sterling at the rate prevailing on the first day of the month in which the fees or other remuneration were paid to the Director unless otherwise agreed between the Company and the Director.
     
    Except to the extent agreed by the Remuneration Committee of the Directors of Rio Tinto, the Director shall make over to the Company any fees, salary or emoluments paid to him for performing services other than to the Company or other members of the Group.
     
    The Company shall provide a motor car for the use of the Director which, unless otherwise agreed, shall be in accordance with the Company's car scheme.
     
  (C)  The Director shall be entitled to participate in such Long Term Incentive Plans as the Company may from time to time have in place, subject to approval by the Remuneration Committee of any awards and grants made under any of these Plans. 
     
  (D)  There shall be refunded to the Director all reasonable out-of-pocket expenses properly incurred and defrayed by him in the performance of his duties in the course of his Employment including expenses of entertainment, subsistence and travelling. The Director shall produce to the Company at its request all supporting vouchers and documents in respect of such expenses. 
     
  (E)  The Director shall be entitled without loss of remuneration to 28 days’ holiday in each year in addition to public holidays to be taken at such time or times as are convenient to the Company but so that up to four of such days’ holiday shall be on days specified by the Company. Annual holiday should be taken by 30 April of the following year. For part years, the Director’s holiday entitlement for the year will be pro rated to the length of his service in that year. The Director is entitled to long service leave in accordance with State of Victoria law and Company practice from time to time. 
     

- 5 -


     
  (F) Subject to the terms of Clause 8(B) below, during any period of absence from work due to sickness, injury or otherwise salary payable to the Director under the terms of this Agreement will continue to be payable for a period of up to six months and thereafter at the discretion of the Board of Directors.
       
  (G) Without prejudice to the Company’s right to terminate the Employment at any time in accordance with clause 3 or clause 8:
       
    (i) the amount of any benefit which the Director is entitled to claim during that period of absence under any Social Security or National Insurance Scheme and/or any scheme of which the Director is a non-contributory member by virtue of the Employment will be deducted from any salary paid to him. The Company will pay the Director statutory sick pay under the Social Security Contributions and Benefits Act 1992 (as amended) and any salary paid to him will be deemed to include statutory sick pay. The Company reserves the right to offset the amount of these benefits against salary paid to the Director even if the Director has not recovered them.
       
    (ii) If the Director is absent from work due to sickness or injury which is caused by the fault of another person, and as a consequence recovers from that person or another person any sum representing compensation for loss of salary under this agreement, the Director will repay to the Company any money it has paid to him as salary in respect of the same period of absence.
       
  (H) The Director shall be a member of the Rio Tinto Staff Superannuation Fund during the Employment. 
       
PATENTS AND INVENTIONS
       
7. (A) If the Director (whether alone or with others) shall at any time during the period of the Employment make an invention (whether or not patentable) within the meaning of the Patents Act 1977 (hereinafter called an "Invention") relating to or capable of being used in the business of the Company or any other member of the Group he shall promptly disclose to the Company full details thereof to enable the Company to assess the Invention and to determine whether under the applicable law the Invention is the property of the Company.
       
  (B) If any Invention belongs to the Company the Director shall consider himself as a trustee for the Company in relation to each such Invention and shall, at the request and expense of the Company, do all things necessary to vest all right, title and interest in any such Invention in the Company or its nominee absolutely as legal and beneficial owner and to secure and preserve full patent or other appropriate forms of 

- 6 -


    protection therefor in any part of the world.
     
  (C) If an Invention does not belong to the Company, the Company shall have the right to acquire for itself or its nominee the Director's rights therein within three months after disclosure pursuant to sub-Clause (A) of this Clause on fair and reasonable terms to be agreed or in default of agreement within one month to be acquired at a price to be determined by a single expert to be nominated in default of agreement, at the request of either the Company or the Director, by the President for the time being of the Chartered Institute of Patent Agents or in default by the Courts.
       
  (D) If the Director (whether alone or with others) shall at any time during the period of the Employment create or make any discovery, design or other work (whether registerable or not and whether or not a copyright work), (hereinafter called "Works"), the Director shall forthwith disclose to the Company full details thereof and shall consider himself as a trustee for the Company in relation to all such Works. The Director shall at the request and expense of the Company execute and do all instruments and things necessary to vest all right, title and interest in and to any such Works in the Company or its nominee absolutely as legal and beneficial owner. The definition of Works shall specifically exclude Invention as defined in 7(A) above and anything which was made or created by the Director and which is wholly unconnected with the Employment.
       
  (E) In consideration of the Company entering into this Agreement the Director hereby assigns to the Company by way of assignment of future copyright the copyright, design and other proprietary rights if any for the full term thereof throughout the world in respect of all copyright works created or made by the Director during the period of the Employment (except only those copyright works created or made by the Director and wholly unconnected with the Employment).
       
  (F) The copyright in all articles, designs, drawings, programs, calculations, specifications, photographs and other similar documents and written material produced by the Director in the course of his duties with the Company shall belong to the Company and all such matters (including but not limited to customer lists, correspondence and any other records) and copies thereof in his possession shall be returned to the Company on termination of employment.
       
  (G) If the Director generates any Information or is involved in generating any Information during the Employment he will promptly give to the Company full details of it and he acknowledges that such Information belongs to the Company.
       
    Information” means any idea, method or information, which is not Invention or Work, generated by the Director either:
       
    (i) in the course of his Employment; or

- 7 -


       
    (ii) outside the course of his Employment but relating to the business, finance or affairs of any Group Company.
       
  (H) If the Director becomes aware of any infringement or suspected infringement of any intellectual property right in any Invention, Work or Information he will promptly notify the Company in writing. 
       
  (I) The Director will not disclose or make use of any Invention, Work or Information without the Company’s prior written consent unless the disclosure is necessary for the proper performance of his duties.
       
  (J) So far as permitted by law the Director irrevocably waives any rights he may have under Chapter IV (moral rights) of Part 1 of the Copyright, Designs and Patents Act 1988 and any foreign corresponding rights in respect of all Works.
       
  (K)  The Director agrees that he will not by his acts or omissions do anything which would or might prejudice the rights of the Company under clause 7.
       
  (L)  The Director will not make copies of any computer programs belonging to any Group Company or their service providers and will not introduce any of his own computer programs or personal files into any computer used by any Group Company in breach of any Group Company policy, unless he has obtained the consent of the Boards of Directors.
       
  (M)  By entering into this agreement the Director irrevocably appoints the Company to act on his behalf to execute any document and do anything in his name for the purpose of giving the Company (or its nominee) the full benefit of the provision of clause 7 or the Company’s entitlement under statute. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by clause 7, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove that the act or thing falls within that authority.
       
Rights and obligations under this Clause shall continue in force after the termination of this Agreement in respect of each Invention and Works and shall be binding upon the representatives of the Director.
       
TERMINATION
       
8. (A) If the Director (owing to sickness, injury or otherwise) does not perform his duties hereunder for a period of at least 180 days (whether or not consecutive) in any period of 365 days the Company shall (without prejudice to any other provision hereof) be entitled by written notice to the Director (given at the expiry of such period or at any time thereafter while the Director continues not to perform his duties hereunder) to terminate this Agreement and the Employment forthwith. For the

- 8 -


    purposes of this sub-Clause (A) "days" means days of the week, whether or not normal working days.
     
  (B) Notwithstanding any other provision of this Agreement, the Company shall (without prejudice to the other rights and remedies of the Company) be entitled to terminate this Agreement and the Employment forthwith if the Director:- 
       
    (i) commits any serious or persistent breach of his obligations under this Agreement, refuses or neglects to comply with any lawful order or direction given to him by or under the authority of the Board of Directors, or is guilty of any gross default or misconduct in connection with or affecting the business of the Company or any other member of the Group or conducts himself in a manner prejudicial to the Company or is guilty of conduct tending to bring himself or the Company into disrepute; or
       
    (ii) is guilty of dishonesty or is convicted of an criminal offence (other than a motoring offence which does not result in imprisonment) in all cases whether or not in connection with the Employment; or 
       
    (iii) commits (or is reasonably believed by the Boards of Directors to have committed) a breach of any legislation in force from time to time which may affect or relate to the business of the Company; or
       
    (iv) becomes of unsound mind, is bankrupted or has a receiving order made against him or makes any general composition with his creditors or takes advantage of any statute for the time being in force affording relief for insolvent debtors; or 
       
    (v) becomes prohibited by law from being a director of a company.
       
    whereupon the Director shall have no claim against the Company for damages or otherwise by reason of such termination.
       
GARDEN LEAVE
       
9. (A)  At any time after notice to terminate the Employment is given by either party under clause 3 above, or if the Director resigns without giving due notice and the Company does not accept his resignation, the Company may require the Director to comply with any or all of the provisions in clause 9(B) and 9(C) for a maximum period of 12 months (the “Garden Leave Period”).
       
  (B) The Company may require that the Director does not:
       
    (i) enter or attend the premises of the Company or any other

- 9 -


      Group Company; or
       
    (ii) contact or have any communication with any customer or client of the Company or any other Group Company in relation to the business of the Company or any other Group Company; or
       
    (iii) contact or have any communication with any employee, officer, director, agent or consultant of the Company or any other Group Company in relation to the business of the Company or any other Group Company; or
       
    (iv) remain or become involved in any aspect of the business of the Company or any other Group Company except as required by such companies. 
       
  (C) The Company may require the Director:
       
    (i) to comply with the provisions of clause 10 - Provisions upon termination; and
       
    (ii) to immediately resign from any directorship which he holds in the Company, any other Group Company or any other company where such directorship is held as a consequence or requirement of the Employment, unless he is required to perform duties to which any such directorship relates in which case he may retain such directorships while those duties are ongoing. The Director hereby irrevocably appoints the Company to be his attorney to execute any instrument and do anything in his name and on his behalf to effect his resignation if he fails to do so in accordance with this clause 9C.
       
  (D) During the Garden Leave Period, the Director will be entitled to receive his salary and all contractual benefits in accordance with the terms of this agreement.
       
    At the end of the Garden Leave Period, the Company retains the right to pay the Director salary in lieu of the balance of any notice period as set out in paragraph 3(B) above. If the Garden Leave Period lasts less than the full 12 months notice period, the Company shall not request that the Director return to the Company for the balance of the notice period.
       
PROVISIONS UPON TERMINATION
       
10.  Upon the termination of this Agreement or the Employment howsoever occasioned the Director shall:-
       
  (A)  forthwith (i) deliver to the Company all films, photographs, tapes, models, equipment, documents (including correspondence, lists, notes, memoranda, plans, reports, papers, drawings and charts) and other 

- 10 -


    materials of whatsoever nature whether originals or copies made or compiled by or delivered to the Director during the period of the Employment and concerning the business, organisation, transactions, accounts, finances or affairs of the Company and the Director shall not retain any copies; and (ii) return to the Company all other property of the Company or (as the case may be) of any other member of the Group (including any motor car made available to the Director which shall be returned in good condition (fair wear and tear excepted)) in the possession or under the control of the Director; and
     
  (B)  forthwith at any time or from time to time thereafter upon the request of the Company, resign without claim for compensation from office as a director of the Company and all other offices held by him in any other member of the Group and should he fail to do so the Company is hereby irrevocably authorised to appoint some person in his name and on his behalf to sign any documents and do anything necessary or requisite to give effect thereto; 
     
  (C)  forthwith the Company shall be entitled to deduct from any monies due to the Director any sums due from the Director to the Company or any other member of the Group; 
     
  (D)  not for the period of 12 months thereafter either on his own behalf or for any other person, firm or organisation, entice or endeavour to entice away from the Company or any other Group Company any person who was to his knowledge at any time during the last 12 months of his service with the Company an employee director, officer, agent, consultant or associate of such company. 
     
DIRECTORSHIPS
     
11. (A) Notwithstanding any other provisions in this Agreement the Director's appointment as a director of Rio Tinto or any other member of the Group shall be subject to the Articles of Association and Constitution from time to time of the relevant company.
     
  (B)  If the Director shall cease to be a Director of Rio Tinto this Agreement shall thereby automatically determine but if such cessation shall be caused by any act or omission of either Rio Tinto or the Director without the consent, concurrence or complicity of the other such act or omission shall be deemed a breach of this Agreement and determination hereunder shall be without prejudice to any claim for damages in respect of such breach. 
     
  (C)  The Director must resign from any office held in any Group Company if he is asked to do so by the Company. 
     
  (D)  If the Director does not resign as an officer of a Group Company, having been requested to do so in accordance with clause C, the Company will be appointed as his attorney to effect his resignation. By

- 11 -


    entering into this agreement the Director irrevocably appoints the Company as his attorney to act on his behalf to execute any document or do anything in his name necessary to effect his resignation in accordance with clause C. If there is any doubt as to whether such a document (or other thing) has been carried out within the authority conferred by this clause C, a certificate in writing (signed by any director or the secretary of the Company) will be sufficient to prove that the act or thing falls within that authority.  
     
  (E)  The termination of any directorship or other office held by the Director will not terminate the Director’s employment or amount to a breach of terms of this agreement by the Company. 
     
  (F)  During the Employment the Director will use his best endeavours not to do anything which could cause him to be disqualified from continuing to act as a director of any Group Company. 
     
  (G)  The Director must not resign his office as a director of any Group Company without the agreement of the Company. 
     
OFFERS ON LIQUIDATION
     
12. The Director will have no claim against the Company if the Employment is terminated by reason of liquidation in order to reconstruct or amalgamate the Company or by reason of any reorganisation of the Company; provided that 
     
  (i) the Director is offered employment with the company succeeding to the Company upon such liquidation or reorganisation; and
     
  (ii) the new terms of employment offered to the Director are no less favourable to him than the terms of this agreement.
     
NOTICES
     
13. Notices by either party must be given by letter or facsimile transmission ("fax") addressed to the other party at (in the case of the Company) its registered office for the time being (with a copy to the Chief Executive Rio Tinto plc at its registered office in London) and (in the case of the Director) his last known address and any such notice given by letter (unless delivered by hand) or fax shall be deemed to have been given at the time at which the letter or fax would be delivered in the ordinary course of post or transmission as the case may be. 
     
STATUTORY PARTICULARS
     
14. The written particulars of employment required to be given to the Director under the provisions of Part I of the Employment Rights Act 1996, as amended, are, unless otherwise previously set out above, stated in the Schedule attached. 

- 12 -


 
MISCELLANEOUS
       
15. (A) This agreement may only be modified by the written agreement of the parties.
       
  (B) Neither the Director or the Company can assign this agreement to anyone else. 
       
  (C)  References in this agreement to rules, regulations, policies, handbooks or other similar documents which supplement it, are referred to in it or describe any pensions or other benefits arrangement are references to the versions or forms of the relevant documents as amended or updated from time to time. 
       
  (D)  This agreement supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in it. It contains the whole agreement between the parties relating to the Employment at the date the agreement was entered into (except for those terms implied by law which cannot be excluded by the agreement of the parties). The Director acknowledges that he has not been induced to enter into this agreement by any representation, warranty or undertaking not expressly incorporated into it. The Director agrees and acknowledges that his only rights and remedies in relation to any representation, warranty or undertaking made or given in connection with this agreement (unless such representation, warranty or undertaking was made fraudulently) will be for breach of the terms of this agreement, to the exclusion of all other rights and remedies (including those in tort or arising under statute). 
       
  (E) Neither party’s rights or powers under this agreement will be affected if:
       
    (i) one party delays in enforcing any provision of this agreement; or
       
    (ii) one party grants time to the other party.
       
  (F) If either party agrees to waive his rights under a provision of this agreement, that waiver will only be effective if it is in writing and it is signed by him. A party’s agreement to waive any breach of any term or condition of this agreement will not be regarded as a waiver of any subsequent breach of the same term or condition or a different term or condition.
       
GOVERNING LAW
       
16. This Agreement shall be governed by and construed according to the laws of the State of Victoria, Australia. 

 

- 13 -


IN WITNESS whereof this Agreement has been executed as a Deed the day and year first before written.

    /s/ R Leigh Clifford
Signed by:  
     
In the presence of:-    
     
     

  Name
     

  Address
     

   
     

   
     

  Occupation
     
     
    /s/ Paul D Skinner
Signed by:  
for an on behalf of Rio Tinto Limited    
In the presence of:-    
     
     

  Name
     

  Address
     

   
     

   
     

  Occupation

 
SCHEDULE
   

Continuous Employment

   
1. The Director's period of continuous employment with the Company began on
7 July 1970. This takes into account all (if any) previous employments with the Group which count as part of the Director's continuous period of employment in accordance with the Employment Rights Act 1996 as amended.
   
Grievance and Disciplinary Procedure
   
2. If at any time the Director considers that he has a grievance arising out of his employment or if he is dissatisfied with any disciplinary decision affecting him, he should first attempt to resolve this by discussion with the Chairman or, if appropriate, the Chairman of the Remuneration Committee. Subject thereto the matter may be referred for determination to the Boards of Rio Tinto either through the non-executive directors of Rio Tinto or direct. 
   
Health and Safety at Work
   
3. It is a condition of the Director's Employment that he will comply with the Company's health and safety policy, which has been prepared in accordance with the Health and Safety at Work Etc Act 1974. 
   
Other Terms
   
4. Except as otherwise stated in the Agreement (including this Schedule) there are no other terms or conditions of employment relating to remuneration, hours of work, normal working hours, entitlement to holidays (including public holidays and holiday pay), incapacity for work due to sickness or injury or to pensions or pension schemes. 

15


Exhibit 4.08


30 March 2004

Mr R L Clifford
Rio Tinto Limited

Dear Mr Clifford,

This letter supplements your Contract with Rio Tinto Ltd dated 30 March 2004 with immediate effect.

1. With your consent, your contractual retirement age has been brought forward from the end of the month in which you attain age 62 to the end of the month in which you attain age 60.
   
2. The Company will arrange to provide you with an additional benefit on your retirement. This additional benefit will be a lump sum calculated as the difference between the following multiples of Final Average Salary (as defined in the Rules of the Rio Tinto Staff Superannuation Fund). The multiples will be interpolated if you retire between these ages:
             
  Age at retirement   Previous multiple   New multiple  
  57   6.11   6.47  
  58   6.29   6.65  
  59   6.47   6.83  
  60   6.65   7.00  

If you die in service before retirement, an additional benefit will also be payable calculated as above, but replacing the age at retirement with the age of death.

The method of provision of the lump sum payable on retirement or on death in service will be determined by the Company in consultation with you or, in the case of death, your dependents.

This arrangement forms part of the your contractual conditions of employment. I would be grateful if you would sign a copy of this letter and return to Anette Lawless.

Yours sincerely

/s/ Paul D Skinner
Paul D Skinner
Chairman


Exhibit 4.09


MEMORANDUM RELATING TO AGREEMENT DATED 30 MARCH 2004 BETWEEN RIO TINTO LIMITED AND MR RICHARD LEIGH CLIFFORD (“THE DIRECTOR”) AND TO BE ANNEXED HERETO


With effect from 1 March 2005 the remuneration specified in Clause 6(A) of the above-mentioned Agreement is £827,000 (A$2,028,270) per annum.

The Remuneration Committee of the Board, consisting solely of non-executive directors, is responsible for the introduction and operation of executive directors’ bonus arrangements.

With effect from 27 May 1998, executive directors have been eligible to participate in two bonus schemes, the Mining Companies Comparative Plan and the Share Option Plan. Details of which are set out in appendix I and appendix II respectively.

Executive directors are also eligible to receive a cash bonus under the company’s Short Term Incentive Scheme, with a target bonus of 60% of basic salary and with bonus potential capped at 120% of salary. The award depends on performance against financial and strategic criteria determined by the Remuneration Committee.

 

for and on behalf of RIO TINTO LIMITED

 

 

/s/ Anette V Lawless  

 
Assistant Secretary  

Exhibit 4.13


MEMORANDUM RELATING TO AGREEMENT DATED 19 JUNE 2002 BETWEEN RIO TINTO LONDON LIMITED AND MR GUY ROBERT ELLIOTT (“THE DIRECTOR”) AND TO BE ANNEXED HERETO


With effect from 1 March 2005 the remuneration specified in Clause 6(A) of the above-mentioned Agreement is £513,000 per annum.

The Remuneration Committee of the Board, consisting solely of non-executive directors, is responsible for the introduction and operation of executive directors’ bonus arrangements.

With effect from 27 May 1998, executive directors have been eligible to participate in two bonus schemes, the Mining Companies Comparative Plan and the Share Option Plan. Details of which are set out in appendix I and appendix II respectively.

Executive directors are also eligible to receive a cash bonus under the company’s Short Term Incentive Scheme, with a target bonus of 60% of basic salary and with bonus potential capped at 120% of salary. The award depends on performance against financial and strategic criteria determined by the Remuneration Committee.

for and on behalf of RIO TINTO LONDON LIMITED

/s/ Anette V Lawless  

 
Director  

Exhibit 8.1


List of subsidiary companies
At 31 December 2004

The principal operating subsidiary companies of the Rio Tinto Group are listed in Note 31 on pages A-52 of the 2004 consolidated financial statements. The principal intermediate holding companies and group finance companies are as follows:

Company and country
of incorporation
Principal
activities
Class of
shares held
Proportion
of class
held
%
Group
interest
%
 
 
 
 
             
Australia            
Australian Coal Holdings Pty Limited Holding company 'A' Class Ordinary shares 100   100  
    Ordinary shares 100   100  
Argyle Diamonds Limited Holding company Class A shares 100   100  
    Class B shares 100   100  
Comalco Aluminium Limited Holding company Ordinary shares 100   100  
Hamersley Holdings Limited Holding company Ordinary shares 100   100  
Kelian Pty Limited Holding company Ordinary shares 100   100  
    B Class shares 100   100  
North IOC Holdings Pty Limited Holding company Ordinary shares 100   100  
North Limited Holding company Ordinary shares 100   100  
Pacific Aluminium Pty Limited Holding company Ordinary shares 100   100  
Peko-Wallsend Pty Limited Holding company Ordinary shares 100   100  
Rio Tinto (Commercial Paper) Limited Finance company Ordinary shares 100   100  
Rio Tinto Finance Limited Finance company Ordinary shares 100   100  
Rio Tinto Finance (USA) Limited Finance company Ordinary shares 100   100  
Rio Tinto Investments One Pty Limited Holding company Ordinary shares 100   100  
Rio Tinto Investments Two Pty Limited Holding company Ordinary shares 100   100  
Tinto Holdings Australia Pty Limited Holding company Ordinary shares 100   100  
    A Class shares 100   100  
Bermuda            
North Finance (Bermuda) Limited Finance company Ordinary shares of USD 1.00 each 100   100  
             
Canada            
Rio Tinto Canada Inc Holding company Class B shares no par value 100   100  
    Class C shares no par value 100   100  
    Class D shares no par value 100   100  
Namibia            
Skeleton Coast Diamonds Limited Holding company Shares of NAD 2.00 each 100   100  
             
Netherlands            
Rio Tinto Eastern Investments BV Holding company Shares of EUR 454.00 each 100   100  
Rio Tinto Holdings BV Holding company Shares of EUR 454.00 each 100   100  
             
South Africa            
Palabora Holdings Limited Holding company Shares of ZAR 1.00 each 57.73   57.73  
             
United Kingdom            
Rio Tinto Aluminium Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Australian Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Finance Holdings Limited Finance company Ordinary shares of GBP 1.00 each 100   100  
  Preference shares of AUD 100.00 each 100   100  
Rio Tinto European Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Finance plc Finance company Ordinary shares of GBP 1.00 each 100   100  
    Ordinary shares of USD 1.00 each 100   100  
Rio Tinto International Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Investments Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Metals Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Minerals Development Limited Holding company Ordinary shares of GBP 0.25 each 100   100  
Rio Tinto Namibian Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Overseas Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto South East Asia Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Talc Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Rio Tinto Western Holdings Limited Holding company Ordinary shares of GBP 1.00 each 100   100  
Tinto Channel Islands Limited Holding company Ordinary shares of USD 1.00 each 100   100  
Tinto Jersey Limited Holding company Ordinary shares of USD 1.00 each 100   100  
             
United States of America            
Kennecott Energy and Coal Company Holding company Common shares of USD 0.01 100   100  
Kennecott Holdings Corporation Holding company Common shares of USD 0.01 100   100  
Kennecott Land Company Holding company Common shares of USD 0.01 100   100  
Kennecott Minerals Holdings Company Holding company Common shares of USD 0.01 100   100  
Kennecott Utah Copper Corporation Holding company Common shares of USD 0.01 100   100  
Rio Tinto America Holdings Inc Holding company Common shares of USD 0.01 100   100  
Rio Tinto America Inc Holding company Common shares of USD 100.00 100   100  

Exhibit 12.1


CERTIFICATION

I, Leigh Clifford, certify that:

1. I have reviewed this annual report on Form 20-F of Rio Tinto plc (“the Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
   
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
     
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) -
     
  (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
   
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
     
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Leigh Clifford
Chief executive

Date: 27 June 2005


CERTIFICATION

I, Guy Elliott, certify that:

1. I have reviewed this annual report on Form 20-F of Rio Tinto plc (“the Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
   
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
     
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) -
     
  (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
   
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
     
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Guy Elliott
Financial director

Date: 27 June 2005


CERTIFICATION

I, Leigh Clifford, certify that:

1. I have reviewed this annual report on Form 20-F of Rio Tinto Limited (“the Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
   
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
     
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) -
     
  (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
   
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
     
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Leigh Clifford
Chief executive

Date: 27 June 2005


CERTIFICATION

I, Guy Elliott, certify that:

1. I have reviewed this annual report on Form 20-F of Rio Tinto Limited (“the Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
   
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
     
  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) -
     
  (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
   
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
     
  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Guy Elliott
Financial director

Date: 27 June 2005


Exhibit 13.1


Certification
Pursuant to Rule 13a-14(b) of the Exchange Act

Pursuant to Rule 13a-14(b) of the Exchange Act, each of the undersigned officers of Rio Tinto plc, registered in England and Wales (the “Company”), hereby certifies, to such officer’s knowledge, that:

The Annual Report on Form 20-F for the year ended 31 December 2004 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

/s/ Leigh Clifford   /s/ Guy Elliot  


 

 
Name: Leigh Clifford   Name: Guy Elliott  
Title: Chief executive   Title: Finance director  
           
Dated: 27 June 2005   Dated: 27 June 2005

The foregoing certification is not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference with any filing under the Securities Act.


Certification
Pursuant to Rule 13a-14(b) of the Exchange Act

Pursuant to Rule 13a-14(b) of the Exchange Act, each of the undersigned officers of Rio Tinto Limited, registered in Victoria, Australia, (the “Company”), hereby certifies, to such officer’s knowledge, that:

The Annual Report on Form 20-F for the year ended 31 December 2004 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

/s/ Leigh Clifford   /s/ Guy Elliot  


 

 
Name: Leigh Clifford   Name: Guy Elliott  
Title: Chief executive   Title: Finance director  
           
Dated: 27 June 2005   Dated: 27 June 2005

The foregoing certification is not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference with any filing under the Securities Act.


Exhibit 15.1


   
   
Consent of Independent Registered Public Accounting Firm  
   
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 of Rio Tinto plc (File numbers 333-13988, 333-10156, 333-8270 and 333-7328) of our report dated 24 June 2005 relating to the financial statements of Rio Tinto plc and Rio Tinto Limited which appear in this Form 20-F.
   
   
   
/s/ PricewaterhouseCoopers LLP /s/ PricewaterhouseCoopers
PricewaterhouseCoopers LLP PricewaterhouseCoopers
Chartered Accountants and Registered Auditors Chartered Accountants
London Perth
United Kingdom Australia
27 June 2005 27 June 2005