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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,
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 2007                                                        |   
|           |                                                                                                       |    | 
|           |                                                                                                       | or | 
|           |                                                                                                       |   
|           | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934          |   
|           | For the transition period from:________________
    to________________                                |   
|           |                                                                                                       |    | 
|           |                                                                                                       | or | 
|           |                                                                                                       |   
|           | Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934       |   
|           | Date of event requiring this shell company report________________                                     |   



|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)       
|                                                       |                                                       
|5 Aldermanbury Square                                  | Level 33, 120 Collins Street                          
|London, EC2V 7HR, United Kingdom                       | Melbourne, Victoria 3000, Australia                   
|(Address of principal executive offices)               | (Address of principal executive offices)              

---

Roger
    Dowding, T: +44 (0)20 7781 1623, E: roger.dowding@riotinto.com
(Name, Telephone, E-mail and/or Facsimilie number and Address of Company Contact
Person)

|Securities registered
    or to be registered pursuant to Section 12(b) of the Act:
|-----------------------------------------------------------------------------------
|                                                                                   
|Title of each class                                                                
|                                                                                   
|American Depositary Shares*                                                        
|                                                                                   
|Ordinary Shares of 10p each**                                                      

|   |                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*  | 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                                                                
|None                                                                               

---

|Securities for which there
    is a reporting obligation pursuant to Section 15(d) of the Act:
|----------------------------------------------------------------------------------------------
|None                                                                                          

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

|Title of each class         |  | Number        |  | Number      |  | Title of each class 
|--------------------------- |  | ------------- |  | ----------- |  | --------------------
|Ordinary Shares of 10p each |  | 1,071,799,661 |  | 456,815,943 |  | 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 if the registrants
    are well-known seasoned issuers, as defined in rule 405 of the Securities
  Act.


|Yes |  | No
|--- |  | --

If this report is an annual
      or transition report, indicate by check mark if the registrants are not
      required to file
  reports pursuant to Section 13or 15(d)
  of the Securities Exchange Act of 1934.


|Yes |  | No
|--- |  | --

Note  Checking the box above
    will not relieve any registrant required to file reports pursuant to Section
    13 or 15(d) of the SecuritiesExchange
    Act of 1934 from their obligations
under those Sections.


Indicate by check mark whether the registrants:
      (1) have filed all reports required to be filed by Section 13 or 15(d)
of the SecuritiesExchange 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 whether the registrants
      are large accelerated filers, accelerated filers, or non-accelerated filers.
See definition ofaccelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):


|Large accelerated filer |  | Accelerated filer |  | Non-accelerated filer
|----------------------- |  | ----------------- |  | ---------------------
|                        |  |                   |  |                      

Indicate by check mark which basis
    of accounting the registrants have used to prepare the financial statements
    included
in this filing:


US GAAPInternational
      Financial Reporting Standards as issued by the International Accounting
      Standards BoardOther


If Other has been checked in
      response to the previous question, indicate by check mark which financial
statement item the registrants haveelected
to follow:


|Item 17 |  | Item 18
|------- |  | -------
|        |  |        

If this is an annual report, indicate by check
    mark whether the registrant is a shell company (as defined in Rule 12b-2
  of the Exchange Act).


|Yes |  | No
|--- |  | --

|
|
|
|



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 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.

|TABLE OF CONTENTS
|-----------------
|                 
|                 
|                 
|PART I           
|Item 1.          
|                 
|Item 2.          
|                 
|Item 3.          
|                 
|Item 4.          
|                 
|Item 4A.         
|                 
|Item 5.          
|                 
|Item 6.          
|                 
|Item 7.          
|                 
|Item 8.          
|                 
|Item 9.          
|                 
|Item 10.         
|                 
|Item 11.         
|                 
|Item 12.         
|                 
|PART II          
|Item 13.         
|                 
|Item 14.         
|                 
|Item 15.         
|                 
|Item 16A.        
|                 
|Item 16B.        
|                 
|Item 16C.        
|                 
|Item 16D.        
|                 
|Item 16E.        
|                 
|PART III         
|                 
|Item 17.         
|                 
|Item 18.         
|                 
|Item 19.         



|Rio Tinto 2007 Form 20-F | 3
|------------------------ | -

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RIO TINTO

PART I



|Item 1.         | Identity of Directors, Senior Management and Advisers
|--------------- | -----------------------------------------------------
|               
|Not applicable.
|                |                                                      
|Item    2.      | Offer Statistics and Expected Timetable              
|               
|Not applicable.
|                |                                                      
|Item 3.         | Key Information                                      

SELECTED FINANCIAL DATA

The selected consolidated financial data below has been derived from the2007 Financial statementsof the Rio Tinto Group. The selected
  consolidated financial data should be read in conjunction with, and qualified in their entirety by reference to, the 2007 Financial statements and notes thereto. The
2007 Financial statements were prepared in accordance with IFRS as issued by the IASB (IFRS).

RIO TINTO GROUP

|Income Statement Data                         |       |  |        |  |        |  |        |  |         | 
|--------------------------------------------- | ----- |  | ------ |  | ------ |  | ------ |  | ------- | 
|For the years ending 31 December              |       |  | 2004   |  | 2005   |  | 2006   |  | 2007    | 
|Amounts in accordance with IFRS(a)            |       |  | US$m   |  | US$m   |  | US$m   |  | US$m    | 
|                                              |       |  |        |  |        |  |        |  |         | 
|Consolidated revenue                          |       |  | 12,954 |  | 19,033 |  | 22,465 |  | 29,700  | 
|Group operating profit (b)                    |       |  | 3,327  |  | 6,922  |  | 8,974  |  | 8,571   | 
|Profit for the year                           |       |  | 3,244  |  | 5,498  |  | 7,867  |  | 7,746   | 
|Group operating profit per share (US cents)   |       |  | 241.3  |  | 507.5  |  | 673.0  |  | 666.6   | 
|Earnings per share (US cents)                 |       |  | 239.1  |  | 382.3  |  | 557.8  |  | 568.7   | 
|Diluted earnings per share (US cents)         |       |  | 238.7  |  | 381.1  |  | 555.6  |  | 566.3   | 
|                                              |       |  |        |  |        |  |        |  |         | 
|                                              |       |  |        |  |        |  |        |  |         | 
|                                              |       |  |        |  |        |  |        |  |         | 
|Dividends per share                           | 2003  |  | 2004   |  | 2005   |  | 2006   |  | 2007    | 
|                                              |       |  |        |  |        |  |        |  |         | 
|US cents (c)                                  |       |  |        |  |        |  |        |  |         | 
|– ordinary dividends                          | 60.5  |  | 66.0   |  | 83.5   |  | 81.5   |  | 116.0   | 
|– special dividend                            |      |  |       |  |       |  | 110.0  |  |        | 
|UK pence (c)                                  |       |  |        |  |        |  |        |  |         | 
|– ordinary dividends                          | 37.05 |  | 36.22  |  | 45.69  |  | 44.77  |  | 58.22   | 
|– special dividend                            |      |  |       |  |       |  | 61.89  |  |        | 
|Australian cents (c)                          |       |  |        |  |        |  |        |  |         | 
|– ordinary dividends                          | 96.89 |  | 90.21  |  | 108.85 |  | 107.34 |  | 143.53  | 
|– special dividend                            |      |  |       |  |       |  | 145.42 |  |        | 
|Weighted average number of shares (millions)  | 1,378 |  | 1,379  |  | 1,364  |  | 1,333  |  | 1,286   | 
|                                              |       |  |        |  |        |  |        |  |         | 
|                                              |       |  |        |  |        |  |        |  |         | 
|                                              |       |  |        |  |        |  |        |  |         | 
|Balance Sheet Data                            |       |  |        |  |        |  |        |  |         | 
|at 31 December                                |       |  | 2004   |  | 2005   |  | 2006   |  | 2007    | 
|Amounts in accordance with IFRS(a)            |       |  | US$m   |  | US$m   |  | US$m   |  | US$m    | 
|                                              |       |  |        |  |        |  |        |  |         | 
|Total assets                                  |       |  | 26,308 |  | 29,803 |  | 34,494 |  | 101,391 | 
|Share capital / premium                       |       |  | 3,127  |  | 3,079  |  | 3,190  |  | 3,323   | 
|Total equity / Net assets                     |       |  | 12,591 |  | 15,739 |  | 19,385 |  | 26,324  | 
|Equity attributable to Rio Tinto shareholders |       |  | 11,877 |  | 14,948 |  | 18,232 |  | 24,772  | 
|                                              |       |  |        |  |        |  |        |  |         | 
|                                              |       |  |        |  |        |  |        |  |         | 

|Notes
|-----
|(a)  
|(b)  
|(c)  
|(d)  
|(e)  



|Rio Tinto 2007 Form 20-F | 4
|------------------------ | -

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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 on page 7.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 have established a process for identifying, evaluating and managing the significant risks faced by the Group.
     The following highlight the Groups
exposure to risk without explaining how these exposures are managed and mitigated
or how some risks are also potential opportunities.

AcquisitionsThe Group has grown partly through the acquisition of other businesses
and most notably through the acquisition of Alcan Inc. for US$38.7 billion during 2007. Business combinations commonly entail a number of risks
and Rio Tinto cannot be sure that management will be able to effectively 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. Furthermore, the Group may, under the terms of
the acquisition, be liable for the past acts or omissions of the acquired businesses
in circumstances where the price paid does not adequately reflect the eventual
cost of these
liabilities.

DivestmentsFollowing the acquisition of Alcan the Group undertook a strategic
review which has highlighted approximately US$30 billion of potential divestments and has announced a target of US$15
billion. The Group intends to explore options for the sale of a shortlist of
assets but any sales would be value driven and dependent on price. The amount
and timing of sale proceeds that might eventually be realised is subject to considerable
uncertainty and the
Group cannot anticipate by when and by how much its borrowings might be reduced.

Economic conditionsCommodity prices, and demand for the Groups products, are cyclical and 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.
     The strong underlying economic conditions and commodity prices have led to a rapid growth in demand for technical skills in mining, metallurgy and geological sciences, and for materials
and supplies related to the mining industry, causing skills and materials shortages. The retention of skilled employees, the recruitment of new staff and the purchasing of materials and supplies may lead to increased costs, interruptions to existing
operations and to delays in new projects.
     Further discussion can be found on page 15, Business environment, markets and regulation, and on page 104, commodity prices.

Exchange ratesThe 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, Canadian, Euro 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 under Exchange rates, reporting currencies and currency exposure
on page 102.

Exploration and new projectsThe Group seeks to identify new mining properties through an active
exploration programme. The Group has also undertaken the development or expansion
of other major operations. There is no guarantee, however, that such expenditure
will be recouped or that existing ore reserves will be replaced. Failure to do
so could have a material and adverse impact on the Groups financial results
and prospects. In particular, Rio Tinto has commenced or recommenced exploration
for and development of new projects in a number of new countries which may increase
risks around land and resource tenure.
     The Group develops new mining properties and expands its existing operations as a means of generating shareholder value. Unanticipated delays and project execution complications along with
increasing regulatory, environmental and social approvals can result in significant increases in construction costs and/or significant delays in construction. These increases could materially and adversely affect the economics of a project and,
consequently, the



|Rio Tinto 2007 Form 20-F | 5
|------------------------ | -

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Groups asset values, costs, earnings and cash flows.

Energy cost and supplyThe Groups operations are energy intensive and, as a result, the Groups costs and earnings could be adversely affected by rising energy costs or by energy supply interruptions. The following factors could
materially adversely affect the Groups energy position: the unavailability of energy or fuel due to a variety of reasons including fluctuations in climate, significant increases in costs of supplied electricity or fuel, interruptions in energy
supply due to equipment failure or other causes, and the inability to extend contracts for the supply of energy on economical terms.

Greenhouse gas emissionsRio Tintos smelting and mineral processing operations are energy intensive and depend heavily on coal, oil, diesel and gas. Increasing regulation of greenhouse gas emissions, including the progressive
introduction of carbon emissions trading mechanisms, in numerous jurisdictions in which the Group operates could adversely impact access to, and cost of, the Groups energy supply. Regulation of greenhouse gas emissions in the jurisdictions of
the Groups major customers could also have an adverse effect on the demand for the Groups products.

Interest rate fluctuationsIncreases in benchmark interest rates will likely increase the interest cost associated with the Groups debt and will increase the cost of future borrowings, which could harm the Groups earnings and
financial condition.

Ore reserve estimatesThere are numerous uncertainties inherent in estimating ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available.
     Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves
being restated. Such changes in reserves could impact on depreciation and amortisation rates, asset carrying values, deferred stripping calculations and provisions for close down, restoration and environmental clean up costs. Further discussion can
be found under Ore reserves on page 108.

Political and communityThe Group has operations in jurisdictions having varying degrees of political and commercial 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. Commercial instability caused by bribery and corruption in their various guises can lead to similar consequences. 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 may 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.

Defined benefit pension plansCertain of the Groups businesses sponsor defined benefit pension plans. If the assets of these pension plans do not achieve expected investment returns for any fiscal year, such deficiency would result in one or
more charges against the Groups earnings. In addition, changing economic conditions, poor pension investment returns or other factors may require the Group to make substantial cash contributions to these pension plans in the future, preventing
the use of such cash for other purposes.

Unions and labour disputesSome of the Groups employees are represented by labour unions under various collective labour agreements. The Group may not be able to satisfactorily renegotiate its collective labour agreements when they expire.
In addition, existing labour agreements may not prevent a strike or work stoppage at its facilities in the future, and any such work stoppage could have a material adverse effect on the Groups earnings and financial condition.

TechnologyThe 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 tenureThe 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.



|Rio Tinto 2007 Form 20-F | 6
|------------------------ | -

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Health, safety and environmentRio 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 operationsMining operations are vulnerable to a number of circumstances beyond
the Groups control, including natural disasters and unexpected geological variations. These can affect costs at particular mines for varying
periods. Mining, smelting and refining processes also rely on mining inputs. 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.

RehabilitationCosts 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 projects and operationsWhere projects and operations are controlled and managed by the
Groups partners, the Group may provide expertise and advice, but it cannot guarantee compliance with its standards and objectives. Improper
management or ineffective policies, procedures or controls could not only adversely affect the value of the related non managed projects and operations but could also, by association, harm the Groups
other operations and future access to new
assets.

RegulationThe group is subject to extensive governmental regulations in all jurisdictions in which it operates. Operations are subject to general and specific regulations governing mining and processing, land tenure and use,
environmental regulations (including site specific environmental licences, permits and statutory authorisations), workplace health and safety, trade and export, corporations, competition, access to infrastructure, foreign investment and taxation.
Some operations are conducted under specific agreements with respective governments and associated acts of parliament. Changes to any regulation or agreement may have an adverse effect on the profitability and viability of an operation.

CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS

This document includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts included in this document, including, without limitation, those regarding Rio Tintos financial position, business strategy, plans and objectives of management for future operations
(including development plans and objectives relating to Rio Tintos products,
production forecasts and reserve positions), are forward looking statements.
Such forward looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievements
of Rio Tinto, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking
statements.Such forward looking statements are
based on numerous assumptions regarding Rio Tintos present and future business strategies and the environment in which Rio Tinto will operate in
the future. Among the important factors that could cause Rio Tintos actual results, performance or achievements to differ materially from those in the forward looking statements include, among others, levels of actual production during any
period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic
conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation and such other risk factors identified in the section entitled, Risk factors herein.
Forward looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward looking statements. These forward looking statements speak only as of the date of this document. Rio Tinto
expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the Takeover Code), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services
Authority and the Listing Rules of the Australian Securities Exchange) to release publicly any updates or revisions to any forward looking statement contained herein to reflect any change in Rio Tintos
expectations with regard thereto or any change in events, conditions or circumstances
on which any such statement is based.



|Rio Tinto 2007Form
    20-F | 7
|--------------------------- | -

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IMPORTANT INFORMATION

This document contains statements which could be
    deemed recommendations or solicitations under the US federal securities laws
    in the context of the pre-conditional offer by BHP Billiton. If BHP Billiton
    does commence a tender offer within the meaning of Rule 14d-2 under the Securities
    Exchange Act of 1934, Rio Tinto will file a Solicitation/Recommendation Statement
    with the SEC on Schedule 14D-9 thereafter and holders of Rio Tintos shares and ADRs are
  advised to read it when it becomes available as it will contain important information. Copies of any such Solicitation/Recommendation Statement and other related documents filed by Rio Tinto will be available free of charge on the SECs website
  at http://www.sec.gov and on Rio Tintos website at www.riotinto.com





|Rio Tinto 2007Form
    20-F | 8
|--------------------------- | -

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|Item 4. | Information on the Company
|------- | --------------------------

INTRODUCTION

Rio Tinto is a leading international mining group whose business is finding, mining and processing the Earths mineral resources. The Groups interests are diverse both in geography and product. Our
activities span the world but we are strongly represented in Australia and North America and we have significant businesses in South America, Asia, Europe and southern Africa. Businesses include open pit and underground mines, mills, refineries and
smelters as well as a number of research and service facilities.The Group combines Rio Tinto plc, which is listed on the London Stock Exchange, and headquartered in London, and Rio Tinto Limited, which is listed on the Australian Securities Exchange
and has executive offices in Melbourne. The Group consists of wholly and partly owned subsidiaries, jointly controlled assets, jointly controlled entities and associated companies, the principal ones being listed in notes 37 to 40 of the 2007 Financial statements.
     On 31 December 2007, Rio Tinto plc had a market capitalisation of £53.0 billion (US$105.9 billion) and Rio Tinto Limited had a market capitalisation of A$38.3 billion
(US$33.5 billion). The combined Groups market capitalisation in publicly held shares at the end of 2007 was US$139.4 billion.

Objective, strategy and management structureOur fundamental objective is to maximise the overall long term value and return to our shareholders. We do this by operating responsibly and sustainably in areas of proven expertise such as exploration, project
evaluation, mining, smelting and refining where the Group has a competitive advantage.
     Our strategy is to maximise net present value by investing in large, long life, cost competitive mines and processing plants. Investments are driven by the quality of each opportunity, not
by the choice of commodity.
     Rio Tintos management structure is designed to facilitate a clear focus on the Groups objective. This structure, reflected in this report, is based on the following principal
product and global support groups:

|•                                                                                                                                                                                                        | Aluminium                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------
|•                                                                                                                                                                                                        | Copper                          
|•                                                                                                                                                                                                        | Diamonds and Industrial Minerals
|•                                                                                                                                                                                                        | Energy                          
|•                                                                                                                                                                                                        | Iron Ore                        
|•                                                                                                                                                                                                        | Exploration                     
|•                                                                                                                                                                                                        | Technology and Innovation       
|•                                                                                                                                                                                                        | Business Resources              
|The chief executive of each product group reports
        to the chief executive of Rio Tinto. Diamonds and Industrial Minerals
    report to the product group heads of Copper and Energy respectively.

Nomenclature and financial dataRio 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 have
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$) is derived from, and should be read in conjunction with, the 2007 Financial statementswhich are in US$. In general, financial data in pounds sterling (£) and Australian dollars (A$) have been translated from the consolidated financial statements and have been provided solely for
convenience; exceptions arise where data, such as directors remuneration,
can be extracted directly from source records. Certain key information has been
provided in all three currencies in the 2007 Financial statements.
     Rio Tinto Group sales revenue, profit before tax and net earnings and operating assets for 2006 and 2007 attributable to the product groups and geographical areas are shown in notes 31 and
32 to the 2007 Financial statements. In the Operating and financial report(OFR),
operating assets and sales revenue for 2006 and 2007 are consistent with the financial information by business unit in the 2007 Financial statements.The tables on pages 28 to 42 show production for 2007, 2006 and 2005 and include estimates of proven and probable ore reserves. Words and phrases, often technical, have been used which
have particular meanings; definitions of these terms are in the Glossary on pages 175 to 177. The weights and measures used are mainly metric units; conversions into other units are shown on page 177.

HistoryRio Tintos predecessor companies were formed in 1873 and 1905. The Rio Tinto Company was formed by investors in 1873 to mine ancient copper workings at Rio Tinto, near Seville in southern Spain. The Consolidated
Zinc Corporation was incorporated in 1905 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



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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, both RTZ and
CRA discovered important mineral deposits, developed major mining projects and
also grew through acquisition.
     RTZ and CRA were unified in 1995 through
a dual listed companies structure. This means the Group, with its common board
of directors, 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 1997, The RTZ Corporation became
Rio Tinto plc and CRA Limited became Rio Tinto Limited, together known as the
Rio Tinto Group. Over the past decade, the Group has continued to invest in developments
and acquisitions in keeping with its strategy.
     In 2007, Rio Tinto completed an agreed
takeover of the Canadian aluminium producer Alcan Inc. in a US$38.7 billion
transaction that transforms the Groups aluminium product group into a global
leader in aluminium.

Contact detailsThe registered office of Rio Tinto plc is at 5 Aldermanbury Square,
  London, EC2V 7HR (telephone: +44 20 7781 2000) and the registered office of
  Rio Tinto Limited is at Level 33, 120 Collins Street, Melbourne, Victoria 3000
  (telephone: +61 3 9283 3333). Rio Tintos agent for service in the US
  is Shannon Crompton, secretary of Rio Tintos US holding companies, who
  may be contacted at Rio Tinto Services Inc., 80 State Street, Albany, New York,
12207-2543.



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CAPITAL PROJECTS

Rio Tinto is investing heavily in future growth
    opportunities from the Groups broad portfolio of assets. Projects have
    been financed out of internally generated funds. Major projects completed
  in 2005-2007, together with ongoing projects are summarised below.

|Project                                                                                                                                                                                                                | Estimated cost |  | Status                                                                                                                                    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                       | (100% basis)   |  |                                                                                                                                           
|                                                                                                                                                                                                                       | US$m           |  |                                                                                                                                           
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Completed in 2005                                                                                                                                                                                                      |                |  |                                                                                                                                           
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore HIsmelt® plant
(Rio Tinto: 60%) at Kwinana in Western Australia.                                                                                                                                             | 200            |  | The plant produced 115,000 tonnes of pig iron during 2007, its second year
    of ramp up towards a planned capacity of 800,000 per annum.
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion of Yandicoogina mine.                                                                                                                                                                              | 200            |  | Expansion completed in the third quarter.                                                                                                 
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion
of West Angelas mine (Rio Tinto: 53%).                                                                                                                                                             | 105            |  | Project completed in the third quarter.                                                                                                   
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Titanium dioxide Expansion
    of upgraded slag plant.                                                                                                                                                                | 76             |  | Commissioning started in first quarter.                                                                                                   
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Copper Development
of the Escondida Norte satellite
    deposit (Rio Tinto: 30%) to provide mill feed
to keep
    Escondidas capacity above 1.2 million tonnes
of copper
    per year to the end of 2008.            | 400            |  | First production occurred in 2005.                                                                                                        
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion
of port capacity to 116 million
    tonnes per annum,                                                                                                                                              | 685            |  | Focus on production ramp up following completion
    of construction.                                                                     
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Completed in 2006                                                                                                                                                                                                      |                |  |                                                                                                                                           
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion
of Hamersley Irons (Rio Tinto:
    100%) Tom Price and Marandoo mines and construction
    of new mine capacity at Nammuldi.                                                                      | 290            |  | The Marandoo and Nammuldi components are
    complete and Tom Price was completed during first
    quarter of 2007.                       
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion
by Robe River (Rio Tinto: 53%) of
    rail capacity including completion of dual tracking
of 100
    km mainline section.                                                                          | 200            |  | The project was completed on budget and ahead of
    schedule.                                                                            
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Copper Escondida
sulphide leach (Rio Tinto: 30%).
    The project will produce 180,000 tonnes per annum
of
    copper cathode for more than 25 years.                                                                 | 925            |  | The first cathode production from the sulphide
leach
    plant occurred in June 2006.                                                     
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Titanium dioxide expansion
    of annual capacity at UGS
    plant from 325,000 tonnes to 375,000 tonnes.                                                                                                             | 79             |  | The project was completed in October three months
    ahead of schedule and under budget.                                                 
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Boric acid Phase 2 of Rio Tinto Minerals boric acid
    Expansion                                                                                                                                                     | 50             |  | The project was completed on schedule and under
    budget.                                                                               
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Coking coal Hail Creek (Rio
    Tinto: 82%) Expansion of
    annual capacity from 6 million tonnes to nameplate 8
    million tonnes per annum, with washing plant increased to
    12 million tonnes per annum.      | 223            |  | The new dragline was commissioned early in the
    third quarter of 2006.                                                                 
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Completed in 2007                                                                                                                                                                                                      |                |  |                                                                                                                                           
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion of Hamersleys
    (Rio Tinto share
    100%) Mount Tom Price mine to 28 million tonnes per
    annum capacity.                                                                                    | 226            |  | Project completed in March 2007.                                                                                                          
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Brownfields mine expansion of Hamersleys
    (Rio Tinto 100%) Yandicoogina mine from 36 million
    tonnes per annum to 52 million tonnes per annum.                                                        | 530            |  | First ore was produced in May 2007, with the
    project completed at the end of the third quarter of
    2007 on time and on budget.     
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Expansion of Hamersleys
    (Rio Tinto 100%)
    Dampier port (Phase B) from 116 million tonnes per
    annum to 140 million tonnes per annum capacity and
    additional rolling stock and infrastructure. | 803            |  | This project was completed at the end of 2007 on
    schedule and on budget.                                                              
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           
|Iron ore Hope Downs development
    (Rio Tinto share:
    50% of mine and 100% of infrastructure). Construction of
    22 million tonnes per annum mine and related
    infrastructure.                               | 980            |  | First production occurred in November 2007, three
    months ahead of schedule. The first train load took
    place in December 2007.     
|                                                                                                                                                                                                                       |                |  |                                                                                                                                           



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CAPITAL PROJECTS (continued)

|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Ongoing                                                                                                                                                                                                             |       |  |                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Copper Kennecott Utah Copper
    (Rio Tinto 100%) East
    1 pushback. The project extends the life of the open pit to
    2017 while retaining options for further underground or
    open pit mining thereafter. | 170   |  | The project was approved in February 2005 and
    work on the pushback continues. The pebble
    crushing unit was commissioned in the third quarter
    of 2006.                                                                                                                                                                  
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Titanium dioxide Construction
by QMM (Rio Tinto
    80%) of a greenfield ilmenite operation in Madagascar
    and associated upgrade of processing facilities
at QIT in
    Canada.                                | 1,000 |  | Construction is under way. The budget was revised
    in 2007. First production is expected at the end
of
    2008.                                                                                                                                                                                                                
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Alumina Expansion
of the Gove Alumina Refinery (Rio
    Tinto 100%) from 2.0 to 3.8 million tonnes per
annum.                                                                                                      | 2,300 |  | Approved in September 2004, the expansion is
    expected to reach full nameplate capacity by the
end
    of 2008.                                                                                                                                                                                                                 
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Aluminium Development
of the 370,000 tonne per
    annum greenfield Sohar smelter in Oman (Rio Tinto
    20%)                                                                                                      | 1,700 |  | Approved in February 2005, first production is
    expected in the third quarter of 2008.                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Aluminium Aluminium
spent pot lining recycling plant
    in Quebec (Rio Tinto 100%).                                                                                                                               | 180   |  | Approved in September 2006, the plant is expected
    to begin pot lining treatment operations in the
    second quarter of 2008.                                                                                                                                                                                                  
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Gold Development
of Cortez Hills (Rio Tinto 40% as at
    31 December 2007; on 5 March 2008, Rio Tinto
    completed the sale of its interest in Cortez).                                                          | 504   |  | Approved in September 2005, the project continues
    to focus on permitting requirements. The project
is
    on time and on budget.                                                                                                                                                                                               
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Uranium Rössing
(Rio Tinto 68.6%) uranium mine life
    extension to 2016.                                                                                                                                         | 112   |  | Approved in December 2005, works are on schedule
    and on budget to prolong the life of the mine
to
    2016 and beyond. The mine life extension estimate
    remains at US$82 million with US$30 million
of
    sustaining capital expenditure.                                                                                 
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Diamonds Argyle
(Rio Tinto 100%) development of
    underground mine and open pit cutback, extending
the life
    of the mine to 2018.                                                                             | 1,500 |  | Approved in December 2005, the underground
    development consisting of 34 km of tunnels and
    excavations is currently 40% complete.
    Construction of the major underground
    infrastructure commenced in February 2008. Full
    production from the underground mine is on
    schedule to be achieved by December 2010.
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Copper Northparkes
(Rio Tinto 80%) E48 block cave
    project extending mine life to 2016.                                                                                                                         | 160   |  | Approved in November 2006. Underground
    development has commenced and is on schedule for
    May 2009 production start.                                                                                                                                                                                                         
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Energy Clermont
(Rio Tinto 50.1%) is expected to
    produce 12.2 million tonnes per annum, replacing
Blair
    Athol.                                                                                             | 750   |  | Approved in January 2007, first shipments are
    expected in the second quarter of 2010 with full
    capacity being reached in 2013.                                                                                                                                                                                             
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Iron ore Cape
Lambert port expansion (Rio Tinto 53%)
    from 55 to 80 million tonnes per annum and additional
    rolling stock and infrastructure.                                                               | 952   |  | Approved in January 2007, the project is forecast
to
    be complete by the end of 2008, with progressive
    capacity ramp up in the first half of 2009. The
    estimated capital cost now includes US$92m
for
    additional rolling stock and infrastructure.                                                                  
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Iron ore Wharf
upgrade and shiploader replacement at
    East Intercourse Island (Rio Tinto 100%).                                                                                                                 | 65    |  | The project is in progress and is expected to
be
    complete by May 2009.                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Alumina Expansion
of Yarwun Alumina Refinery from
    1.4 to 3.4 million tonnes per annum.                                                                                                                         | 1,800 |  | Approved in July 2007, the expansion will more
    than double annual production at Yarwun and is
    expected to come onstream by 2011.                                                                                                                                                                                           
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    
|Iron ore Expansion
of Hope Downs Stage 2 (Rio Tinto
    50%) from 22 to 30 million tonnes per annum.                                                                                                               | 350   |  | Approved in August 2007, the expansion will be
    complete by early 2009.                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                    |       |  |                                                                                                                                                                                                                                                                                                                                    



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CAPITAL PROJECTS (continued)

|Recently approved                                                                                                                          |       |  |                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------ | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Diamonds Construction
at Diavik (Rio Tinto 60%) of an underground mine.                                                                   | 787   |  | Capital investment of US$563 million was approved
in November 2007 in addition to US$224 million invested in 2006-2007 for
the feasibility studies and related capital projects. First production from the
underground mine is expected to commence in 2009
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Iron ore Mesa A development (Rio Tinto 53%):
construction of a 25 million tonne per annum mine and
related infrastructure.                | 901   |  | Approved in November 2007, the mine is forecast to
be complete by 2010 with a progressive ramp up to
25 million tonnes per annum by 2011.                                                                                                                  
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Iron ore Brockman 4 development (Rio Tinto 100%):
construction of a 22 million tonne per annum mine (Phase
A) and related infrastructure. | 1,521 |  | Approved in November 2007, Phase A of the
project, to 22 million tonnes is forecast to be
complete by 2010, with scope to expand further to
36 million tonnes per annum by 2012.                                                                           
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Coking coal extension and expansion of Kestrel mine
(Rio Tinto share 80%).                                                                | 991   |  | Approved in December 2007, the investment will
extend the life of the mine to 2031 and increase
production to an average of 5.7mtpa.                                                                                                                       
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Nickel Development of Eagle nickel mine in Michigan,
US.                                                                                  | 300   |  | Approved in December 2007, this high grade nickel
and copper mine is expected to commence
production in late 2009, delivering 16,000 tonnes of
nickel per annum over a seven year period.                                                                  
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Aluminium Replacement of overhead cranes and
upgrade of crane runways on Lines 1 and 2 at Boyne
Smelters (Rio Tinto 59.4%).               | 270   |  | Approved in January 2008, the mobile cranes and
associated runways on reduction Lines 1 and 2 will
be replaced. The project is estimated to be
completed by late 2010.                                                                                     
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Aluminium Replacement of Lines 1 and 2 carbon bake
furnace at Boyne Smelters (Rio Tinto 59.4%).                                           | 347   |  | Approved in January 2008, the carbon baking
furnace that supplies anodes to Lines 1 and 2 will be
replaced. The project is estimated to be completed
by mid 2011.                                                                                          
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            
|Iron ore Expansion to increase the production of iron
ore concentrate by the Iron Ore Company of Canada (Rio
Tinto 58.7%)                 | 475   |  | Approved March 2008, the first phase of an
expansion programme intended to increase production
capacity by 50 per cent to 22 million tonnes per
annum by 2011.                                                                                             
|                                                                                                                                           |       |  |                                                                                                                                                                                                                                                            

ACQUISITIONS

Rio Tinto is also investing heavily in future growth opportunities from acquisitions. These opportunities have been financed out of internally generated funds and, in the the case of Alcan Inc., out of a US$40
  billion credit facility which was fully underwritten and subsequently syndicated at floating rates of interest.

|Asset                                                        | Estimated |  | Status                                                                                                                                                                                 
|------------------------------------------------------------ | --------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                             | cost      |  |                                                                                                                                                                                        
|                                                             | US$m      |  |                                                                                                                                                                                        
|                                                             |           |  |                                                                                                                                                                                        
|Acquired in 2005                                             |           |  |                                                                                                                                                                                        
|                                                             |           |  |                                                                                                                                                                                        
|Iron ore Hope Downs iron ore assets in Western
Australia    | n/a       |  | Rio Tinto reached agreement with Hancock
Prospecting Pty Ltd to purchase a 50% interest.                                                                                               
|                                                             |           |  |                                                                                                                                                                                        
|Acquired in 2006                                             |           |  |                                                                                                                                                                                        
|                                                             |           |  |                                                                                                                                                                                        
|Copper Ivanhoe Mines (Rio Tinto: 9.9%)                      | 303       |  | Agreement to acquire a strategic stake including,
upon completion of satisfactory a long term
investment agreement with the Mongolian
government, a second tranche of 9.9% for US$338m.
|                                                             |           |  |                                                                                                                                                                                        
|Copper Northern Dynasty Minerals (Rio Tinto: 9.9%)          |           |  | Increased stake to 19.8% during February 2007                                                                                                                                          
|                                                             |           |  |                                                                                                                                                                                        
|Acquired in 2007                                             |           |  |                                                                                                                                                                                        
|                                                             |           |  |                                                                                                                                                                                        
|Aluminium Alcan Inc                                         | 38,652    |  | Acquisition of Alcan Inc announced in July 2007
and completed in October 2007                                                                                                          
|                                                             |           |  |                                                                                                                                                                                        
|Energy Hydrogen Energy (Rio Tinto: 50%)                     | 35        |  | Joint venture with BP                                                                                                                                                                  
|                                                             |           |  |                                                                                                                                                                                        
|Diamonds & Industrial Minerals Dampier Salt (Rio
Tinto: 3%) | 19        |  | The purchase of a 3% interest in Dampier Salt from
a minority shareholder that increased the Groups
total interest to 68.4%.                                                          
|                                                             |           |  |                                                                                                                                                                                        



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DIVESTITURES

On the acquisition of Alcan Inc the Group announced an asset divestment target of at least US$10 billion and following the completion of a strategic review, which highlighted approximately US$30 billion of
  potential divestments, increased this target to at least US$15 billion. Rio Tinto will explore options for the sale of a shortlist of assets. These are all good businesses and any sales will be value driven and dependent on price.

|Asset                                                                     | Estimated |  | Status                                                                                                                                                                                                
|------------------------------------------------------------------------- | --------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                          | proceeds  |  |                                                                                                                                                                                                       
|                                                                          | US$m      |  |                                                                                                                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Divested in 2005                                                          |           |  |                                                                                                                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Iron ore Labrador Iron Ore Royalty Income Fund
(LIORIF) (Rio Tinto: 19%) | 130       |  | LIORIF has an interest of 15.1% in, and receives
royalties from, Iron Ore Company of Canada
(IOC), a subsidiary of Rio Tinto. The transaction
had no effect on Rio Tintos 59% direct interest in
IOC.
|                                                                          |           |  |                                                                                                                                                                                                       
|Other operations Lihir Gold (Rio Tinto: 14.5%)                           | 295       |  | Rio Tinto relinquished its management agreement
with Lihir, and subsequently sold its interest.                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Divested in 2006                                                          |           |  |                                                                                                                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Aluminium Eurallumina SpA (Rio Tinto: 56.2%)                             | n/a       |  | Sold to RUSAL                                                                                                                                                                                         
|                                                                          |           |  |                                                                                                                                                                                                       
|Diamonds Ashton Mining of Canada Inc (Rio Tinto:
51.7%)                  | n/a       |  | Sold to Stornaway Diamond Corporation for
US$26m plus shares representing an interest of
17.7%.                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Divested in 2007                                                          |           |  |                                                                                                                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Diamonds and Industrial Minerals Lassing and
Ennsdorf                    | 6         |  | Rio Tinto Minerals disposed of its operations at
Lassing and Ennsdorf for consideration of $6m.                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Divested in 2008                                                          |           |  |                                                                                                                                                                                                       
|                                                                          |           |  |                                                                                                                                                                                                       
|Copper Greens Creek mine (Rio Tinto: 70%)                                | 750       |  | Sale agreed to Hecla Mining Company, the Groups
minority partner.                                                                                                                                    
|                                                                          |           |  |                                                                                                                                                                                                       
|Copper Cortez joint venture (Rio Tinto: 40%)                             | 1,695     |  | Sold to Barrick Gold Corporation, the Groups
partner, for a cash consideration plus a deferred
bonus payment and a contingent royalty interest.                                                      
|                                                                          |           |  |                                                                                                                                                                                                       



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BUSINESS ENVIRONMENT, MARKETS AND REGULATION

Competitive environmentRio 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.
     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 major economies requiring metals and minerals
for development could mean even higher market growth.

Economic overviewThe world economy grew by 5.2 per cent in 2007 on a purchasing power parity basis, marking the fifth successive year of global growth in excess of four per cent.
     This extended global economic boom has inevitably not been without its stresses and strains. The implications of some of the excesses driven by previous loose monetary conditions and easy
credit availability emerged last year. The full implications of the US housing downturn which started in the second half of 2005 began to be felt last year and this has led to financial market volatility and asset writedowns by some of the major
banking institutions. Despite this, the manufacturing sector of the US economy performed well during 2007 and growth across the country averaged 2.2 per cent.
     Growth in the rest of
the developed world was reasonably supportive for the mining sector. European
Union economies, which in general are not subject to same imbalances as the US,
grew  above their long run trend rate for the second year in a row. The Japanese
economy, whilst volatile and still dependent for growth on external demand, expanded
by 1.8 per cent.
     The developed world accounts for around half of global metals
demand but
its importance to commodity markets is much less than it was as recently as the
start of this decade. Changes in demand in other regions  most notably
in China, but also increasingly in other emerging countries  has become
much more  important to the mining sector than cyclical fluctuations in consumption
in the developed world.
     So whilst weaker economic growth in the US, Europe and Japan acted to hold down growth in commodity demand last year, the effect of this was more than offset by accelerating economic
activity elsewhere. China has been the principal driver behind this change. Its economy expanded 11.4 per cent last year and apparent copper demand in the country rose by close to 30 per cent. Aluminium demand was up a remarkable 40 per cent. Other
emerging markets also achieved buoyant growth. The Asia region excluding Japan expanded by eight per cent and Latin America grew by five per cent.
     Given that 2007 started with already depleted stocks, and with the mining industry still struggling to add capacity despite increased levels of capital investment, the macroeconomic
conditions outlined above were more than sufficient to generate some further increases in what were already high prices at the start of the year. A number of historic price highs were breached. Slower growth and additions to supply caused some
metals prices to fall back in the second half of the year, but a number of bulk and energy commodities prices continued their upwards trajectory.
     Amongst the base metals, lead, tin and nickel registered the greatest increase in annual average prices in 2007 (up 82 per cent, 59 per cent and 65 per cent year on year respectively).
Aluminium and copper saw more modest increases of three per cent and six per cent, respectively. Zinc was the only LME metal to return a 2007 average price lower than in 2006, following a sharp sell off through the year.
     Iron ore benchmark prices increased by 9.5 per cent in April but with additions to low cost supply still not keeping pace with demand the market has become even more dependent on high cost
Indian and Chinese production. As a result of this and higher freight costs, spot prices for iron ore to China doubled over the course of the year. Benchmark prices are likely to see more of the benefit of these strong market conditions in 2008.
     In February 2008, Rio Tinto noted the announced settlements between another iron ore producer and steelmakers, and indicated it would continue to negotiate for a freight premium to reflect
Australias proximity to Asia and major customers.
     Australian thermal coal export prices ended the year on a high note of US$90 per tonne due to tight market conditions resulting from diminishing Chinese exports and infrastructure
constraints on supply. The average annual price of US$65 per tonne was one third up on the 2006 level. In contrast, average US coal prices in the Powder River Basin were down some 20 per cent on their 2006 level, reflecting softer demand in the
US. The star performer amongst energy prices was uranium, with average reported spot prices doubling year on year. Most trade in uranium takes place on longer contracted terms, and these have begun to reflect stronger market conditions.Demand for industrial minerals such as borates and titanium minerals has held up well with prices holding



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steady. The same applies to the diamond market, where supply
    trends have been supportive of prices.
     One of the beneficiaries of financial
uncertainty are often precious metals prices. The average gold price rose 15
per cent in 2007 to US$691 per ounce. Most of this increase took place later
in the year and gold finished 2007 selling at record levels of over US$830
per ounce, compared to a 2006 average of around US$602 per ounce.
     Many less widely traded metals have
also continued to benefit from firm demand. In particular, the molybdenum price
continued its remarkable performance, averaging US$30 per pound in 2007,
close to its record level in 2005.

Marketing channelsRio Tintos marketing channels are described under Marketing on
page 93.

Governmental regulationRio Tinto is subject to extensive governmental regulation 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 operations
  in Australia, New Zealand, and Indonesia are subject to state, provincial and
  federal regulations of general application governing mining and processing,
  land tenure and use, environmental requirements, including site specific environmental
  licences, permits and statutory authorisations, workplace health and safety,
  trade and export, corporations, competition, access to infrastructure, 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 operations in the Northern Territory, Australia and
  Namibia are subject to specific regulation in relation to mining and the export
  of uranium.
     US and Canada based operations are
subject to local, state, provincial and national regulations governing land tenure
and use, environmental aspects of operations, product and workplace health and
safety, trade and export administration, corporations, competition, securities
and taxation. In relation to hydro-electric power generation in Canada, water
rentals and royalties, as well as surplus power sales, are regulated by the Quebec
and British Columbia provincial governments.
     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 existing 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 in relation to existing mining assets,
15 per cent ownership should vest in HDSAs within five years of 1 May 2004. Rio
Tinto anticipates that the government of South Africa will continue working towards
the introduction of new royalty payments in respect of mining tenements, expected
to become effective during 2009.

Environmental regulationRio Tinto measures its performance against environmental regulation
  referred to in the previous section by rating incidents on a low, moderate,
  high, or critical scale of likelihood and consequence of impacting the environment.
  High and critical ratings are reported to the Executive committee and the board Committee
  on social and environmental accountability, including progress with remedial
  actions. Prosecutions and other breaches are also used to gauge Rio Tintos
  performance.
     In 2007, there were nine high or critical
environment incidents compared with eight in 2006. These incidents were of a
nature to impact the environment or may have concerned local communities. Of
these two impacted air quality, five resulted from water discharge and two were
spills. Examples of these include:

|• | Air emission concentrations of fluorine exceeded
    license conditions at Boyne smelters, Australia.                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------
|• | Unauthorised discharge of mine water downstream of a dam as a result of poor communications with a contractor at Kestrel, Australia.         
|• | Sewage discharged into a holding pond following
    a blockage in pumps at Weipa, Australia.                                                 
|• | Sea water used in cooling was discharged to the ocean at a higher temperature and pH than limits imposed by the license at Yarwun, Australia.
|• | Minor land clearing inside an area identified
    as having heritage value at Hope Downs, Australia.                                         
|• | Diesel leak from below the floor of a bulk
    storage tank at West Angelas, Australia.                                                      

During 2007 three operations incurred fines amounting to US$9,633 (2006: US$56,779).
     Further information in respect of
the Groups environmental performance is included throughout this annual
report and on the website.



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GROUP MINES

|Mine                            |  | Location                                |  | Access             |  | Title/lease                                                                                                                             
|------------------------------- |  | --------------------------------------- |  | ------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------
|                                |  |                                         |  |                    |  |                                                                                                                                         
|RIO TINTO ALCAN                 |  |                                         |  |                    |  |                                                                                                                                         
|                                |  |                                         |  |                    |  |                                                                                                                                         
|CBG Sangaredi(23%)              |  | Conakry, Guinea                         |  | Road and air       |  | Lease expires in 2038                                                                                                                   
|                                |  |                                         |  |                    |  |                                                                                                                                         
|Ely                             |  | Weipa, Queensland,
    Australia        |  | Road and air       |  | Alcan Queensland Pty. Limited
    Agreement Act 1965 expires in 2048
    with 21 year right of renewal with a
    two year notice period
|                                |  |                                         |  |                    |  |                                                                                                                                         
|GBC Awaso(80%)                  |  | Awaso, Ghana                            |  | Road               |  | Lease expires in 2022, renewable in
    25 year periods                                                                                 
|                                |  |                                         |  |                    |  |                                                                                                                                         
|Gove                            |  | Gove, Northern Territory,
    Australia |  | Road, air and port |  | 100% Leasehold (held in trust by the
    Commonwealth on behalf of the
    Traditional Owners until end of mine
    life)               
|                                |  |                                         |  |                    |  |                                                                                                                                         
|Porto Trombetas (MRN)
    (12%) |  | Porto Trombetas, Brazil                 |  | Air or port        |  | Mineral rights granted for
    undetermined period                                                                                      



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GROUP MINES(continued)

|Mine                            |  | History                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Type of mine |  | Power source                                          
|------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ------------------------------------------------------
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|RIO TINTO ALCAN                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|CBG Sangaredi(23%)              |  | Bauxite mining commenced in 1973.
    Shareholders are 51% Halco and
    49% Guinea. Alcan holds 45% of
    Halco since 2004 and off-takes 45%.
    Current annual capacity is 13 million
    tonnes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Open cut     |  | On site generation (fuel oil)                         
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|Ely                             |  | Discovered in 1957; 100% secured in
    1965. In 1997, Ely Bauxite Mining
    Project Agreement signed with the
    local Aboriginal land owners.
    Bauxite Mining and Exchange
    Agreement signed in 1998 with
    Comalco to allow for extraction of
    the ore by Comalco. Mining
    commenced in 2006, first ore
    extracted in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |              |  | Supplied by Weipa                                     
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|GBC Awaso(80%)                  |  | Bauxite mining commenced in 1940
    (100% British Aluminium). From
    1974 to 1997, Ghana held 55%,
    Alcan 45%; since 1998 Alcan 80%
    Ghana 20%. Annual capacity is one
    million tonnes, currently limited to
    750,000 tonnes by rail infrastructure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Open cut     |  | Electricity grid with on site
    generation back up  
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|Gove                            |  | Bauxite mining commenced in 1970
    feeding both the Gove refinery and
    export market capped at two million
    tonnes per annum. Bauxite export
    ceased in 2006 with feed intended for
    the expanded Gove Refinery. Current
    production capacity about ten million
    tonnes per annum with mine life
    estimated to 2025.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Open cut     |  | Central power station
    located at the Gove refinery
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       
|Porto Trombetas (MRN)
    (12%) |  | In June 1974, an agreement was
    signed between the shareholders of
    Mineração Rio do Norte S.A,
    consisting at that time of the
    following companies: CVRD (41%),
    Alcan Aluminum Limited (19%),
    CB-Votorantim (10%), Reynolds
    Alumínio do Brasil Ltda (5%), Norsk
    Hydro a.s. (5%), Mineração Rio
    Xingu Ltda (5%), A/S Aaardal og
    Sunndal Verk (5%), Instituto
    Nacional de Industria (5%) and Rio
    Tinto Zinc do Brasil Ltda (5%).
    Mineral extraction commenced in
    April 1979. Initial production
    capacity 3.4 million tonnes annually.
    From October 2003, production
    capacity up to 16.3 million tonnes per
    year. Capital structure currently: Vale
    (40%), BHP-Billiton (14.8%), Rio
    Tinto Alcan(12%), CBA (10%),
    Alcoa/Abalco (18.2%) and Hydro
    (5%). Production 17.8 million tonnes
    of wet and dry bauxite annually. |  | Open cut     |  | On site generation (heavy
    oil, diesel)            
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              |  |                                                       



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GROUP MINES (continued)

|Mine                                         |  | Location                                       |  | Access                                           |  | Title/lease                                                                                                                                       
|-------------------------------------------- |  | ---------------------------------------------- |  | ------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Weipa                                        |  | Weipa, Queensland,
    Australia               |  | Road, air and port                               |  | Queensland Government lease expires
    in 2041 with option of 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 joint venture
    (40%)             |  | Papua, Indonesia                               |  | Pipeline, road and port                          |  | Indonesian Government Contracts of
    Work expire in 2021 with option of
    two ten year extensions                                             
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Kennecott MineralsCortez/Pipeline (40%) (a)  |  | Nevada, US                                     |  | Road                                             |  | Patented and unpatented mining
    claims                                                                                                         
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Kennecott MineralsGreens Creek (70%) (b)     |  | Alaska, US                                     |  | Port                                             |  | Patented and unpatented mining
    claims                                                                                                         
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Kennecott Utah CopperBingham Canyon          |  | Near Salt Lake City,Utah, US                   |  | Pipeline, road and rail                          |  | Owned                                                                                                                                             
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Northparkes(80%)                             |  | Goonumbla, New South
    Wales, Australia      |  | Road and rail                                    |  | State Government mining lease issued
    in 1991 for 21 years                                                                                     
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Palabora(58%)                                |  | Phalaborwa, Limpopo
    Province, South Africa |  | Road and rail                                    |  | Lease from South African
    Government until deposits exhausted.
    Base metal claims owned by Palabora                                         
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|DIAMONDS                                     |  |                                                |  |                                                  |  |                                                                                                                                                   
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Argyle Diamonds                              |  | Kimberley Ranges, Western
    Australia        |  | Road and air                                     |  | Mining tenement held under Diamond
    (Argyle Diamond Mines Joint
    Venture) Agreement Act 1981-1983;
    lease extended for 21 years from 2004
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Diavik(60%)                                  |  | N orthwest Territories,
    Canada             |  | Air, ice road in winter                          |  | Mining leases from Canadian federal
    government expiring in 2017 and
    2018                                                                  
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Murowa(78%)                                  |  | Zvishavane, Zimbabwe                           |  | Road and air                                     |  | Claims and mining leases                                                                                                                          
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|ENERGY                                       |  |                                                |  |                                                  |  |                                                                                                                                                   
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   
|Energy Resources of
    Australia(68%)Ranger |  | Northern Territory, Australia                  |  | Road                                             |  | Leases granted by State                                                                                                                           
|                                             |  |                                                |  |                                                  |  |                                                                                                                                                   



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GROUP MINES (continued)

|Mine                                             |  | History                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Type of mine                          |  | Power source                                                                                                     
|------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Weipa                                            |  | Bauxite mining commenced in 1961.
    Major upgrade completed in 1998.
    Open cut Rio Tinto interest increased
    from 72.4% to 100% in 2000. In
    2004 a mine expansion was
    completed that has lifted annual
    capacity to 16.5 million tonnes.
    Mining commenced on the adjacent
    Ely mining lease in 2006, in
    accordance with the 1998 agreement
    with Alcan. A second shiploader that
    increases the shipping capability of
    the Weipa operation was
    commissioned in 2006 |  | Open pit                              |  | On site generation; new
    power station
    commissioned in 2006                                               
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|COPPER                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Escondida(30%)                                   |  | Production started in 1990 and
    expanded in phases to 2002 when the
    new concentrator was completed;
    production from Norte commenced in
    2005 and the sulphide leach produced
    the first cathode during 2006                                                                                                                                                                                                                                                                                    |  | Open pit                              |  | Supplied from SING grid
    under various contracts with
    Norgener, Gas Atacama and
    Edelnor               
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Grasberg joint venture (40%)                     |  | Joint venture interest acquired in 1995.
      Capacity expanded to over and 200,000
      tonnes of ore per day in 1998 with
      addition of underground production
      of more than 35,000 tonnes per day
      in 2003, with an expansion to a sustained
      rate of 50,000 tonnes per day by
    mid 2007                                                                                                                                                                                             |  | Open pit and underground              |  | Long term contract with US-Indonesian
      consortium operated, purpose built,
    coal fired generating station
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Kennecott Minerals
    Cortez/Pipeline (40%) (a) |  | Gold production started at Cortez in
    1969; at Pipeline deposit in 1997;
    Cortez Hills was approved in 2005                                                                                                                                                                                                                                                                                                                                                                                               |  | Open pit                              |  | Public utility                                                                                                   
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Kennecott Minerals
    Greens Creek (70%) (b)    |  | Redeveloped in 1997                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Underground/drift and fill            |  | On site diesel generators                                                                                        
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Kennecott Utah CopperBingham 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%)                                 |  | Production started in 1995; interest
    acquired in 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Open pit                              |  | Supplied from State grid                                                                                         
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Palabora(58%)                                    |  | Development of 20 year underground
    mine commenced in 1996 with open
    pit closure in 2003                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Underground                           |  | Supplied by ESKOM via
    grid network                                                                           
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|DIAMONDS                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Argyle Diamonds                                  |  | Interest increased from 59.7%
    following purchase of Ashton Mining
    in 2000. Underground mine project
    approved in 2005 to extend mine life
    to 2018                                                                                                                                                                                                                                                                                                                                                |  | Open pit to underground
    in future |  | Long term contract with
    Ord Hydro Consortium and
    on site generation backup                               
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Diavik(60%)                                      |  | Deposits discovered 1994-1995.
    Construction approved 2000.
    Diamond production started 2003.
    Second dike closed off in 2005 for
    mining of additional orebody                                                                                                                                                                                                                                                                                                                                     |  | Open pit to underground
    in future |  | On site diesel generators;
    installed capacity 27MW
    with an upgrade under way                             
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Murowa(78%)                                      |  | Discovered in 1997. Small scale
    production started in 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Open pit                              |  | Supplied by ZESA with
    diesel generator backup                                                                
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|ENERGY                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  
|Energy Resources of
    Australia(68%)Ranger     |  | Mining commenced in 1981. Interest
    acquired through North in 2000. Life
    of mine extension to 2020 announced
    in 2007                                                                                                                                                                                                                                                                                                                                                                                 |  | Open pit                              |  | On site diesel/steam power
    generation                                                                        
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                       |  |                                                                                                                  



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GROUP MINES (continued)

|Mine                                                                                                                                                                |  | Location                                                                           |  | Access                                                                  |  | Title/lease                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Rio Tinto Coal AustraliaBengalla (30%)Blair Athol (71%)
 Hail Creek (82%)Hunter Valley Operations (76%)Kestrel (80%)
 Mount Thorley Operations (61%)Warkworth (42%) |  | New South Wales and Queensland, Australia                                          |  | Road, rail, conveyor and port                                           |  | Leases granted by State                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Rio Tinto Energy AmericaAntelopeColowyo (20%)Cordero RojoDecker (50%)Jacobs RanchSpring Creek                                                                       |  | 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                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Rössing Uranium(69%)                                                                                                                                                |  | Namib Desert, Namibia                                                              |  | Rail, road and port                                                     |  | Federal lease                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|INDUSTRIALMINERALS                                                                                                                                                  |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Rio Tinto Minerals:Boron                                                                                                                                            |  | California, US                                                                     |  | Road, rail and port                                                     |  | Owned                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Rio Tinto Minerals:Salt(68.4%)                                                                                                                                      |  | Dampier, Lake MacLeod and Port Hedland, Western Australia                          |  | Road and port                                                           |  | State agreements (mining leases) expiring in 2013 at Dampier, 2018 at Port Hedland
and 2021 at Lake MacLeod with options to renew in each case                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Rio Tinto Minerals:Talc                                                                                                                                             |  | 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                                                                                                                                                   |  | The Saguenay, 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 mineral leases; State lease for Reserve 4 initially runs
to the end of 2022; Ingonyama Trust lease for Reserve10 runs to 2010. Both mineral
leases are required to be converted to new order mining rights by 30 April 2009
in terms of South African legislation. An application for conversion was made
in 2006 for the Ingonyama Trust mineral lease, and an application is expected
to be made by mid 2008 for the conversion of the State mineral lease
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|IRON ORE                                                                                                                                                            |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Hamersley IronBrockmanMarandooMount Tom Price
 NammuldiParaburdooYandicoogina
 Channar (60%)Eastern Range (54%)                                                     |  | Hamersley Ranges, Western Australia                                                |  | Railway and port (owned by Hamersley Iron and operated by Pilbara Iron) |  | Agreements for life of mine with Government of Western Australia                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                    |  |                                                                                    |  |                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|Rio Tinto 2007 Form 20-F | 21
|------------------------ | --

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Back to Contents

GROUP MINES(continued)

|Mine                                                                                                                                                             |  | History                                                                                                                                                                                                           |  | Type of mine                                                                                                                                   |  | Power source                                                                                                                             
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Rio Tinto Coal AustraliaBengalla (30%)Blair Athol (71%)Hail Creek (82%)Hunter Valley Operations
(76%)Kestrel (80%)
Mount Thorley Operations
(61%)Warkworth (42%) |  | Peabody Australian interests acquired
in 2001. Production started for export
at Blair Athol and adjacent power
station at Tarong in 1984. Kestrel
acquired and recommissioned in
1999. Hail Creek started in 2003 |  | Open cut and underground
(Kestrel)                                                                                                             |  | State owned grid                                                                                                                         
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Rio Tinto Energy America
Antelope
Colowyo (20%)
Cordero Rojo
Decker (50%)
Jacobs RanchSpring Creek                                                               |  | Antelope, Spring Creek, Decker and
Cordero acquired in 1993, Colowyo
in 1995, Caballo Rojo in 1997,
Jacobs Ranch in 1998 and West
Antelope in 2004                                                                |  | Open cut                                                                                                                                       |  | Supplied by IPPs and
Cooperatives through
national grid service                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Rössing Uranium(69%)                                                                                                                                             |  | Production began in 1978. Life of
mine extension to 2016 approved in
2005                                                                                                                                         |  | Open pit                                                                                                                                       |  | Namibian National Power                                                                                                                  
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|INDUSTRIAL
MINERALS                                                                                                                                              |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Rio Tinto Minerals:
Boron                                                                                                                                        |  | Deposit discovered in 1925, acquired
by Rio Tinto in 1967                                                                                                                                                         |  | Open pit                                                                                                                                       |  | On site co-generation units                                                                                                              
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Rio Tinto Minerals:Salt (68.4%)                                                                                                                                  |  | Construction of the Dampier field
started in 1969; first shipment
in1972. Lake MacLeod was acquired
in 1978 as an operating field. Port
Hedland was acquired in 2001 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 Pty Ltd;
Lake MacLeod from
Western Power and on site
generation units; Port
Hedland from Western
Power
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Rio Tinto Minerals:
Talc                                                                                                                                         |  | Production started in 1885; acquired
in 1988
. (Australian mine acquired in
2001)                                                                                                                                 |  | Open pit                                                                                                                                       |  | Supplied by Atel and on site
generation units. Australian
mine power supplied by
Western Power                                           
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|QIT-Fer et Titane                                                                                                                                                |  | Production started in 1950; interest
acquired in 1989                                                                                                                                                             |  | Open pit                                                                                                                                       |  | Long term contract with
Hydro-Quebec                                                                                                     
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Richards Bay Minerals
(50%)                                                                                                                                      |  | Production started in 1977; interest
acquired in 1989. Fifth dredge
commissioned in 2000                                                                                                                          |  | Beach sand dredging                                                                                                                            |  | Contract with ESKOM                                                                                                                      
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|IRON ORE                                                                                                                                                         |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          
|Hamersley Iron
BrockmanMarandooMount Tom PriceNammuldiParaburdooYandicooginaChannar (60%)Eastern Range (54%)                                                     |  | Annual capacity increased to 68
million tonnes during 1990s.
Yandicoogina first ore shipped in
1999 and port capacity increased.
Eastern Range first shipped ore in
2004                                          |  | Open pit                                                                                                                                       |  | Supplied through the
integrated Hamersley and
Robe power network
operated by Pilbara Iron                                                
|                                                                                                                                                                 |  |                                                                                                                                                                                                                   |  |                                                                                                                                                |  |                                                                                                                                          



|Rio Tinto 2007 Form 20-F | 22
|------------------------ | --

---



Back to Contents

GROUP MINES (continued)

|Mine                                                    |  | Location                                             |  | Access                                                                      |  | Title/lease                                                                                                                                                                    
|------------------------------------------------------- |  | ---------------------------------------------------- |  | --------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                        |  |                                                      |  |                                                                             |  |                                                                                                                                                                                
|Hope Downs Joint
Venture(50% mine, 100%
infrastructure) |  | Pilbara region, Western
Australia                    |  | Railway owned and
operated by Rio Tinto                                     |  | Agreements for life of mine with
Government of Western Australia                                                                                                               
|                                                        |  |                                                      |  |                                                                             |  |                                                                                                                                                                                
|Iron Ore Company of
Canada(59%)                         |  | Labrador City, Province of
Newfoundland and Labrador |  | 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
|                                                        |  |                                                      |  |                                                                             |  |                                                                                                                                                                                
|Rio Tinto Brasil
Corumbá                                |  | Matto Grosso do Sul, Brazil                          |  | Road, air and river                                                         |  | Government licence for undetermined
period                                                                                                                                     
|                                                        |  |                                                      |  |                                                                             |  |                                                                                                                                                                                
|Robe River Iron
Associates(53%)
Mesa J
West Angelas     |  | Pilbara region, Western
Australia                    |  | Railway and port (owned
by Robe River and
operated by Pilbara Iron)         |  | Agreements for life of mine with
Government of Western Australia                                                                                                               
|                                                        |  |                                                      |  |                                                                             |  |                                                                                                                                                                                



|Rio Tinto 2007 Form 20-F | 23
|------------------------ | --

---



Back to Contents

GROUP MINES (continued)

|Mine                                                    |  | History                                                                                                                                                                                                                                                                                                   |  | Type of mine |  | Power source                                                                             
|------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | -----------------------------------------------------------------------------------------
|                                                        |  |                                                                                                                                                                                                                                                                                                           |  |              |  |                                                                                          
|Hope Downs Joint
Venture(50% mine, 100%
infrastructure) |  | Joint venture venture between Rio
Tinto and Hancock Prospecting Pty
Limited. Construction of Stage 1 to
22 million tonnes per annum
commenced April 2006 and first
production occurred November 2007.
Stage 2 to 30 million tonnes per
annum has been approved and is
forecast to be completed by Q1 2009 |  | Open pit     |  | Supplied through the
integrated Hamersley and
Robe power network
operated by Pilbara Iron
|                                                        |  |                                                                                                                                                                                                                                                                                                           |  |              |  |                                                                                          
|Iron Ore Company of
Canada(59%)                         |  | 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 13.5 million
tonnes can be pelletised Interest
acquired in 2000 through North
acquisition                                                   |  | Open pit     |  | Supplied by Newfoundland
Hydro under long term
contract                                  
|                                                        |  |                                                                                                                                                                                                                                                                                                           |  |              |  |                                                                                          
|Rio Tinto Brasil
Corumbá                                |  | Iron ore production started in 1978;
interest acquired in 1991                                                                                                                                                                                                                                            |  | Open pit     |  | Supplied by ENERSUL                                                                      
|                                                        |  |                                                                                                                                                                                                                                                                                                           |  |              |  |                                                                                          
|Robe River Iron
Associates(53%)
Mesa J
West Angelas     |  | First shipment in 1972. Annual sales
reached 30 million tonnes in late
1990s. Interest acquired in 2000
through North acquisition. West
Angelas first ore shipped in 2002 and
mine expanded in 2005                                                                                                       |  | Open pit     |  | Supplied through the
integrated Hamersley and
Robe power network
operated by Pilbara Iron
|                                                        |  |                                                                                                                                                                                                                                                                                                           |  |              |  |                                                                                          

|     
|-----
|Notes
|(a)  
|(b)  



|Rio Tinto 2007 Form 20-F | 24
|------------------------ | --

---



Back to Contents

GROUP SMELTERS AND REFINERIES

|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|------------------------------ |  | ------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Smelter/refinery               |  | Location                                   |  | Title/lease                                                                                                                                                      |  | Plant type/product                                                              |  | Capacity as of
31 December 2007                                                                                               
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|RIO TINTO ALCAN                |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Alma                           |  | Alma, Quebec,
    Canada                   |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium rod, t-foundry, sow,
    molten metal |  | 415,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Alouette(40%)                  |  | Sept-Iles, Quebec,
    Canada              |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium ingot, sow                            |  | 572,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Alucam(46.7%)                  |  | Edea, Cameroon                             |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, ingot                           |  | 100,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Anglesey(51%)                  |  | Anglesey, Wales, UK                        |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium billet, block, sow                    |  | 145,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Arvida                         |  | Arvida, Quebec,
    Canada                 |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium billet, molten metal                  |  | 166,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Beauharnois                    |  | Beauharnois, Quebec,
    Canada            |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium ingot foundry                         |  | 52,000 tonnes per year
    aluminium                                                                                          
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Becancour(25%)                 |  | Becancour, Quebec,
    Canada              |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium billet, slab, 
t-foundry,
    t-bar   |  | 404,000 tonnes per year aluminium                                                                                             
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Bell Bay                       |  | Bell Bay, Northern
    Tasmania, Australia |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium ingot, block, t-bar                   |  | 178,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Boyne Island
    Smelters(59%) |  | Boyne Island,
    Queensland, Australia    |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium ingot, billet, t-bar                  |  | 545,000 tonnes per year
    aluminium                                                                                         
|                              
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Dunkerque                      |  | Dunkerque, France                          |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, t-foundry, 
t-bar               |  | 259,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Gardanne                       |  | Gardanne, France                           |  | 100% Freehold                                                                                                                                                    |  | Refinery producing specialty
    aluminas                                       |  | 635,000 tonnes per
    year specialty
    aluminas(including 133
    000 tonnes of smelter
    grade aluminas)                
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Gove                           |  | Gove, Northern
    Territory, Australia    |  | 100% Leasehold.
    Commonwealth land held
    (in trust on behalf of
    Traditional Owners).
    Numerous lots with
    varying expiry dates
    starting 2011 |  | Refinery producing alumina                                                      |  | 2,000,000 tonnes per year
    alumina                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|La Grande-Baie                 |  | Grande-Baie, Quebec,
    Canada            |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, sow, molten
    metal           |  | 207,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|ISAL                           |  | Reykjavik, Iceland                         |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, t-bar                           |  | 179,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Kitimat                        |  | Kitimat, British
    Columbia, Canada      |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium billet, slab, ingot                   |  | 277,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Laterriere                     |  | Laterriere, Quebec,
    Canada             |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, t-bar, molten
    metal         |  | 228,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Lochaber                       |  | Fort William,
    Scotland, UK             |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, t-bar                           |  | 43,000 tonnes per year
    aluminium                                                                                          
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Lynemouth                      |  | Lynemouth,
    Northumberland, UK          |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, t-bar                           |  | 178,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Ningxia(50%)                   |  | Qingtongxia, China                         |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium ingot                                 |  | 152,000 tonnes per
    year aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Queensland
    Alumina(80%)    |  | Gladstone,
    Queensland, Australia       |  | 73.3% Freehold.26.7% Leasehold (of
    which more than 80%
    expires in 2026 and after)                                                                        |  | Refinery producing alumina                                                      |  | 3,953,000 tonnes per year
    alumina                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|Sao Luis (Alumar)
    (10%)    |  | Sao Luis, Maranhao,
    Brazil             |  | 100% Freehold                                                                                                                                                    |  | Refinery producing alumina                                                      |  | 140,000 tonnes per
    year(10%) of alumina
    which will increase to
    350,000 tonnes per year
    after expansion in 2009
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               
|St-Jean-de-
    Maurienne      |  | St-Jean-de-Maurienne,
    France           |  | 100% Freehold                                                                                                                                                    |  | Aluminium smelter producing
    aluminium slab, rod                             |  | 135,000 tonnes per year
    aluminium                                                                                         
|                               |  |                                            |  |                                                                                                                                                                  |  |                                                                                 |  |                                                                                                                               



|Rio Tinto 2007Form
    20-F | 25
|--------------------------- | --

---



Back to Contents

GROUP SMELTERS AND REFINERIES (continued)

|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|--------------------------------------------------------- | ------------ | -------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|Smelter/refinery                                          |              | Location                                     |  | Title/lease                                                                                                        |  | Plant type/product                                                         |  | Capacity as of
31 December 2007                                                          
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Sebree                                                    |              | Kentucky, US                                 |  | 100% Freehold                                                                                                      |  | Aluminium smelter producing
    aluminium billet, ingot foundry, t-bar     |  | 196,000 tonnes per yearaluminium                                                         
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Shawinigan                                                |              | Shawinigan, Quebec,
    Canada               |  | 100% Freehold                                                                                                      |  | Aluminium smelter producing
    aluminium billet, sow                      |  | 99,000 tonnes per year
    aluminium                                                     
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|SORAL(50%)                                                |              | Husnes, Norway                               |  | 100% Freehold                                                                                                      |  | Aluminium smelter producing
    aluminium billet                           |  | 164,000 tonnes per year
    aluminium                                                    
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Tiwai Point (New
    Zealand Aluminium
    Smelters)(79%) |              | Invercargill,
    Southland, New
    Zealand |  | 19.6% Freehold.
    80.4%
    Leasehold (expiring in
    2029 and use of certain
    Crown land)                   |  | Aluminium smelter producing
    aluminium ingot, billet, t-bar             |  | 352,000 tonnes per year
    aluminium                                                    
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Tomago(51.6%)                                             |              | Tomago, New South
    Wales, Australia       |  | 100% Freehold                                                                                                      |  | Aluminium smelter producing
    aluminium billet, slab, ingot              |  | 520,000 tonnes per year
    aluminium                                                    
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Vaudreuil
    (Jonquiere)                                 |              | Quebec, Canada                               |  | 100% Freehold                                                                                                      |  | Refinery producing alumina                                                 |  | 1,300,000 tonnes per                                                                     
|                                                          | year alumina
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Yarwun                                                    |              | Gladstone,
    Queensland, Australia         |  | 97% Freehold.
    3% Leasehold (expiring in
    2101 and after)                                                    |  | Refinery producing alumina                                                 |  | 1,400,000 tonnes per
    year alumina                                                    
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|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(58%)                                             |              | Phalaborwa, South
    Africa                 |  | 100% Freehold                                                                                                      |  | Reverberatory Pierce Smith
    copper refinery                             |  | 130,000 tonnes per year
    refined copper                                               
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|Boron                                                     |              | California, US                               |  | 100% Freehold                                                                                                      |  | Borates refinery                                                           |  | 565,000 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                                            |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|HIsmelt®(60%)                                             |              | Kwinana, Western
    Australia               |  | 100% Leasehold (expiring
    in 2010 with rights of
    renewal for further 25 year
    terms)                     |  | HIsmelt®ironmaking plant
    producing pig iron                            |  | 800,000 tonnes per year
    pig iron                                                     
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          
|IOC Pellet Plant
    (59%)                                |              | Labrador City,
    Newfoundland,
    Canada  |  | 100% Leaseholds (expiring
    in 2020, 2022 and 2025
    with rights of renewal for
    further terms of 30 years) |  | Pellet induration furnacesproducing multiple iron ore pellet
        types |  | 13,500,000 tonnes per year pellet                                                        
|                                                          |              |                                              |  |                                                                                                                    |  |                                                                            |  |                                                                                          



|Rio Tinto 2007Form
    20-F | 26
|--------------------------- | --

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Back to Contents

GROUP POWER PLANTS

|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|--------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | --------------------- |  | ----------------
|Smelter/refinery                  |  | Location                                                                                                                                     |  | Title/lease   |  | Plant type/product    |  | Capacity as of  
|                                  |  |                                                                                                                                              |  |               |  |                       |  | 31 December 2007
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|RIO TINTO ALCAN                   |  |                                                                                                                                              |  |               |  |                       |  |                 
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Daba Power Plant(21.8%)           |  | Qingtongxia, China                                                                                                                           |  | 100% Freehold |  | Thermal power station |  | 1,200 megawatts 
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Gladstone Power Station
    (42%) |  | Gladstone, Queensland,
    Australia                                                                                                         |  | 100% Freehold |  | Thermal power station |  | 1,680 megawatts 
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Highlands Power Stations          |  | Lochaber, Kinlochleven, UK                                                                                                                   |  | 100% Freehold |  | Hydro-electric power  |  | 80 megawatts    
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Lynemouth Power Station           |  | Lynemouth, UK                                                                                                                                |  | 100% Freehold |  | Thermal power station |  | 420 megawatts   
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Kemano Power Plant                |  | Kemano, British Columbia,
    Canada                                                                                                         |  | 100% Freehold |  | Hydro-electric power  |  | 896 megawatts   
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Quebec Power Stations             |  | The Saguenay, Quebec, Canada
    (Chute-a-Caron, Chute a la
    Savanne, Chute- des-Passes,
    Chute du Diable, Isle-Maligne,
    Shipshaw) |  | 100% Freehold |  | Hydro-electric power  |  | 2,687 megawatts 
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 
|Vigelands Power Station           |  | Nr Kristiansand, Norway                                                                                                                      |  | 100% Freehold |  | Hydro-electric power  |  | 26 megawatts    
|                                  |  |                                                                                                                                              |  |               |  |                       |  |                 



|Rio Tinto 2007Form
    20-F | 27
|--------------------------- | --

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Back to Contents

METALS AND MINERALS PRODUCTION

|                                              |             |  | 2007           |  | 2006           |  | 2005           | 
|--------------------------------------------- | ----------- |  | -------------- |  | -------------- |  | -------------- | 
|                                              |             |  | Production (a) |  | Production (a) |  | Production (a) | 
|                                              |             |  |                |  |                |  |                | 
|                                              | Rio Tinto   |  | Total          |  | Rio Tinto      |  | Total          | 
|                                              | % share (b) |  |                |  | share          |  |                | 
|                                              |             |  |                |  |                |  |                | 
|ALUMINA (000 tonnes)                         |             |  |                |  |                |  |                | 
|Eurallumina (Italy) (c)                       |            |  |               |  |               |  | 914            | 
|Gardanne (France) (d)                         | 100.0       |  | 21             |  | 21             |  |                | 
|Gove (Australia) (d)                          | 100.0       |  | 405            |  | 405            |  |                | 
|Jonquiere (Canada) (d)                        | 100.0       |  | 252            |  | 252            |  |                | 
|Queensland Alumina (Australia) (d) (e)        | 80.0        |  | 3,816          |  | 1,766          |  | 3,871          | 
|Sao Luis (Alumar) (Brazil) (d)                | 10.0        |  | 288            |  | 29             |  |                | 
|Yarwun (Australia) (d) (f)                    | 100.0       |  | 1,260          |  | 1,260          |  | 1,240          | 
|Speciality Plants (Canada/France/Germany) (d) | 100.0       |  | 144            |  | 144            |  |                | 
|                                              |             |  |                |  |                |  |                | 
|Rio Tinto total                               |             |  |                |  | 3,877          |  |                | 
|                                              |             |  |                |  |                |  |                | 
|ALUMINIUM (refined) (000 tonnes)             |             |  |                |  |                |  |                | 
|Alma (Canada) (d)                             | 100.0       |  | 80.1           |  | 80.1           |  |                | 
|Alouette (Sept-Iles) (Canada) (d)             | 40.0        |  | 108.9          |  | 43.5           |  |                | 
|Alucam (Edea) (Cameroon) (d)                  | 46.7        |  | 18.8           |  | 8.8            |  |                | 
|Anglesey (UK)                                 | 51.0        |  | 144.7          |  | 73.3           |  | 143.8          | 
|Arvida (Canada) (d)                           | 100.0       |  | 31.8           |  | 31.8           |  |                | 
|Beauharnois (Canada) (d)                      | 100.0       |  | 9.8            |  | 9.8            |  |                | 
|Becancour (Canada) (d)                        | 25.1        |  | 80.1           |  | 20.1           |  |                | 
|Bell Bay (Australia)                          | 100.0       |  | 178.3          |  | 178.3          |  | 177.5          | 
|Boyne Island (Australia)                      | 59.4        |  | 550.3          |  | 329.6          |  | 545.1          | 
|Dunkerque (France) (d)                        | 100.0       |  | 49.5           |  | 49.5           |  |                | 
|Grande-Baie (Canada) (d)                      | 100.0       |  | 39.7           |  | 39.7           |  |                | 
|ISAL (Reykjavik) (Iceland) (d)                | 100.0       |  | 35.0           |  | 35.0           |  |                | 
|Kitimat (Canada) (d)                          | 100.0       |  | 46.8           |  | 46.8           |  |                | 
|Lannemezan (France) (d)                       | 100.0       |  | 5.0            |  | 5.0            |  |                | 
|Laterriere (Canada) (d)                       | 100.0       |  | 44.0           |  | 44.0           |  |                | 
|Lochaber (UK) (d)                             | 100.0       |  | 8.3            |  | 8.3            |  |                | 
|Lynemouth (UK) (d)                            | 100.0       |  | 33.3           |  | 33.3           |  |                | 
|Ningxia (Qingtongxia) (China) (d)             | 50.0        |  | 30.9           |  | 15.5           |  |                | 
|Sebree (USA) (d)                              | 100.0       |  | 36.8           |  | 36.8           |  |                | 
|Shawinigan (Canada) (d)                       | 100.0       |  | 18.3           |  | 18.3           |  |                | 
|SORAL (Husnes) (Norway) (d)                   | 50.0        |  | 32.0           |  | 16.0           |  |                | 
|St-Jean-de Maurienne (France) (d)             | 100.0       |  | 25.2           |  | 25.2           |  |                | 
|Tiwai Point (New Zealand)                     | 79.4        |  | 353.0          |  | 280.9          |  | 337.3          | 
|Tomago (Australia) (d)                        | 51.6        |  | 97.4           |  | 50.2           |  |                | 
|                                              |             |  |                |  |                |  |                | 
|Rio Tinto total                               |             |  |                |  | 1479.7         |  |                | 
|                                              |             |  |                |  |                |  |                | 
|BAUXITE (000 tonnes)                         |             |  |                |  |                |  |                | 
|Awaso (Ghana) (d) (g)                         | 80.0        |  | 216            |  | 173            |  |                | 
|Gove (Australia) (d)                          | 100.0       |  | 985            |  | 985            |  |                | 
|Porto Trombetas (MRN) (Brazil) (d)            | 12.0        |  | 3,392          |  | 407            |  |                | 
|Sangaredi (Guinea) (d)                        | (h)         |  | 2,774          |  | 1,248          |  |                | 
|Weipa (Australia)                             | 100.0       |  | 18,209         |  | 18,209         |  | 16,319         | 
|                                              |             |  |                |  |                |  |                | 
|Rio Tinto total                               |             |  |                |  | 21,022         |  |                | 
|                                              |             |  |                |  |                |  |                | 
|BORATES (000 tonnes) (i)                     |             |  |                |  |                |  |                | 
|Rio Tinto Minerals  Boron (US)               | 100.0       |  | 541            |  | 541            |  | 538            | 
|Rio Tinto Minerals  Argentina (Argentina)    | 100.0       |  | 19             |  | 19             |  | 15             | 
|                                              |             |  |                |  |                |  |                | 
|Rio Tinto total                               |             |  |                |  | 560            |  |                | 
|                                              |             |  |                |  |                |  |                | 
|COAL  HARD COKING (000 tonnes)              |             |  |                |  |                |  |                | 
|Rio Tinto Coal Australia                      |             |  |                |  |                |  |                | 
|Hail Creek Coal (Australia)                   | 82.0        |  | 5,012          |  | 4,110          |  | 4,544          | 
|Kestrel Coal (Australia)                      | 80.0        |  | 2,586          |  | 2,069          |  | 2,729          | 
|                                              |             |  |                |  |                |  |                | 
|Rio Tinto total hard coking coal              |             |  |                |  | 6,179          |  |                | 
|                                              |             |  |                |  |                |  |                | 



|Rio Tinto 2007 Form 20-F | 28
|------------------------ | --

---



Back to Contents

METALS AND MINERALS PRODUCTION (continued)

|                                         |             |  |                |  | 2007           |  |                |  | 2006      |  |         |  | 2005      | 
|---------------------------------------- | ----------- |  | -------------- |  | -------------- |  | -------------- |  | --------- |  | ------- |  | --------- | 
|                                         |             |  | Production (a) |  | Production (a) |  | Production (a) | 
|                                         |             |  |                |  |                |  |                |  |           | 
|                                         | Rio Tinto   |  | Total          |  | Rio Tinto      |  | Total          |  | Rio Tinto |  | Total   |  | Rio Tinto | 
|                                         | % share (b) |  |                |  | share          |  |                |  | share     |  |         |  | share     | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|COAL  OTHER* (000 tonnes)              |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto Coal Australia                 |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Bengalla (Australia)                     | 30.3        |  | 5,155          |  | 1,561          |  | 5,544          |  | 1,679     |  | 5,965   |  | 1,806     | 
|Blair Athol (Australia)                  | 71.2        |  | 7,924          |  | 5,645          |  | 10,190         |  | 7,259     |  | 10,600  |  | 7,551     | 
|Hunter Valley Operations (Australia)     | 75.7        |  | 10,094         |  | 7,642          |  | 12,024         |  | 9,104     |  | 12,374  |  | 9,369     | 
|Kestrel Coal (Australia)                 | 80.0        |  | 1,035          |  | 828            |  | 863            |  | 691       |  | 774     |  | 619       | 
|Mount Thorley Operations (Australia)     | 60.6        |  | 2,924          |  | 1,771          |  | 3,895          |  | 2,359     |  | 3,962   |  | 2,400     | 
|Tarong Coal (Australia)                  | 100.0       |  | 4,510          |  | 4,510          |  | 6,979          |  | 6,979     |  | 6,470   |  | 6,470     | 
|Warkworth (Australia)                    | 42.1        |  | 5,775          |  | 2,430          |  | 7,342          |  | 3,089     |  | 6,293   |  | 2,647     | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Total Australian other coal              |             |  |                |  | 24,388         |  |                |  | 31,159    |  |         |  | 30,863    | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto Energy America                 |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Antelope (US)                            | 100.0       |  | 31,267         |  | 31,267         |  | 30,749         |  | 30,749    |  | 27,174  |  | 27,174    | 
|Colowyo (US)                             | (j)         |  | 5,077          |  | 5,077          |  | 5,754          |  | 5,754     |  | 5,325   |  | 5,325     | 
|Cordero Rojo (US)                        | 100.0       |  | 36,712         |  | 36,712         |  | 36,094         |  | 36,094    |  | 34,234  |  | 34,234    | 
|Decker (US)                              | 50.0        |  | 6,340          |  | 3,170          |  | 6,449          |  | 3,225     |  | 6,288   |  | 3,144     | 
|Jacobs Ranch (US)                        | 100.0       |  | 34,565         |  | 34,565         |  | 36,258         |  | 36,258    |  | 33,823  |  | 33,823    | 
|Spring Creek (US)                        | 100.0       |  | 14,291         |  | 14,291         |  | 13,181         |  | 13,181    |  | 11,881  |  | 11,881    | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Total US coal                            |             |  |                |  | 125,083        |  |                |  | 125,260   |  |         |  | 115,580   | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto total other coal               |             |  |                |  | 149,471        |  |                |  | 156,419   |  |         |  | 146,443   | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|COPPER (mined) (000 tonnes)             |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Bingham Canyon (US)                      | 100.0       |  | 212.2          |  | 212.2          |  | 265.6          |  | 265.6     |  | 220.6   |  | 220.6     | 
|Escondida (Chile)                        | 30.0        |  | 1,405.5        |  | 421.6          |  | 1,313.4        |  | 394.0     |  | 1,270.2 |  | 381.1     | 
|Grasberg  Joint Venture (Indonesia) (k) | 40.0        |  | 569.4          |  | 28.4           |  | 115.5          |  | 46.2      |  | 273.9   |  | 109.6     | 
|Northparkes (Australia)                  | 80.0        |  | 43.1           |  | 34.5           |  | 83.3           |  | 66.6      |  | 54.0    |  | 43.2      | 
|Palabora (South Africa) (l)              | 57.7        |  | 71.4           |  | 41.2           |  | 61.5           |  | 31.1      |  | 61.2    |  | 30.0      | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto total                          |             |  |                |  | 737.9          |  |                |  | 803.5     |  |         |  | 784.4     | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|COPPER (refined) (000 tonnes)           |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Escondida (Chile)                        | 30.0        |  | 238.4          |  | 71.5           |  | 134.4          |  | 40.3      |  | 143.9   |  | 43.2      | 
|Kennecott Utah Copper (US)               | 100.0       |  | 265.6          |  | 265.6          |  | 217.9          |  | 217.9     |  | 232.0   |  | 232.0     | 
|Palabora (South Africa) (l)              | 57.7        |  | 91.7           |  | 52.9           |  | 81.2           |  | 40.9      |  | 80.3    |  | 39.3      | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto total                          |             |  |                |  | 390.0          |  |                |  | 299.2     |  |         |  | 314.5     | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|DIAMONDS (000 carats)                   |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Argyle (Australia)                       | 100.0       |  | 18,744         |  | 18,744         |  | 29,078         |  | 29,078    |  | 30,476  |  | 30,476    | 
|Diavik (Canada)                          | 60.0        |  | 11,943         |  | 7,166          |  | 9,829          |  | 5,897     |  | 8,272   |  | 4,963     | 
|Murowa (Zimbabwe)                        | 77.8        |  | 145            |  | 113            |  | 240            |  | 187       |  | 251     |  | 195       | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto total                          |             |  |                |  | 26,023         |  |                |  | 35,162    |  |         |  | 35,635    | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|GOLD (mined) (000 ounces)               |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Barneys Canyon (US)                      | 100.0       |  | 11             |  | 11             |  | 15             |  | 15        |  | 16      |  | 16        | 
|Bingham Canyon (US)                      | 100.0       |  | 397            |  | 397            |  | 523            |  | 523       |  | 401     |  | 401       | 
|Cortez/Pipeline (US) (m)                 | 40.0        |  | 538            |  | 215            |  | 444            |  | 178       |  | 904     |  | 361       | 
|Escondida (Chile)                        | 30.0        |  | 187            |  | 56             |  | 170            |  | 51        |  | 183     |  | 55        | 
|Grasberg  Joint Venture (Indonesia) (k) | 40.0        |  | 2,689          |  | 423            |  | 238            |  | 95        |  | 1,676   |  | 670       | 
|Greens Creek (US) (m)                    | 70.3        |  | 68             |  | 48             |  | 63             |  | 44        |  | 73      |  | 51        | 
|Kelian (Indonesia)                       | 90.0        |  |               |  |               |  |               |  |          |  | 43      |  | 38        | 
|Lihir (Papua New Guinea) (n)             |            |  |               |  |               |  |               |  |          |  | 424     |  | 61        | 
|Northparkes (Australia)                  | 80.0        |  | 79             |  | 63             |  | 95             |  | 76        |  | 57      |  | 46        | 
|Rawhide (US)                             | 51.0        |  | 19             |  | 10             |  | 26             |  | 13        |  | 35      |  | 18        | 
|Others                                   |            |  | 19             |  | 11             |  | 18             |  | 9         |  | 15      |  | 7         | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Rio Tinto total                          |             |  |                |  | 1,233          |  |                |  | 1,003     |  |         |  | 1,726     | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|GOLD (refined) (000 ounces)             |             |  |                |  |                |  |                |  |           |  |         |  |           | 
|Kennecott Utah Copper (US)               | 100.0       |  | 523            |  | 523            |  | 462            |  | 462       |  | 369     |  | 369       | 
|                                         |             |  |                |  |                |  |                |  |           |  |         |  |           | 

|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|* | Coal  other includes thermal coal, semi-soft coking
    coal and semi-hard  coking coal.



|Rio Tinto 2007 Form 20-F | 29
|------------------------ | --

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Back to Contents

METALS AND MINERALS PRODUCTION (continued)

|                                          |             |  |                |  | 2007           |  |                |  | 2006      |  |        |  | 2005      | 
|----------------------------------------- | ----------- |  | -------------- |  | -------------- |  | -------------- |  | --------- |  | ------ |  | --------- | 
|                                          |             |  | Production (a) |  | Production (a) |  | Production (a) | 
|                                          |             |  |                |  |                |  |                |  |           | 
|                                          | Rio Tinto   |  | Total          |  | Rio Tinto      |  | Total          |  | Rio Tinto |  | Total  |  | Rio Tinto | 
|                                          | % share (b) |  |                |  | share          |  |                |  | share     |  |        |  | share     | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|IRON ORE (000 tonnes)                    |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Channar (Australia)                       | 60.0        |  | 10,549         |  | 6,330          |  | 9,798          |  | 5,879     |  | 8,644  |  | 5,186     | 
|Corumbá (Brazil)                          | 100.0       |  | 1,777          |  | 1,777          |  | 1,982          |  | 1,982     |  | 1,410  |  | 1,410     | 
|Eastern Range (Australia)                 | (n)         |  | 6,932          |  | 6,932          |  | 8,215          |  | 8,215     |  | 6,559  |  | 6,559     | 
|Hamersley Iron (Australia)                | 100.0       |  | 94,567         |  | 94,567         |  | 79,208         |  | 79,208    |  | 74,387 |  | 74,387    | 
|Hope Downs (Australia) (p)                | 50.0        |  | 64             |  | 32             |  |               |  |          |  |       |  |          | 
|Iron Ore Company of Canada (Canada)       | 58.7        |  | 13,229         |  | 7,768          |  | 16,080         |  | 9,442     |  | 15,647 |  | 9,188     | 
|Robe River (Australia)                    | 53.0        |  | 51,512         |  | 27,301         |  | 52,932         |  | 28,054    |  | 52,385 |  | 27,764    | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Rio Tinto total                           |             |  |                |  | 144,707        |  |                |  | 132,780   |  |        |  | 124,494   | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|LEAD (000 tonnes)                        |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Greens Creek (US) (m)                     | 70.3        |  | 17.0           |  | 11.9           |  | 16.9           |  | 11.9      |  | 16.9   |  | 11.9      | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|MOLYBDENUM (000 tonnes)                  |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Bingham Canyon (US)                       | 100.0       |  | 14.9           |  | 14.9           |  | 16.8           |  | 16.8      |  | 15.6   |  | 15.6      | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|PIG IRON (000 tonnes)                    |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|HIsmelt®(Australia)                       | 60.0        |  | 115            |  | 69             |  | 89             |  | 53        |  | 9      |  | 5         | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|SALT (000 tonnes)                        |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Rio Tinto Minerals  salt (Australia) (q) | 68.4        |  | 7,827          |  | 5,242          |  | 8,323          |  | 5,405     |  | 8,480  |  | 5,507     | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|SILVER (mined) (000 ounces)              |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Bingham Canyon (US)                       | 100.0       |  | 3,487          |  | 3,487          |  | 4,214          |  | 4,214     |  | 3,958  |  | 3,958     | 
|Escondida (Chile)                         | 30.0        |  | 7,870          |  | 2,361          |  | 6,646          |  | 1,994     |  | 6,565  |  | 1,970     | 
|Grasberg  Joint Venture (Indonesia) (k)  | 40.0        |  | 5,238          |  | 477            |  | 1,675          |  | 670       |  | 3,410  |  | 1,364     | 
|Greens Creek (US) (m)                     | 70.3        |  | 8,646          |  | 6,075          |  | 8,866          |  | 6,230     |  | 9,664  |  | 6,791     | 
|Others                                    |            |  | 914            |  | 602            |  | 1,345          |  | 861       |  | 1,422  |  | 843       | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Rio Tinto total                           |             |  |                |  | 13,002         |  |                |  | 13,968    |  |        |  | 14,926    | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|SILVER (refined) (000 ounces)            |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Kennecott Utah Copper (US)                | 100.0       |  | 4,365          |  | 4,365          |  | 4,152          |  | 4,152     |  | 3,538  |  | 3,538     | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|TALC (000 tonnes)                        |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Rio Tinto Minerals  talc                 | 100.0       |  | 1,281          |  | 1,281          |  | 1,392          |  | 1,392     |  | 1,364  |  | 1,364     | 
|(Australia/Europe/North America) (r)      |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|TITANIUM DIOXIDE FEEDSTOCK (000 tonnes)  |             |  |                |  |                |  |                |  |           |  |        |  |          
|Rio Tinto Iron & Titanium                 | 100.0       |  | 1,458          |  | 1,458          |  | 1,415          |  | 1,415     |  | 1,312  |  | 1,312     | 
|(Canada/South Africa) (s)                 |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|URANIUM (000 lbs U3O8)(t)                |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Energy Resources of Australia (Australia) | 68.4        |  | 11,713         |  | 8,011          |  | 10,370         |  | 7,092     |  | 13,013 |  | 8,900     | 
|Rössing (Namibia)                         | 68.6        |  | 6,714          |  | 4,605          |  | 7,975          |  | 5,469     |  | 8,182  |  | 5,611     | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Rio Tinto total                           |             |  |                |  | 12,616         |  |                |  | 12,561    |  |        |  | 14,511    | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|ZINC (mined) (000 tonnes)                |             |  |                |  |                |  |                |  |           |  |        |  |           | 
|Greens Creek (US) (m)                     | 70.3        |  | 50.8           |  | 35.7           |  | 47.5           |  | 33.4      |  | 52.9   |  | 37.2      | 
|                                          |             |  |                |  |                |  |                |  |           |  |        |  |           | 



|Rio Tinto 2007 Form 20-F | 30
|------------------------ | --

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METALS AND MINERALS PRODUCTION (continued)

|Notes
|-----
|(a)  
|(b)  

| |                                   |      |  |      |  |      | 
| | --------------------------------- | ---- |  | ---- |  | ---- | 
| | Rio Tinto Share %                 |      |  |      |  |      | 
| |                                   |      |  |      |  |      | 
| | Operation See note                | 2007 |  | 2006 |  | 2005 | 
| | Queensland Alumina (e)            | 46.3 |  | 38.6 |  | 38.6 | 
| | Palabora (l)                      | 57.7 |  | 50.5 |  | 49.0 | 
| | Rio Tinto Minerals  salt
    (q) | 67.0 |  | 64.9 |  | 64.9 | 
| |                                   |      |  |      |  |      | 

|    |                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | Rio Tinto sold its 56.2 per cent share in Eurallumina with an effective date
    of 31 October 2006 and production data are shown up to that date.                                                                                                                                                                                                        
|(d) | Rio Tinto acquired the operating assets of Alcan with effect from 24 October
      2007; production is shown as from that date. The Rio Tinto assets and the
      Alcan assets have been combined under the Rio Tinto Alcan
name.                                                                                                                        
|(e) | Rio Tinto held a 38.6 per cent share in QAL until 24 October 2007; this increased
    to 80.0 per cent following the Alcan acquisition                                                                                                                                                                                                                    
|(f) | Yarwun was previously known as Comalco Alumina Refinery.                                                                                                                                                                                                                                                                                                  
|(g) | Rio Tinto has an 80 per cent interest in the Awaso mine but purchases the
    additional 20 per cent of production                                                                                                                                                                                                                                        
|(h) | Rio Tinto has a 22.9 per cent shareholding in the Sangaredi mine but receives
    45 per cent of production under the partnership agreement.                                                                                                                                                                                                              
|(i) | Borate quantities are expressed as B2O3.                                                                                                                                                                                                                                                                                                                  
|(j) | In view of Rio Tinto Energy Americas responsibilities under a management
      agreement for the operation of the Colowyo mine, all of Colowyos
      output is included in Rio Tintos share of
production.                                                                                                                                            
|(k) | Through a joint venture agreement with Freeport-McMoRan Copper & Gold
      (FCX), 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.                                                                                                     
|(l) | Rio Tintos shareholding in Palabora varied during 2005 and 2006 due
    to the progressive conversion of debentures into ordinary shares.                                                                                                                                                                                                                
|(m) | In February 2008 Rio Tinto reached agreement for the sale of Greens Creek
    and on 5 March 2008 the Group completed the sale of its interest in the Cortez
    joint venture to its partner.                                                                                                                                                            
|(n) | On 30 November 2005, Rio Tinto sold its 14.5 per cent interest in Lihir
      Gold; it had agreed in September 2005 to relinquish the management agreement
      for Lihir. The production data are shown up to 30 September 2005, from
      which date the Rio Tinto interest in Lihir was held as an investment rather
    than being equity accounted.
|(o) | Rio Tintos share of production includes 100 per cent of the production
      from the Eastern Range mine. Under the terms of the joint venture agreement
      (Rio Tinto 54 per cent), Hamersley Iron manages the operation and is obliged
    to purchase all mine production from the joint venture.                                                  
|(p) | Hope Downs started production in the fourth quarter of 2007                                                                                                                                                                                                                                                                                               
|(q) | Rio Tinto increased its shareholding in Rio Tinto Minerals  salt
    to 68.4 per cent at the beginning of July 2007.                                                                                                                                                                                                                                     
|(r) | Talc production includes some products derived from purchased ores.                                                                                                                                                                                                                                                                                       
|(s) | Quantities comprise 100 per cent of QIT and 50 per cent of Richards Bay
    Minerals production.                                                                                                                                                                                                                                                         
|(t) | With effect from the second quarter of 2007 Rio Tinto is reporting uranium
    production as 000 lbs U3O8rather than tonnes.                                                                                                                                                                                                                             



|Rio Tinto 2007 Form 20-F | 31
|------------------------ | --

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Back to Contents

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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|• | Ore reserves presented in accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices were to be in
line with the average of historical prices for the three years to 30 June 2007, or contracted prices where applicable. For this purpose, contracted prices are applied only
to future sales volumes for which the price is predetermined by an existing contract; and the average of historical prices is applied to expected sales volumes in excess of such amounts. Moreover, reported ore
reserve estimates have not been increased above the levels expected to be economic based on Rio Tinto's own long term price assumptions.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|• | 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 2007. 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



|Rio Tinto 2007 Form 20-F | 32
|------------------------ | --

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Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                             | Type |  | Total ore reserves at end |  |        |  |          | 
|---------------------------- | ---- |  | ------------------------- |  | ------ |  | -------- | 
|                             | of   |  | 2007                      |  |        |  |          | 
|                             | mine |  |                           |  |        |  |          | 
|                             | (b)  |  | Tonnage                   |  | Grade  |  | Interest | 
|                             |      |  |                           |  |        |  | %        | 
|                             |      |  |                           |  |        |  |          | 
|                             |      |  |                           |  |        |  |          | 
|BAUXITE(c)                   |      |  |                           |  |        |  |          | 
|                             |      |  | millions                  |  |        |  |          | 
|                             |      |  | of tonnes                 |  | %Al2O3 |  |          | 
|Reserves at operating mine   |      |  |                           |  |        |  |          | 
|Gove (Australia) (d)         | O/P  |  | 143                       |  | 49.2   |  | 100.0    | 
|Porto Trombetas (Brazil) (d) | O/P  |  | 166                       |  | 51.2   |  | 12.0     | 
|Weipa (Australia) (d)        | O/P  |  | 1,224                     |  | 53.6   |  | 100.0    | 
|                             |      |  |                           |  |        |  |          | 
|Rio Tinto total              |      |  |                           |  |        |  |          | 
|                             |      |  |                           |  |        |  |          | 

|                                |     |  |           |  |       |  |            | 
|------------------------------- | --- |  | --------- |  | ----- |  | ---------- | 
|                                |     |  |           |  |       |  | Marketable | 
|BORATES(e)                      |     |  |           |  |       |  | product    | 
|                                |     |  | millions  |  |       |  | millions   | 
|                                |     |  | of tonnes |  |       |  | of tonnes  | 
|Reserves at operating mine      |     |  |           |  |       |  |            | 
|Rio Tinto Minerals - Boron (US) |     |  |           |  |       |  |            | 
|- mine                          | O/P |  | 19.2      |  | 100.0 |  | 19.2       | 
|- stockpiles (f)                | S/P |  | 2.3       |  | 100.0 |  | 2.3        | 
|                                |     |  |           |  |       |  |            | 
|Rio Tinto total                 |     |  |           |  |       |  | 21.5       | 
|                                |     |  |           |  |       |  |            | 

|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|------------------------------------------- | --- |  | --------- |  | ---------- |  | ----------------------- |  | ------- |  | ----- | -----
|                                            |     |  | Coal type |  | Marketable |  | Marketable coal quality |  |         |  |       |      
|                                            |     |  | (h)       |  | reserves   |  | (i)                     |  | (i)     |  |       |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|COAL(g)                                     |     |  |           |  |            |  | Calorific               |  | Sulphur |  |       |      
|                                            |     |  |           |  | millions   |  | value                   |  | content |  |       |      
|                                            |     |  |           |  | of tonnes  |  | MJ/kg                   |  | %       |  |       |      
|Reserves at operating mines                 |     |  |           |  |            |  |                         |  |         |  |       |      
|Rio Tinto Energy America                    |     |  |           |  |            |  |                         |  |         |  |       |      
|Antelope (US)                               | O/C |  | SC        |  | 325        |  | 20.59                   |  | 0.24    |  | 100.0 |      
|Colowyo (US) (j)                            | O/C |  | SC        |  | 9          |  | 24.19                   |  | 0.44    |  | 100.0 |      
|Cordero Rojo (US)                           | O/C |  | SC        |  | 241        |  | 19.54                   |  | 0.30    |  | 100.0 |      
|Decker (US)                                 | O/C |  | SC        |  | 12         |  | 22.10                   |  | 0.39    |  | 50.0  |      
|Jacobs Ranch (US)                           | O/C |  | SC        |  | 383        |  | 20.35                   |  | 0.43    |  | 100.0 |      
|Spring Creek (US) (k)                       | O/C |  | SC        |  | 295        |  | 21.75                   |  | 0.33    |  | 100.0 |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|Total US coal                               |     |  |           |  |            |  |                         |  |         |  |       |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|Rio Tinto Coal Australia                    |     |  |           |  |            |  |                         |  |         |  |       |      
|Bengalla (Australia)                        | O/C |  | SC        |  | 137        |  | 28.21                   |  | 0.47    |  | 30.3  |      
|Blair Athol (Australia)                     | O/C |  | SC        |  | 37         |  | 26.91                   |  | 0.30    |  | 71.2  |      
|Hail Creek (Australia)                      | O/C |  | MC        |  | 174        |  | 32.20                   |  | 0.35    |  | 82.0  |      
|Hunter Valley Operations                    | O/C |  | SC + MC   |  | 298        |  | 28.90                   |  | 0.58    |  | 75.7  |      
|(Australia)                                 |     |  |           |  |            |  |                         |  |         |  |       |      
|Kestrel (Australia) (l)                     | U/G |  | SC + MC   |  | 136        |  | 31.60                   |  | 0.59    |  | 80.0  |      
|Mount Thorley Operations                    | O/C |  | SC + MC   |  | 23         |  | 29.48                   |  | 0.46    |  | 60.6  |      
|(Australia)                                 |     |  |           |  |            |  |                         |  |         |  |       |      
|Warkworth (Australia)                       | O/C |  | SC + MC   |  | 242        |  | 28.87                   |  | 0.45    |  | 42.1  |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|Total Australian coal                       |     |  |           |  |            |  |                         |  |         |  |       |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|Rio Tinto total reserves at operating mines |     |  |           |  |            |  |                         |  |         |  |       | 1,920
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|Undeveloped reserves(m)                     |     |  |           |  |            |  |                         |  |         |  |       |      
|Rio Tinto Coal Australia                    |     |  |           |  |            |  |                         |  |         |  |       |      
|Clermont (Australia)                        | O/C |  | SC        |  | 189        |  | 27.90                   |  | 0.33    |  | 50.1  |      
|Mount Pleasant (Australia)                  | O/C |  | SC        |  | 350        |  | 26.73                   |  | 0.51    |  | 75.7  |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      
|Rio Tinto total undeveloped reserves        |     |  |           |  |            |  |                         |  |         |  |       |      
|                                            |     |  |           |  |            |  |                         |  |         |  |       |      



|Rio Tinto 2007 Form 20-F | 33
|------------------------ | --

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Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                                            | Type of   |  | Total ore reserves at
    end 2007 |  | Average |  |          |  |          | 
|------------------------------------------- | --------- |  | ---------------------------------- |  | ------- |  | -------- |  | -------- | 
|                                            | mine      |  |                                    |  |         |  | mill     |  |          | 
|                                            | (b)       |  | Tonnage                            |  | Grade   |  | recovery |  | Interest | 
|                                            |           |  |                                    |  |         |  | %        |  | %        | 
|                                            |           |  |                                    |  |         |  |          |  |          | 
|                                            |           |  |                                    |  |         |  |          |  |          | 
|COPPER                                      |           |  |                                    |  |         |  |          |  |          | 
|                                            |           |  | millions                           |  |         |  |          |  |          | 
|                                            |           |  | of tonnes                          |  | %Cu     |  |          |  |          | 
|                                            |           |  |                                    |  |         |  |          |  |          | 
|Reserves at operating mines                 |           |  |                                    |  |         |  |          |  |          | 
|Bingham Canyon (US)                         |           |  |                                    |  |         |  |          |  |          | 
| mine                                      | O/P       |  | 563                                |  | 0.52    |  | 86       |  | 100.0    | 
| stockpiles (f)                            | S/P       |  | 49                                 |  | 0.33    |  | 86       |  | 100.0    | 
|Escondida (Chile) (n)                       |           |  |                                    |  |         |  |          |  |          | 
| sulphide mine                             | O/P       |  | 1,690                              |  | 1.14    |  | 86       |  | 30.0     | 
| sulphide leach mine                       | O/P       |  | 2,217                              |  | 0.53    |  | 32       |  | 30.0     | 
| oxide mine                                | O/P       |  | 46                                 |  | 1.12    |  | 68       |  | 30.0     | 
| sulphide stockpiles (f)                   | S/P       |  | 14                                 |  | 1.24    |  | 86       |  | 30.0     | 
| sulphide leach stockpiles (f)             | S/P       |  | 182                                |  | 0.75    |  | 32       |  | 30.0     | 
| oxide stockpiles (f)                      | S/P       |  | 112                                |  | 0.78    |  | 68       |  | 30.0     | 
|Grasberg (Indonesia)                        | O/P + U/G |  | 2,712                              |  | 1.04    |  | 88       |  | (o)      | 
|Northparkes (Australia)                     |           |  |                                    |  |         |  |          |  |          | 
| mine                                      | U/G       |  | 47                                 |  | 0.97    |  | 89       |  | 80.0     | 
| stockpiles (f)                            | S/P       |  | 0.7                                |  | 0.69    |  | 85       |  | 80.0     | 
|Palabora (South Africa)                     | U/G       |  | 104                                |  | 0.62    |  | 88       |  | 57.7     | 
|                                            |           |  |                                    |  |         |  |          |  |          | 
|Rio Tinto total reserves at operating mines |           |  |                                    |  |         |  |          |  |          | 
|                                            |           |  |                                    |  |         |  |          |  |          | 
|Undeveloped reserves (m)                    |           |  |                                    |  |         |  |          |  |          | 
|Eagle (US) (p)                              | U/G       |  | 3.2                                |  | 3.04    |  | 95       |  | 100.0    | 
|Oyo Tolgoi (Mongolia) (q)                   | O/P       |  | 930                                |  | 0.50    |  | 87       |  | 9.9      | 
|                                            |           |  |                                    |  |         |  |          |  |          | 
|Rio Tinto total undeveloped reserves        |           |  |                                    |  |         |  |          |  |          | 
|                                            |           |  |                                    |  |         |  |          |  |          | 

|                            |           |  |           |  |           |  |  |  |       |  |             | 
|--------------------------- | --------- |  | --------- |  | --------- |  |  |  | ----- |  | ----------- | 
|                            |           |  |           |  |           |  |  |  |       |  | Recoverable | 
|DIAMONDS(c)                 |           |  |           |  |           |  |  |  |       |  | diamonds    | 
|                            |           |  | millions  |  | carats    |  |  |  |       |  | millions    | 
|                            |           |  | of tonnes |  | per tonne |  |  |  |       |  | of carats   | 
|                            |           |  |           |  |           |  |  |  |       |  |             | 
|Reserves at operating mines |           |  |           |  |           |  |  |  |       |  |             | 
|Argyle (Australia)          |           |  |           |  |           |  |  |  |       |  |             | 
| AK1 pipe mine             | O/P + U/G |  | 89        |  | 2.2       |  |  |  | 100.0 |  | 192.3       | 
| AK1 pipe stockpiles (f)   | S/P       |  | 5.2       |  | 1.0       |  |  |  | 100.0 |  | 5.2         | 
|Diavik (Canada)             | O/P + U/G |  | 22        |  | 3.5       |  |  |  | 60.0  |  | 46.2        | 
|Murowa (Zimbabwe)           |           |  |           |  |           |  |  |  |       |  |             | 
| mine                      | O/P       |  | 21        |  | 0.7       |  |  |  | 77.8  |  | 11.5        | 
| stockpiles (f)            | S/P       |  | 0.2       |  | 0.5       |  |  |  | 77.8  |  | 0.1         | 
|                            |           |  |           |  |           |  |  |  |       |  |             | 
|Rio Tinto total             |           |  |           |  |           |  |  |  |       |  | 255.4       | 
|                            |           |  |           |  |           |  |  |  |       |  |             | 

|                                            |           |  |           |  |           |  |    |  |       |  |             | 
|------------------------------------------- | --------- |  | --------- |  | --------- |  | -- |  | ----- |  | ----------- | 
|                                            |           |  |           |  |           |  |    |  |       |  | Recoverable | 
|GOLD                                        |           |  |           |  |           |  |    |  |       |  | metal       | 
|                                            |           |  | millions  |  | grammes   |  |    |  |       |  | millions    | 
|                                            |           |  | of tonnes |  | per tonne |  |    |  |       |  | of ounces   | 
|                                            |           |  |           |  |           |  |    |  |       |  |             | 
|Reserves at operating mines                 |           |  |           |  |           |  |    |  |       |  |             | 
|Bingham Canyon (US)                         |           |  |           |  |           |  |    |  |       |  |             | 
| mine                                      | O/P       |  | 563       |  | 0.30      |  | 65 |  | 100.0 |  | 3.567       | 
| stockpiles (f)                            | S/P       |  | 49        |  | 0.18      |  | 65 |  | 100.0 |  | 0.183       | 
|Cortez/Pipeline (US) (r)                    |           |  |           |  |           |  |    |  |       |  |             | 
| mine                                      | O/P + U/G |  | 129       |  | 2.70      |  | 81 |  | 40.0  |  | 3.629       | 
| stockpiles (f)                            | S/P       |  | 1.6       |  | 4.47      |  | 86 |  | 40.0  |  | 0.080       | 
|Grasberg (Indonesia)                        | O/P + U/G |  | 2,712     |  | 0.90      |  | 69 |  | (o)   |  | 13.672      | 
|Greens Creek (US) (s)                       | U/G       |  | 7.7       |  | 3.68      |  | 68 |  | 70.3  |  | 0.437       | 
|Northparkes (Australia)                     |           |  |           |  |           |  |    |  |       |  |             | 
| mine                                      | U/G       |  | 47        |  | 0.40      |  | 73 |  | 80.0  |  | 0.357       | 
| stockpiles (f)                            | S/P       |  | 0.7       |  | 0.58      |  | 76 |  | 80.0  |  | 0.008       | 
|                                            |           |  |           |  |           |  |    |  |       |  |             | 
|Rio Tinto total reserves at operating mines |           |  |           |  |           |  |    |  |       |  | 21.932      | 
|                                            |           |  |           |  |           |  |    |  |       |  |             | 



|Rio Tinto 2007 Form 20-F | 34
|------------------------ | --

---



Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                                     | Type of |  | Total ore reserves at end 2007 |  | Average   |  |          |  |          | 
|------------------------------------ | ------- |  | ------------------------------ |  | --------- |  | -------- |  | -------- | 
|                                     | mine    |  |                                |  | mill      |  |          |  |          | 
|                                     | (b)     |  | Tonnage                        |  | Grade     |  | recovery |  | Interest | 
|                                     |         |  |                                |  |           |  | %        |  | %        | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|GOLD                                 |         |  |                                |  |           |  |          |  |          | 
|                                     |         |  | millions                       |  | grammes   |  |          |  |          | 
|                                     |         |  | of tonnes                      |  | per tonne |  |          |  |          | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|Undeveloped reserves(m)              |         |  |                                |  |           |  |          |  |          | 
|Oyo Tolgoi (Mongolia) (q)            | O/P     |  | 930                            |  | 0.36      |  | 71       |  | 9.9      | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|IRON ORE(c)                          |         |  |                                |  |           |  |          |  |          | 
|                                     |         |  | millions                       |  |           |  |          |  |          | 
|                                     |         |  | of tonnes                      |  | %Fe       |  |          |  |          | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|Reserves at operating mines          |         |  |                                |  |           |  |          |  |          | 
|and mines under construction         |         |  |                                |  |           |  |          |  |          | 
|Channar (Australia)                  |         |  |                                |  |           |  |          |  |          | 
| Brockman Ore                       | O/P     |  | 106                            |  | 63.4      |  |          |  | 60.0     | 
|Corumbá (Brazil)                     |         |  |                                |  |           |  |          |  |          | 
| mine                               | O/P     |  | 209                            |  | 67.0      |  |          |  | 100.0    | 
| stockpiles (f)                     | S/P     |  | 1                              |  | 66.3      |  |          |  | 100.0    | 
|Eastern Range (Australia)            |         |  |                                |  |           |  |          |  |          | 
| Brockman Ore (t)                   | O/P     |  | 111                            |  | 63.2      |  |          |  | 54.0     | 
|Hamersley (Australia)                |         |  |                                |  |           |  |          |  |          | 
| Brockman 2 (Brockman Ore)          | O/P     |  | 25                             |  | 62.7      |  |          |  | 100.0    | 
| Brockman 4 (Brockman Ore)          | O/P     |  | 570                            |  | 62.3      |  |          |  | 100.0    | 
| Marandoo (Marra Mamba Ore)         | O/P     |  | 50                             |  | 61.7      |  |          |  | 100.0    | 
| Mt Tom Price (Brockman Ore)        |         |  |                                |  |           |  |          |  |          | 
| mine                               | O/P     |  | 104                            |  | 64.4      |  |          |  | 100.0    | 
| stockpiles (f)                     | S/P     |  | 21                             |  | 64.5      |  |          |  | 100.0    | 
| Mt Tom Price (Marra Mamba Ore)     | O/P     |  | 33                             |  | 61.2      |  |          |  | 100.0    | 
| Paraburdoo (Brockman Ore) (u)      | O/P     |  | 28                             |  | 63.9      |  |          |  | 100.0    | 
| Paraburdoo (Marra Mamba Ore) (u)   | O/P     |  | 0.8                            |  | 63.3      |  |          |  | 100.0    | 
| Nammuldi (Marra Mamba Ore)         | O/P     |  | 30                             |  | 61.2      |  |          |  | 100.0    | 
| Yandicoogina (Pisolite Ore HG) (v) |         |  |                                |  |           |  |          |  |          | 
| mine                               | O/P     |  | 271                            |  | 58.7      |  |          |  | 100.0    | 
| stockpiles (f)                     | S/P     |  | 5                              |  | 58.5      |  |          |  | 100.0    | 
| Yandicoogina (Process Product)     |         |  |                                |  |           |  |          |  |          | 
| mine                               | O/P     |  | 119                            |  | 58.5      |  |          |  | 100.0    | 
|Hope Downs (Australia)               |         |  |                                |  |           |  |          |  |          | 
| Marra Mamba Ore                    | O/P     |  | 344                            |  | 61.4      |  |          |  | 50.0     | 
|Iron Ore Company of Canada (w)       |         |  |                                |  |           |  |          |  |          | 
|(Canada)                             | O/P     |  | 538                            |  | 65.0      |  |          |  | 58.7     | 
|Robe River (Australia)               |         |  |                                |  |           |  |          |  |          | 
| Pannawonica (Pisolite Ore)         |         |  |                                |  |           |  |          |  |          | 
| mine                               | O/P     |  | 288                            |  | 57.2      |  |          |  | 53.0     | 
| stockpiles (f)                     | S/P     |  | 16                             |  | 56.9      |  |          |  | 53.0     | 
| West Angelas (Marra Mamba Ore)     |         |  |                                |  |           |  |          |  |          | 
| mine                               | O/P     |  | 385                            |  | 61.8      |  |          |  | 53.0     | 
| stockpiles (f)                     | S/P     |  | 6                              |  | 59.3      |  |          |  | 53.0     | 
|                                     |         |  |                                |  |           |  |          |  |          | 
|Rio Tinto total                      |         |  |                                |  |           |  |          |  |          | 
|                                     |         |  |                                |  |           |  |          |  |          | 

|                           |     |  |           |  |      |  |    |  |      |  |             | 
|-------------------------- | --- |  | --------- |  | ---- |  | -- |  | ---- |  | ----------- | 
|                           |     |  |           |  |      |  |    |  |      |  | Recoverable | 
|LEAD                       |     |  |           |  |      |  |    |  |      |  | metal       | 
|                           |     |  | millions  |  |      |  |    |  |      |  | millions    | 
|                           |     |  | of tonnes |  | %Pb  |  |    |  |      |  | of tonnes   | 
|                           |     |  |           |  |      |  |    |  |      |  |             | 
|Reserves at operating mine |     |  |           |  |      |  |    |  |      |  |             | 
|Greens Creek (US) (s)      | U/G |  | 7.7       |  | 3.79 |  | 66 |  | 70.3 |  | 0.136       | 
|                           |     |  |           |  |      |  |    |  |      |  |             | 



|Rio Tinto 2007 Form 20-F | 35
|------------------------ | --

---



Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                           | Type of |  | Total ore reserves at
    end 2007 |  | Average |  |          |  |          | 
|-------------------------- | ------- |  | ---------------------------------- |  | ------- |  | -------- |  | -------- | 
|                           | mine    |  |                                    |  |         |  | mill     |  |          | 
|                           | (b)     |  | Tonnage                            |  | Grade   |  | recovery |  | Interest | 
|                           |         |  |                                    |  |         |  | %        |  | %        | 
|                           |         |  |                                    |  |         |  |          |  |          | 
|                           |         |  |                                    |  |         |  |          |  |          | 
|MOLYBDENUM                 |         |  |                                    |  |         |  |          |  |          | 
|                           |         |  | millions                           |  |         |  |          |  |          | 
|                           |         |  | of tonnes                          |  | %Mo     |  |          |  |          | 
|                           |         |  |                                    |  |         |  |          |  |          | 
|Reserves at operating mine |         |  |                                    |  |         |  |          |  |          | 
|Bingham Canyon (US) (x)    |         |  |                                    |  |         |  |          |  |          | 
| mine                     | O/P     |  | 563                                |  | 0.047   |  | 62       |  | 100.0    | 
| stockpiles (f)           | S/P     |  | 49                                 |  | 0.020   |  | 62       |  | 100.0    | 
|                           |         |  |                                    |  |         |  |          |  |          | 
|Rio Tinto total            |         |  |                                    |  |         |  |          |  |          | 
|                           |         |  |                                    |  |         |  |          |  |          | 

|                        |     |  |           |  |      |  |    |  |       |  |             | 
|----------------------- | --- |  | --------- |  | ---- |  | -- |  | ----- |  | ----------- | 
|                        |     |  |           |  |      |  |    |  |       |  | Recoverable | 
|NICKEL                  |     |  |           |  |      |  |    |  |       |  | metal       | 
|                        |     |  | millions  |  |      |  |    |  |       |  | millions    | 
|                        |     |  | of tonnes |  | %Ni  |  |    |  |       |  | of tonnes   | 
|                        |     |  |           |  |      |  |    |  |       |  |             | 
|Undeveloped reserves(m) |     |  |           |  |      |  |    |  |       |  |             | 
|Eagle (US) (p)          | U/G |  | 3.2       |  | 3.89 |  | 84 |  | 100.0 |  | 0.105       | 
|                        |     |  |           |  |      |  |    |  |       |  |             | 

|                            |           |  |           |  |           |  |    |  |       |  |             | 
|--------------------------- | --------- |  | --------- |  | --------- |  | -- |  | ----- |  | ----------- | 
|                            |           |  |           |  |           |  |    |  |       |  | Recoverable | 
|SILVER                      |           |  |           |  |           |  |    |  |       |  | metal       | 
|                            |           |  | millions  |  | grammes   |  |    |  |       |  | millions    | 
|                            |           |  | of tonnes |  | per tonne |  |    |  |       |  | of ounces   | 
|                            |           |  |           |  |           |  |    |  |       |  |             | 
|Reserves at operating mines |           |  |           |  |           |  |    |  |       |  |             | 
|Bingham Canyon (US)         |           |  |           |  |           |  |    |  |       |  |             | 
| mine                      | O/P       |  | 563       |  | 2.42      |  | 77 |  | 100.0 |  | 33.533      | 
| stockpiles (f)            | S/P       |  | 49        |  | 1.56      |  | 77 |  | 100.0 |  | 1.881       | 
|Grasberg (Indonesia)        | O/P + U/G |  | 2,712     |  | 4.11      |  | 68 |  | (o)   |  | 77.186      | 
|Greens Creek (US) (s)       | U/G       |  | 7.7       |  | 471       |  | 72 |  | 70.3  |  | 58.378      | 
|                            |           |  |           |  |           |  |    |  |       |  |             | 
|Rio Tinto total             |           |  |           |  |           |  |    |  |       |  | 170.978     | 
|                            |           |  |           |  |           |  |    |  |       |  |             | 

|                              |           |  |           |  |       |  |            | 
|----------------------------- | --------- |  | --------- |  | ----- |  | ---------- | 
|                              |           |  |           |  |       |  | Marketable | 
|TALC(e)                       |           |  |           |  |       |  | product    | 
|                              |           |  | millions  |  |       |  | millions   | 
|                              |           |  | of tonnes |  |       |  | of tonnes  | 
|                              |           |  |           |  |       |  |            | 
|Reserves at operating mines   |           |  |           |  |       |  |            | 
|Rio Tinto Minerals  talc (y) |           |  |           |  |       |  |            | 
|Europe/N America/Australia)   | O/P + U/G |  | 33.5      |  | 100.0 |  | 33.5       | 
|                              |           |  |           |  |       |  |            | 

|                                            |     |  |           |  |       |  |            | 
|------------------------------------------- | --- |  | --------- |  | ----- |  | ---------- | 
|                                            |     |  |           |  |       |  | Marketable | 
|TITANIUM DIOXIDE                            |     |  |           |  |       |  | product    | 
|FEEDSTOCK(e)                                |     |  | millions  |  |       |  | millions   | 
|                                            |     |  | of tonnes |  |       |  | of tonnes  | 
|                                            |     |  |           |  |       |  |            | 
|Reserves at operating mines                 |     |  |           |  |       |  |            | 
|QIT (Canada)                                | O/P |  | 53.5      |  | 100.0 |  | 53.5       | 
|RBM (South Africa)                          | D/O |  | 24.2      |  | 50.0  |  | 12.1       | 
|                                            |     |  |           |  |       |  |            | 
|Rio Tinto total reserves at operating mines |     |  |           |  |       |  | 65.5       | 
|                                            |     |  |           |  |       |  |            | 
|Undeveloped reserves (m)                    |     |  |           |  |       |  |            | 
|QMM (Madagascar)                            | D/O |  | 12.4      |  | 80.0  |  | 9.9        | 
|                                            |     |  |           |  |       |  |            | 



|Rio Tinto 2007 Form 20-F | 36
|------------------------ | --

---



Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                              |         |  | Total ore reserves |  |         |  |          |  |          | 
|----------------------------- | ------- |  | ------------------ |  | ------- |  | -------- |  | -------- | 
|                              | Type of |  | at end 2007        |  | Average |  |          |  |          | 
|                              | mine    |  |                    |  |         |  | mill     |  |          | 
|                              | (b)     |  | Tonnage            |  | Grade   |  | recovery |  | Interest | 
|                              |         |  |                    |  |         |  | %        |  | %        | 
|                              |         |  |                    |  |         |  |          |  |          | 
|                              |         |  |                    |  |         |  |          |  |          | 
|URANIUM                       |         |  |                    |  |         |  |          |  |          | 
|                              |         |  | millions           |  |         |  |          |  |          | 
|                              |         |  | of tonnes          |  | %U308   |  |          |  |          | 
|Reserves at operating mines   |         |  |                    |  |         |  |          |  |          | 
|Energy Resources of Australia |         |  |                    |  |         |  |          |  |          | 
|(Australia)                   |         |  |                    |  |         |  |          |  |          | 
|– Ranger #3 mine              | O/P     |  | 11.8               |  | 0.220   |  | 88.5     |  | 68.4     | 
|– Ranger #3 stockpiles (f)    | S/P     |  | 20.3               |  | 0.107   |  | 86.0     |  | 68.4     | 
|Rössing (Namibia) (z)         |         |  |                    |  |         |  |          |  |          | 
|– mine                        | O/P     |  | 148.4              |  | 0.037   |  | 85       |  | 68.6     | 
|– stockpiles (f)              | S/P     |  | 1.8                |  | 0.038   |  | 85       |  | 68.6     | 
|                              |         |  |                    |  |         |  |          |  |          | 
|Rio Tinto total               |         |  |                    |  |         |  |          |  |          | 
|                              |         |  |                    |  |         |  |          |  |          | 
|                              |         |  |                    |  |         |  |          |  |          | 

|                           |     |  |           |  |       |  |    |  |      |  | Recoverable | 
|-------------------------- | --- |  | --------- |  | ----- |  | -- |  | ---- |  | ----------- | 
|ZINC                       |     |  |           |  |       |  |    |  |      |  | metal       | 
|                           |     |  | millions  |  |       |  |    |  |      |  | millions    | 
|                           |     |  | of tonnes |  | %Zn   |  |    |  |      |  | of tonnes   | 
|Reserves at operating mine |     |  |           |  |       |  |    |  |      |  |             | 
|Greens Creek (US) (s)      | U/G |  | 7.7       |  | 10.18 |  | 76 |  | 70.3 |  | 0.419       | 
|                           |     |  |           |  |       |  |    |  |      |  |             | 



|Rio Tinto 2007 Form 20-F | 37
|------------------------ | --

---



Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                                    | Type of |  | Proven ore reservesat
    end 2007 |  | Probable
    ore reservesat end 2007 | 
|----------------------------------- | ------- |  | ---------------------------------- |  | ------------------------------------ | 
|                                    | mine    |  |                                    |  |                                      | 
|                                    | (b)     |  | Tonnage                            |  | Grade                                | 
|                                    |         |  |                                    |  |                                      | 
|                                    |         |  |                                    |  |                                      | 
|BAUXITE(c)                          |         |  | millions                           |  |                                      | 
|                                    |         |  | of tonnes                          |  | %Al2O3                               | 
|Reserves at operating mine          |         |  |                                    |  |                                      | 
|Gove (Australia) (d)                | O/P     |  | 78                                 |  | 49.4                                 | 
|                                    |         |  |                                    |  |                                      | 
|Porto Trombetas (Brazil) (d)        | O/P     |  | 149                                |  | 51.3                                 | 
|Weipa (Australia) (d)               | O/P     |  | 149                                |  | 53.2                                 | 
|                                    |         |  |                                    |  |                                      | 
|                                    |         |  |                                    |  |                                      | 
|BORATES(e)                          |         |  | millions                           |  |                                      | 
|                                    |         |  | of tonnes                          |  |                                      | 
|Reserves at operating mine          |         |  |                                    |  |                                      | 
|Rio Tinto Minerals - Boron (US) (j) |         |  |                                    |  |                                      | 
|– mine                              | O/P     |  | 14.3                               |  |                                      | 
|– stockpiles (f)                    | S/P     |  | 0.1                                |  |                                      | 
|                                    |         |  |                                    |  |                                      | 
|                                    |         |  |                                    |  |                                      | 

|                                     |     |  |             |  |            |  | Marketable Reserves | 
|------------------------------------ | --- |  | ----------- |  | ---------- |  | ------------------- | 
|                                     |     |  | Recoverable |  | % Yield to |  |                     | 
|                                     |     |  | reserves    |  | give       |  | Proven              | 
|                                     |     |  | total       |  | marketable |  |                     | 
|                                     |     |  |             |  | reserves   |  |                     | 
|COAL(g)                              |     |  | millions    |  |            |  | millions            | 
|                                     |     |  | of tonnes   |  |            |  | of tonnes           | 
|Reserves at operating mines          |     |  |             |  |            |  |                     | 
|Rio Tinto Energy America             |     |  |             |  |            |  |                     | 
|Antelope (US)                        | O/C |  | 325         |  | 100        |  | 325                 | 
|Colowyo (US) (j)                     | O/C |  | 9           |  | 100        |  | 9                   | 
|Cordero Rojo (US)                    | O/C |  | 241         |  | 100        |  | 241                 | 
|Decker (US)                          | O/C |  | 12          |  | 100        |  | 12                  | 
|Jacobs Ranch (US)                    | O/C |  | 383         |  | 100        |  | 379                 | 
|Spring Creek (US) (k)                | O/C |  | 295         |  | 100        |  | 295                 | 
|Rio Tinto Coal Australia             |     |  |             |  |            |  |                     | 
|Bengalla (Australia)                 | O/C |  | 182         |  | 75         |  | 75                  | 
|Blair Athol (Australia)              | O/C |  | 42          |  | 89         |  | 37                  | 
|Hail Creek (Australia)               | O/C |  | 258         |  | 67         |  | 100                 | 
|Hunter Valley Operations (Australia) | O/C |  | 440         |  | 68         |  | 235                 | 
|Kestrel (Australia) (l)              | U/G |  | 163         |  | 83         |  | 53                  | 
|Mount Thorley Operations (Australia) | O/C |  | 36          |  | 66         |  | 21                  | 
|Warkworth (Australia)                | O/C |  | 379         |  | 64         |  | 142                 | 
|Undeveloped reserves(m)              |     |  |             |  |            |  |                     | 
|Rio Tinto Coal Australia             |     |  |             |  |            |  |                     | 
|Clermont (Australia)                 | O/C |  | 197         |  | 96         |  | 185                 | 
|Mount Pleasant (Australia)           | O/C |  | 459         |  | 76         |  |                     | 
|                                     |     |  |             |  |            |  |                     | 



|Rio Tinto 2007 Form 20-F | 38
|------------------------ | --

---



Back to Contents

ORE RESERVES (under Industry Guide 7) (continued)

|                                | Type of   |  | Proven ore reservesat
    end 2007 |  | Probable ore reservesat
    end 2007 | 
|------------------------------- | --------- |  | ---------------------------------- |  | ------------------------------------ | 
|                                | mine      |  |                                    |  |                                      | 
|                                | (b)       |  | Tonnage                            |  | Grade                                | 
|                                |           |  |                                    |  |                                      | 
|                                |           |  |                                    |  |                                      | 
|COPPER                          |           |  | millions                           |  |                                      | 
|                                |           |  | of tonnes                          |  | %Cu                                  | 
|Reserves at operating mines     |           |  |                                    |  |                                      | 
|Bingham Canyon (US)             |           |  |                                    |  |                                      | 
|– mine                          | O/P       |  | 318                                |  | 0.57                                 | 
|– stockpiles (f)                | S/P       |  | 19                                 |  | 0.32                                 | 
|Escondida (Chile) (n)           |           |  |                                    |  |                                      | 
|– sulphide mine                 | O/P       |  | 612                                |  | 1.24                                 | 
|– sulphide leach mine           | O/P       |  | 514                                |  | 0.51                                 | 
|– oxide mine                    | O/P       |  |                                    |  |                                      | 
|– sulphide stockpiles (f)       | S/P       |  | 14                                 |  | 1.24                                 | 
|– sulphide leach stockpiles (f) | S/P       |  | 182                                |  | 0.75                                 | 
|– oxide stockpiles (f)          | S/P       |  | 112                                |  | 0.78                                 | 
|Grasberg (Indonesia)            | O/P + U/G |  | 771                                |  | 1.10                                 | 
|Northparkes (Australia)         |           |  |                                    |  |                                      | 
|– mine                          | U/G       |  |                                    |  |                                      | 
|– stockpiles (f)                | S/P       |  | 0.7                                |  | 0.69                                 | 
|Palabora (South Africa)         | U/G       |  | 104                                |  | 0.62                                 | 
|Undeveloped reserves (m)        |           |  |                                    |  |                                      | 
|Eagle (US) (p)                  | U/G       |  |                                    |  |                                      | 
|Oyo Tolgoi (Mongolia) (q)       | O/P       |  | 127                                |  | 0.58                                 | 
|                                |           |  |                                    |  |                                      | 
|                                |           |  |                                    |  |                                      | 
|DIAMONDS(c)                     |           |  | millions                           |  | carats                               | 
|                                |           |  | of tonnes                          |  | per tonne                            | 
|Reserves at operating mines     |           |  |                                    |  |                                      | 
|Argyle (Australia)              |           |  |                                    |  |                                      | 
|– AK1 pipe mine                 | O/P + U/G |  | 19                                 |  | 1.2                                  | 
|– AK1 pipe stockpiles (f)       | S/P       |  | 0.4                                |  | 2.6                                  | 
|Diavik (Canada)                 | O/P + U/G |  | 9.0                                |  | 3.4                                  | 
|Murowa (Zimbabwe)               |           |  |                                    |  |                                      | 
|– mine                          | O/P       |  |                                    |  |                                      | 
|– stockpiles (f)                | S/P       |  |                                    |  |                                      | 
|                                |           |  |                                    |  |                                      | 
|                                |           |  |                                    |  |                                      | 
|GOLD                            |           |  | millions                           |  | grammes                              | 
|                                |           |  | of tonnes                          |  | per tonne                            | 
|Reserves at operating mines     |           |  |                                    |  |                                      | 
|Bingham Canyon (US)             |           |  |                                    |  |                                      | 
|– mine                          | O/P       |  | 318                                |  | 0.33                                 | 
|– stockpiles (f)                | S/P       |  | 19                                 |  | 0.18                                 | 
|Cortez/Pipeline (US) (r)        |           |  |                                    |  |                                      | 
|– mine                          | O/P + U/G |  | 12                                 |  | 4.34                                 | 
|– stockpiles (f)                | S/P       |  | 1.6                                |  | 4.47                                 | 
|Grasberg (Indonesia)            | O/P + U/G |  | 771                                |  | 1.09                                 | 
|Greens Creek (US) (s)           | U/G       |  |                                    |  |                                      | 
|Northparkes (Australia)         |           |  |                                    |  |                                      | 
|– mine                          | U/G       |  |                                    |  |                                      | 
|– stockpiles (f)                | S/P       |  | 0.7                                |  | 0.58                                 | 
|Undeveloped reserves (m)        |           |  |                                    |  |                                      | 
|Oyo Tolgoi (Mongolia) (q)       | O/P       |  | 127                                |  | 0.93                                 | 
|                                |           |  |                                    |  |                                      | 



|Rio Tinto 2007 Form 20-F | 39
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ORE RESERVES (under Industry Guide 7) (continued)

|                                  |        |  | Proven
    ore reserves |  | Probable
    ore reserves | 
|--------------------------------- | ------ |  | ----------------------- |  | ------------------------- | 
|                                  | Typeof |  | at
    end 2007         |  | at
    end 2007           | 
|                                  | mine   |  |                         |  |                           | 
|                                  | (b)    |  | Tonnage                 |  | Grade                     | 
|                                  |        |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 
|IRON ORE(c)                       |        |  | millions                |  |                           | 
|                                  |        |  | of tonnes               |  | %Fe                       | 
|Reserves at operating mines       |        |  |                         |  |                           | 
|and mines under construction      |        |  |                         |  |                           | 
|Channar (Australia)               |        |  |                         |  |                           | 
|– Brockman Ore                    | O/P    |  | 89                      |  | 63.4                      | 
|Corumbá (Brazil)                  |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 102                     |  | 66.9                      | 
|–stockpiles (f)                   | S/P    |  | 1                       |  | 66.3                      | 
|Eastern Range (Australia)         |        |  |                         |  |                           | 
|–Brockman Ore (t)                 | O/P    |  | 81                      |  | 63.2                      | 
|Hamersley (Australia)             |        |  |                         |  |                           | 
|–Brockman 2 (Brockman Ore)        | O/P    |  | 18                      |  | 62.7                      | 
|–Brockman 4 (Brockman Ore)        | O/P    |  | 336                     |  | 62.4                      | 
|–Marandoo (Marra Mamba Ore)       | O/P    |  | 48                      |  | 61.7                      | 
|–Mt Tom Price (Brockman Ore)      |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 59                      |  | 64.2                      | 
|–stockpiles (f)                   | S/P    |  |                         |  |                           | 
|- Mt Tom Price (Marra Mamba Ore)  | O/P    |  |                         |  |                           | 
|–Paraburdoo (Brockman Ore) (u)    | O/P    |  | 23                      |  | 64.0                      | 
|–Paraburdoo (Marra Mamba Ore) (u) | O/P    |  |                         |  |                           | 
|–Nammuldi (Marra Mamba Ore)       | O/P    |  | 25                      |  | 61.5                      | 
|–Yandicoogina (Pisolite Ore HG)   |        |  |                         |  |                           | 
|(v)                               |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 271                     |  | 58.7                      | 
|–stockpiles (f)                   | S/P    |  |                         |  |                           | 
|–Yandicoogina (Process Product)   |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 119                     |  | 58.5                      | 
|Hope Downs (Australia)            |        |  |                         |  |                           | 
|–Marra Mamba Ore                  | O/P    |  | 32                      |  | 61.9                      | 
|Iron Ore Company of Canada (w)    |        |  |                         |  |                           | 
|(Canada)                          | O/P    |  | 406                     |  | 65.0                      | 
|Robe River (Australia)            |        |  |                         |  |                           | 
|–Pannawonica (Pisolite Ore)       |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 262                     |  | 57.3                      | 
|–stockpiles (f)                   | S/P    |  | 2                       |  | 57.0                      | 
|–West Angelas (Marra Mamba Ore)   |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 196                     |  | 62.1                      | 
|–stockpiles (f)                   | S/P    |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 
|LEAD                              |        |  | millions                |  |                           | 
|                                  |        |  | of tonnes               |  | %Pb                       | 
|Reserves at operating mine        |        |  |                         |  |                           | 
|Greens Creek (US) (s)             | U/G    |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 
|MOLYBDENUM                        |        |  | millions                |  |                           | 
|                                  |        |  | of tonnes               |  | %Mo                       | 
|Reserves at operating mine        |        |  |                         |  |                           | 
|Bingham Canyon (US) (x)           |        |  |                         |  |                           | 
|–mine                             | O/P    |  | 318                     |  | 0.049                     | 
|–stockpiles (f)                   | S/P    |  | 19                      |  | 0.022                     | 
|                                  |        |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 
|NICKEL                            |        |  | millions                |  |                           | 
|                                  |        |  | of tonnes               |  | %Ni                       | 
|Undeveloped reserves (m)          |        |  |                         |  |                           | 
|Eagle (US) (p)                    | U/G    |  |                         |  |                           | 
|                                  |        |  |                         |  |                           | 



|Rio Tinto 2007 Form 20-F | 40
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ORE RESERVES (under Industry Guide 7) (continued)

|                              |           |  | Proven ore reserves |  | Probable ore reserves | 
|----------------------------- | --------- |  | ------------------- |  | --------------------- | 
|                              | Type of   |  | at end 2007         |  | at end 2007           | 
|                              | mine      |  |                     |  |                       | 
|                              | (b)       |  | Tonnage             |  | Grade                 | 
|                              |           |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|SILVER                        |           |  | millions            |  | grammes               | 
|                              |           |  | of tonnes           |  | per tonne             | 
|Reserves at operating mines   |           |  |                     |  |                       | 
|Bingham Canyon (US)           |           |  |                     |  |                       | 
|– mine                        | O/P       |  | 318                 |  | 2.59                  | 
|–stockpiles (f)               | S/P       |  | 19                  |  | 1.51                  | 
|Grasberg (Indonesia)          | O/P + U/G |  | 771                 |  | 4.31                  | 
|Greens Creek (US) (s)         | U/G       |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|TALC(e)                       |           |  | millions            |  |                       | 
|                              |           |  | of tonnes           |  |                       | 
|Reserves at operating mines   |           |  |                     |  |                       | 
|Rio Tinto Minerals - talc (y) | O/P + U/G |  | 25.7                |  |                       | 
|(Europe/N.America/Australia)  |           |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|TITANIUM DIOXIDE              |           |  | millions            |  |                       | 
|FEEDSTOCK(e)                  |           |  | of tonnes           |  |                       | 
|Reserves at operating mines   |           |  |                     |  |                       | 
|QIT (Canada) (w)              | O/P       |  | 30.0                |  |                       | 
|RBM (South Africa)            | D/O       |  | 5.6                 |  |                       | 
|Undeveloped reserves (m)      |           |  |                     |  |                       | 
|QMM (Madagascar)              | D/O       |  | 12.0                |  |                       | 
|                              |           |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|URANIUM                       |           |  | millions            |  |                       | 
|                              |           |  | of tonnes           |  | %U308                 | 
|Reserves at operating mines   |           |  |                     |  |                       | 
|Energy Resources of Australia |           |  |                     |  |                       | 
|(Australia)                   |           |  |                     |  |                       | 
|–Ranger #3 mine               | O/P       |  | 4.8                 |  | 0.224                 | 
|–Ranger #3 stockpiles (f)     | S/P       |  | 20.3                |  | 0.107                 | 
|Rössing (Namibia) (z)         |           |  |                     |  |                       | 
|–mine                         | O/P       |  | 17.8                |  | 0.051                 | 
|–stockpiles (f)               | S/P       |  | 1.8                 |  | 0.038                 | 
|                              |           |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 
|ZINC                          |           |  | millions            |  |                       | 
|                              |           |  | of tonnes           |  | %Zn                   | 
|Reserves at operating mine    |           |  |                     |  |                       | 
|Greens Creek (US) (s)         | U/G       |  |                     |  |                       | 
|                              |           |  |                     |  |                       | 



|Rio Tinto 2007 Form 20-F | 41
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ORE RESERVES (under Industry Guide 7) (continued)

|Notes
|-----
|(a)  
|     

|Ore reserves                     | Unit   |  | US$  | 
|-------------------------------- | ------ |  | ---- | 
|                                 |        |  |      | 
|Aluminium                        | pound  |  | 1.02 | 
|Copper                           | pound  |  | 2.31 | 
|Gold                             | ounce  |  | 529  | 
|Iron ore                         |        |  |      | 
|Australian benchmark
    (fines) | dmtu** |  | 0.61 | 
|Atlantic benchmark
    (fines)   | dmtu** |  | 0.64 | 
|Lead                             | pound  |  | 0.56 | 
|Molybdenum                       | pound  |  | 27   | 
|Silver                           | ounce  |  | 9.66 | 
|Zinc                             | pound  |  | 1.05 | 

|                              
|------------------------------
|* = non managed operations    
|** = dry metric
    tonne unit
|                              
|                              
|(b)                           
|(c)                           
|(d)                           
|(e)                           
|(f)                           
|(g)                           
|(h)                           
|(i)                           
|(j)                           
|(k)                           
|(l)                           
|(m)                           
|(n)                           
|(o)                           
|(p)                           
|(q)                           
|(r)                           
|(s)                           
|(t)                           
|(u)                           
|(v)                           
|(w)                           
|(x)                           
|(y)                           
|(z)                           
|(aa)                          



|Rio Tinto 2007 Form 20-F | 42
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LOCATION OF GROUP OPERATIONS

NoteWholly owned unless stated otherwise



|Rio Tinto 2007 Form 20-F | 43
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LOCATION OF GROUP OPERATIONS (continued)

AluminiumOperating assets
	US$43,846 millionSales revenue
	US$7,309millionUnderlying earnings
	US$1,097million Rio Tintos Aluminium product group is the wholly owned, integrated aluminium
  subsidiary, Rio Tinto Alcan, which owns and manages operations predominately
  located in Canada and Australia, with other significant interests in the UK,
  France, New Zealand, Brazil, Guinea, China, Iceland, Ghana, Norway and the
  US. The group is currently organised into four business units  Bauxite & Alumina,
  Primary Metal, Engineered Products and Packaging. Rio Tinto announced in 2007
  the intention to divest both the Engineered Products and Packaging business
  units.
Sites relating to these businesses are not shown. AluminiumOperating sites1
	Alma20
	Alouette (40%)7
	Alucam (Edea) (47%)2
	Anglesey Aluminium (51%)1
	Arvida9
	Awaso (80%)1
	Beauharnois1
	Becancour (25%)3
	Bell Bay4
	Boyne Island (59%)5
	CBG Sangaredi (23%)6
	Dunkerque8
	Gardanne10
	Gove alumina refinery11
	Gove bauxite mine1
	Grande-Baie12
	ISAL1
	Jonquiere13
	Kitimat1
	Laterriere14
	Lochaber15
	Lynemouth17
	Ningxia (50%)16
	Porto Trombetas (MRN) (12%)4
	Queensland Alumina Limited (80%)18
	Sao Luis (Alumar) (10%)19
	Sebree1
	Shawinigan21
	SORAL (50%)22
	St-Jean-de-Maurienne23
	Tiwai Point (79%)24
	Tomago (52%)25
	Weipa4
	Yarwun


CopperOperating assets
    US$4,118millionSales revenue
    US$8,501millionUnderlying earnings
    US$3,479million The Copper group comprises Kennecott Utah Copper
    and Kennecott Minerals in the US, and interests in the copper mines of Escondida
    in Chile, Grasberg in Indonesia, Northparkes in Australia, Palabora in South
    Africa. Projects under evaluation include the Resolution, Pebble and Eagle
    projects in the US, Oyu Tolgoi in Mongolia, La Granja in Peru and Sulawesi
  in Indonesia.  Copper and goldOperating sites26
	Bougainville (not operating) (54%)27
	Cortez/Pipeline (40% - sale completed on 5 March 2008)28
	Escondida (30%)29
	Grasberg joint venture (40%)30
	Kennecott Utah Copper31
	Northparkes (80%)32
	Palabora (58%)33
	Rawhide (51%)Projects34
	La Granja35
	Oyu Tolgoi (10%)36
	Pebble (10%)37
	Resolution (55%)NickelProjects38
	Eagle39
	SulawesiZinc, lead, silverOperating sites40
	Greens Creek (70% - sale agreed during February 2008)




|Rio Tinto 2007 Form 20-F | 44
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LOCATION OF GROUP OPERATIONS (continued)

Diamonds and Industrial MineralsOperating assets
	US$4,632millionSales revenue
	US$3,921millionUnderlying earnings
	US$488million The Diamond and Industrial Minerals group comprises Rio Tintos diamond
  interests in the Diavik mine in Canada, the Argyle mine in Australia, and the
  Murowa mine in Zimbabwe, served by diamond sales offices in Belgium and India.
  Rio Tintos industrial minerals businesses comprise Rio Tinto Minerals,
  made up of borate and talc operations in the US, South America, Europe and
  Australia, and salt in Australia, as well as Rio Tinto Iron & Titanium
  interests in North America, South Africa and Madagascar. DiamondsOperating sites41
	Argyle42
	Diavik (60%)43
	Murowa (78%)BoratesOperating sites44
	Boron45
	Coudekerque Plant46
	Tincalayu47
	Wilmington PlantPotashProjects48
	Rio Colorado PotashSaltOperating sites49
	Dampier (68%)50
	Lake MacLeod (68%)49
	Port Hedland (68%)TalcOperating sites (only major sites are shown)51
	Ludlow52
	Talc de Luzenac53
	Three Springs54
	YellowstoneTitanium dioxide feedstockOperating sites55
	QIT-Fer et Titane Lac Allard56
	QIT-Fer et Titane Sorel Plant57
	Richards Bay Minerals (50%)Projects58
	QIT Madagascar Minerals (80%)


EnergyOperating assets
	US$3,399millionSales revenue
	US$4,621millionUnderlying earnings
	US$484million The Energy group is represented in coal by Rio Tinto Coal Australia and Coal & Allied
  in Australia and by Rio Tinto Energy America in the US. It also includes uranium
  interests in Energy Resources of Australia and
the Rössing Uranium mine in Namibia.  CoalOperating sites59
	Antelope60
	Bengalla (30%)61
	Blair Athol (71%)62
	Colowyo (20%)59
	Cordero Rojo63
	Decker (50%)61
	Hail Creek (82%)64
	Hunter Valley Operations (76%)59
	Jacobs Ranch65
	Kestrel (80%)64
	Mt Thorley Operations (61%)63
	Spring Creek66
	Warkworth (42%)Projects61
	Clermont (50%)60
	Mt Pleasant (76%)UraniumOperating sites67
	ERA (68%)68
	Rössing (69%)Projects69
	Kintyre70
	Sweetwater




|Rio Tinto 2007 Form 20-F | 45
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LOCATION OF GROUP OPERATIONS (continued)



Iron OreOperating assets
	US$9,038millionSales revenue
	US$8,799millionUnderlying earnings
	US$2,651million The Iron Ore groups interests comprise Hamersley Iron and Robe River in
Australia, Iron Ore Company of Canada, the Corumbá mine in Brazil and
the Simandou, Guinea, and Orissa, India, projects. The group includes
the HIsmelt® direct iron making plant in Australia. Iron oreOperating sites71
	
	Corumbá72
	
	Hamersley Iron mines:Brockman Channar (60%)Eastern Range (54%)Hope Downs (50% joint venture)MarandooMt Tom PriceNammuldiParaburdooYandicoogina73
	
	HIsmelt®(60%)74
	
	Iron Ore Company of Canada (59%)72
	
	Robe River mines: (53%)PannawonicaWest AngelasProjects75
	
	IOC Pellet Plant (59%)76
	
	Orissa (51%)77
	
	Simandou (95%)


Exploration The Exploration group is organised into five geographically based teams in
  North America, South America, Australasia, Asia and Africa/Europe and a sixth
  project generation team that searches the world for new opportunities and provides
  specialised geological, geophysical and commercial expertise to the regional
  teams. The Asia team was formed in 2006, reflecting a significant expansion
  in exploration effort in Russia, Mongolia and the Former Soviet
Union. Technology and Innovation Technology and Innovation, previously Operational
    and Technical Excellence, has bases in Australia, Canada, the UK and the
    US. Its role is to identify and promote best operational technology practice
    across the Group and to pursue step change innovation of strategic importance
  to orebodies of the future.




|Rio Tinto 2007 Form 20-F | 46
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|Item
    4A. | Unresolved Staff Comments
|------------ | -------------------------

As far as Rio Tinto is aware there are no unresolved written comments from
  the SEC staff regarding its periodic reports under the Exchange Act received
more than 180 days before 31 December 2007.

|Item 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------

This Item contains forward looking statements and attention
is drawn to the Cautionary statement on page 7.

|This Item includes a discussion
          of the main factors affecting the Groups Profit for the
          year, as measured in accordance with International Financial
          Reporting Standards (IFRS). In monitoring its financial
          performance, the Group also focuses on that part of the Profit for
          the year attributable to equity shareholders of Rio Tinto, which is
          referred to as Net earnings, and on an additional measure
          called Underlying earnings. The latter measure, which is
          also based on the amounts attributable to Rio Tinto shareholders, is
          reported to provide greater understanding of the underlying business
          performance of Rio Tinto operations. This measure is used by management
          to track the performance of the Group on a monthly basis. The earnings
          of the Groups product groups as reviewed by management exclude
          amounts that are outside the scope of underlying earnings. Net earnings
          and underlying earnings have been reconciled on page 53 and the exclusions
          in arriving at underlying earnings have been analysed on page 55. Segmental information is provided in note 50 to the 2007 Financial statements.
     In this report, the sales revenue
of the parent companies and their subsidiaries is referred to as Consolidated
sales revenue. Rio Tinto also reports a sales revenue measure that includes
its share of jointly controlled entities and associates, which is referred to
as Gross sales revenue. This latter measure is considered informative
because a significant part of the Group's business is conducted through operations
that are subject to equity accounting.     This Item is comprised of the
following:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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Chairmans statement

2007 was another record year for Rio Tinto characterised by continuing
  strong demand and prices for our metals and minerals, a change in chief executive
  and the transformational acquisition of Alcan. Once again Rio
  Tintos consistent strategy, focused on value creation and business excellence,
  delivered significant returns for our shareholders and major benefits to the
  countries and communities in which we operate.
     The purchase of Alcan, announced in
  July and completed in October created a world leader in aluminium. Alongside
  this major acquisition we continued to invest heavily in our existing business
  with a programme totalling US$5.0 billion, further strengthening our platform for future production and earnings growth. The Alcan acquisition, and the many other initiatives which the new executive team launched in 2007, further
  demonstrated the strength and depth of Rio Tintos managerial capability
  to deliver value to shareholders.

Results and dividendsThe Groups underlying earnings in 2007 were a record US$7,443 million, one per cent above 2006. Net earnings were US$7,312 million compared with US$7,438 million in 2006. Cash flow from operations
increased 15 per cent to a record US$12,569 million.
     The total dividends declared for 2007 of 136 US cents per share represent an increase of 31 per cent over the 2006 dividends. We have committed to further increases in the dividends of at
least 20 per cent in each of 2008 and 2009. This underpins our confidence in the growth of our business and is a strong signal of our belief in the strength of future demand and prices. We have always said that our priority for excess capital after
meeting our investment in profitable growth is the ordinary dividend, and we are pleased to reinforce this commitment to our shareholders.
     Our growth potential is further evidenced
by our planned capital expenditure in 2008 and 2009 of US$9 billion in each year, including the commitments we have made to completing Rio
Tinto Alcans growth projects. This indicative programme will, of course,
be subject to rigorous appraisal of each investment.

StrategyOur acquisition of Alcan was fully consistent with our long standing
strategy. We remain focused on large, long life, low cost resources capable of
delivering superior returns across the economic cycle. Alcans
extensive global asset base has among the lowest cost aluminium smelters in the
world and is an industry leader in production technology and self generated energy,
particularly hydro-electricity. This will be important in a carbon constrained
world.



|Rio Tinto 2007 Form 20-F | 47
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Creating value for shareholders
    is Rio Tintos primary objective and the addition of Alcan enables us
    to capture value from growing aluminium demand alongside our established
    leadership positions
in iron ore and copper.

Sustainable developmentA successful business is one that is sustainable. It is one that
  maintains long term profitability by pursuing value creating projects which
  recognise the importance of good social and environmental outcomes. Moreover,
  I believe making our business sustainable is about recognising and managing
  the full spectrum of risk, thereby making the best opportunities available
  to us.
     The value of this approach was demonstrated
in the agreed transaction to acquire Alcan. Our positive reputation for social
and environmental responsibility was welcomed by the Alcan board and led to the
Government of Quebec readily agreeing to Rio Tinto continuing Alcans commitments
to social and economic development in Quebec.
     For our part we recognised the strategic
advantage of expanding our position in aluminium, a recyclable metal which, in
the case of Rio Tinto Alcan, is produced with a high proportion of hydro-generated
electricity.
     Our joint venture with BP to seek
cleaner uses of coal through production of hydrogen energy coupled with storage
of carbon dioxide underground reflects similar thinking. Our reputation supports
our position as the developer of choice in Guinea where we are investing to develop
a major iron ore project.
     We were accepted into the FTSE4Goodindex
in the UK after its policy committee decided to include companies involved in
the production of uranium. Rio Tinto has maintained membership of the Dow
Jones Sustainability Worldindex since its inception in 1999 and has been
an active member of the World Business Council for Sustainable Development and
the International Council on Mining and Metals (ICMM), whose members are committed
to superior business practices in sustainable development.

Board and management developmentsAs you know, Tom Albanese succeeded Leigh Clifford as chief executive
  in May 2007. We thank Leigh for his many years of service to Rio Tinto, and
  its predecessor companies, including the last seven as chief executive. He
  contributed much to creating Rio Tintos platform for the future and we
  owe him a lot. As his successor, Tom has a long and proven track record in
  Rio Tinto and has made a very strong start in his first year as chief executive.
     Following the acquisition of Alcan
we were pleased to welcome Yves Fortier and Paul Tellier to the board as non
executive directors, and Dick Evans, chief exective of Rio Tinto Alcan, as an
executive director.
     Yves joins the Nominations committeeand
the Committee on social and environmental accountability. Paul joins the Audit
committeeand the Remuneration committee. This strong representation
from Canada will provide important continuity in the integration of Alcan and
brings valuable new perspectives to the board.
     As announced at the 2007 annual general
meetings, Sir Richard Sykes, currently the senior non executive director, will
retire at the conclusion of the 2008 annual general meetings after ten years
on the board. Richard has made a highly valued contribution to Rio Tinto over
the period based on his prior experience of leading a major global company and
across the technology field. We thank him for that. Andrew Gould, currently chairman
of the Audit committee, will become the senior non executive director
on Sir Richards retirement and will become chairman of the Remuneration
committee. Sir David Clementi will replace Andrew as chairman of the Audit
committee. These changes will take effect at the conclusion of the 2008 annual
general meetings.
     Ill health led to the resignation
of Ashton Calvert from the board in November and we were deeply saddened to hear
of his death shortly afterwards. Ashton joined the board in 2005 following a
long and distinguished career in the Australian foreign service. He made a major
contribution to Rio Tinto and provided valuable insights across a range of major
strategic issues, notably in relation to our businesses in Australia and Asia.
He was a wonderful colleague.

Forward outlookWe are seeing a dramatic change in the worlds centres of
  economic power, with rapid growth, urbanisation and industrialisation in many
  parts of the developing world. We expect a large part of the worlds population  billions
  of people  to move through increasingly metal intensive phases of economic
  development. This will transform our industry and underpin future growth in
  markets.
     Commodity markets appear to be entering
the fifth straight year of growth with mineral and metal prices at levels well
above their long term average. Projections for Rio Tintos main product
groups  iron ore, aluminium and copper  suggest that demand could
potentially triple over the next 25 years.
     While it is premature to say that
the current price cycle has peaked, we are mindful of short term risks associated
with the expected slowdown in the US economy. However, the US is now somewhat
less important in world commodity demand than it was five years ago. Our analysis
suggests a sharp slowdown in the US would have only a modest impact on growth
in China and India.
     In the short term, with low commodity
stocks and a likely continuation of supply side challenges, we expect solid global
economic growth, led by China, to support strong increases in demand for most
metals and minerals during 2008 and 2009.

Approach from BHP BillitonIn November Rio Tinto received an unsolicited approach from BHP
  Billiton proposing a combination of the companies. This was fully considered
  by the board and rejected on the basis that it significantly undervalued Rio
Tintos assets and



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future prospects.
     On 6 February 2008, BHP Billiton announced pre-conditional takeover offers for Rio Tinto of 3.4 BHP Billiton shares for each Rio Tinto share. The board gave this careful consideration and
      concluded that the offers still significantly undervalue Rio Tinto. The board unanimously rejected the pre-conditional offers as not being in the best interests of Rio Tinto shareholders.
     The offers, while improved, still
      fail to recognise the underlying value of Rio Tintos high quality
      assets and prospects. Our plans are unchanged and will remain so unless
      a proposal
      is made that fully reflects the value of Rio Tinto. Meanwhile we will forge
      ahead
with our stated strategy.

Our peopleAs I hope this message has demonstrated, 2007 was an important year for Rio Tinto and, following a number of significant developments, I believe the Group is even more strongly positioned to deliver value for
      shareholders in the future. Managing major strategic initiatives places strong demands on management and they have responded with great resilience. In strong markets meeting the demands of customers, and developing new projects within tight
      timetables and budgets, places considerable pressure on every individual in the Rio Tinto organisation. Our record results in 2007 are very much a product of the commitment, dedication and hard work of all our people across the world. On behalf of
the board and you, our shareholders, I thank them for all they have done to deliver success in another record year.

Paul SkinnerChairman
5 March 2008

Interview with the Chief executive

How would you describe the past year?It would be a bit of an understatement to say its been exciting. We announced the Alcan deal in July. We successfully closed it, as we said we would, in October. The integration with Alcan is going well and we
        are looking forward to reaping synergies of US$940 million per annum
        by the end of 2009. The acquisition of Alcan is just the beginning. In
        May and
        June,
        we announced major expansion plans in iron ore and uranium, and we followed
        this with further expansion announcements in the fourth quarter. We predict
        rapid
      expansion in iron ore and strong prospects across our portfolio of assets.
     I deeply regret that four people lost their lives at operations we manage. I am pleased to see a continued reduction in the lost time injury frequency rate and the all injury frequency
  rate.

What is the plan?Rio Tinto is all about value, and 2008 heralds a greatly expanded
      development pipeline. Major investments in growth projects made or approved
      in 2007 total US$46 billion. This includes the acquisition of Alcan Inc.
      for US$38 billion, and, on a 100 per cent basis, construction of two new iron ore mines in the Pilbara of Australia for US$2.42 billion, the underground development of the Diavik diamond mine in Canada (US$563 million) bringing total
      investment in the underground mine to US$787 million, the expansion to 30 million tonnes per year of the Hope Downs iron ore project (US$350 million), the Yarwun alumina refinery expansion to 3.4 million tonnes per year (US$1.8 billion),
      the Cape Lambert port expansion to 80 million tonnes per year (US$860 million), the US$991 million investment in the extension of the Kestrel coal mine and US$300
      million for the Eagle nickel project in the US.
     To feed a metal hungry world we have the people, execution capability and resources to deliver these projects better than anyone else.

Is this fast growth profile a departure from your strategy?I am a strong believer in our core values and our strategy,
      which is to invest in large, cost efficient, long life assets and to leverage
      these
      with the people, capital, and technologies to create enduring value for
    our shareholders. There has never been a time when a development pipeline
    like
      ours is worth as
      much as it is today. Our plans are all aligned with our strategy. What
    has changed is the market environment, which is the strongest it has been
    in
      a generation. Our proven strategy positions us to meet the challenges that
      this
      level of demand imposes. We intend to stick to our mantra around value,
    but well need to do this smarter, well need to do this faster and well need to do
      this better than anyone else. Well be doing this by bringing on more projects, which we can develop at a faster pace, which can be sold at higher prices. This is what weve
      been doing this year, and this is what I intend to continue to do
      into the future.
     One thing that we must take account
      of in applying our strategy going forward is that the world is rapidly
changing and we have to change with it. The worlds best orebodies include
      many beyond our Australia and North America heartlands, so we cannot afford to ignore more challenging parts of the world. While being sensitive to government and stakeholder expectations, we have to be capable of operating where the worlds
      leading orebodies are located. We are also in the midst of a period of
      unprecedented industry change. We should not assume our asset and business
      mix is static.
      We should continue to be alert to value adding investments and portfolio
      changes where
      we see opportunity, and where we can deliver competitive value in line
      with our
strategy.



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How long will the current market environment last?Over the past five years we have watched the growth of China and
  its impact on our business with an initial measure of optimism and healthy
  scepticism to now what I would best describe as very high expectations based
  on real facts. Markets appear to be entering the fifth straight year of demand
  strength with virtually all minerals and metals prices at levels significantly
  above their long term historical trends. We are continuing to see a fundamental
  shift in the global economy towards fast and resource intensive growth as countries
  like China and India continue to industrialise, urbanise and expand their per
  capita GDP, and I would expect these conditions to continue for some time,
  perhaps for several decades. With this strong demand, supply growth continues
  to be constrained, held back by literally decades of underinvestment in people,
  in exploration and in mines and infrastructure. While this bodes well for the
  future, it is of absolute importance that our mines and businesses stay globally
competitive and sufficiently robust to weather any possible downturns.

But what about the slowdown in the US?I think we should be insulated from the effects of a major US
  slowdown. While many of our markets, like North American copper, aluminium
  and industrial minerals, depend on important sectors like US housing, our overall
  business is increasingly focused on global demand trends. Clearly China, and
  to a lesser extent India, has become extremely important to these global trends,
  and this will be even more so in the future based on strong demographic and
  economic growth prospects. The importance of the US has declined substantially
  relative to that of China since 2000. Specific examples include seaborne iron
  ore, where the US is a negligible market participant, or copper and aluminium,
  where China now consumes more than twice as much as the US. The key issue for
  the health of commodity markets over the medium term is the magnitude of any
  negative spillover effect from a slowing US economy on economic activity in
  the rest of the world and China in particular. We dont think a recession
  in the US will have a significant effect on demand for steel, copper and aluminium
  in China. If there is a recession in the US, the impact on growth in Chinese
  GDP is expected to be one per cent or less. This would still leave scope for
  Chinese growth at levels of ten per cent. For India, the impact of any further
  US slowdown would likely be smaller because of Indias more limited exposure
to world trade.

How do you describe Rio Tintos performance in 2007?Rio Tinto set new annual records for production of iron ore, bauxite,
  alumina, aluminium, refined copper and refined gold. Production is running
  at full tilt and accelerated in the second half. Our excellent production results
  show the momentum in our business and the volume growth that is the fruit of
  our investments over recent years. With significant expansions on track in
  iron ore and in aluminium, as well as the contribution of the Alcan acquisition
  which creates the worlds leading aluminium producer, 2008 is expected
to see an acceleration of this growth.

What are the highlights of your growth plan?One driver is iron ore, where we have developed a conceptual pathway
  to more than triple our production capacity to more than 600 million tonnes
  per annum (Mt/a), primarily from expansions of up to 420 Mt/a from the Pilbara
  and 170 Mt/a from Simandou in Guinea. At Simandou, feasibility studies are
  likely to be completed by 2010 for first production to start in 2013 at a rate
  of 70 Mt/a. Additional phases of development are being considered to increase
  production in 50 Mt/a increments to 170 Mt/a.
       Rio Tinto has 1.9 billion tonnes
  of ore reserves and further iron ore mineralisation in the Pilbara. Exploration
  is targeting to increase the mineralisation inventory. Exploration drilling
  at Simandou has also been active with more than 35,000 metres undertaken in
  2007. At Simandou we are targeting to add iron ore mineralisation to Rio Tintos
  inventory.
     The targeted mineralisation in both
the Pilbara and Simandou areas is based on an assessment of tenure areas using
surface mapping, drilling results and other information. Technical and economic
studies are not complete to enable classification as ore reserves, but results
so far provide an indication of just how much potential we have in these areas.
     In aluminium, Rio Tinto Alcan is the
global leader in bauxite production and aluminium smelting with low cost capacity
derived from a unique combination of sustainable hydropower and industry leading
technology. With the commissioning of the Gove expansion and the expansion at
the Yarwun refinery in Australia under way, we are also on a path to become the
world leader in alumina production, doubling capacity by 2015. The integration
with Alcan is expected to yield US$940 million per year in operating synergies
by 2009, US$340 million per year more than was estimated at mid year. We
have a range of smelter upgrades in Quebec and British Columbia planned, in addition
to greenfield projects in Oman, Malaysia, Saudi Arabia, Abu Dhabi and South Africa,
plus other projects just entering the development process. Global aluminium demand
is growing strongly. Global consumption grew by more than ten per cent in 2007,
with Chinese growth at 38 per cent. Besides strong Chinese consumption, increased
marginal costs of Chinese supply will continue to support this business. However,
we will need to be particularly mindful of the impact of a strong Canadian dollar
on this business.
     In copper, Rio Tintos most profitable
producer, Bingham Canyon in Utah, offers opportunities for growth, could operate
until 2036, and hosts a newly discovered world class molybdenum deposit underneath
the current open pit. New porphyry mineralisation has also been discovered below
the pit walls and there are more exploration targets within three to four kilometres
of the open pit. I am especially proud of everything the team at Kennecott Copper
has done, from



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difficult days just a few years ago, to its current success
    and its promising outlook. Exploration and evaluation at La Granja in Peru
    has increased the extent of mineralised material several times since Rio
    Tinto acquired the property in late 2005. This makes it potentially the largest
    undeveloped copper project in South America with a possible production rate
    of up to 500,000 tonnes of copper a year by 2014.
     Rio Tinto has a stake in three more
of the largest undeveloped copper projects in the world. At Oyu Tolgoi in Mongolia
we are targeting to produce up to 440,000 tonnes of copper per year with valuable
gold by-products and at Resolution in the US we are targeting an operation of
up to 500,000 tonnes per year for 40 years or more.
     Exploration, southwest of Oyu Tolgoi,
has been very promising with a new discovery called Heruga. We also have a 19.8
per cent interest in the Canadian company that controls the Pebble copper-gold
deposit in Alaska, still in the early stages of planning. We are reentering the
nickel market with two significant projects  Eagle in Michigan and Sulawesi
in Indonesia  that could make us one of the top nickel producers globally.
We announced the go-ahead for Eagle a few months ago. First production is scheduled
to begin in late 2009.
     The current uranium market outlook
is very positive, with prices close to record highs, and Rio Tinto is in an excellent
position to sustain higher levels of production going forward. With spot prices
having risen sixfold since 2004, we have a window of opportunity to lock in higher
contract prices over the next several years. We are already the second largest
uranium producer in the world and we have identified significant opportunities
to expand our business at Energy Resources of Australia and at Rössing.
     In coal, our reserve position is one
of the largest in Australia, but performance has been hampered by a lack of infrastructure,
the result of a legacy of uncoordinated responses by miners, rail carriers and
ports. We hope to see the new government in Australia begin to address this national
issue as a matter of the greatest urgency. As infrastructure challenges in New
South Wales and Queensland are alleviated and we overcome weather related disruptions,
we will enjoy significant brownfield and greenfield expansion capabilities from
thermal coal mines such as Clermont and Mount Pleasant and our coking coal mines
at Hail Creek and Kestrel. Recently we reaffirmed our commitment to the Australian
coal sector with an investment to extend and expand Kestrel. Meanwhile, we continue
to explore for coal throughout the world.
     Turning to industrial minerals, we
have some exciting growth prospects here as well. We are now beginning to see
increasing Chinese demand for titanium dioxide feedstock, as we have been foreshadowing
for the past several years. China is estimated to have made up 17 per cent of
global titanium dioxide feedstock demand in 2007, and this is growing rapidly.
Our mineral sands project in Madagascar is proceeding well. The 750,000 tonnes
per year operation is due to come on stream at the end of 2008, producing some
of the highest grade titanium dioxide in ilmenite in the world. Weve increased
our feasibility expenditure on the Potasio Rio Colorado potash project which
remains subject to final permitting and approval by the board.
     In diamonds, we are making better
progress with the Argyle underground development and the Diavik underground project
we announced late last year will extend the mine life beyond 2020. Diavik is
without doubt the most profitable diamond mine in Canada.

What are your project priorities?We are focusing on the commodities closely linked to the metals,
  minerals, and energy intensive stage of development of the worlds growth
  economies. Our capital expenditure in 2008 and 2009 is expected to be US$9
  billion in each year, primarily on projects in iron ore, copper and aluminium.
  As I outlined above, we have every reason to have confidence in demand growth
  in these key areas. For example, Chinas steel production is now five
  times more than the amount produced in the US. China is building from scratch
  a city the size of Brisbane every month. That takes a lot of steel from iron
  ore, as well as copper, for electrification, aluminium and other metals and
  minerals. Last year, China consumed over 30 per cent of the worlds aluminium
  and its annual
rate of consumption grew at 38 per cent.

What are you doing about rising production costs?We are a global company and we are applying advantages of scale
  and breadth to improve efficiencies and create value. Working through our One
  Rio Tintoconcept we continue to improve, with greater cohesion and collaboration,
  as a single operating organisation. We expect to achieve considerable savings
  by operating common systems across our diverse businesses to leverage off the
  critical mass of the whole. This proved successful when applied to our safety
  systems, how we run procurement, and in implementing our business improvement
  programme Improving performance together(IPT). In the two years of
  the IPT programme it yielded more than US$800 million of extra value and
  I fully expect this to continue to grow under One Rio Tinto. We have
  a target to reduce corporate function costs by US$500 million before 2010.
  Every effort is being made to capture the benefits of global standardisation
  and the transfer of best practice between our operations. Our rapid integration
  of Alcan, with higher than originally targeted synergies, is a great example
  of these new systems at work.
     I envisage that One Rio Tintowill
also allow us to be better positioned to introduce innovative technologies across
the Group. We are by our nature a capital and process intensive industry, and
we are repositioning ourselves from being a fast follower to a targeted innovator
of technology in areas where we can make a difference. An example is our goal
of developing a fully automated iron ore mine in the Pilbara within the next
five years.
     Our 2007 second half results show
that we are doing better than most in stemming the effects of industry inflation.



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Where are new opportunities coming from?In exploration, we believe weve had an unrivalled company
  track record in discovery among the major mining companies. Many of our major
  value adding projects are the result of exploration successes, which means
  they were acquired at a very competitive initial investment. For example, La
  Granja in Peru was acquired for US$22 million plus a minimum investment
  of US$60 million and has the potential to become one of the worlds
  largest copper producers. Weve maintained our commitment to exploration
  over the years and the consistency of expenditure and activity over the cycle
  has produced extraordinary results. Looking ahead, our exploration portfolio
  is an exciting multi-commodity mix of brownfield and greenfield opportunities
  ranging from iron ore in the Pilbara to bauxite prospects in Brazil, potash
  in Canada and coking coal in Mongolia. We have an exceptional set of assets
  and growth opportunities, both in established projects and exploration prospects.
  We have well trained and motivated people throughout our organisation. And
  we have a great track record for management delivery in safety, in daily operations
  and in the execution of our capital projects. We face
the future with confidence.

Any reflections on the future?Ive inherited a great business and a great organisation.
  Our primary objective is the creation of further value for our shareholders
  in a market environment that is nothing short of spectacular. Rio Tinto, with
  its 135 year heritage of assets, its strong organisation, people and prospects,
  is well positioned to capitalise on the terrific opportunities available at
  this point in the market cycle. We cannot rest on our laurels though, and the
  fast pace of events in 2007 should be seen as a guide to how we have to look
  to the future, being ever more competitive in an ever more dynamic world. The
  modernisation of our head office, introduction of our new Rio Tinto brand,
  and the development of new global systems under a unified One Rio Tintois
  all evidence of this vision. Im very excited about the way things are
  going and our plans for value creation for the shareholders of Rio Tinto.
     In closing, I would like to express
my thanks and appreciation to all Rio Tinto people around the world for their
strong support and dedication at this time.

Tom AlbaneseChief executive
5 March 2008

Group financial performance

The Group uses a number of key performance indicators
    (KPIs) to monitor financial performance. These are summarised
  below and discussed later in this report.

|KPI                               | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 2007  |   | 2006  |   | 2005  |  
|--------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----- | - | ----- | - | ----- | -
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | US$m  |   | US$m  |   | US$m  |  
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |   |       |   |       |  
|Underlyingearnings                | Underlying earnings is the key financial performance indicator whichmanagement use internally to assess performance. It is presented here as
    anadditional measure of earnings to provide greater understanding of theunderlying business performance of the Groups operations. Itemsexcluded from net earnings to arrive at underlying earnings are explainedin note 2 to the 2007 Financial statements.
The Groups underlyingearnings for the past three years are discussed below. | 7,443 |   | 7,338 |   | 4,955 |  
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |   |       |   |       |  
|Gearing (netdebt to totalcapital) | The Groups total capital is defined as Rio Tintos shareholders funds
      plusnet debt and outside equity shareholders interests. The Groups
      approachto capital management is discussed in the Liquidity and capital resourcessection on page 100.                                                                                                                                                                                                                             | 63    | % | 11    | % | 8     | %
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |   |       |   |       |  
|Capitalinvestment                 | Continuing investment in value adding growth projects. The Groupscapital projects are listed on pages 11 to 13.                                                                                                                                                                                                                                                                                                                                                                           |       |   |       |   |       |  
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |   |       |   |       |  
|Totalshareholderreturn (TSR)    | Total shareholder return measures the Groups performance in terms
      ofgenerating shareholder wealth through dividends and the share price. TheGroups TSR performance compared to the FTSE 100 index, the ASX AllOrdinaries index and the HSBC Global Mining Index is shown on page128. The relationship between TSR and executive remuneration is alsodiscussed on page 122.                                                                                                         | 91.8  | % | 7.6   | % | 78.4  | %
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |   |       |   |       |  

Acquisition of AlcanDuring 2007, the Rio Tinto Group acquired 100 per cent of the issued
share capital of Alcan Inc. The total cost of acquisition amounted to US$38.7 billion, including fees. Alcans results are included within
the Groups results from 24 October 2007.
     Alcan Inc. is the parent company of an international group of companies involved in bauxite mining, alumina refining, aluminium smelting, engineered products, flexible and specialty
packaging, as well as related research and development.
     The Group has decided to dispose of
Alcan Packaging, which is presented in the balance sheet in the lines: Assets held for sale and Liabilities of disposal groups held
for sale. Therefore, the income and cash flow statements



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for the year exclude amounts relating to Alcan Packaging. Following a company
  wide strategic review of the combined Rio Tinto and Alcan assets, on 26 November
  2007 the intention to divest the Engineered Products
business was also announced.

Net earnings and underlying earningsBoth net earnings and underlying earnings deal with amounts attributable
  to equity shareholders of Rio Tinto. However, IFRS requires that the profit
  for the period reported in the income statement should also include earnings
  attributable to outside shareholders in subsidiaries. The profit for the period
is reconciled to net earnings and to underlying earnings as follows:

|                                                                | 2007  |   | 2006  |   | 2005  |  
|--------------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                                | US$m  |   | US$m  |   | US$m  |  
|                                                                |       |   |       |   |       |  
|Profit for the year                                             | 7,746 |   | 7,867 |   | 5,498 |  
|Less: attributable to outside equity shareholders               | (434  | ) | (429  | ) | (283  | )
|                                                                |       |   |       |   |       |  
|Attributable to equity shareholders of Rio Tinto (net earnings) | 7,312 |   | 7,438 |   | 5,215 |  
|Less: exclusions from underlying earnings                       | 131   |   | (100  | ) | (260  | )
|                                                                |       |   |       |   |       |  
|Underlying earnings attributable to shareholders of Rio Tinto   | 7,443 |   | 7,338 |   | 4,955 |  
|                                                                |       |   |       |   |       |  

2007 financial performance compared with 2006Net earnings of US$7,312 million in 2007 were US$126 million below 2006, a decrease of two per cent. Underlying earnings of US$7,443 million were US$105
million above 2006, an increase of one per cent. Underlying earnings per share
increased by five per cent and net earnings per share increased by two per cent
in 2007 reflecting the lower number of shares resulting from the share buyback
programme in the first half of the year. The principal
factors explaining the changes in underlying earnings are shown in the table
below.

|Changes in underlying earnings 2006  2007 | US$m                                             |      
|------------------------------------------ | ------------------------------------------------ | -----
|                                           |                                                  |      
|2006 Underlying earnings                   | 7,338                                            |      
|Effect of changes in:                      |                                                  |      
|                                           | Prices                                           | 1,364
|                                           | Exchange rates                                   | (403 
|                                           | Volumes                                          | 516  
|                                           | General inflation                                | (218 
|                                           | Cash costs                                       | (442 
|                                           | Non-cash costs                                   | (201 
|                                           | Exploration, evaluation and technology
    costs | (309 
|                                           | Tax/other                                        | (202 
|                                           |                                                  |      
|2007 Underlying earnings                   | 7,443                                            |      
|                                           |                                                  |      

The effect of price movements on all major commodities was to increase earnings
  by US$1,364 million. Prices for the major products remained strong throughout
  the year and were higher overall than those experienced in 2006: average copper
  prices were six per cent higher whilst average aluminium prices were three
  per cent higher. The strength of the global iron ore market was reflected in
  the 9.5 per cent increase in the benchmark price, mainly effective from 1 April
  2007. The seaborne thermal and coking coal markets were also strong and strengthened
  further in the second half.Molybdenum
prices averaged US$30/lb throughout 2007, an increase
of 20 per cent compared with the prioryear.
     There was significant movement in
the US dollar in 2007 relative to the currencies in which Rio Tinto incurs the
majority of its costs. The Australian dollar was 11 per cent stronger, the Canadian
dollar was six per cent stronger and the South African rand four per cent weaker.
The effect of all currency movements was to decrease underlying earnings relative
to 2006 by US$403 million.
     Higher sales volumes predominantly
from growth projects increased underlying earnings by US$516 million compared with 2006. The ramp up of new projects in iron ore (including the
Yandicoogina and brownfields expansions), higher volumes of copper in concentrate at Escondida from improved grades, higher refined copper sales from the Kennecott Utah Copper (KUC)
smelter operating at close to capacity and higher diamond grades at Diavik were
the main contributors.
     The Group continued to invest further
in the future development of the business with an increased charge to underlying
earnings of US$309 million from exploration, evaluation and
technology costs. Higher freight and demurrage costs and increased energy costs reduced underlying earnings by US$163 million and US$82 million, respectively. Significant shipping congestion at the port of Newcastle affected coal sales with
a resulting impact on costs at Rio Tinto Coal Australia, through higher demurrage and a higher unit cost of sale. General inflation and mining inflation increased costs by US$218 million and US$140
million respectively as higher contractor, maintenance and input costs were experienced
throughout the Group, notably in the iron ore and copper operations, as industry
supply constraints persisted.An
increase in non cash costs reduced 2007 earnings by US$201
million compared with 2006, following the



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completion of several large capital investment projects.
     The effective tax rate on underlying
earnings, excluding equity accounted units, was 25.7 per cent compared with 24.2
per cent in 2006. The tax charge in 2007 was reduced by US$392 million as
a result of the impact of the reduction in the Canadian tax rate enacted in December
2007 on deferred tax provisions. The 2006 tax rate benefited from US$335
million of US Alternative Minimum Tax credits, which were recognised on the balance
sheet as a result of improved prospects for recovery of these from future taxable
earnings from the Groups US operations, as well as the utilisation of US$140
million of previously unrecognised tax assets.
     Alcans contribution to underlying
earnings for the nine weeks to 31 December 2007 was US$424 million, including
a benefit relating to the change in the Canadian tax rate as described above.
Exploration divestments increased 2007 underlying earnings by US$139 million
relative to 2006. A higher interest charge from an increase in net debt following
the Alcan acquisition reduced earnings by US$248 million relative to 2006.
These variances and the tax variances referred to above are included within the
US$202 million adverse variance for Tax/other.

2006 financial performance compared with 2005Net earnings of US$7,438 million in 2006 were US$2,223
  million above 2005, an increase of 43 per cent. Underlying earnings of US$7,338
  million were US$2,383 million above 2005, an increase of 48 per cent. Underlying
  earnings per share, which increased by 52 per cent, also reflected the lower
  number of shares resulting from the share buyback programme. The principal
  factors explaining the changes in underlying earnings are shown in the table
below.

|                         |                                                  | US$m  |  
|------------------------ | ------------------------------------------------ | ----- | -
|                         |                                                  |       |  
|2005 Underlying earnings | 4,955                                            |      
|Effect of changes in:    |                                                  |      
|                         | Prices                                           | 3,068 |  
|                         | Exchange rates                                   | (35   | )
|                         | General inflation                                | (174  | )
|                         | Volumes                                          | (135  | )
|                         | Cash costs                                       | (629  | )
|                         | Non cash costs                                   | (66   | )
|                         | Exploration, evaluation and technology
    costs | (46   | )
|                         | Tax/other                                        | 400   |  
|                         |                                                  |       |  
|2006 Underlying earnings | 7,338                                            |      
|                         |                                                  |       |  

The effect of price movements on all major commodities was to increase
earnings by US$3,068 million. Prices for the major products remained strong
throughout the year and were considerably higher than those experienced in 2005:
average copper prices were 84 per cent higher whilst average aluminium prices
were 35 per cent higher. The strength of the global iron ore market was reflected
in the 19 per cent increase in the benchmark price, mainly effective
from 1 April 2006. The seaborne thermal coal market was also strong, although
it weakened in the second half.
     Molybdenum prices averaged US$25/lb throughout 2006, a decline of 20 per cent compared with the prior year.
     The
net effect of changes in average levels of exchange rates against the US dollar
for those currencies influencing
      the Groups costs was to reduce underlying earnings relative to 2005 by US$35
  million.
     Lower sales volumes decreased underlying
  earnings by US$135 million compared with 2005. As anticipated, significantly reduced volumes from lower grades at Grasberg impacted earnings by
  US$355 million year on year. This more than offset higher volumes at other
  operations. The ramp up of new projects in iron ore (including the Yandicoogina
  and brownfields expansions), higher copper in concentrate volumes from improved
  grades and throughput at Northparkes, higher ore grades and the commencement
  of sulphide leach production at Escondida, along with higher molybdenum and
  gold production at KUC, were the main contributors. Record volumes of thermal
  coal
  sales at Rio Tinto
  Energy America and alumina at Yarwun, also contributed to higher volumes. Lower
  sales volumes were recorded at Argyle with a build up of diamond inventories
  due to softer market conditions, at Kennecott Minerals from lower grades at
  Cortez, and at Hail Creek from lower coking coal volumes in response to lower
  customer
  demand.
     Excluding the effects of general inflation,
  higher costs reduced earnings by US$741 million, of which US$77 million
  was the result of higher energy costs. Ongoing acute shortages in the mining
  industry, in particular in the Pilbara, continued to put pressure on costs.
  Costs at KUC were affected by an extended, scheduled smelter maintenance shutdown
  whilst
  Escondida experienced higher wages, following the strike in August.
  Significant shipping congestion at the port of Newcastle affected coal sales
  in the second half of the year with a resulting impact on costs at Rio Tinto
  Coal Australia, through higher demurrage and a higher unit cost of sale.
     The effective tax rate on underlying
  earnings, excluding equity accounted units, was 24.2 per cent compared with
29.2 per cent in 2005, following the recognition of US$335 million of
  US Alternative Minimum Tax (AMT) credits expected to be utilised in future years. This reflected improved projections of long term taxable earnings from the Groups US operations. Additionally, the high levels of profit generated by the
  Groups US operations in 2006 resulted in the realisation of US$140 million of previously unrecognised deferred tax assets in the year. Deferred tax provisions decreased by US$46 million as a result of a reduction in Canadian tax rates.
These favourable tax variances are included within the favourable variance of US$400 million for Tax/other.



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Exclusions in arriving at underlying earnings 20052007Earnings contributions from Group businesses and business segments
  are based on underlying earnings. Amounts excluded from net earnings in arriving
  at underlying earnings are summarised in the discussion of year on year results
below.

|                                                                                                                        | 2007 |   | 2006 |   | 2005 |  
|----------------------------------------------------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|                                                                                                                        | US$m |   | US$m |   | US$m |  
|                                                                                                                        |      |   |      |   |      |  
|Profit less losses on disposal of interests in businesses                                                               | 1    |   | 3    |   | 311  |  
|Impairment reversals less (charges)                                                                                     | (113 | ) | 44   |   | 4    |  
|Exchange gains/(losses) on US$ net debt and
    intragroup balances (including those relating toequity accounted units) | 156  |   | (14  | ) | (99  | )
|Gains/(losses) on currency and interest rate derivatives not qualifying for
    hedge accounting                        |      |   |      |   |      |  
|(including those relating to equity accounted units)                                                                    | 34   |   | 30   |   | (40  | )
|Other exclusions                                                                                                        | (209 | ) | 37   |   | 84   |  
|                                                                                                                        |      |   |      |   |      |  
|Total excluded in arriving at underlying earnings                                                                       | (131 | ) | 100  |   | 260  |  
|                                                                                                                        |      |   |      |   |      |  

In 2007 an impairment charge of US$328
  million after tax was recognised at Argyle following a decline in value as a
  result of large increases in the estimated capital costs of the underground
  project. This was partly offset by the reversal of the residues of the impairments
  of Tarong Coal and Palabora.
       Other exclusions from underlying
  earnings in 2007, a charge of US$209 million, mainly comprised non-recurring
  consequences of the Alcan acquisition, including integration costs. Of this
  total, US$146 million resulted from the sale of Alcan inventories that were
  revalued based on selling prices at the date of acquisition.
       Net earnings in 2006 included net
  impairment reversals totalling US$44 million. Impairments were reversed
  at KUC and IOC which more than offset impairment charges at Argyle and Tarong
  Coal.
       Exchange gains and losses on US dollar
  net debt and intragroup balances that are recorded in the Groups income
  statement, together with gains and losses on currency and interest rate derivative
  contracts that do not qualify as hedges under IFRS are excluded from underlying
  earnings. In 2007, these items produced a gain of US$190 million (2006:
  a gain of US$16 million) reflecting the weakening of the US dollar against
  the Australian and Canadian dollars. In 2005 these items represented a loss
  of US$139 million.
       In 2005, gains from disposals of
  interests in businesses amounted to US$311 million, relating mainly to the
  sale of Rio Tintos interests in the Labrador Iron Ore Royalty Income Fund
  and in Lihir Gold.The effective
  tax rate on net earnings in 2007, excluding equity accounted units was 25.3
  per cent compared with 26.8 per cent in 2006. The reduction in the Canadian
  tax rate reduced the 2007 effective tax rate and the recognition of US deferred
  tax assets lowered the effective tax rate in 2006. There were significant untaxed
  gains in 2005 which lowered the effective tax rate and the tax benefits referred
  to above reduced the tax rate for 2006.

Group financial results by product groupThe table below summarises the Groups underlying earnings
by product group for each of the three years to 2007. These are discussed on
pages 56 to 98.

|                                    | 2007  |   | 2006  |   | 2005  |  
|----------------------------------- | ----- | - | ----- | - | ----- | -
|                                    | US$m  |   | US$m  |   | US$m  |  
|                                    |       |   |       |   |       |  
|Iron Ore                            | 2,651 |   | 2,251 |   | 1,722 |  
|Energy                              | 484   |   | 706   |   | 730   |  
|Aluminium                           | 1,097 |   | 746   |   | 392   |  
|Copper                              | 3,479 |   | 3,538 |   | 1,987 |  
|Diamonds and Industrial Minerals    | 488   |   | 406   |   | 438   |  
|Other operations                    | 15    |   | 33    |   | 40    |  
|Other items                         | (526  | ) | (241  | ) | (186  | )
|Exploration and evaluation          | 20    |   | (84   | ) | (124  | )
|Net interest                        | (265  | ) | (17   | ) | (44   | )
|                                    |       |   |       |   |       |  
|Group underlying earnings           | 7,443 |   | 7,338 |   | 4,955 |  
|Exclusions from underlying earnings | (131  | ) | 100   |   | 260   |  
|                                    |       |   |       |   |       |  
|Net Earnings                        | 7,312 |   | 7,438 |   | 5,215 |  
|                                    |       |   |       |   |       |  

Trend informationThe demand for the Groups products is closely aligned with changes in global Gross Domestic Product. Changes in the GDP of developing countries are expected to 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 are expected to have a greater impact on industrial minerals that have many applications in consumer products. Copper is used in a wide range of
applications from infrastructure to consumer electronics and demand for it has tended to grow in line with or slightly faster than global GDP. Trends in production of the Groups
minerals and metals, gross sales revenue and underlying earnings are set out
in this Operating and financial review and prospects.



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Aluminium group

|Mined                                      | Rio Tinto share |  
|------------------------------------------ | --------------- | -
|Weipa bauxite                              | million tonnes  |  
|                                           |                 |  
|2003                                       | 12.1            |  
|2004                                       | 12.8            |  
|2005                                       | 15.6            |  
|2006                                       | 16.3            |  
|2007                                       | 21.0            |  
|                                           |                 |  
|Production                                 | Rio Tinto share |  
|Alumina                                    | 000 tonnes     |  
|                                           |                 |  
|2003                                       | 2,014           |  
|2004                                       | 2,231           |  
|2005                                       | 2,963           |  
|2006                                       | 3,247           |  
|2007                                       | 3,877           |  
|                                           |                 |  
|Aluminium                                  | 000 tonnes     |  
|                                           |                 |  
|2003                                       | 817             |  
|2004                                       | 837             |  
|2005                                       | 854             |  
|2006                                       | 845             |  
|2007                                       | 1,480           |  
|                                           |                 |  
|Underlying earnings contribution*          | US$m            |  
|                                           |                 |  
|2004                                       | 331             |  
|2005                                       | 392             |  
|2006                                       | 746             |  
|2007                                       | 1,097           |  
|                                           |                 |  
|Changes in underlying earnings 2005 - 2007 | US$m            |  
|                                           |                 |  
|2005 Underlying earnings                   | 392             |  
|Effect of changes in:                      |                 |  
|Prices and exchange rates                  | 454             |  
|General inflation                          | (36             | )
|Volumes                                    | 8               |  
|Costs                                      | (65             | )
|Tax and other                              | (7              | )
|                                           |                 |  
|2006 Underlying earnings                   | 746             |  
|Effect of changes in:                      |                 |  
|Prices and exchange rates                  | (12             | )
|General inflation                          | (37             | )
|Volumes                                    | 11              |  
|Costs                                      | (36             | )
|Tax and other                              | 425             |  
|                                           |                 |  
|2007 Underlying earnings                   | 1,097           |  
|                                           |                 |  

|* | A reconciliation of the net earnings with
        underlying earnings for 2007, 2006 and 2005 as determined under IFRS
    is set out on page 53.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

STRATEGIC OVERVIEW

Alcan Inc. (Alcan) joined the Rio Tinto
        Group on 23 October 2007. The total cost of the acquisition amounted
        to US$38.7 billion, including fees. The expanded aluminium product group, formed by the combination of
  Alcan and Rio Tintos existing aluminium assets, was renamed Rio Tinto Alcan
  (RTA).
     RTA comprises closely integrated, high quality bauxite, alumina and aluminium businesses with a broad global reach. The business is founded on large reserves of the mineral bauxite, which
  is refined into the intermediate product alumina, before being smelted into aluminium metal. RTA is a world leader in the production of bauxite and aluminium, with a defined pathway to becoming the largest producer of alumina through the
  commissioning of the Gove refinery expansion and current expansion of the Yarwun refinery, both in Australia.
     RTA is an industry leader in technology
  which, combined with an ownership position in clean hydro-electric generating
  capacity of 3,689 megawatts (MW), provides a significant, sustainable competitive
  advantage of increasing value in a carbon constrained world. The combined group
  has one of the industrys most extensive bauxite mine, alumina refinery
  and aluminium smelter development portfolios, comprising 16 major projects in
  13
  countries.



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RTAs strategy is to maximise
    shareholder return whilst achieving excellence in health, safety and environmental
    performance; maximising value generated from existing assets; and optimising
    and opportunistically growing the bauxite, alumina and aluminium businesses.
    RTA uses its dedicated business improvement programme, called Lean Six Sigma,
    to improve operations, process stability and eliminate waste.
     RTA is currently organised into four
business units  Bauxite & Alumina, Primary Metal, Engineered Products
and Packaging. In the announcement of Rio Tintos offer for Alcan in July
2007, it was disclosed that it had been agreed with Alcan that the Packaging
business would be divested. The Packaging business has therefore been classified
as an Asset held for sale and its results for the period since acquisition have
not been included in the earnings of the Rio Tinto Group.
     RTAs financial results include
Alcan businesses from 24 October 2007. On this basis, in 2007 RTA contributed
22 per cent of Rio Tintos gross sales revenue and 15 per cent of its underlying
earnings. As at 31 December 2007, RTA accounted for 63 per cent of Rio Tintos
operating assets.
     At year end, RTA employed 71,600 people
of whom 67,000 joined the group with Alcan. About 25,000 employees are employed
in the Bauxite & Alumina and Primary Metal business units and approximately
45,000 employees in the Engineered Products and Packaging businesses.

Dick Evans, chief executive, Rio Tinto Alcan, is based in Montreal, Canada.

DIVESTMENTS

As part of Rio Tintos offer for Alcan
    on 12 July 2007, it was announced that the Packaging business would be divested.
    Following a company wide strategic review of the combined Rio Tinto and Alcan
    assets, on 26 November 2007 the intention to divest the Engineered Products
  business was also announced.

INTEGRATION OF ALCAN

Rio Tintos offer for Alcan on 12 July
    2007 aimed at after tax synergies of US$600 million per annum by the
    end of 2009. Within the parameters of relevant takeover regulations, intensive
    and cooperative integration efforts were made between 12 July and 23 November
    2007 which resulted in an increase in the targeted after tax synergies to
    US$940 million per annum by the end of 2009. A rigorous and comprehensive
    integration plan is being progressively executed and is overseen by an Integration
  Steering Committee and an Integration Management Office.

SAFETY

|All injury frequency rate | per 200,000 hours | 
|------------------------- | ----------------- | 
|                          |                   | 
|2003                      | 1.43              | 
|2004                      | 1.48              | 
|2005                      | 1.37              | 
|2006                      | 1.40              | 
|2007                      | 1.02              | 
|                          |                   | 

An important factor in Rio Tintos acquisition of Alcan was alignment across both businesses on the importance of safety. While philosophies were similar, Alcans
definitions were different to those used by Rio Tinto and hence 2007 performance
is not comparable. Moving forward, former Alcan operations will adopt Rio Tinto
definitions and consolidated data will be presented from 2008. The safety results
are based on data from the former Rio Tinto
Aluminium business; data from former Alcan businesses are not included.
     Regrettably a metal merchant was fatally
injured at an Engineered Products operation in December. Alcans Recordable Case Rate at the end of 2007 represented a 28 per cent reduction
over 2006 and an 84 per cent reduction compared to 2001. This performance was 23 per cent better than Alcans
target for the period. The Lost Time Injury Illness Rate also declined by 26
per cent but remained eight per cent short of the 2007
target.
     Some notable examples of Alcans
success in reducing these rates include controlling hazardous energy sources
from upstream operations and development and roll out of large scale man machine
interface programmes in downstream operations.
     The former Rio Tinto Aluminium business
recorded its best ever safety performance in 2007. The All Injury Frequency Rate
improved by 26 per cent over 2006 and the number of Lost Time Injuries reduced
by 30 per cent compared to the previous year. During the year New Zealand Aluminium
Smelters was awarded the Rio Tinto Chief Executives Safety Award and Weipa
received the award for the Most Improved Site. In 2007, the Safety Leadership
Development Programme was introduced across the business and implementation of
the Health, Safety and Environment Quality Management System continued.



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GREENHOUSE GAS EMISSIONS

The former Rio Tinto Aluminium sites have approached meeting greenhouse
  gas (GHG) and energy targets by planning improvements in the key metrics of
  net carbon ratio, anode effects, power efficiency and fuel use. Projects are
  undertaken to improve overall site performance, including cost and production,
  in addition to supporting GHG and energy targets. There are a considerable
  number of individual projects being undertaken through the business improvement
  system, each supported by a detailed plan of activities to bridge the gap between
  current and targeted performance.
     To track and encourage focus on target
performance, Rio Tinto Aluminium for several years produced and distributed to
its management team quarterly tracking of target performance at all sites. Comparing
2007 actual performance with the 2008 targets shows Anglesey is meeting both
energy and GHG target performance, Weipa is meeting energy targets and so is
Boyne Island Smelters. Other sites are currently not meeting 2008 targets.
     Alcans total greenhouse
gas emissions were 27.8 million tonnes of CO2 equivalent
in 2007, calculated on an equity share basis, representing
a four per cent improvement in on site greenhouse gas emissions per tonne of
product over a 2005 baseline as a result of efficiency improvements, retrofitting
best in class technology and shutdown of some underperforming operations. It
is anticipated that the contribution of Alcan will be lower when reported under
Rio Tinto greenhouse gas accounting rules. The new RTA is expected to make up
about two thirds of Rio Tintos gas emissions in the future.
     The expanded RTA group will prepare
and present revised plans, incorporating activities and costing, for all assets.
The group will combine the best ideas from both Rio Tinto and Alcan and enjoy
the benefit of a high percentage of low GHG intensity power sourced from hydro-electricity.

FINANCIAL PERFORMANCE

2007 compared with 2006
  In 2007, RTAs contribution to the Groups underlying
earnings was US$1,097 million, an increase of 47 per cent. The higher contribution
was due mainly to the one off impact of the reduction in the Canadian tax rates
attributable to the Alcan businesses, but also benefited from higher aluminium
prices. The average aluminium price in 2007 was US$2,646 per tonne compared
with US$2,557 per tonne in 2006. The performance excludes results from the
Packaging business as it is classified as a discontinued operation.

2006 compared with 2005
  In 2006, the former Rio Tinto Aluminiums contribution to
  the Groups underlying earnings was US$746 million, an increase of
  90 per cent. Higher aluminium prices resulted in earnings increasing by US$451
  million, with the average aluminium price in 2006 at US$2,557 per tonne
  compared with US$1,896
per tonne in 2005.

BAUXITE & ALUMINA OPERATIONS

|Bauxite                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Bauxite production capacity
          more than doubled during the year, with the groups wholly owned
          bauxite mine at Weipa (Australia) being joined by Alcans four
          operating bauxite mines from around the world (Australia, Brazil, Ghana
          and Guinea). At year end, RTAs bauxite production capacity was
          the largest in the industry, at 34.4 million tonnes per annum, up from
          16.5 million tonnes in 2006.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

The Weipa mine located on Cape York, Australia
  contains reserves of 1,224 million tonnes and additional mineralisation. It
  has an annual production capacity of 18.2 million tonnes and is by far the largest
  bauxite mine in the group. In 2007 the mine increased its production capacity
  by 1.7 million tonnes from 16.5 million tonnes as the result of commissioning
  of a second shiploader in late 2006. Alcans Ely mining lease is situated
  adjacent to Weipa and is included in the reserve figures for Weipa. Bauxite
  from Weipa is either shipped to Gladstone for processing at the groups
  wholly owned Yarwun refinery and 80 per cent owned Queensland Alumina Limited
  (QAL) refinery or sold to third parties.

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RTAs other
  Australian mine, at Gove contains reserves of 143 million tonnes and additional
  mineralisation. It has an annual production capacity of 6.9 million tonnes and
  is co-located with the Groups Gove alumina refinery in the Northern Territory,
  Australia. Output from the mine is consumed mainly by the refinery, although
  some amounts are sold to third parties.
       RTA owns 12.0 per cent of the Porto Trombetas
  mine in Brazil. Its share of reserves is 20 million tonnes and share of additional
  mineralisation, constituting a share of annual production capacity of 2.1 million
  tonnes. Across the Atlantic, RTA owns 22.9 per cent of the Sangaredi mine in
  Guinea and 80 per cent of the Awaso mine in Ghana, constituting shares of annual
  production capacity of 6.2 million tonnes and 1 million tonnes respectively.
  The reserve positions of these African mines are currently under review.

|Alumina                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The addition of Alcans
        assets during 2007 boosted RTAs total alumina production capacity
        almost threefold, from 3.2 million tonnes per annum in 2006 to 8.3 million
        tonnes at the end of 2007. In addition to increasing smelter grade alumina
        refining capacity, the Alcan assets included specialty alumina production
        capacity of 740,000 tonnes per annum. Specialty alumina represents a
        range of products that is used extensively in a wide range of industrial
    and consumer applications.
|The
        combination of Rio Tinto and Alcan has created an alumina business which
        is balanced in terms of internal alumina demands from the Primary Metal
        aluminium business. This is important as a balanced or long net alumina
        position prevents the group from being negatively exposed to periodic
    alumina price spikes.                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

The Gove refinery is a wholly owned two million tonnes per annum plant which
is in the final stages of a 1.8 million tonnes per annum expansion. It is expected
to take overall capacity to 3.8 million tonnes per annum by the end of 2008.
The refinery is located next to the Gove bauxite mine. Associated infrastructure
includes a deep water port, township and oil fired power station. Following completion
of the expansion, the Gove refinery is expected to operate in the second quartile
of the industry cash cost curve. Alternative energy sources are currently being
evaluated for use at Gove, which could result in a significant further reduction
in cash operating costs.
     The wholly owned Yarwun refinery, located in Gladstone,
Australia, has current nameplate capacity of 1.4 million tonnes per annum. On
3 July 2007, Rio Tinto Aluminium announced an expansion of the Yarwun refinery
to increase capacity to 3.4 million tonnes per annum. First shipments are expected
in the second half of 2010. An important feature is the inclusion of a gas fired
cogeneration facility. Gas will become the primary fuel source, demonstrating
RTAs ongoing commitment to reducing greenhouse gas emissions and improving
energy efficiency. There remains potential for the refinery to be ultimately
expanded to over four million tonnes per annum. Following completion of the proposed
Yarwun expansion, the refinery is expected to operate in the second quartile
of the industry cash cost curve.
     The combination of Rio Tinto and Alcan has resulted
in an 80 per cent interest in QAL, an increase from 38.6 per cent at the end
of 2006. QAL, also located in Gladstone, Australia, is one of the
worlds largest alumina refineries, with a capacity of just under four million
tonnes per annum. QAL operates in the second quartile of the industry cash cost
curve and has opportunities for further development.
     Outside Australia, RTA wholly owns the 1.3 million
tonne per annum Jonquière refinery in Quebec, Canada and the Gardanne
refinery in France, which produces mainly specialty alumina, but also has capacity
to produce 150,000 tonnes of smelter grade alumina per annum. Both refineries
are placed in the fourth quartile of the industry cash cost curve. Other wholly
owned refinery operations relate to specialty alumina, in which four smaller
plants combine with Gardanne and part of Jonquière to provide around 740,000
tonnes of annual production capacity.
     RTA owns a ten per cent share of the Sao Luis (also
known as Alumar) refinery in Brazil, which has a current capacity of 1.5 million
tonnes per annum. The refinery is currently undergoing a 2.1 million tonnes per
annum expansion, of which RTAs contribution is expected to be approximately
US$200 million and which is expected to be completed during 2009. Once completed,
the refinery is expected to operate in the first quartile of the industry cash
cost
curve.

2007 operating performanceBauxite production during 2007 included output from Alcans
bauxite mines from 24 October 2007. Accordingly, total production for 2007 of
21 million tonnes exceeded 2006 production by 29 per cent.
       Production of bauxite at Weipa reached record levels in 2007, at 18.2 million tonnes (beneficiated and calcined), 12 per cent higher than in 2006. Increased capacity from the commissioning
of the second shiploader in late 2006 was



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the major contributor to Weipas improved production capability. Adverse
      weather conditions that impacted production in early 2006 did not occur
      in 2007. Weipa bauxite shipments rose by 15 per cent, to 18.2 million tonnes.
      Rio Tinto Aluminium advised its calcined
bauxite customers in December 2006 that it would withdraw from the production
of calcined bauxite by 2008 after 40 years of providing this product to the abrasives
and oil and gas exploration industries. Calcined bauxite represents about one
per cent of Weipas total bauxite production.
     To meet the increased transport needs for bauxite
and alumina, Rio Tinto has committed US$210 million to the purchase of five
new post Panamax bulk ore carriers to be used on the Weipa to Gladstone run and
for international trade. These ships are being built in Japan. The first ship, Wakamatha was
delivered in the third quarter of 2007. In 2007, Weipas improved safety
performance was recognised with a Chief Executives Safety Award.
     As is the case with bauxite production, 2007 alumina
production included the output of Alcans alumina refineries from 24 October
2007. Smelter grade alumina production for 2007 was therefore 15 per cent higher
than in 2006 at 3.73 million tonnes. The addition of Alcans specialty alumina
business during 2007 provided 144,000 tonnes of production from 24 October 2007.
     The Yarwun refinery produced at higher levels than
2006 being the first full year of operation since the plant ramped up to nameplate
capacity.
     On 31 October 2007, RTA announced that it had reached
an agreement with Norsk Hydro ASA to expand its alumina supply to Hydro Aluminium
from 500,000 tonnes of alumina per annum to 900,000 tonnes from 2011 to the end
of the contract. Under a 20 year contract signed in 2003 with Norsk Hydro, RTA
is committed to supplying Hydro Aluminium with 500,000 tonnes of alumina per
annum from 2006 until 2030. The new contract underpins RTAs decision to
expand the Yarwun alumina refinery and is consistent with its strategy of maximising
the value of RTAs
world class bauxite deposits at Weipa.

PRIMARY METAL OPERATIONS

The addition of Alcan aluminium smelters
    to the Rio Tinto Group created the worlds premier primary aluminium
    producer, with year end capacity of 4.1 million tonnes per annum representing
    nearly five times the groups 2006 production capacity of 853,700 tonnes.
     The transformation of this business during 2007
was significant. Aside from the enormous increase in primary aluminium smelting
capacity, the business added one partly owned and 11 wholly owned power facilities,
boosting owned electricity generation capacity by 620 per cent to twice the industry
average. In addition, a range of businesses related to aluminium smelting (including
technology sales and service, engineering services, smelting equipment sales
and smelting consumables production) were added.

|Smelting facilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As of 31 December 2007 the business
        unit comprised 25 smelters in 11 countries, the vast majority of which
        are located in OECD countries. The former Rio Tinto Aluminium consisted
    of interests in four smelters in three countries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|As
        with any commodity business, the position on the global cash cost curve
        is important in determining the relative profitability of operations
        within the industry. In this regard, RTA enjoys an excellent position,
        with the worlds largest share of first quartile production capacity
        and an overall average position at the low end of the second quartile.
        This position is particularly noteworthy given the number of RTA facilities
        and the enormous scale of total production capacity. The RTA smelting
        system has around half of its capacity located in the first quartile
        of the industry cash cost curve, with another third in the second quartile.
        Only one fifth of RTAs current smelting capacity lies in the higher
        cost part of the industry cash cost curve. This is expected to prove
        increasingly valuable as the industrys average cash costs rise
        as expected, influenced by factors such as rising energy costs, potential
        Chinese currency revaluations and possible greenhouse gas
emission costs.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

The groups largest concentration of smelting assets is located in Canada.
RTA has ownership interests in nine smelters in Canada, seven of which are wholly
owned and all but one of which are located in the Province of Quebec. Total annual
production capacity in Canada, resulting from the acquisition of Alcan, is 1.77
million tonnes as at 31 December 2007. All of this capacity is powered by clean,
renewable hydro-electricity, the majority of which is
self owned.
     In the Oceania region, RTA has ownership interests
in four smelters, three in Australia and one in New Zealand. The Bell Bay smelter
in Australia is wholly owned, while ownership interests range from 52 to 79 per
cent in respect of



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the other three facilities. The total annual
    attributable production capacity in this region is 1.06 million tonnes as
    at 31 December
    2007, an increase of
    37 per cent over the prior year mainly due to the addition of a 51.6 per
    cent interest in Australias Tomago smelter as a result of the combination
    with Alcan.RTA
  also has a substantial presence in Europe with ownership interests in eight
  smelters, principally in France and the UK. The annual production
    capacity at the end of 2007 was one million tonnes, an increase of over 1,200
    per cent due to the combination with Alcan. Two of the smelters in the UK
  totalling 221,000 tonnes of annual capacity are powered by wholly owned electricity
  generation
    facilities. The Lannemezan smelter in France, which had a capacity of 25,000
    tonnes as at 31 December 2007, will be closed during the first half of 2008.In
  addition to Canada, Oceania and Europe, RTA wholly owns one smelter in the
  United States, which, together with interests in smelters in Cameroon and
  China,
    represents annual production capacity of 324,000 tonnes as at the end of
  2007. Alcan Ningxia Aluminum Company Limited (Ningxia), in which RTA holds
  a 50 per
    cent stake in the pre-bake Line 3, is one of the lowest cost aluminium producers
    in China. Further, the group retains a 20 per cent stake in the 350,000 tonne
    per annum Sohar smelter in Oman, which is on track to be commissioned during
    2008. The smelter will utilise RTAs AP35 technology which, together
    with RTA operational expertise, will contribute toward the expected position
    of
    the smelter in the
first quartile of the industry cash cost curve.

Power facilitiesGiven the long term
nature of a smelter investment, and the fact that electricity costs usually represent
around one quarter
    of industry
    average smelting cash
    costs, a secure, long life and competitively priced electricity supply is
    of vital importance in the aluminium smelting industry. In this respect,
    RTA is
    very favourably positioned. As at 31 December 2007, RTA owns electricity
    generating capacity of 5,076 MW, up from 706 MW at the end of 2006. The group
    owns generation
    capacity sufficient to meet around half of its electricity needs, a proportion
    far above the industry average, while long term power purchase contracts
    account for a further 46 per cent. An additional advantage is that 75 per
    cent of the
    total RTA electricity supply is non fossil fuel based hydropower and nuclear
    power.As
with the aluminium smelters, the significant majority of RTAs
    power facilities are located in Canada. Six separate wholly owned power stations
    located on the Peribonka and Saguenay rivers in Quebec comprise a generation
    capacity of 2,687 MW. The water management system for these power stations,
    with their associated dams, reservoirs and catchment areas, covers an area
    of 73,800 square kilometres. The groups wholly owned Kemano power station
    in British Columbia has capacity of 896 MW and primarily supplies electricity
    to the wholly owned Kitimat smelter. It is noteworthy that the groups
    Canadian self owned hydropower assets are the result of construction efforts
    that took place over a period of 50 years, and that such assets would be
    extremely difficult and costly to replicate today.The
group owns a 42 per cent share
    of the coal fired Gladstone Power Station (GPS) in Australia, used to supply
    the Boyne Island smelter. The GPS interest held by RTA has a capacity of
    706 MW.In
China, RTA owns nearly 22 per cent of the Daba power station, a facility
    which provides electricity to the Ningxia smelter. The groups share
of generating capacity from this coal fired plant is 261 MW.In Europe, the
      group
      wholly owns four power stations, three in the UK totalling 500 MW of capacity
      and one in Norway of 26 MW. Of the total of 526 MW of European generating
      capacity, 420 MW is coal
fired while the remainder is hydro powered.

|Technology                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The combination of Rio Tinto and Alcan
    creates an excellent opportunity to exercise undisputed industry leadership
    in technology. RTAs
technology strategy is to:
|•                                                                                                                                                                         
|•                                                                                                                                                                         
|•                                                                                                                                                                         

During 2007, design and engineering work continued
    on schedule in respect of
the AP50 pilot plant in Quebec, expected to cost around US$550 million and
have a nameplate capacity of 60,000 tonnes per annum. The plant is expected to
serve as the basis for commercialisation of the AP50 technology, which incorporates
unique design features that make it a superior platform for the fullest exploitation
of a suite of breakthrough
technologies currently under development.An
innovative portfolio of breakthrough technologies is being pursued with the overall
      goal of lowering unit energy consumption by up to 20 per cent while reducing
      and eventually eliminating GHG and other emissions. RTA is focused on step
      changes in energy consumption, environmental impact and full economic cost,
      in order to maintain and extend RTAs position as industry technology
      leader,
thereby supporting a key corporate objective of sustainable growth.RTA
also sells technology to third parties. In addition to being a viable business,
      this product offering has the benefit of enhancing RTAs appeal as
      the joint venture partner of choice, given the combination of technological
      and management skills the group is able to offer. This aspect of the RTA
      business may prove increasingly valuable in accessing growth options in
      the future, as the supply
side of the industry trends away from the developed world due to diminishing
availability of competitively priced, secure power.



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Other businessesRTAs Primary Metal business unit participates in a number of other businesses
    related to the smelting of primary metal. These include the production and
    sale of cathode blocks, anodes, aluminium fluoride and calcined coke, the provision
    of engineering services and sale of smelting equipment, as well as the sale
    of electricity where generation is surplus to production needs. These businesses
    are relatively small compared to the smelting and power operations. During
    the first half of 2007, they comprised less than ten per cent of Primary Metals
    revenues. The various businesses have a presence in most regions of the world,
with particular emphasis in North America and Europe.

2007 operating performanceIn 2007,
RTA produced 1.5 million tonnes of primary aluminium, up 75 per cent from 2006
levels due to the addition of Alcan aluminium
    production
    from 24
    October 2007.In
respect of the four smelters owned by Rio Tinto Aluminium prior to the Alcan
acquisition, RTAs share of aluminium production of
    862,000 tonnes was above 2006 production levels of 845,000 tonnes. Much of
    this improvement was attributable to Tiwai Point, (New Zealand Aluminium Smelters)
    where production was not hampered by the low lake levels that had been experienced
    in 2006.During
2007, RTA smelters continued to produce close to capacity, with the exception
of Edea (Cameroon) which operated at levels of around 85
    per cent due to power constraints.On
1 October, NZAS and Meridian Energy Limited signed an 18 year electricity price
agreement for 572 MW of continuous
consumption
    at the smelter. The agreement runs from 1 January 2013 to 31 December 2030.
    The new agreement provides NZAS with the basis for a secure and reliable
power supply to meet the smelters operational requirements during this
period. The smelter already has the lowest level of GHG emissions of any smelter
    of similar technology worldwide and this contract will maintain that position.
    In November 2007, the smelter received a gold award from the New Zealand
    Business
Excellence Foundation.

Weipa(Rio Tinto: 100 per cent)A 3.5 million tonne per annum expansion of the
    groups Weipa bauxite mine is currently under way. The expansion is
    scheduled to be completed by late 2009 and is expected to cost around US$30
    million. The expansion is expected to further leverage the world class Weipa
    bauxite deposit.

Gove(Rio Tinto:
      100 per cent)As of the date
      of Rio Tintos acquisition
      of Alcan, a 1.8 million tonnes per annum expansion of the Gove alumina refinery
      in Australia was nearing completion, with certain components of the expansion
      already commissioned and being brought into production. The expansion cost
      is US$2.3 billion, and is expected to bring the Gove refinery to a
      total capacity of 3.8 million tonnes per annum, making it one of the largest
      refineries
      in the world. Nameplate capacity is expected to be reached by the end of
      2008. Following completion of the expansion, the Gove refinery is expected
    to operate in the second quartile of the industry cash cost curve.

Yarwun(Rio Tinto:
      100 per cent)On 3 July 2007,
      Rio Tinto approved an expansion of the Yarwun alumina refinery in Gladstone,
      Queensland in order to more
      than double annual production, increasing output by two million tonnes.
    First shipments are expected in the second half of 2010. The expansion is
    expected
      to cost around US$1.8 billion. Work commenced on the expansion in the
      third quarter and is expected to take about three years to complete. First
      shipments are expected in the second half of 2010. All government approvals
      have been granted. Once completed, the refinery is expected to be positioned
    in the second quartile of the industry cost curve.

Sao Luis (Alumar)(Rio
      Tinto: ten per cent)A 2.1 million
      tonnes per annum expansion of the Alumar refinery in Brazil (Rio Tinto
      share 210,000 tonnes) is under
      way and progress on construction is approximately 35 per cent advanced
    as at 31 December 2007. The project will cost an estimated US$200 million
      (Rio Tintos share). Alumar is expected to be positioned in the first
    quartile of the industry operating cost curve once construction is completed.

Guinea(Rio Tinto:
      50 per cent)A 1.6 million tonnes per annum greenfield
      alumina refinery project in Guinea is being evaluated in partnership with
      Alcoa Inc. The project is currently at the pre feasibility stage and it is
      expected that the sponsors will make a decision in the first half of 2008
      with regard to undertaking detailed feasibility studies. It is expected that
      the refinery would be positioned in the first quartile of the industry cost
    curve.

Ghana(Rio Tinto:
      51 per cent)A 1.5 million tonnes per annum greenfield
      alumina refinery project is under consideration in partnership with the Government
      of Ghana. The project is currently at the conceptual study stage and it is
    expected that the sponsors will



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make a decision in the first half of 2008 with regard to undertaking a pre
    feasibility study. It is expected that the refinery would be positioned in
    the first quartile of the industry
cost curve.

Madagascar(Rio
      Tinto: 51 per cent)A 1.6 million tonnes per annum greenfield alumina refinery and associated bauxite
    mine is being considered in partnership with a Malagasy company. The project
    is currently at the conceptual study stage and it is expected that the sponsors
    will make a decision in the first half of 2008 with regard to undertaking a
    pre feasibility study. It is expected that the refinery would be positioned
    in the first quartile of the industry
cost curve.

Sohar(Rio Tinto: 20 per cent)In 2007, construction advanced on time and
  on budget at the 350,000 tonnes per annum smelter at Sohar, Oman. When complete,
  the 350,000 tonne potline would be the worlds largest both in terms of
  capacity and overall length, utilising the worlds most advanced commercial
  technology, the RTA owned AP35 smelting technology. The smelter is expected
  to produce aluminium ingot for export commencing in the first half of 2008.
  Once operational, the smelter is expected to be positioned in the first quartile
  of the industry cost curve. A second potline of similar size is currently the
  subject of discussions among the joint venture partners. Under the original
  agreement between the partners, RTA has the right to take up to 60 per cent
  of this second potline.

Hydropower(Rio
      Tinto: 100 per cent)On 26 April
      2007, the former Alcan announced the investment of US$130 million in a new, power efficient hydro generator
      to be installed at the groups Shipshaw power facility in Quebec, Canada.
      The new generator will optimise the performance of the facility and improve
      the efficiency with which the water flow is utilised. In addition, on 30
      January 2008, the group announced an investment of US$90 million in
      its Lochaber, Scotland hydro-electric facilities, designed to ensure the
      future
      of smelting in the Highlands of Scotland for many years to come. The project,
      which will see the installation of new hydro-electric turbo generators,
    is expected to commence in 2009 and be completed by 2012.

Spent pot lining facility(Rio
      Tinto: 100 per cent)RTA is building
      a US$180 million aluminium
      spent pot lining recycling plant in Quebecs Saguenay-Lac-Saint-Jean
      region of Canada. This unique industrial scale pilot plant is expected to
      have a capacity of approximately 80,000 tonnes to recycle spent pot lining
      using Alcans proprietry technology. Spent pot lining is the residual
      material generated in the de-lining of pots following the aluminium smelting
      electrolysis process. The spent pot lining is composed of carbon and various
      inert elements and is typically pre-treated and land filled under strict
      precautions. Through this new process, all of the spent pot lining will be
      recycable, providing the global aluminium industry with a sustainable re-usable
      solution for spent pot lining by-products. The plants technology was
      developed at RTAs Arvida Research and Development Centre and is expected
    to begin pot lining treatment operations in 2008.

Kitimat(Rio Tinto:
      100 per cent)In 2006, Alcan
      announced its intention to modernise the existing Kitimat smelter, replacing
      the current Soderberg
    technology with industry leading AP35+ prebake technology and increasing
    smelter capacity
      to 400,000 tonnes per annum. The facility will take advantage of the RTA
      owned Kemano hydro-electric facility, with a capacity of 896 MW, and access
      to the Pacific Rim in terms of raw materials and metal markets, while reducing
      the environmental footprint of the existing plant by 40 per cent by reducing
      GHG generation by around 500,000 tonnes per annum. Total investment in
    respect of the project is expected to be around US$2 billion. On 30 January 2008,
      the third and final condition for proceeding to board approval of the project
      was completed with clearance from the British Columbia Utilities Commission
      in respect of BC Hydros 2007 Energy Purchase Agreement with RTA.
      The other two hurdles were the securing of an acceptable labour agreement
      for
      construction and start up and assurances on environmental permitting issues.
      Advanced feasibility studies have been completed and the project is expected
      to be submitted for approval during 2008, on which basis first metal can
      be expected in 2011. When completed, the smelter is expected to be positioned
    in the first quartile of the industry cost curve.

Quebec(Rio Tinto:
      100 per cent)In December 2006,
      the former Alcan announced a plan to build a US$550 million pilot plant at its Complexe Jonquière
      site in Quebec, Canada to develop the companys proprietary AP50 smelting
      technology. The pilot plant is expected to produce approximately 60,000 tonnes
      of aluminium per annum and will be the platform for future generations of
      AP50 technology. The first of its kind, the plant is the start of a planned
      ten year US$1.8 billion investment programme in Quebecs SaguenayLac-Saint-Jean
      region, involving up to an additional 390,000 tonnes annually of new smelting
      capacity by 2015. The new AP50 pilot facility will be the cornerstone of
      an industrial strategy developed by RTA with the support of the Government
      of Quebec. Engineering and feasibility studies are advancing as are site
      preparation activities, and initial approval is expected around the middle
    of 2008. When completed, the smelter is expected to be



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Coega(Rio Tinto: 80 per cent)Feasibility studies have been substantially
  completed in respect of the construction of a 720,000 tonnes per annum smelter
  at Coega, Eastern Cape Province, South Africa. Although an energy contract
  with the South African utility, ESKOM was signed in November 2006, ongoing
  discussions are reviewing the terms of the project to align its timing with
  the availability of secure power generation capacity from ESKOM. When completed,
  the smelter is expected to be positioned in the first quartile of the industry
  cost curve.

Saudi Arabia(Rio
      Tinto: 49 per cent)In 2007,
      a heads of agreement was signed with Maaden (the Saudi Arabian
    Mining Company) to investigate the development of a bauxite mine at Az Zabirah,
    and construction of a power plant, alumina refinery and aluminium smelter complex
    at Ras Az Zawr, on the Gulf Coast of Saudi Arabia. Under the agreement, RTA
    is expected to take a 49 per cent interest in the project, with Maaden
    owning the remainder. Pre feasibility work is scheduled to be completed in
    2008. The proposed aluminium smelter is planned to have a capacity of 720,000
    tonnes per annum and if completed, is expected to be positioned in the first
    quartile of the industry cost curve. The proposed alumina refinery would
    have a capacity of 1.6 million tonnes per annum and if completed, is expected
    to
    be positioned in the second quartile of the industry cost curve. Most of
the smelter output, at least initially, is planned for export.

Sarawak(Rio Tinto:
      60 per cent)On 7 August 2007, Rio Tinto and Cahya Mata Sarawak Berhad signed a heads of
    agreement for the proposed development of a smelter in the State of Sarawak,
    Malaysia. Under the signing of the heads of agreement, detailed feasibility
    studies on the design, engineering, construction, commissioning and operation
    of a smelter with an initial capacity of 550,000 tonnes are being undertaken.
    The smelter is expected to have the capability to be expanded to 1.5 million
    tonnes per annum. It is proposed that electricity for the smelter may come
    from the Bakun hydro-electric dam, which is currently under construction. If
    completed, the smelter is expected to be positioned in the first quartile of
the industry cost curve.

Abu Dhabi(Rio
      Tinto: 50 per cent)Discussions are continuing with General Holding Corporation of Abu Dhabi for
    a development that could result in a smelter with a first stage production
    capacity of 720,000 tonnes of metal per annum. Abu Dhabi Aluminium Company
    (Adalco) has been formed to manage the joint venture. If completed, the smelter
is expected to be positioned in the first quartile of the industry cost curve.

Iceland(Rio Tinto:
      100 per cent)During 2007, the
      community near RTAs ISAL
    smelter expressed dissatisfaction with a proposed expansion and modernisation
    of the facilities,
    by narrowly
    rejecting a town planning referendum which included the matter. RTA is continuing
    to assess options for the possible expansion of its smelting activities in
Iceland.

Cameroon(Rio
      Tinto: 46.7 per cent)A potential upgrade and expansion of the Alucam smelter by 200,000 tonnes per
    annum, together with the construction of a new 330 MW hydro-electric power
    station, is being contemplated. Pre-feasibility studies have been completed
    and environmental authorisations have been obtained. RTA and the Government
    of Cameroon committed on 29 November 2007 to additional access to water resources
    to facilitate the launch of technical and pre-feasibility studies for a new
    greenfield smelter with potential capacity of 400,000 tonnes per annum. If
    completed, these smelter projects are expected to be positioned in the first
quartile of the industry cost curve.

ENGINEERED PRODUCTS

RTAs Engineered Products business unit is
    a portfolio of inter connected aluminium and non aluminium businesses providing
    innovative, high value added solutions to meet the diverse needs of its global
    customer base. In particular, the business is the premier supplier of high
    value added aluminium products to the worlds leading aircraft manufacturers.
    In Europe, it also produces large profile extrusions for the transportation
    industry and is a top supplier of beverage can stock. The business is the
    North American leader in aluminium wire and cable, and a world leader in
    composite products with a unique portfolio of brands and product solutions.
    As at 31 December 2007, the business unit comprised 95 operating and sales
    sites in 34 countries and regions around the world. The unit is organised
    into seven sub business units; Aerospace, Transport and Industry (ATI), Cable,
    Extruded Products, Composites, Specialty Sheet, Engineered and Automotive
    Solutions (EAS) and the Alcan International Network (AIN). 
      On 8 November 2007, RTA announced the sale of
the non aerospace portion of its service centre operations in Europe, Alcan Service
Centres (ASC), to Amari Metals. The transaction was completed on 4 January 2008.
Rio Tinto announced on 26 November 2007 the intention to explore options for
the divestment of the remainder of the Engineered Products business unit. Although
Engineered Products is a market leader in many of its largest businesses, and
has



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recently experienced strong growth, the business
    unit does
not fit within Rio Tintos overall corporate strategy.

PACKAGING

RTAs
      Packaging business unit enjoys market leading positions in each of the four
      packaging segments in which
          it operates; Food Flexible, Pharmaceutical and Medical, Beauty and Personal
          Care, and Tobacco. It is one of the few participants in its product markets
          with a truly global reach having executed considerable expansion into
      emerging countries and regions over the last few years. The business delivers
      innovative
          packaging solutions using plastics, engineered films, aluminium, paper,
        paperboard and glass to customers worldwide. As at 31 December 2007, the
        business unit
          comprised 129 operating sites in 31 countries and regions around the
      world. The potential divestment of the Packaging business unit was being
      explored
          by Alcan during the first half of 2007 and was confirmed in the announcement
          by Rio Tinto of an agreed bid for Alcan on 12 July, 2007. The sale process
        for the Packaging business unit is ongoing.



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Copper group

|Mined                                          | Rio Tinto share |  
|---------------------------------------------- | --------------- | -
|Copper                                         | 000 tonnes     |  
|                                               |                 |  
|2003                                           | 867             |  
|2004                                           | 753             |  
|2005                                           | 784             |  
|2006                                           | 803             |  
|2007                                           | 738             |  
|                                               |                 |  
|                                               |                 |  
|Gold                                           | 000 ounces     |  
|                                               |                 |  
|2003                                           | 2,731           |  
|2004                                           | 1,552           |  
|2005                                           | 1,726           |  
|2006                                           | 1,003           |  
|2007                                           | 1,233           |  
|                                               |                 |  
|                                               |                 |  
|Refined                                        | Rio Tinto share |  
|Copper                                         | 000 tonnes     |  
|                                               |                 |  
|2003                                           | 349             |  
|2004                                           | 333             |  
|2005                                           | 314             |  
|2006                                           | 299             |  
|2007                                           | 390             |  
|                                               |                 |  
|                                               |                 |  
|Underlying earnings contribution*              | US$m            |  
|                                               |                 |  
|2004                                           | 860             |  
|2005                                           | 1,987           |  
|2006                                           | 3,538           |  
|2007                                           | 3,479           |  
|                                               |                 |  
|                                               |                 |  
|Changes in underlying earnings
    2005 - 2007 | US$m            |  
|                                               |                 |  
|2005 Underlying earnings                       | 1,987           |  
|Effect of changes in:                          |                 |  
|Prices and exchange rates                      | 1,707           |  
|General inflation                              | (28             | )
|Volumes                                        | (179            | )
|Costs                                          | (196            | )
|Tax and other                                  | 247             |  
|                                               |                 |  
|2006 Underlying earnings                       | 3,538           |  
|Effect of changes in:                          |                 |  
|Prices and exchange rates                      | 388             |  
|General inflation                              | (37             | )
|Volumes                                        | 309             |  
|Costs                                          | (230            | )
|Tax and other                                  | (489            | )
|                                               |                 |  
|2007 Underlying earnings                       | 3,479           |  
|                                               |                 |  

|* | A reconciliation of the net earnings with
        underlying earnings for 2007, 2006 and 2005 as determined under IFRS
    is set out on page 53.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

STRATEGIC OVERVIEW

Rio Tintos Copper portfolio comprises
        a diverse mix of operations and projects along the development pipeline.
      During 2007 the focus on copper and molybdenum was supplemented by nickel.The
      Copper group comprises Kennecott Utah Copper in the US and interests in
      the producing
      copper mines of Escondida
    in Chile, Grasberg in Indonesia, Northparkes in Australia and Palabora in
    South Africa. The group has management responsibility for Kennecott Minerals
    Company in the US and includes interests in undeveloped world class copper
    orebodies at La Granja in Peru, Oyu Tolgoi in Mongolia and Resolution in
    the US. Nickel projects in Indonesia and the US offer a pathway to becoming
    a top tier global nickel producer.     
    As one of the worlds leading copper
    businesses, Rio Tintos pipeline of projects position the Group to become
    the worlds leading base metal producer by value creation. Recent exploration
    at the La Granja project in Peru has highlighted the potential for doubling
    forecast production to in excess of 500,000 tonnes per annum. Development
    work on Oyu Tolgoi is progressing well with significant further exploration
    potential in Mongolia. Average production is projected to be 440,000 tonnes
    per annum of copper and 320,000 ounces per annum of gold over the life of
    the mine.



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Rio Tinto has a 9.9 per cent interest in the
    Pebble copper-gold-molybdenum project in Alaska managed by the Northern Dynasty
    Minerals/Anglo American
    joint venture. Rio Tinto continues to be involved and monitor progress.There
    are
    significant extension options in copper, gold and molybdenum at Kennecott
    Utah Copper and upside on the Resolution project, both in the US. In addition
    to
    these world class projects, the group is developing the E48 underground deposit
    at Northparkes. At Palabora, studies are progressing to evaluate an extension
    to the existing underground block cave lift, to explore the option of developing
    a second lift and to review options for enhancing revenue from magnetite
    stockpiles, a form of iron ore produced as a by-product of copper concentration.Historically,
    the Copper group built the majority of its portfolio through acquisitions
    (Kennecott) or joint ventures (Escondida, Grasberg) followed by expansions.
    The current
    pipeline of projects represents a transition with a greater proportion of
    opportunities created through exploration and acquisitions at an early stage
    of development.
    The Copper groups long term development plans are not confined to its
    principal product. Rio Tinto has a number of nickel development opportunities
    which are currently being evaluated. At the small, high grade Eagle nickel
    deposit (Rio Tinto: 100 per cent) in Michigan in the US, feasibility studies
    were completed during 2007 and the decision to construct the underground mine
    was made in November 2007. In Indonesia, positive progress was made with the
    government on a Contract of Work for the Sulawesi Nickel project.A
Copper Projects team was formed in 2007 to manage the planning, development and
related
    technology aspects of the portfolio of major projects, namely La Granja,
Oyu Tolgoi, Resolution Copper, Keystone at Kennecott Utah Copper and Sulawesi
Nickel.
    The team will collaborate with the Technology and Innovation group to focus
    on block cave design (with project work at Palabora), rapid construction
(at Diavik), copper leaching (at La Granja) and nickel/cobalt recoveries (trials
    in Australia). With the significant ramp up of activities at each project
site,
    there has been an elevated focus on safety systems especially in the area
of contractor management.Oyu
Tolgoi, Resolution Copper and Kennecott Utah Coppers
    Bingham Canyon are amenable to being mined using the underground block caving
    technique. Unlike an open pit mine, which involves extensive removal of the
    surface waste rock to access the orebody, the block cave method accesses
    the orebody from underneath through a series of deep shafts and tunnels.
    These
    shafts and tunnels generate minimal waste rock. The block caving technique
    is currently being used at both Palabora and Northparkes. La Granja will
    rely on innovative leaching technology which will be about three times higher
    than
    their average level through the 1990s and well above levels achieved in the
    early part of this decade. Copper stocks have been at critically low levels
    since a surge of consumption in 2004 depleted available inventories. Since
    then, supply has been constrained while underlying demand has strengthened
    with Chinese economic growth. Prices could remain near current levels as
    long as production growth continues to lag the underlying demand trend. Strong
    Chinese
    demand growth is expected in 2008 while on the supply side issues include
    the likelihood of ongoing disruptions and possible constraints on the availability
    of sulphuric acid affecting solvent extraction and electro-winning (SxEw)
    operations.
    The importance of investment funds in exchange traded commodity markets means
    that large price movements could take place on the back of commodity specific
    speculative shifts or broader shifts in investor sentiment, well in advance
    of any fundamental change in physical markets. Looking to the long run, strong
    demand growth prospects are based on the expected resource intensive development
    of economies such as China and associated investment in power distribution
    networks and other infrastructure. On balance, there has been a structural
    shift in copper costs supporting the expectation of significantly higher
    long run prices than would be implied by historical trends.Rio
Tinto announced
    in November 2007 that it would explore options for the sale of a shortlist
    of assets, including three businesses from the Copper product group  Greens
    Creek (zinc, lead, silver) (Rio Tinto: 70 per cent), Cortez/Pipeline (gold)(Rio
    Tinto: 40 per cent) and Northparkes (copper, gold)(Rio Tinto: 80 per cent).
    These are all good businesses and any sales will be value driven and dependent
    on price. On 12 February 2008 the Group reached agreement for the sale of the
    Greens Creek interest for US$750 million. On 5 March 2008 the Group completed
    the sale of its interest in the Cortez gold mine for US$1,695 million,
    a deferred bonus payment and a contingent royalty.At
31 December 2007, the Copper group, which also produces gold and molybdenum as
significant co-products,
    accounted for six per cent of the Groups operating assets and in 2007
    contributed approximately 25 per cent of Rio Tintos gross sales revenue,
    of which 72 per cent was from copper, 12 per cent from molybdenum and the
    remainder mostly from gold. It accounted for 47 per cent of underlying earnings
    in 2007.Bret Clayton, chief executive, Copper, is based in London.

SAFETY

|All injury frequency rate | per 200,000 hours
|------------------------- | -----------------
|                          |                  
|2003                      | 1.72             
|2004                      | 1.25             
|2005                      | 1.64             
|2006                      | 1.47             
|2007                      | 1.28             
|                          |                  

In 2007 there was one fatality at Resolution Copper
    and four fatalities at non managed operations (three at Grasberg and one
    at Escondida). For Copper group managed operations, the all injury frequency
  rate (AIFR) was 1.27 compared to



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1.47 for 2006. There were notable improvements in AIFR at Kennecott Minerals
    (3.68 to 1.84) and Palabora (1.08 to 0.60) .On 10 March 2008 a helicopter under charter to the La Granja copper project
  in Peru went missing while two pilots were ferrying eight passengers from the
  La Granja camp to Chiclayo. Wreckage was observed from the air and it was subsequently
  found that all ten occupants of the helicopter had perished. Rio Tinto is providing
  support and counselling to the families and colleagues of those involved.

GREENHOUSE GAS EMISSIONS

Kennecott Utah Copper
    (KUC) currently has 49 projects that will reduce greenhouse gas (GHG) emissions,
    including reduction
          of diesel consumption by haul trucks and increasing throughput at the
    pebble crusher. The challenge in 2008 will be to achieve GHG reductions per
    unit
          of copper produced.
     Palabora is expecting a reduction of 13.3 per cent
    which is below the targeted reduction of 19.8 per cent. The reason is the
    switch,
          made for economic reasons, from processing purchased concentrates to
    processing Palabora owned low grade surface stockpiles. This results in higher
    energy
          use and a reduction in production.
     Given the energy limitations in
    South Africa, Palabora continues to implement energy efficiency measures
    while
          maintaining operational flexibility. Northparkes in Australia has set
    reduction targets although GHG emissions per unit of copper will increase
    due to the
early cessation of the E26 underground phase and processing of harder ore.

FINANCIAL
PERFORMANCE

2007 compared with 2006The
        Copper groups contribution to 2007 underlying earnings
              was US$3,479 million, similar to 2006 record earnings. Higher prices
              and volumes offset higher costs and the absence of 2006 tax benefits. The
              average price of copper was 324 US cents per pound during 2007, six per cent
              higher than in 2006. The average gold price of US$691 per ounce increased
              by 15 per cent. The average price of molybdenum was US$29.92 per pound
              compared with US$24.60 per pound in 2006. Higher volumes were achieved
              across all operations except Northparkes, with the largest increases at Escondida
              due to a full years sulphide leach production, and at KUC due to the
              absence of the 2006 smelter shutdown. Higher operational costs were due to
              increased truck numbers resulting from longer haul profiles at KUC, increased
              diesel power costs due to natural gas restrictions at Escondida and the premature
              shutdown of Lift 2 at Northparkes. Evaluation projects also impacted cash
              costs due to higher spending at Resolution, La Granja, the Keystone project
              at KUC and the share of spending on the Oyu Tolgoi project.      KUCs contribution
              to underlying earnings of US$1,649 million was US$161 million lower
              than 2006, primarily through the absence of the US$289 million tax credit
              recognised in the prior year, a higher tax rate due to the shift from the
              Alternative Minimum Tax accounting basis in the US group and increased depreciation
              following the impairment reversal during 2006. As well as increased prices,
              offsetting these decreases in earnings were higher refined copper and gold
              volumes as smelter performance improved following the extended shutdown in
              late 2006 as well as a reduction in the environmental liability following
              a re-assessment of the acid plume clean-up rate.     Rio
  Tintos share of
              underlying earnings from Escondida was US$1,525 million, an increase
              of US$275 million from the prior year. This was achieved through
              higher prices and increased copper volumes as a result of the continued
              ramp up
              of the sulphide leach plant and a higher ore grade which more than
      compensated for higher energy and material costs.
     The Grasberg
          joint venture contributed US$159 million to underlying earnings, US$37
          million above 2006. This was due to significant increases in gold volumes
          due to improved grade
      offset by a fall in copper volumes as grade and mill throughput both fell.
     Palaboras 2007 earnings
          of US$58 million were US$6 million above the prior year, as
          increasing volumes achieved through improved underground production
          and ore grade
  and also higher copper rod premiums all benefited earnings.Northparkes
  contributed US$137 million to underlying earnings, a fall of US$92
  million from 2006.Performance
  was dominated by the premature shutdown of the Lift 2 underground area during
  the first half of the
      year, resulting in the
          processing of low grade open pit stockpiles and increased costs.     Kennecott
          Minerals
            earnings of US$106 million were US$1 million above the prior year,
            with higher prices and increased gold volumes from Cortez offset by the absence
            of the US$14 million tax credit from the prior year and the resulting
            higher effective tax rate in 2007.     The
  impact on earnings of expenditure on evaluation projects was US$155 million in 2007, an increase of US$125
            million from the prior year as activities increased on a number of
            projects. Activities included pre-feasibility studies at Resolution
            Copper and
            La Granja and early construction work at Oyu Tolgoi in anticipation
            of the
            signing
  of an Investment Agreement with the Mongolian government.



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2006 compared with 2005The Copper
groups contribution to underlying earnings was US$3,538
    million, US$1,551 million higher than in 2005. The average price of copper
    was 306 US cents per pound during 2006, 84 per cent higher than in 2005. The
    average gold price of US$602 per ounce increased by 36 per cent. The average
    price of molybdenum was US$24.60 per pound compared with US$30.70 per
    pound in 2005.KUCs
earnings of US$1,810 million were US$767
    million higher than in 2005, with the operation benefiting from higher prices
    and volumes and a tax credit of US$289 million following recognition
    of deferred tax assets. Record molybdenum production was achieved during
    the year,
    offsetting the impact of lower refined copper production due to a scheduled
    smelter shutdown in the second half of 2006. An increase in the groups
    long term copper price assumption triggered an assessment of the amount of
    recoverable copper at KUC. As a result, impairments recorded in 2001 and
    2002 were reversed in 2006.Rio
Tintos share of earnings from Escondida increased
    by US$648 million to US$1,250 million. Higher prices and the commencement
    of sulphide leaching counterbalanced higher mining costs and input prices.
      The
    Grasberg joint venture contributed US$122 million to underlying earnings,
    US$110 million below 2005. Lower grades of copper, gold and silver, the
    result of mine sequencing, led to significantly lower production of all three
metals.
     Palaboras 2006 earnings
    of US$52 million were US$33 million above the prior year, benefiting
    from higher copper prices and sales volumes and the sale of some smelter
    stocks.Northparkes earnings
of US$229 million represents a US$172
    million increase from 2005. In addition to higher prices, better grades,
    increased throughput and improved recoveries all contributed to a 54 per
    cent increase in production of copper contained in concentrates.Kennecott
    Minerals 2006 earnings of US$105 million were US$32 million
    above 2005. The effect of higher gold and zinc prices and the recognition
    of a US$14 million deferred tax asset were offset by higher costs and
    lower sales
volumes from Cortez, due to lower grades.

Kennecott Utah Copper(Rio Tinto:
    100 per cent)Kennecott Utah Copper (KUC) operates the
  Bingham Canyon mine, Copperton concentrator and Garfield smelter and refinery
  complex, near Salt Lake City, US. KUC is a polymetallic mine, producing copper,
  gold, molybdenum and silver. As the second largest copper producer in the US,
  KUC supplies more than 13 per cent of the nations annual refined copper
  requirements and it employs approximately 1,800 people.     KUC joined
  the Climate Registry, a voluntary reporting system for greenhouse gas emissions.
  KUC will continue to report publicly on greenhouse gas emissions associated
  with the operations.

2007 operating performanceKUC
    has been operating for over 100 years, was Rio Tintos most profitable
    mine in 2007 and has extensive optionality for future development. KUC is
    well positioned on the industry cost curve,
      benefiting from significant co-product revenues from gold and molybdenum.
      It continues to demonstrate operating flexibility by delivering high volumes
      of molybdenum during a continuing period of exceptionally high prices.
    Building on the foundation of Rio Tintos Improving performance together(IPT)
      methodology, KUC continued to improve its knowledge of molybdenum mineralisation
      in the orebody to optimise production. The bulk flotation upgrade at the
      concentrator started in 2007 with an expected capital cost of US$88
      million. The project, scheduled for completion in June 2008, is expected
      to increase
      recovery by around two per cent and increase concentrate grade by four
      per cent.KUC
  continues to be one of the most favourable brownfield environments of all Rio
  Tintos mines and retains significant options for further
      mine life extensions. Over the past two years brownfield exploration has
      uncovered a world class molybdenum deposit sitting underneath the Bingham
      open pit, additional porphyry mineralistion below the southern pit wall
      at depth and multiple targets with further potential both in the immediate
      three
      to four kilometre wide orbit of the Bingham pit and within 20 kilometres
      in the Oquirrh Range.The
  Keystone project continues to evaluate pit expansion options while concurrently
  establishing underground access, through the
      dewatering and rehabilitation of an existing mine shaft to provide access
      for an underground
      drilling programme. Additional option analysis to accelerate the underground
      schedule through shaft and level access design will be conducted in 2008.
      Current open pit options indicate that there is good opportunity to expand
      mining in the southern area of the pit. Current ore reserves will support
      open pit operations until 2019 and this could be extended to 2036 through
      a combination of underground and open pit options.KUC
  is progressing with a feasibility study to advance the molybdenum autoclave
  process (MAP),
      which will convert molybdenum concentrates into final saleable products.
      KUC currently
      produces a high grade molybdenum concentrate that is shipped to a third
      party roaster for conversion to metallurgical grade molybdenum products.
      The proposal
      is to produce enhanced chemical grade products on a brownfield site west
      of the smelter. The main economic drivers for the project are attracting
      a chemical grade premium with contract floor pricing and higher molybdenum
      recoveries. A decision whether or not to proceed with construction will
      be made in the first quarter of 2008, with operations commencing in the
      first
      quarter of 2010. The estimated capital cost to construct the facility is
US$169



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million with an additional US$106 million
    to expand the plant in 2014 to match a predicted increase in mined molybdenum
production.

Principal operating statistics at KUC
2005-2007

|                                                      | 2007    |  | 2006    |  | 2005    | 
|----------------------------------------------------- | ------- |  | ------- |  | ------- | 
|                                                      |         |  |         |  |         | 
|Rock mined (000 tonnes)                              | 142,297 |  | 145,343 |  | 140,906 | 
|Ore milled (000 tonnes)                              | 47,525  |  | 47,857  |  | 46,664  | 
|Head grades:                                          |         |  |         |  |         | 
|Copper (%)                                            | 0.53    |  | 0.63    |  | 0.53    | 
|Gold (g/t)                                            | 0.38    |  | 0.49    |  | 0.37    | 
|Silver (g/t)                                          | 3.00    |  | 3.50    |  | 3.23    | 
|Molybdenum (%)                                        | 0.050   |  | 0.057   |  | 0.058   | 
|Copper
	      concentrates produced (000 tonnes)     | 889     |  | 1,019   |  | 881     | 
|Production of metals in copper concentrates           |         |  |         |  |         | 
|Copper
	      (000 tonnes)                           | 212.2   |  | 265.6   |  | 220.6   | 
|Gold
	      (000 ounces)                             | 397     |  | 523     |  | 401     | 
|Silver
	      (000 ounces)                           | 3,487   |  | 4,214   |  | 3,958   | 
|Molybdenum
	      concentrates produced (000 tonnes) | 26.6    |  | 30.2    |  | 29.5    | 
|Contained
	      molybdenum (000 tonnes)             | 14.9    |  | 16.8    |  | 15.6    | 
|Concentrate
	      smelted on site (000 tonnes)      | 1,103   |  | 918     |  | 1,042   | 
|Production of refined metals                          |         |  |         |  |         | 
|Copper
	      (000 tonnes)                           | 265.6   |  | 217.9   |  | 232.0   | 
|Gold
	      (000 ounces)                             | 523     |  | 462     |  | 369     | 
|Silver
	      (000 ounces)                           | 4,365   |  | 4,152   |  | 3,538   | 
|                                                      |         |  |         |  |         | 

Grasberg joint venture(Rio Tinto:
  40 per cent)Grasberg,
    located in the province of Papua in 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).
    The Government of Indonesia owns the remaining nine per cent of PTFI. The
    joint
    venture gives Rio Tinto a 40 per cent share of production above specific
    levels until 2021 and 40 per cent of all production after 2021, as well as
    representation
on operating and technical committees.
     The joint venture
      operates under an agreement with the Government of Indonesia, which allows
      the joint venture
    to conduct exploration, mining and production activities in a 10,000 hectare
    area (Block A). Exploration activities are conducted in an approximate 200,000
    hectare area (Block B). All of the proved and probable mineral reserves and
    current mining operations are located in Block A. Rio Tinto and PTFI also
    have joint ventures in other entities which have exploration rights in areas
    covering 690,000 hectares in addition to Blocks A and B. Rio Tinto has the
    right to 40 per cent of the exploration potential in all areas outside of
Block A.In meeting 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 trust funds were established
      in 2001 in recognition of the traditional land rights of the local Amungme
      and Komoro tribes. In 2007, PTFI contributed US$48 million (net of Rio
      Tinto portion) and Rio Tinto US$4.5 million in total to the funds. 
       As
      a result of training and educational programmes, Papuans represented more
      than a quarter of PTFIs approximately 10,776 strong workforce by
the end of 2007.

2007 operating performanceIn mid 2007,
the Deep Ore Zone expansion to 50,000 tonnes per day was completed, and a further
expansion to 80,000 tonnes per
    day is
    under way. Ninety per cent
    of the tunnelling on the Common Infrastructure Project was completed, which
    will provide access to large undeveloped orebodies through a tunnel system
    400 metres below existing workings. Feasibility studies for Grasberg block
    cave operations are well advanced and mine development activities will commence
    in the first half of 2008. The Big Gossan development will reach full production
    rates by the end of 2010. The high pressure grinding rolls project which
    involves new energy saving technology for treating ore in the mill was completed
    during
    2007. 
       Rio Tintos share of metal is 40 per cent of the production in excess
    of a level specified in the joint venture agreement (the Product Schedule).
    This means that Rio Tintos share is leveraged to relatively small variations
    in total production. Rio Tintos 2007 share of production showed considerable
    variation from 2006  volumes of payable copper decreased to 60 million
    pounds in 2007 from 99 million pounds in 2006, offset by an increase in the
    volume of payable gold from 94,000 ounces in 2006 to 411,000 ounces in 2007.
    The sequencing in mining areas with varying ore grades causes fluctuations
    in the timing of ore production, resulting in varying annual production of
    copper and gold. This continuing variation in production will continue year
    on year. It is expected that in the first half of 2008 mining will be in
    a relatively low grade section of the Grasberg open pit. 
       The current mine
    plan
    reflects a transition from the Grasberg open pit to the Grasberg underground
    block cave orebody in mid 2015. PTFI, as manager, continually analyses its
    longer range
mine plans to assess the optimal design of



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the Grasberg open pit and the timing of development
    of the Grasberg underground block cave orebody. The review in 2006 resulted
    in changes
    to the expected
    final Grasberg open pit design which will result in a section of high grade
    ore previously expected to be mined in the open pit to be mined in Grasbergs
underground block cave operations.

Principal operating statistics for PTFI
2005-2007

|                                     | 2007   |  | 2006   |  | 2005   | 
|------------------------------------ | ------ |  | ------ |  | ------ | 
|                                     |        |  |        |  |        | 
|Ore milled (000 tonnes)             | 77,593 |  | 83,716 |  | 78,907 | 
|Head grades:                         |        |  |        |  |        | 
|Copper (%)                           | 0.82   |  | 0.85   |  | 1.13   | 
|Gold (g/t)                           | 1.24   |  | 0.85   |  | 1.65   | 
|Silver (g/t)                         | 3.53   |  | 3.84   |  | 4.88   | 
|Production of metals in concentrates |        |  |        |  |        | 
|Copper
	      (000 tonnes)          | 569.4  |  | 610.8  |  | 793.9  | 
|Gold
	      (000 ounces)            | 2,689  |  | 1,880  |  | 3,546  | 
|Silver
	      (000 ounces)          | 5,238  |  | 5,609  |  | 7,531  | 
|                                     |        |  |        |  |        | 

Escondida(Rio Tinto: 30 per cent)The
    low cost Escondida copper mine in Chiles
    Atacama Desert, is the largest copper mine in the world in terms of annual
    production,
    and has a mine life
    expected to exceed 30 years. It accounts for approximately eight per cent
    of world primary copper production. BHP Billiton owns 57.5 per cent of Escondida
and is the operator and product sales agent.
     The Escondida
      district hosts two of the largest porphyry copper deposit systems in the
      world  Escondida
    and Escondida Norte, located five kilometres from Escondida. A sulphide leach
    project was completed during 2006 and continued to ramp up during 2007. Escondida
    employs approximately 2,900 people. Options for future growth at Escondida
    continue to be evaluated jointly. These include increasing throughput by
    adding new facilities such as a concentrator to the two existing ones, optimising
    mining rates through coordinating mine plans with adjacent pits and identifying
    new ore sources through exploration. A brownfields exploration programme
has been in place since 2005, with encouraging results.
     The energy situation in northern
    Chile is tight and vulnerable to rationing. Diesel power has replaced natural
    gas and the future energy matrix is likely to shift towards coal and liquefied
    natural gas (LNG). Escondida is supporting the development of a LNG plant
    which should provide additional power and reliability to the system. In the
    longer term, Escondida will secure power through the construction of a coal
fired power station which will be operational by 2011.

2007 operating performanceEscondidas
copper concentrate production was 11 per cent higher than 2006 due to higher
grades and throughput. Refined
    copper
    production was 77
    per cent higher than 2006 due to a full year of sulphide leach production
which commenced in June 2006.

Principal operating statistics at Escondida
2005-2007

|                                     | 2007    |  | 2006    |  | 2005    | 
|------------------------------------ | ------- |  | ------- |  | ------- | 
|                                     |         |  |         |  |         | 
|Rock mined (000 tonnes)             | 345,377 |  | 338,583 |  | 359,569 | 
|Ore milled (000 tonnes)             | 90,697  |  | 84,158  |  | 86,054  | 
|Head grade:                          |         |  |         |  |         | 
|Copper (%)                           | 1.64    |  | 1.59    |  | 1.53    | 
|Production of metals in concentrates |         |  |         |  |         | 
|Copper
	      (000 tonnes)          | 1,247   |  | 1,122   |  | 1,127   | 
|Gold
	      (000 ounces)            | 187     |  | 170     |  | 183     | 
|Silver
	      (000 ounces)          | 7,870   |  | 6,646   |  | 6,565   | 
|Copper cathode (000 tonnes)         | 238.4   |  | 134.4   |  | 143.9   | 
|                                     |         |  |         |  |         | 

Palabora(Rio Tinto: 57.7 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
    developed a US$465 million block cave underground mine with a planned production
    rate of at least 32,000 tonnes of ore per day. Approximately 678,900 tonnes
    of copper are expected to be produced over the remaining life of the mine.
    
       Palabora supplies most of South Africas copper needs and exports the
    balance. It employs approximately 2,050 people. For the first time, three
    year wage agreements were entered into with organised labour until the end
    of February
2011.
     Palabora is progressing arrangements
    to meet the requirements of legislation governing broad based economic empowerment
in the South African mining industry.



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2007 operating performanceUnderground
production increased as a result of improved block caving conditions, procedures
and equipment availability.
    Ore milled increased
    mainly due to higher
    underground production and the processing of Palabora marginal and oxide
    ore surface stock piles. Concentrate tonnage was 15 per cent greater than
    2006
    due to reclaimed low grade concentrate during the first quarter of 2007 and
    higher milled tonnage. Smelter production also increased on the prior year
    due to the absence of the 2006 smelter shutdown. Magnetite production in
    2007 was up 16 per cent year on year, in line with
Palaboras plans to meet offtake agreements.

Principal operating statistics at Palabora
2005-2007

|                                               | 2007   |  | 2006   |  | 2005  | 
|---------------------------------------------- | ------ |  | ------ |  | ----- | 
|                                               |        |  |        |  |       | 
|Ore milled (000 tonnes)                       | 12,915 |  | 10,730 |  | 9,536 | 
|Head grade:                                    |        |  |        |  |       | 
|Copper (%)                                     | 0.70   |  | 0.71   |  | 0.72  | 
|Copper concentrates produced (000 tonnes)     | 239.2  |  | 208.9  |  | 197.1 | 
|Contained copper (000 tonnes)                 | 71.4   |  | 61.5   |  | 61.2  | 
|New concentrates smelted on site (000 tonnes) | 295.8  |  | 288.5  |  | 304.4 | 
|Refined copper produced (000 tonnes)          | 91.7   |  | 81.2   |  | 80.3  | 
|Magnetite concentrate ('000 tonnes)            | 1,306  |  | 1,127  |  | 888   | 
|                                               |        |  |        |  |       | 

Northparkes(Rio Tinto: 80 per cent)Rio
    Tintos interest in the Northparkes copper-gold mine in central New
    South Wales, Australia, resulted from the acquisition of North Ltd. Northparkes
    is a joint venture with the Sumitomo Group (20 per cent). 
       Following an initial
    open pit operation at Northparkes, underground block cave mining has been undertaken
    since 1997. In November 2006, the joint venture partners approved the development
    of the E48 block cave project, which is expected to cost US$160 million
    (Rio Tinto share: US$127 million) and extend the mines life until
2016. Northparkes employs approximately 220 people.

2007 operating performanceProduction was constrained by early closure of the E26 Lift 2 due to the ingress
    of clay at the underground drawpoints. Ore was and will continue to be sourced
    from stockpiles, the E22 open pit and the Lift 2 North block cave until production
commences from the E48 block cave in 2009.

Principal operating statistics at Northparkes
2005-2007

|                               | 2007  |  | 2006  |  | 2005  | 
|------------------------------ | ----- |  | ----- |  | ----- | 
|                               |       |  |       |  |       | 
|Ore milled (000 tonnes)       | 5,297 |  | 5,789 |  | 5,453 | 
|Head grade:                    |       |  |       |  |       | 
|Copper (%)                     | 0.91  |  | 1.53  |  | 1.12  | 
|Gold (g/t)                     | 0.62  |  | 0.64  |  | 0.46  | 
|Production of contained metals |       |  |       |  |       | 
|Copper
	      (000 tonnes)    | 43.1  |  | 83.3  |  | 54.0  | 
|Gold
	      (000 ounces)      | 78.8  |  | 94.7  |  | 57.0  | 
|                               |       |  |       |  |       | 

Kennecott Minerals(Rio Tinto: 100
  per cent)Kennecott
    Minerals in the US managed the Greens Creek mine (Rio Tinto: 70 per cent)
    on Admiralty Island in Alaska which produces
    silver,
    zinc, lead and gold
    and the Rawhide mine (Rio Tinto: 51 per cent) in Nevada which produces gold
    and silver by leaching since mining operations ceased in 2002. Reclamation
    work is well advanced. Kennecott Minerals also owned the groups interest
    in the Cortez joint venture (Rio Tinto: 40 per cent), also in Nevada. 
       Kennecott
    Minerals has a successful record in mine closure, having demonstrated responsible
    post mining use of land at Flambeau, Wisconsin, where the mine became a nature
    park, and at Ridgeway in South Carolina, now a
wetland for ecological studies.
     Rio Tinto announced
      in November 2007 that it would explore options for the sale of a shortlist
      of assets
    including the Greens Creek mine and the Cortez joint venture. On 12 February
    2008 the Group reached agreement for the sale of Greens Creek to its minority
    partner for US$750 million. On 5 March 2008 the Group completed the sale
    of its interest in the Cortez joint venture to its partner for a cash consideration
    of US$1,695 million, a deferred bonus payment in the event of additional
    reserves and a contingent royalty interest. 
       Kennecott Minerals employed approximately
250 people, excluding employees of non managed operations.

2007 operating performanceNet earnings
of US$106 million matched 2006
    earnings, with prices for gold, silver, zinc and lead remaining strong. At
    Greens Creek,
    production increased
    over 2006 due to the completion of the major rehabilitation programme at
    the mine. Cortez gold production remains constrained as mining moves into
    the final
    lower grade stages of the Pipeline orebody. 2007 production was, however,
    21 per cent higher than 2006 due to
increased leach ore tonnes.



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Resolution(Rio Tinto: 55 per cent)The Resolution Copper project is located
  in the historic Pioneer Mining District three miles east of Superior, Arizona.
  Exploration from 2001 to 2003 indicated a large, world class copper resource
  more than 2,000 metres (7,000 feet) below surface. The project team is currently
  working through a pre-feasibility study, including dewatering the former Magma
  mine and sinking an exploratory shaft to 2,000 metres below the surface, as
  well as preparing numerous studies to evaluate the technical, legal and environmental
  issues and to prepare the mining plan.
      The key issue facing the project is progress on
the passage of a land exchange bill through the US Congress to exchange 1,300
hectares of federal land above the Resolution deposit for over 2,000 hectares
of land with high conservation value spread throughout Arizona. In July 2007,
land exchange bills were reintroduced into the US Senate and House, followed
by a House hearing in November. The next steps include mark up of the bill in
the House and a hearing in the Senate which is likely to take place in the first
half of 2008.

Oyu Tolgoi(Rio
      Tinto: 9.9 per cent interest in Ivanhoe Mines)In
      October 2006 Rio Tinto purchased a stake of just under ten per cent in
      Ivanhoe Mines of Canada in order to jointly
      develop the Oyu Tolgoi copper-gold resource in Mongolias south Gobi
      region. Rio Tinto has the ability progressively to increase its stake to
      43 per cent over the next four years at pre-determined prices. This phased,
      risk managed entry into an outstanding resource secures a valuable share
      of a potential average production rate of 440,000 tonnes of copper per
      year with significant gold by-products.
           There is extensive exploration potential
      in Mongolia, including ground controlled by Entrée Gold around Oyu
      Tolgoi. Rio Tinto is the largest single shareholder in Entrée Gold
      and, with Ivanhoe, owns a total equity interest of 30.6 per cent. Ivanhoe
      has an option for up to an 80 per cent interest in the Entrée ground
      over the north and south extensions of the Oyu Tolgoi trend. Exploration
      on the Entrée Gold joint venture by Ivanhoe has recently delineated
      a continuous molybdenum-rich copper and gold mineralisation up to 400 metres
      wide along a 1,100 metre strike length. Overall, the Oyu Tolgoi mineralised
      trend now has a strike length of over 20 kilometres.
           Rio Tinto is actively
      engaged and working with the Mongolian Government to progress settlement
    of a long term investment agreement.

Entrée Gold(Rio
      Tinto: 16 per cent)In June 2005
      Rio Tinto acquired a 9.9 per cent stake via private placement in Entrée Gold Inc, a Canadian junior
      mining company. Entrée Gold's main asset includes three claims that
      surround the Ivanhoe Mines Oyu Tolgoi project in Mongolia. Rio Tinto's entry
      into Entrée Gold was due primarily to the prospectivity of the land
      package, including high grade copper and gold intercepts in their tenement
      already under agreement to Ivanhoe adjacent to the Oyu Tolgoi lease. Recent
      drilling by Ivanhoe identified significant high grade intercepts of porphyry
      mineralisation on the Heruga concession adjacent to the Oyu Tolgoi project.
      As part of the initial entry into Entrée Gold, Rio Tinto secured a
      further 6.3 million A and B class warrants which were due to expire by the
      end of June 2007. On the 28th June, Rio Tinto exercised these warrants at
      a cost of US$16.9 million which took Rio Tinto's direct equity in Entrée
      Gold to approximately 16 per cent. The combined Rio Tinto and Ivanhoe equity
    position is now over 30 per cent.

La Granja(Rio
      Tinto: 100 per cent)La Granja
      in the Cajamarca region of northern Peru is a copper project in the pre-feasibility
      phase. Rio Tinto acquired
      the project in December 2005 for US$22 million plus a minimum investment
      of US$60 million, through a public bidding process carried out by the
      Peruvian Government.
        As of December 2007, 41 kilometres of drilling
  had been completed which led to discovery of four additional porphyries in the
  vicinity, as well as further exploration potential. Drilling results suggest
  that the main areas have a targeted mineralisation at a copper equivalent average
  grade of about 0.5 per cent. Initial investigations indicate two to four times
  more mineralised material than was reported by previous owners, making La Granja
  the largest undeveloped copper project in Latin America. It has the potential
  to be a very large, long life operation. First production could occur in 2014.
     Instead of looking at La Granja as
      a conventional milling operation producing concentrates for export, the
      pre-feasibility
      study is aimed at demonstrating the possibility of recovering copper metal
      using leaching of copper from whole ore, with solvent extraction and electrowinning.
     There
are many stakeholders with an interest in the project due to the potential positive
impact on the local and national economy. At the same
      time, local
      communities have high expectations of Rio Tintos presence in the
      area, where basic skills of literacy and numeracy and basic infrastructure
      and
      services are lacking. Rio Tinto is working in a participatory manner with
      local communities to help them develop and improve their quality of life
    with the engagement of local, regional and national authorities.

Pebble(Rio Tinto:
      19.8 per cent interest in Northern Dynasty Minerals)Rio Tinto acquired a 9.9 per cent interest
      in Northern Dynasty Minerals during the year and increased its interest to
      19.8 per cent during February 2007. Northern Dynasty Minerals is advancing
      the Pebble copper-gold-molybdenum deposit in south western Alaska, which
      includes an orebody amenable to block caving. In July 2007, Anglo American
    agreed to



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invest US$1.4 billion in stages to earn a
    50 per cent
stake in the project.
     The project comprises two orebodies,
    Pebble East and Pebble West. Drilling has shown Pebble East to be deep and
    higher grade, suggesting an attractive underground mining option with a smaller
    environmental footprint than the Pebble West deposit which would entail open
    pit mining. Rio Tinto will not support development unless it is conducted
    in a way that protects fish, wildlife and the
environment.

Sulawesi Nickel(Rio
      Tinto: 100 per
cent)The Sulawesi Nickel project is situated on the island
of Sulawesi in Indonesia and is the result of the discovery by Rio Tinto Exploration
in 2000 of a world
    class laterite deposit. Because of the nature of the deposit, mining is planned
    to be a shallow open cut process with continuous rehabilitation. Initial
production is planned at a rate of about 46,000 tonnes of nickel per annum, with
potential
    to increase to about 100,000 tonnes. The project will involve the construction
    of an access highway and a new seaport on the east coast of Sulawesi.
     Upon
    completion of the negotiation of a Contract of Work (CoW) with the Government
    and ratification of the agreement by the Indonesian Parliament, it is intended
to start a pre-feasibility study into development.

Eagle(Rio Tinto:
      100 per cent)Late in 2007 Rio Tinto approved the development of the eagle nickel high grade
    underground mine in Michigan, US, which is scheduled to begin operation in
    2009. There are six further adjacent prospects which may give the potential
    to extend the current mine life beyond 30 years at the current planned production
    rates. Deeper drilling under and adjacent to the Eagle deposit reinforced the
    potential for further economic nickel mineralisation outside the current mine
    plan. There are similarities to other world class magmatic nickel-sulphide
    deposits. Rio Tinto has an extensive land position in the Eagle district which
    is extremely prospective, including a 30 kilometre identified trend containing
multiple target intrusions.



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Diamonds and Industrial Minerals group

|Mined                                      | Rio Tinto share |  
|------------------------------------------ | --------------- | -
|Diamonds                                   | 000 carats     |  
|                                           |                 |  
|2003                                       | 33,272          |  
|2004                                       | 25,202          |  
|2005                                       | 35,635          |  
|2006                                       | 35,162          |  
|2007                                       | 26,023          |  
|                                           |                 |  
|Underlying earnings contribution*          | US$m            |  
|                                           |                 |  
|2004                                       | 431             |  
|2005                                       | 438             |  
|2006                                       | 406             |  
|2007                                       | 488             |  
|                                           |                 |  
|Changes in underlying earnings 2005  2007 | US$m            |  
|                                           |                 |  
|2005 Underlying earnings                   | 438             |  
|Effect of changes in:                      |                 |  
|Prices and exchange rates                  | 46              |  
|General inflation                          | (26             | )
|Volumes                                    | (97             | )
|Costs                                      | (22             | )
|Tax and other                              | 67              |  
|                                           |                 |  
|2006 Underlying earnings                   | 406             |  
|Effect of changes in:                      |                 |  
|Prices and exchange rates                  | (20             | )
|General inflation                          | (39             | )
|Volumes                                    | 58              |  
|Costs                                      | 53              |  
|Tax and other                              | 30              |  
|                                           |                 |  
|2007 Underlying earnings                   | 488             |  
|                                           |                 |  

|* | A reconciliation of the net earnings with
        underlying earnings for 2007, 2006 and 2005 as determined under IFRS
    is set out on page 53.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

STRATEGIC OVERVIEW

From 1 June 2007 the number of product
        groups in which Rio Tinto is organised was reduced by combining the Industrial
        Minerals group with the Diamonds group to form Diamonds and Industrial
        Minerals. The structuring better reflects the size of the Diamonds and
        Industrial Minerals businesses in the context of the broader Rio Tinto.
        Diamonds and Industrial Minerals report to the product group heads of Copper
      and Energy respectively.Diamonds
      comprises Rio Tintos
    60 per cent interest in the Diavik Diamonds mine located in the Northwest
    Territories of Canada, the wholly owned Argyle mine in Western Australia,
    Rio Tintos 78 per cent interest in the Murowa mine in Zimbabwe and
    diamond sales and representative offices in Antwerp, Belgium and Mumbai,
    India.
          Within the global diamond industry, Rio Tinto
    Diamonds is well positioned as a leading supplier to the market with a clear
    focus on the upstream portion
    of the value chain. The groups differentiated approach to marketing
    has enabled it to capture higher prices.
         
    The groups strategy is to
    compete in the diamond business and strive to build further value through
    operational excellence and continued development of new and existing resources.
    The focus is on the mining, recovery and sale of rough natural diamonds.
    In keeping with Rio Tintos values, the group is a leading proponent
    of a number of programmes and partnerships that help improve social and environmental
    standards of partners, suppliers and customers.
     Rio Tinto sells
      diamonds from all three operations through its marketing arm according
      to a strict chain
    of custody process ensuring all products are segregated according to mine
    source.
         
    The Industrial Minerals part of the group is made up of Rio Tinto
    Minerals (RTM), a global leader in borates, talc and salt supply and science,
    and Rio Tinto Iron & Titanium (RTIT), a major producer of titanium dioxide
    feedstock. Industrial minerals markets include automotive, construction,
    telecommunications, agriculture and consumer products industries. Market
    differentiation depends on technical and marketing expertise and the group
    maintains R&D facilities in Europe, Canada and the US to develop new
    products and support customers. 
     The Industrial Minerals strategy is to create
    value by directing resources toward high value growth sectors in mature and
    emerging markets. To support this, the group focuses on meeting customers needs
    for consistent quality, on time delivery and responsiveness; setting and
    meeting aggressive business improvement targets; expanding high grade titanium
    dioxide feedstock capacity; and establishing stock points to supply demand
    growth in emerging economies.



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The Industrial Minerals operating strategy is market driven and focuses on
    optimising volumes and product mix.
      Business improvement
    targets set in 2004 have largely been met resulting in the lowering of the
    sustainable cost base
    of Industrial Minerals. As part of a business optimisation exercise two talc
    operations were sold and two more were decommissioned in 2007. The Canadian
    RTIT metal powders plant has been integrated into the other RTIT operations
    to improve operating synergies. Operational excellence programmes continue
    to deliver improvements through systematically eliminating waste, reducing
    process variability, and engaging and empowering the workforce.
      Commercial
    and operating excellence is the foundation for growth, with acquisitions
      of sufficient scale serving to complement the existing portfolio. Greenfields
    projects are under way in potash and soda ash. RTIT is operating its assets
    at maximum capacity while maximising returns from co-products. Volume growth
    in the high grade titanium dioxide feedstock market will be underpinned by
    the commissioning and expansion of the Madagascar deposit.
      During 2007 negotiations
    at Richards Bay Minerals (RBM) were progressed to an advanced stage to divest
    26 per cent of the business to historically disadvantaged groups as part
      of
    the legal requirement in South Africa to convert mineral rights. Rio Tinto
    marginally increased its share in its salt operations by buying out minority
    shareholders. At the end of 2007 a Group wide review of assets was conducted
    to determine the long term value of retaining these assets within Rio Tinto.
    Based on the outcome of this review the RTM borates and talc businesses are
being considered for divestment.At 31 December
      2007, Diamonds and Industrial Minerals accounted for seven per cent of
      the Groups
    operating assets and contributed approximately 12 per cent of Rio Tintos
    gross turnover and seven per cent of underlying earnings in 2007. Approximately
    8,000 people were employed in 2007.
      Andrew Mackenzie was appointed chief
    executive, Diamonds and Industrial Minerals on 1 June. In November he left
    the Group. Responsibility for the Industrial Minerals portfolio was assumed
    by Preston Chiaro, chief executive, Energy, while Bret Clayton, chief executive,
Copper, is responsible for Diamonds.

SAFETY

|All injury frequency rate | per 200,000 hours
|------------------------- | -----------------
|                          |                  
|2003                      | 1.89             
|2004                      | 1.67             
|2005                      | 1.45             
|2006                      | 0.91             
|2007                      | 1.07             
|                          |                  

GREENHOUSE GAS EMISSIONS

Greenhouse gas (GHG)
    emissions per tonne of product are decreasing at both Diavik and Argyle diamond
    mines. Both
        sites are evaluating and implementing projects to further reduce emissions.
        At
          Argyle these projects are focused on inreasing the proportion of hydro-electric
          power, which already meets the majority of power requirements.The
majority of RTMs GHG emissions are from the Boron California facility
          where an energy management plan has been introduced. There are currently
          24
          energy management projects that are being progressed, and emissions
          per tonne
          of product are decreasing. During 2007 RTIT sites undertook audits
to identify opportunities for GHG and energy reduction.

FINANCIAL PERFORMANCE

2007 compared with 2006Diamonds contributed US$280 million to Rio
  Tintos underlying earnings in 2007, an increase of US$69 million
  over 2006. Sales revenue for 2007 was US$1,020 million, US$182 million
  higher than in 2006. Increased volumes from Diavik, a reduction in stocks at
  Argyle and tax credits in Australia and Canada contributed to earnings. An
  impairment charge of US$328 million after tax was taken at Argyle, reflecting
  industry cost pressures and the difficult ground conditions encountered in
  the underground project.
      The rough diamond market recovered during 2007
as excess pipeline inventory was consumed after weakness in the latter half of
2006. The polished diamond market was steady, but the weakness of the US economy
is expected to curtail demand in the lower end of the market.
      Industrial Minerals net earnings were US$248
million, an improvement of two per cent on 2006. Net earnings from RTM decreased
eight per cent to US$84 million while revenue grew five per cent. Earnings
were negatively



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affected by a tax charge related to the borates business, and the impact of cyclones
in Western Australia on salt volumes.
     RTIT recorded
      earnings of US$164
    million, up from US$152 million in 2006. Revenue increased by 15 per
    cent due to an increase in sales to emerging markets and strong co-product
    prices. The effect of the strong Canadian dollar and rising input costs continued
    to put pressure on earnings from RTITs wholly-owned QIT-Fer et Titane
(QIT) business.

2006 compared with 2005Diamonds contributed
US$211 million to underlying earnings in 2006, a decrease
    of US$75 million from 2005. Reduced 2006 earnings are mainly a result
    of the weakened second half market.Diamonds turnover
for 2006 was US$838
    million, US$238 million lower than in 2005 driven primarily by a downturn
    in the rough diamond market in the second half of 2006. This resulted in
    lower prices for most product types with Rio Tinto Diamonds stocking some
    lower quality
    product to be sold in 2007.      Diamond
production remained at similar levels to 2005 across all operations. Argyle produced
29.1 million carats in 2006,
    approximately
    1.4 million carats less than in 2005. This was in line with expectations
    of a decreasing diamond production profile as the open pit winds down and
    underground
    production ramps up over the next five years. Diavik produced 5.9 million
    carats in 2006, 0.9 million carats more than in 2005. Murowa produced 0.2
    million
    carats in 2006, slightly less than in 2005.      The
rough diamond market started strong in the first half of 2006 but deteriorated
into the second half. Year
    end prices closed at similar levels to the start of 2006. A number of factors
    influenced this mid year correction, including a congested processing pipeline,
    tight manufacturing and trading liquidity and storms that caused flooding
    in Indias major cutting center, Surat, which forced the shutdown of
    many cutting and manufacturing centres for several weeks.      Polished
diamond prices
    remained constant through 2006 with reasonable demand experienced for most
    products, particularly for larger better quality white diamonds.      During
2006 Rio Tintos shares in Ashton Mining of Canada were taken up by Stornoway
    Diamonds under its takeover bid for Ashton. In exchange for the shares in
    Ashton, Rio Tinto received cash totaling approximately C$29.6 million
    and 25.6 million Stornoway common shares.      Industrial
Minerals contribution
    to 2006 underlying earnings was US$243 million, a 30 per cent improvement
on 2005.
     Rio Tinto Minerals
      earnings at US$91 million were 54 per cent improved on 2005. The absence
      in 2006 of the 2005 Rio Tinto Minerals restructure provision and modest
      revenue increases,
    combined with strong cost performance, despite upward pressure from cyclones
    in Western Australia and labour markets, contributed to this result.
       Rio
    Tinto Iron & Titanium earnings at US$152 million were 19 per cent
    higher than in 2005. Good price performance across all products, combined
    with favourable volume trends, strict cost control at RBM, and beneficial
    Canadian tax changes offset increased costs in the Canadian operations and
    the impact of the
strong Canadian dollar.

Argyle(Rio Tinto: 100 per cent)Rio Tinto owns and operates the Argyle diamond
  mine in Western Australia. Production from Argyles AK1 open pit mine
  is expected to continue through 2008, when the mine will transition to underground
  operations which are expected to extend the life of the mine to about 2018.

2007 operating performanceDue to lower grades, diamonds recovered
      decreased to 18.7 million carats in 2007 from 29.1 million carats in 2006
      despite a two per cent increase in the volume of ore treated. Mine productivity
      was lower due to mining at lower elevations in the pit. Improvement programmes
      are in place to mitigate the cost pressures brought about by the resources
boom in Western Australia.

Diavik Diamonds(Rio
      Tinto: 60 per cent)Rio Tinto
      operates the Diavik Diamond Mine, located 300 kilometres north east of
      Yellowknife, Northwest Territories.
      It is an unincorporated joint venture between Rio Tinto and Harry Winston
      Diamond Corporation (formerly Aber Diamonds). Operations began in 2003
    with mining of the A154 kimberlite pipes. In 2007 a second dike was completed
      to enable development of an open pit to mine on the A418 pipe. Open pit
    mining
      is expected to cease in 2012, at which time Diavik will become an all underground
      mine. Diaviks total mine life remains within the 16 to 22 years projected
    in the original feasibility study of 1999.

2007 operating performanceVolumes
    of ore mined and processed were similar to 2006, however increased grades
    meant that Rio Tintos share
      of diamonds recovered increased to 7.2 million carats in 2007 from 5.9
      million carats in 2006. The availability of the winter road was much improved
      from
the previous year and supply of materials did not negatively affect operations.



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Murowa(Rio Tinto:
      77.8 per cent)Production at
      Murowa commenced in late 2004 after US$11
    million was spent on constructing a 200,000 tonnes per year plant and supporting
    infrastructure.
    Chain of custody safeguards put in place at the commencement of production
have performed without incident.

2007 operating performanceThe effects
of power disruptions and lower feed head grades meant that Rio Tintos share
of diamonds recovered decreased to 0.11 million carats from 0.19 million carats
in 2006. Operating conditions
    in
    the country remained challenging
with hyperinflation and commodity shortages.

RTM comprises borates, talc and salt mines,
      refineries, and shipping and packing facilities on five continents. Global
      headquarters are located in Denver, Colorado.Borates More
      than one million tonnes of refined borates are produced at Boron Operations,
      the organisations principal borate mining and refining operation
      in Californias Mojave Desert. Borates are essential to plants and
      part of a healthy diet for people. They are also key ingredients in hundreds
      of products essential to an acceptable standard of living, chief among
      them:
      insulation fibreglass, textile fibreglass, and heat resistant glass (44
      per cent of world demand); ceramic and enamel frits and glazes (13 per
      cent);
      detergents, soaps and personal care products (six per cent); agricultural
      micro-nutrients (seven per cent); and other uses including wood preservatives
    and flame retardants (30 per cent).Talc RTM
operates talc mines  including
      the worlds largest, in southwest France  and processing facilities
      in Austria, Australia, Belgium, Canada, France, Italy, Japan, Mexico, Spain
      and the US. Talcs enhance performance in countless applications, including
      paper, paints, polymers, automotive mouldings, ceramics, personal care
      products and pharmaceuticals. This multiplicity demands an in depth understanding
      not only of talcs properties and functions but also of its full range
      of applications and user industries.Salt(Rio Tinto: 68.4 per cent)  RTM
      manages three salt operations located in Western Australia. It produces
      industrial salt by solar evaporation at its Dampier, Port Hedland and Lake
      MacLeod operations,
      where it also mines gypsum. Customers are located in Asia and the Middle
      East. The majority are chemical companies who use salt as feedstock for
      the production of chlorine and caustic soda (together known as chlor-alkali
      production).
      Products are also used as food salt and for general purposes including
    road de-icing.

2007 operating performanceBorates Production
      volumes were up one per cent at 560,000 tonnes of boric oxide, and sales
      volumes
      declined slightly from 2006. North American markets continued to be affected
      by a sluggish housing industry in 2007 but were offset by strong growth
in Asian markets and steady performance in European markets.Talc Talc
      output decreased by eight per cent to 1,281,000 tonnes as smaller operations
      were closed
    and marginal sales were discontinued. Sales volumes decreased slightly. Strong
      polymer and coating sales in Europe offset volume declines in North America
      driven by the housing and automotive sector slowdown.Salt(Rio
      Tinto: 68.4 per cent)  The residual effects of the cyclones in Western
      Australia led to a three per cent decline in salt volumes to 5.2 million
      tonnes (Rio
      Tinto share). The recovery effort is expected to take until the fourth
      quarter of 2008, with full capacity likely in 2010. A 500,000 tonnes per
      annum capacity
expansion at Lake MacLeod has been completed.

RIO TINTO IRON & TITANIUM OPERATIONS

Quebec Iron & TitaniumRichards Bay Minerals(Rio
Tinto: 50 per cent)Rio Tinto Iron & Titanium (RTIT) comprises
      the wholly owned Quebec Iron & Titanium (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. RBM is progressing arrangements
      to meet the requirements of legislation governing broad based economic
      empowerment in the South African mining industry.
      QITs proprietary process technology enables
it to supply both the sulphate and chloride pigment manufacturing methods. QIT
has the capacity to produce 375,000 tonnes of upgraded slag (UGS) per annum and
is currently improving its smelter facility to smelt ilmenite from the Madagascar
project into high grade slag. Identified mineralisation will sustain more than
20 years operation at current production rates if converted to ore reserves.
      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.
      RTIT is headquartered
in the UK.



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2007 operating performanceTitanium dioxide pigment is the principal end use market for feedstocks manufactured
by RTIT.
     Titanium dioxide feedstock output
    remained steady from 2006 to 2007 with both smelters operating at full capacity.
    Prices of chloride feedstock remained flat with the market going into oversupply.
    The production of UGS increased by five per cent to take advantage of the
    increasing demand for high grade feedstock. Sales of feedstock into the sulphate
    market increased to meet demand from Asia. Prices for iron co-products remained
strong during the year.

DIAMONDS AND INDUSTRIAL MINERALS GROUP PROJECTS

Diavik underground(Rio
      Tinto: 60
per cent)Following the completion
of the feasibility study in 2007 approval was given to proceed with underground
mining of the A154N,
    A154S
    and A418 kimberlites.
    Additional funding of US$563 million was approved, bringing the total investment
    in the underground mine to US$787 million. Under the current life of mine
    plan, diamond production from underground would begin in 2009 and continue
beyond 2020.To support underground mining, Diavik must construct
    new surface works including a crusher and paste backfill plant, expand its
    water treatment
      and power generating plants, and construct ancillary facilities including
    fuel and cement storage, and additional accommodation facilities. 
       About 20
    kilometres
      of tunnels will be constructed to bring underground mining into production.
      The capital investment of US$563 million will be spent over the next two
      years, adding to the US$224 million invested in 2006-2007 for the underground
      feasibility studies and related capital projects. 
       The study into the A21
      kimberlite concluded that this should not be included in reserves at this
      point and further
      project development
will be conducted in 2008.

Murowa(Rio Tinto:
      77.8 per cent)The feasibility study into expanding the capacity of Murowa mining and processing
    operations was completed during 2007. A decision to proceed will depend on
  resolving security of tenure.

Argyle underground(Rio
      Tinto: 100
per cent)Rio Tinto approved the development
of an underground block cave mine under the AK1 open pit in late 2005. It also
approved an
    open pit
    cutback on the
    Northern Bowl to facilitate the transition from open pit to underground mining.
    The cost estimate for the project was revised to US$1.5 billion due to
    the overheated Western Australian mining and construction industry and challenging
    ground conditions. However, efforts continue to recover value, and some improvement
    on the revised cost estimate may be possible following more rapid underground
    development rates in the second half. First production from the underground
operation is expected in 2009.

QIT Madagascar Minerals(Rio
      Tinto
80 per cent)The project was approved
in 2005 and comprises a mineral sand mine and separation plant, and port facilities
in southern
    Madagascar as
    well as an upgrade of
    QITs ilmenite smelting facilities in Canada. The Government of Madagascar
    contributed US$35m to the establishment of the port as part of its Growth
    Poles project funded by the World Bank. The project has maintained its schedule,
    however cost inflation and foreign exchange effects have increased the cost
    estimate to US$1.0 billion. Nevertheless, increased product selling prices
    have meant that the project value has been maintained. First production is
    expected at the end of 2008. 
       The mine will be a key initial customer of the
    deep sea multi-use public port at Ehoala, providing the base load to help
    establish the port. Over time, it is expected the port will make an important
    contribution
    to economic development of the region. 
       RTIT will manage the port operations.
    At the end of the life of the mine, the port will fall under the responsibility
and control of the Government of Madagascar.
     Extensive engagement and consultation
    with the Government of Madagascar and local people and leaders has taken
    place over many years. The World Bank is involved in a development role and
    non government organisations, including the Royal Botanic Gardens, Kew and
    Missouri Botanical Gardens, have been involved in planning environmental
and conservation strategies.

Potasio Rio Colorado S.A.
      (Rio Tinto
100 per cent)The Rio Colorado potash project in Argentina lies 1,000 kilometres south west
    of Buenos Aires. Potash is used principally as an agricultural fertiliser.
    Evaluation of the project began in late 2003, and has included a two year large
    scale trial of solution mining. This ran successfully from late 2004. During
    2007 the feasibility study was completed. Development of the project depends
    on finalising permits and other agreements as well as approval by the board
    of Rio Tinto. Subject to this, first production could occur in 2011. Installed
    capacity will be 2.9 million tonnes per year. The scale and quality of the
resource provide potential for expansion.



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Kazan trona(Rio
      Tinto 100 per cent)The Kazan trona project is located 35 kilometres northwest of Ankara in Turkey.
    Rio Tinto is conducting pre-feasibility studies and, upon expected approval
    in 2008, will move into large scale solution mining trials. Trona is converted
    to soda ash, or sodium carbonate, by dissolving ore and recrystallizing the
    soda ash. Soda ash is one of oldest known and largest volume inorganic chemicals,
    used primarily in the glass, chemicals, soap and detergent, and pulp and paper
    industries. Kazan trona is expected to be a more environmentally sustainable
commodity to meet rising global demand than chemical synthesis.



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Energy group

|Mined                                          | Rio Tinto share |  
|---------------------------------------------- | --------------- | -
|Coal                                           | million tonnes  |  
|                                               |                 |  
|2003                                           | 148.8           |  
|2004                                           | 157.4           |  
|2005                                           | 153.6           |  
|2006                                           | 162.3           |  
|2007                                           | 155.6           |  
|                                               |                 |  
|                                               |                 |  
|Uranium                                        | 000 pounds     |  
|2003                                           | 11,372          |  
|2004                                           | 13,170          |  
|2005                                           | 14,511          |  
|2006                                           | 12,561          |  
|2007                                           | 12,616          |  
|                                               |                 |  
|                                               |                 |  
|Underlying earnings contribution*              | US$m            |  
|                                               |                 |  
|2004                                           | 431             |  
|2005                                           | 730             |  
|2006                                           | 706             |  
|2007                                           | 484             |  
|                                               |                 |  
|                                               |                 |  
|Changes in underlying earnings
    2005  2007 | US$m            |  
|                                               |                 |  
|2005 Underlying earnings                       | 730             |  
|Effect of changes in:                          |                 |  
|Prices and exchange rates                      | 199             |  
|General inflation                              | (50             | )
|Volumes                                        | (13             | )
|Costs                                          | (211            | )
|Tax and other                                  | 51              |  
|                                               |                 |  
|2006 Underlying earnings                       | 706             |  
|Effect of changes in:                          |                 |  
|Prices and exchange rates                      | 102             |  
|General inflation                              | (51             | )
|Volumes                                        | 6               |  
|Costs                                          | (251            | )
|Tax and other                                  | (28             | )
|                                               |                 |  
|2007 Underlying earnings                       | 484             |  
|                                               |                 |  

|* | A reconciliation of the net earnings with
        underlying earnings for 2007, 2006 and 2005 as determined under IFRS
    is set out on page 53.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

STRATEGIC OVERVIEW

The Energy group comprises thermal coal,
        coking coal and uranium operations. Coal interests located in Australia
        and the US supply internationally traded and US and Australian domestic
        markets. Rio Tinto Uranium supplies uranium oxide produced at its majority
        owned mines in Australia and Namibia to electric power utilities worldwide.
        Rio Tinto Uranium is currently the worlds second largest uranium
      supplier.The
      group strategy aims to harness and focus resources to deliver world class
      performance
      in operations, sustainable
    development and value creation. The strategy is focused on positioning the
    group as the worlds value leader in mineable energy. 
         
    The groups
    reserve position in thermal and coking coal is sufficient to underpin significant
    greenfield and brownfield expansions.
     In 2007 the
      Energy group undertook a review of its asset portfolio which highlighted
      opportunities in the current
    market to divest assets. Options to divest Rio Tinto Energy America (RTEA)
    and the Kintyre, Australia, and Sweetwater, US, uranium projects are currently
    being explored. 
         
    A key part of the groups strategy is to ensure that
    the group is a leading advocate of, and investor in, the sustainable future
    uses of coal and uranium. In 2007 the group continued to dedicate resources
    and investment funds to the development of clean coal technology through
    the FutureGen project in the US, COAL21 in Australia and in numerous low
    emission coal research organisations in the US and Australia.
         
    In 2007 Hydrogen
    Energy was launched, a 50:50 joint venture with BP which will develop low
    carbon energy projects around the world. Hydrogen Energy will position Rio
    Tinto Energy to profit from the advent of a global low carbon energy future
    and initiate the development of a broader risk management strategy for climate
    change regulation while providing a meaningful offer on climate change and
    product stewardship.



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The
    groups
      strategic intent is to build through Hydrogen Energy a low carbon energy
      business primarily
    reliant on coal that will ultimately leverage Rio Tintos capabilities
    in identifying, acquiring and operating large long life coal assets. Gasification
    opens new and larger markets for coal and the aim is to maximise returns
    across the emerging coal gasification value chain. Early positioning will
    convey an important element of competitive advantage. A key to unlocking
    value will be to proactively shape government policy to support and enable
    initial projects.
         Hydrogen Energy will initially focus on the production
    of hydrogen for power generation using fossil fuels feedstocks and carbon
    capture and storage technology to produce new large scale supplies of clean
    electricity. Hydrogen Energy has announced initiation of studies for possible
    projects in California,
Western Australia, and Abu Dhabi.The Rössing Uranium life
    of mine extension project in Namibia continues. With the substantial recovery
    of uranium prices in recent years, Rössing is well positioned to expand
    and further extend the life of its operations. This will enable the company
    to continue to be a leading contributor to the Namibian economy, as it has
been for the past 30 years.
     At Energy Resources
      of Australias
    (ERA) Ranger mine, a number of opportunities for further low cost brownfield
    expansion are under consideration. ERA also owns the Jabiluka deposit, the
    second largest undeveloped uranium deposit in the world. In addition to the
    significant and sustainable operating assets at Rössing and ERA, Rio
    Tinto has increased its uranium exploration activity around the world. With
    a global nuclear power renaissance now under way, driven in large part by
    the need for large baseload electricity generation that does not emit greenhouse
    gases, Rio Tinto intends to maintain and enhance its position as one of the
worlds leading uranium suppliers to power this growth.
    At 31 December
      2007, the Energy group accounted for 4.9 per cent of Group operating assets
      and, in 2007,
    contributed 13.8 per cent of Rio Tintos gross sales revenue and 6.5
    per cent of underlying earnings.Preston Chiaro, chief executive, Energy
and Industrial Minerals, is based in London.

SAFETY

|All injury frequency rate | per 200,000 hours
|------------------------- | -----------------
|                          |                  
|2003                      | 2.35             
|2004                      | 2.02             
|2005                      | 1.31             
|2006                      | 0.89             
|2007                      | 0.89             
|                          |                  

Safety performance and awareness continued
  to be a major focus of all operations. Energy Resources of Australia achieved
      significant improvements
      in safety performance.
      The lost time injury rate fell by 74 per cent and the all injury rate by
      46 per cent. The injury severity rate, a measure of the seriousness of
  injuries, also decreased by a factor of over three. At Rio Tinto Energy America
  the
      severity
      index improved to approximately half of the severity index in 2006. At
  Rio Tinto Coal Australias (RTCA) Kestrel mine the lost time injury rate fell
      by 57 per cent and the all injury rate by 60 per cent. Two Energy group operations
      were winners of the Chief Executives Safety Awards, Hunter Valley
      Operations and the Antelope
mine in the US.

GREENHOUSE GAS EMISSIONS

A greenhouse gas (GHG) performance
    review was submitted by each business unit as part of a planning process.
    This
      included a discussion on targets and performance and a list of proposed
  and implemented
        projects noting project progress, savings, costs and NPV (net present
  value).Energy
  Resources of Australia is expected to exceed its targeted GHG reductions.
        Rio Tinto Energy America is slightly above target and Rio Tinto Coal
  Australia emissions per tonne have increased. Both RTEA and RTCA have a number
  of
      NPV positive optimisations and diesel reduction projects being researched
      or
        implemented. With a life of mine extension under way, Rössing Uranium
      has set a revised target. A number of optimisation projects have been identified.The Energy group is also focussing
      on long term emissions reductions through the Hydrogen Energy joint venture.
      The plan identifies significant expenditure in terms of operating and capital
      costs for Hydrogen Energy in 2008 and 2009.



2007 compared with 2006The Energy groups 2007 contribution to underlying
  earnings was US$484 million, US$222 million less than in 2006.
      Coal chain infrastructure bottlenecks and allocation
cutbacks in Australia resulted
in ongoing and significant



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production cutbacks and much higher demurrage
    costs. It is anticipated that production in Australia will not return to
    full capacity
    until 2010 when infrastructure
    bottlenecks are expected to be cleared. Port allocation arrangement negotiations
    were continuing at year end.The
results also reflected the softening of coking coal prices although there were
increases in thermal coal prices and
    the stronger
    uranium oxide market. The weakening of the US dollar against the Australian
    dollar reduced earnings at Australian operations. For all operations, rising
    fuel prices and the tightness of the labour supply market continued to place
    pressure on operating results.Despite
lower volumes of uranium sold, higher market prices and the expiration of older
contracts containing price caps
    contributed to a 69 per cent increase in uranium revenues in 2007 compared
    to 2006.At
    Rössing Uranium, results were affected by reduced production volumes
    due to grade and plant performance and increased operating costs associated
    with
    development projects to increase capacity in the future. At ERA results were
    affected by production losses associated with severe rain and flooding of
    the pit.The strong upward momentum that characterised the uranium market
    in the
    past three years continued for the first half of 2007, as demand remained
    robust in the wake of supply disruptions that affected a number of projects
    worldwide.
    However, unlike previous years, 2007 saw a fundamental change in market behaviour
    as the spot price became de-linked from the long term market due to the increasing
    influence of speculators in the commodity. Historically, the spot market
    has traded at a nominal discount to the term market, but last year saw substantial
volatility in spot prices.
     The long term
      uranium price, at which Rio Tinto sells most of its material, exhibited
      strong growth in the
    early part of the year, rising to a high of US$95 per pound in May, an
    increase of 27 per cent over December 2006. Thereafter, the long term price
    remained at US$95 as utility purchasing activity continued at moderately
high levels.

2006 compared with 2005The Energy
groups contribution to underlying earnings was US$706
    million, US$24 million lower than in 2005.Results
benefited from a sustained increase in the price received for thermal coal. Capacity
problems in the
    coal supply chain in the Hunter Valley region of New South Wales impeded
    production
    from Coal & Allied operations. Drought in parts of Queensland and New
    South Wales also affected production levels. Operations focused on producing
    high
    margin products and optimising the coal supply chain. Increases in the cost
    of basic materials, fuel, explosives and labour were not fully offset by
    production growth, resulting in a rise in the cost per unit of
production across all operations.
     Although spot
      prices for uranium rose dramatically during the first part of the year,
      this had little effect
    on Rio Tintos long term contract portfolio. Uranium oxide is typically
    sold under long term contracts, with pricing determined both by fixed prices
    negotiated several years in advance, and by market prices at time of delivery.
    Therefore, the rise in the spot price of uranium oxide during the period
    was not fully reflected in the years earnings, but the rise in long
    term prices did contribute to the improved results. Moreover, for both mines,
    legacy contracts at low prices are being replaced with new long term contracts
    that provide floor price protection at levels far above market prices at
the beginning of this decade.

Rio Tinto Energy America(Rio Tinto:
    100 per cent)Rio Tinto Energy America 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. RTEA also manages the groups interest in Colowyo Coal
  in Colorado, US. In total it employs approximately 2,300 people.The
  second largest US coal producer, RTEA sells its ultra low sulphur coal to electricity
  generators predominantly in mid western and southern states.In April, RTEA bid and won access to approximately 98 million tonnes of additional
  coal reserves for its Spring Creek Mine in Montana. In June, RTEA bid and won
  access to additional mineralisation for the Colowyo Mine in Colorado. The acquisitions
  will extend the operating lives of the respective mines.Rio
    Tinto has announced that it is exploring options to sell RTEA.

2007 operating performanceRTEAs 2007 contribution to underlying
        earnings was US$132 million, US$45 million lower than in 2006.
        Results reflected steadily increasing US coal prices throughout 2007,
        more than offset
        by a higher effective tax rate in 2007.RTEAs
2007 sales were 128.3 million tonnes (excludes brokered sales), a decrease of
222,000 tonnes
        from 2006. Further increases were limited as customers had built higher
        levels
        of coal stockpiles in 2006. Earnings were reduced by a higher effective
        tax rate than in 2006. In 2007 the effective rate was 35 per cent as
        all prior
        year loss carry forwards had been applied. Adjusting to comparable tax
        rates, the 2007 result was better than 2006, largely driven by improved
        contract
prices.
     Antelope mine production of 31.3
    million tonnes set a new record for annual production and sales, above the
    2006 record of 30.7 million tonnes. Colowyo mine production of 5.1 million
    tonnes decreased by 700,000 tonnes.



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Cordero Rojo mine production of 36.7 million
    tonnes increased by 600,000 tonnes. Jacobs Ranch mine production of 34.6
    million tonnes decreased
    by 1.7 million
    tonnes. Spring Creek mine production of 14.3 million tonnes set a new record
    for annual production and sales above the 2006 record of 13.2 million tonnes.Consistent
    with the worldwide mining industry, RTEA experienced an increase in the input
    prices of materials and supplies in 2007 resulting in higher
    variable costs of mining. Diesel prices in 2007 increased by more than 15
    per cent relative
    to 2006. Labour costs increased significantly reflecting the competitive
    regional labour shortage and steadily increasing healthcare costs. Tyre costs
    increased
    with the worldwide shortage of large mining equipment tyres. At the same
    time, strip ratios increase as reserves get deeper, resulting in the requirement
    to move increasing volumes of overburden.RTEA
is a member of the FutureGen Alliance, which seeks to construct the worlds first coal fuelled zero
    emissions power plant. The project achieved a major milestone with
    a site in Illinois selected for development. Construction was planned to
    commence
    upon completion of the permitting process, however this is now in doubt with
    the US Department of Energy announcing a restructure of the FutureGen project
in January 2008.

Rio Tinto Coal Australia(Rio
      Tinto:
100 per cent)Rio Tinto Coal Australia
manages the groups Australian coal interests.
    These include, in Queensland: 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
    (Coal & Allied) for operation of its four mines located within the Hunter
    Valley in New South Wales. Coal & Allied (Rio Tinto: 75.7 per cent) is
    publicly listed on the Australian Securities Exchange and had a market capitalisation
    of A$6.5 billion (US$5.7 billion) at 31 December 2007. Coal & Allied
    wholly owns Hunter Valley Operations, has an 80 per cent interest in Mount
    Thorley Operations, a 55.6 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 loading terminal.Production
    from the Tarong mine is sold exclusively to Tarong Energy Corporation (TEC),
    an
    adjacent state owned power utility. In October 2007 the sale of the Tarong
    mine to TEC was announced with the sale to take effect from 31 January 2008.Blair
Athol produces thermal coal and sells principally to the Japanese market generally
on annual agreements. Kestrel and Hail Creek sell mainly metallurgical
    coal to customers in Japan, south east Asia, Europe and Central America,
    generally on annual agreements.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 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.RTCA
and Coal & Allied collectively employ approximately
2,500 people.

2007 operating performanceRTCAs 2007 contribution to underlying earnings
was US$246 million,
    US$244 million lower than in 2006. There was an increase in thermal coal
    prices but this was offset by production cutbacks necessitated by shipping
    bottlenecks and the continued weakening of the US dollar against the Australian
    dollar. Rising fuel prices and the tightness of the labour supply market
    continued to place pressure on operating results.A
tax benefit of US$29
    million was received on the release of a tax provision that was no longer
    required.As
the majority of costs are fixed with only consumables such as fuel, tyres and
explosives being variable, reduced port capacities had a direct
and negative
    impact on underlying earnings.Inadequate
capacity of coal chain infrastructure in both the Hunter Valley and Queensland
operations was a significant contributor
    to less than satisfactory results for RTCA. Significant production cutbacks
    of 14 per cent from 2006 levels were necessary, resulting in equipment and
    contract employees being idled. It is anticipated that production will not
    return to full capacity until 2010 when infrastructure bottlenecks are expected
    to be cleared.RTCA
operations declared force majeureunder its sales
    contracts on two occasions during 2007; in June as a result of severe weather
    conditions in the Hunter Valley and in November as a result of announced
    first quarter 2008 allocation cutbacks at the Dalrymple Bay port facilities
    in Queensland.Total
production at Blair Athol decreased from 10.2 million tonnes to 7.9 million tonnes
primarily as a result of limited port capacity.
Kestrels
    production increased by 0.8 per cent to 3.6 million tonnes. Hail Creek production
    was
    five million tonnes, an increase of ten per cent. At Tarong, production decreased
    by 35 per cent in line with lower
demand from Tarong Energy Corporation.

Energy Resources of Australia(Rio
Tinto: 68.4 per cent)Energy Resources
of Australia Ltd (ERA) is a publicly listed company and had a market capitalisation
of A$3.7 billion (US$3.3 billion) at 31 December
    2007. ERA employs 420 people, an increase from 385 at the end of 2006.Since
    1980 ERA has mined ore and produced uranium oxide at its Ranger open pit
mine, 250 kilometres east of Darwin in Australias Northern Territory. ERA
    also has title to the adjacent Jabiluka mineral lease, which in 2003 was
    put on
    long term care and maintenance. Ranger and Jabiluka are surrounded by, but
remain separate from, the World



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Heritage listed Kakadu National Park, and especially stringent environmental
requirements and governmental oversight apply.ERA is a large
      uranium producer, with considerable operational experience and a well established
      market position.
    The Ranger mine is the second largest uranium mine in the world and ERA is
    the fourth largest producer. ERAs strategy is focused on creating the
    most value from the mineralisation available on existing lease areas. In
    line with the Energy groups strategy of seeking additional production
    volumes and long term expansions to supply the current favourable market
    environment, ERA put significant effort into achieving growth through capitalising
    on opportunities for expansion and extension of production including, an
    extension of the existing Ranger mine, and installation of additional processing
equipment to treat low grade and lateritic ore.

2007 operating performanceERAs 2007 full year earnings rose by 124 per
cent to US$38 million
    in comparison with 2006 earnings of US$17 million. This was driven by
    a rise in the average realised price of uranium oxide from US$18.36 per
    pound to US$25.06 per pound despite sales being lower at 11.7 million
    pounds compared to the 2006 volume of 12.7 million pounds. The 2007 sales
    figures
    include no borrowed material.
      Production of uranium oxide in 2007 was 11.7
    million pounds, approximately 13 per cent higher than in 2006.
      The favourable
    production result was significant given a severe rain event associated with
    a tropical low pressure system, resulting in nearly 850 millimetres of rain
    falling over the Ranger operation in seven days in February 2007. This resulted
    in flooding of the Ranger open pit, restricting access to high grade ore,
    forcing a processing plant shutdown and a declaration of force majeureon
    sales contracts in March 2007. In the third quarter of 2007 access to high
    grade
    ore was again possible through the implementation of various water disposal
    measures.
      Recovery work was successful in allowing production
to return to normal levels in 2008 with no adverse environmental consequences.
All sales
    commitments were met in 2007 and force majeurewas lifted in January
    2008. Further work is under way to reduce the impact of future weather events
    on the mines performance.
       In September ERA announced an extension of
    the Ranger mine at a capital cost A$57 million, which added 10.7 million
    pounds of additional reserves, and extended the mine life from 2008 to 2012.
    Expenditure of A$10 million was also approved to examine options to further
    extend the mine and increase production from the processing plant.
       Exploration
    and evaluation activity increased in 2007 with ERA spending US$11.8 million
    compared to US$6 million in 2006. Exploration and evaluation focused
on near mine extensions to the Ranger orebody.
     ERA continued to work with the
    Mirarr, traditional owners of the mining lease. The Mirarr commenced delivery
    of a cultural awareness programme to all new ERA employees and advised ERA
    on the establishment of traditional fire management practices on the Ranger
    lease. Increasing indigenous employment is a significant focus including
    the provision of training and employment opportunities. The year saw the
    number of indigenous employees increase to 65, or 16 per cent of the workforce.
Improving on this will continue to be a focus for 2008.

Rössing Uranium(Rio
      Tinto:
68.6 per cent)Rössing Uranium Limited produces and exports uranium oxide from Namibia
    to power utilities globally. Rössing continues to play a major role
    in the Namibian economy, both in terms of GDP contribution as well as education,
employment and training.
     Rössing
      currently employs approximately 1,175 people. Following the life of mine
      extension project
    approved in 2005, capital equipment acquisitions for the new mining area
    are in place and planning work for further extension continues. In 2007 production
    volumes of 6.7 million pounds were constrained as a result of having limited
    access to ore sources. The phase one pit is in its last two years of life.
    Mining and processing volumes, however, have been good and the mine is positioned
    for higher volumes in 2008 and beyond.
      The year was one of consolidation
    and preparation for future growth and sustainable production. Truck and loading
    fleets doubled and over 300 people were recruited and trained. The current
    approved life of mine extensions will take the mine life to 2016 and further
    potential opportunities exist to extend both the mine life and production
    volumes depending on the long term price outlook and costs of production.
    Activities will continue to focus on continuous net present value (NPV) growth,
    improving margins and creation of options from known reserves and potentially
economic mineralisation.

2007 operating performanceEarnings
increased to US$95 million from US$27 million in 2006 due
    to higher market prices for uranium oxide.
       Operating costs increased to US$38
    per pound of uranium oxide production from US$22 per pound in 2006 as
    a result of lower production volumes, outsourcing of waste stripping as well
    as exploration activities that are not yet adding to production volumes.
    Costs
    were also affected by ore grades and higher than planned diesel and other
operating costs.
     All new primary production equipment
    is now fully commissioned to bring the fleet complement to 24 haul trucks
    from 16 at the beginning of the year, and six loading units compared to four
    previously. Initiatives are under way to improve the performance of the milling
    process.
      Lower than planned leach extraction in 2007 was
due to the average ore type which impacted on process controls. In 2008 there
will be a focus
    on maintaining stability in the process and improving the head grade by applying
a better blending strategy.



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Rössing
      continues to put significant effort and management focus on safety. The
      goal is to eliminate
    all injuries from the workplace and to have an embedded safety culture and
systems that identify and rectify potential safety hazards.

Energy Resources of Australia(Rio
    Tinto: 68.4 per cent)In September 2007 ERA announced
        an extension to the Ranger open pit at a capital cost of A$57 million
        to extend mining until 2012. The pushback, when combined with optimisation
        of the existing pit,
        added an additional 10.7 million pounds of contained uranium oxide to
        reserves. The majority of the additional production from the extension
        is expected
        to occur in 2011.
      ERA has also approved expenditure of A$10
      million for a pre-feasibility study to examine options to further expand
  the mine and increase production from the processing plant. The study commenced
    in the third quarter of 2007 and will continue into 2008.
      ERAs other capital expansion projects to
      process laterite ore and radiometrically sort low grade ores are well advanced
      with both projects scheduled for commissioning in the second quarter of
2008. The laterite processing plant will contribute approximately 0.88 million
  pounds per annum of uranium oxide to production from 2008 through to 2014.
The
  radiometric
      sorter will upgrade lower grade ore and allow an additional 2.4 million
pounds of uranium oxide to be produced over a five year period from 2008 to the
  end of 2013.
      Exploration continued throughout the year including
      for the first time drilling through the wet season. Activity focused on
further defining the down dip extension of the Ranger orebody, as well as understanding
      and defining the uranium mineralisation to support the pre-feasibility
study
on further expansion of the mine.

Rössing Uranium(Rio
      Tinto: 68.6 per cent)After years
      of working below capacity during a period of low uranium prices, in December
      2005 approval was granted to
      restore annual production capacity to 8.8 million pounds per annum and
    extend the life of the operation until at least 2016. Total incremental and
    sustaining
      capital cost of the expansion is US$112 million. 
      In 2007, delays were
      experienced with the start of construction projects due to slow contractor
      tender submissions. Recruitment of staff has been slow due to skills shortages
    in southern Africa. Work is now progressing well.

Rio Tinto Coal Australia Clermont(Rio
    Tinto: 50.1 per cent)Rio Tinto
    and its joint venture partners approved investment of US$750 million for the development of the Clermont
      thermal coal mine in central Queensland, situated 15 kilometres south east
      of the Blair Athol mine. Clermont is expected to become Australias
      largest thermal coal producer when it reaches full capacity, which is scheduled
      for 2013. The mine will be brought into production to replace Blair Athol,
      due to close in 2015, and will use Blair Athols existing infrastructure
      and market position. To date construction has progressed to plan with boxcut
      production to commence in mid 2008 and first coal production expected in
    2010.

Rio Tinto Coal Australia Kestrel(Rio
    Tinto: 80 per cent)Rio Tinto and
    its joint venture partners approved investment of US$991 million for
    the extension of the Kestrel mine. This represents a 20 year investment in
    the Bowen Basin of Queensland
      to help meet Asian demand for metallurgical coal. First coal production
    from the extension is forecast for 2012 when the existing mine ceases production.

Coal & Allied Mount Pleasant(Rio
    Tinto: 75.7 per cent)In 2006, Coal & Allied
    started a feasibility study on the Mount Pleasant coal mine project located
    adjacent to the Bengalla
      coal mine near Muswellbrook in the Hunter Valley, New South Wales. With
    continued uncertainty surrounding coal chain infrastructure in the Hunter
    Valley, further
    study is required before the feasibility study can be finalised.

Coal & Allied Lower Hunter Land(Rio
    Tinto: 75.7 per cent)In 2006 Coal
    and Allied signed a memorandum of understanding with the New South Wales
    Government to facilitate the
    provision of extensive land conservation corridors in the Lower Hunter via
    the transfer
      of 80 per cent of the Companys post mining land holdings. The remaining
      20 per cent is being considered for land development. Extensive community
      consultation continued through 2007 with various options considered. Feasibility
    studies will be conducted in 2008 to finalise these options.

Rio Tinto Energy America(Rio
      Tinto: 100 per cent)During 2007 RTEA commenced construction
      of the Jacobs Ranch overland conveyor and in pit crusher project. This will
      reduce emissions and operating costs in addition to providing latent capacity
      for expansion (from around 38 million tonnes to around 45 million tonnes
      per annum). Commissioning is on schedule for completion in 2008. At Antelope
      and Spring Creek recent expansion projects were completed in 2007 and production
    is ramping up to meet market demand.



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Iron Ore group

|Production                                 | Rio Tinto share |  
|------------------------------------------ | --------------- | -
|                                           | million tonnes  |  
|                                           |                 |  
|2003                                       | 102.6           |  
|2004                                       | 107.8           |  
|2005                                       | 124.5           |  
|2006                                       | 132.8           |  
|2007                                       | 144.7           |  
|                                           |                 |  
|Underlying earnings contribution*          | US$m            |  
|                                           |                 |  
|2004                                       | 565             |  
|2005                                       | 1,703           |  
|2006                                       | 2,251           |  
|2007                                       | 2,651           |  
|                                           |                 |  
|Changes in underlying earnings 2005  2007 | US$m            |  
|                                           |                 |  
|2005 Underlying earnings                   | 1,703           |  
|Effect of changes in:                      |                 |  
|Prices and exchange rates                  | 616             |  
|General inflation                          | (25             | )
|Volumes                                    | 156             |  
|Costs                                      | (229            | )
|Tax and other                              | 30              |  
|                                           |                 |  
|2006 Underlying earnings                   | 2,251           |  
|Effect of changes in:                      |                 |  
|Prices and exchange rates                  | 537             |  
|General inflation                          | (43             | )
|Volumes                                    | 136             |  
|Costs                                      | (255            | )
|Tax and other                              | 25              |  
|                                           |                 |  
|2007 Underlying earnings                   | 2,651           |  
|                                           |                 |  

|* | A reconciliation of the net earnings with
        underlying earnings for 2007, 2006 and 2005 as determined under IFRS
    is set out on page 53.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

STRATEGIC OVERVIEW

Rio Tintos Iron Ore group conforms
        with the larger Groups overall strategy of pursuing the worlds
        best natural resources, wherever they are located, using the best technologies,
        and operating them safely. RTIO seeks to do this by being faster and
        better at producing iron ore, supported by an unmatched capacity and
        capability
      to develop key infrastructure.RTIO
      is geographically well placed to take advantage of the exceptionally strong
      market conditions
      and outlook
    in Asia, with a massive mineralisation inventory base close to an integrated
    production platform in the Pilbara of Western Australia. This enables a rapid
    expansion of production in the short and medium term. RTIOs large mineralisation
    position in Australia and Guinea, west Africa, together with an established
    project execution capability, provides potential for a global iron ore production
    capacity of more than 600 million tonnes per annum.As new
competitors and constraints emerge, RTIOs strategy to meet the industry
challenges is focused on achieving industry leadership in global
iron ore. The strategy is centred on rapidly expanding the business, both globally
and in the Pilbara, and delivering maximum value from RTIOs operations
by developing a world class production platform.RTIOs portfolio of operations
    is international, including Australia, Canada and Brazil, a major development
    project in Guinea at Simandou, and the Orissa project in India. It also includes
    the HIsmelt® plant in Australia, which applies revolutionary technology
    to convert iron ore fines with significant impurities into high quality pig
    iron. 
     
    RTIO Asia was established in Singapore in November 2007 to provide
    an integrated sales, marketing, distribution and logistics service for Hamersley
    Iron products in the Asia Pacific. It aims to maximise Hamersleys share
    of forecast growth in the region. 
     
    At 31 December 2007, the Iron Ore group
    accounted for 13 per cent of Rio Tintos operating assets, and in 2007
    contributed 26 per cent of the Groups gross sales revenue and 36 per
    cent of underlying earnings. 
      At year end 2007 RTIO employed 6,520 people
    in Western Australia and 8,630 worldwide. In a highly contested market, the
    recruitment effort was exceptional, with 1,951 new starters in 2007.
     Environmental initiatives included
    development of a strategic approach to water for the Pilbara, to ensure long
    term security of supply at the ports and in the management of dewatering
    discharge associated with the increasing requirement for below water table
    mining across the Pilbara, and recognising the importance of this issue for
    traditional



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land owners of the region.
     A major milestone
      was reached with the completion of the Phase B upgrade of the port of Dampier,
      now ramping
    up towards its new capacity of 140 million tonnes per annum (Mt/a). Work
    has commenced on the Cape Lambert upgrade to 80 Mt/a from 55 Mt/a, which
    is expected to be completed in early 2009. Two new mines were approved for
    development  Brockman 4 (22 Mt/a) and Mesa A/Warramboo (25 Mt/a)  at
    a combined total cost of US$2.4 billion, of which Rio Tintos share
    is US$2.0 billion. Both mines will replace tonnages from deposits nearing
    the end of their mine life. 
       Rio Tintos 50:50 joint venture with Hancock
    Prospecting is progressing well. In November, Hope Downs 1 (22 Mt/a), began
    production  a full quarter ahead of schedule, and the stage 2 expansion
    to 30 Mt/a has been brought forward one year, with production planned to
    commence at the start of 2009. In December approval was given for a US$71.4
    million feasibility study into the development of a Hope Downs 4 mine (15-20
    Mt/a). 
       RTIOs growth strategy has seen more than US$7 billion committed
    to port, rail, power and mine assets since 2003, resulting in a world class,
    integrated iron ore network. A feasibility study into expanding Pilbara capacity
    to 320 Mt/a by 2012 is well advanced and a decision will be made in early
    2009. Cape Lambert has been identified as the preferred site for port expansion.
    
       In late November 2007 Rio Tinto senior management outlined an aggressive
    expansion programme designed to capitalise on RTIOs global spread of
    assets and markets. This included a conceptual framework towards establishing
    a Pilbara production capacity of 420 Mt/a and an expansion at Simandou in
    Guinea of up to 170 Mt/a. 
       During the year, RTIO was inducted into the Australian
    Export Hall of Fame, was twice honoured at the Australian Business Arts Foundation
    awards and won a 2007 Water Award for its re-injection project
at Yandicoogina.
     Sam Walsh, chief executive Iron Ore, is based in Perth, Western Australia.

SAFETY

|All injury frequency rate | per 200,000 hours | 
|------------------------- | ----------------- | 
|                          |                   | 
|2003                      | 2.19              | 
|2004                      | 1.79              | 
|2005                      | 1.48              | 
|2006                      | 1.24              | 
|2007                      | 0.92              | 
|                          |                   | 

Iron Ore Company of Canadas safety performance continued to improve in
    2007 with a 59 per cent reduction in the lost time injury frequency rate to
    0.29. The Corumbá mine in Brazil again won the Chief Executives
    Safety Award. Work progressed on a number of safety initiatives across operations,
    particularly focused on issues surrounding contractor management, vehicle safety
    and implementing proactive measures to prevent the risk of injury. Cyclone
    preparation measures in the Pilbara employee accommodations were reviewed,
    focusing on standardised safety measures. Overall, the groups all injury
    frequency rate was 0.92 (1.24 in 2006) and the lost time injury frequency
rate 0.38 (0.59) .

GREENHOUSE GAS EMISSIONSThe 20082009 greenhouse gas (GHG)
        plan notes an increased focus on energy reduction through the appointment
        of an energy specialist in late 2007 and the conduct of further energy
      reviews. A feasibility study is being conducted to examine the possible
  replacement of power stations to reduce GHG emissions and mitigate current
  potential
      environment risk.
     A number of additional activities
      aimed at reducing energy use and GHG emissions are also under way including
      replacing heavy mobile equipment and locomotives. Dash 7 and Dash 8 locomotives
      are being replaced by new generation GE EVO locomotives. The RTIO technology
      group is also examining hybrid locos in collaboration with General Electric,
      liquid natural gas replacement for diesel trucks and locomotives, rail electrification,
      and closed cycle power generation for existing open cycle power units. Rio
      Tinto has approved new gas fired power generation in the Pilbara as a step
      towards lower emissions electricity.

FINANCIAL PERFORMANCE

2007 compared with 2006RTIOs contribution to 2007 underlying earnings
  was US$2,651 million, US$400 million higher than in 2006. 
      Demand for iron ore remained extremely strong
across the product range throughout 2007, driven by the continuing robust growth
in global steel demand and production, significantly exceeding seaborne suppliers capacity
to match. Total Chinese iron ore imports rose from 326 million tonnes to 383
million tonnes, accounting for more than 90 per cent of world growth. Hamersley
Iron and Robe
River in Australia operated at record or near record levels of



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production in 2007.In December RTIO announced plans
    to sell up to 15 million tonnes of iron ore on the spot market in 2008, taking
    advantage of the large gap between annual (benchmark) and short term prices
while continuing to meet longer term contractual commitments.

2006 compared with 2005RTIOs contribution to 2006 underlying earnings was US$2,251 million,
    US$548 million higher than in 2005. 
       Demand for iron ore continued to be
    extremely strong across the product range throughout 2006, driven by continued
    growth in global steel demand and production. Total Chinese iron ore imports
    rose from 275 million tonnes to 326 million tonnes. Hamersley Iron, Robe River,
    Iron Ore Company of Canada and Corumbá in Brazil all operated at record
    or near record levels of production in 2006. 
       For the contract year commencing
    April 2006 RTIO reached agreement with customers on price increases of 19
    per cent for all products following on from the previous agreement of a 71.5
    per
    cent increase. In December 2006, prices for the 2007 contract year were agreed
    with Baosteel of China, for a 9.5 per cent increase to the benchmark price.
    Similar price increase agreements were subsequently reached
with other steelmakers.

Hamersley Iron(Rio Tinto: 100 per
    cent)Hamersley Iron operates nine mines in Western
  Australia, including three mines in joint ventures, about 700 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. 
      The final phase in ramping up Pilbara infrastructure
to 220 million tonnes of annual capacity is well under way. Dampier ports
two terminals now account for a combined capacity of 140 Mt/a. With the completion
of Junction South East, Yandicoogina mine capacity has been expanded to 52 Mt/a,
and brownfield mine expansions at Marandoo, Nammuldi and Mount Tom Price have
been completed. 
      The new Hope Downs mine, owned in 50:50 joint
venture with Hope Downs Iron Ore Pty Ltd (owned by Hancock Prospecting Pty Ltd),
but managed by RTIO, began production in November, a full quarter ahead of schedule,
and the first train was loaded in mid December. 
      Approval was granted for the US$1.52 billion
Brockman 4 mine, 60 kilometres north west of Tom Price, which is expected to
begin ramp up in 2010 to 22 Mt/a. The mine will be connected to the main network
via a 35 kilometre rail spur, and the design allows for an additional 14 Mt/a
expansion.
     Work is progressing on a number of
options for new mine development as part of the feasibility study to reach 320
Mt/a capacity. A decision is expected in early 2009. Work also continued on pre-development
studies for new mines.

2007 operating performanceHamersley
    Irons total production in
      2007 was 112.1 million tonnes, 14.9 million tonnes more than the 97.2 million
      tonnes in 2006. This result was notable for being achieved amid significant
      expansion work across several sites. 
           
      Shutdowns and flooding from two cyclones
      early in the year hindered operations significantly, although tie down procedures
      performed well. Several derailments also impacted operations significantly,
      resulting in an estimated 1.39 million lost saleable ore tonnage. Remedial
      action was undertaken on high risk sections and a rerailing project was approved
      which will eventually see 45 per cent of the network replaced. 
           
      Reinvestment
      in additional yard capacity, locomotives and rolling stock has been implemented
      to improve efficiency and remove bottleneck issues associated with limited
      rail capacity. 
           
      The Pilbara Blend product was successfully introduced mid
      year, winning widespread customer acceptance and at 100 per cent of the reference
      price. Pilbara Blend will comprise 15 per cent of the worlds seaborne
      iron ore trade. 
           
      Shipments by Hamersley Iron totalled 109.5 million tonnes,
      including sales through joint ventures. Shipments to China also reached a
      new record level at 59.6 million tonnes, confirming Chinas place as
      the single largest, and fastest growing, destination for Hamersleys
iron ore.

Hamersleys total shipments of iron
ore to major markets(million tonnes)

|                                                                          | 2007  |  | 2006 |  | 2005 | 
|------------------------------------------------------------------------- | ----- |  | ---- |  | ---- | 
|                                                                          |       |  |      |  |      | 
|China                                                                     | 59.6  |  | 52.9 |  | 49.5 | 
|Japan                                                                     | 30.0  |  | 27.4 |  | 24.5 | 
|Other Asia                                                                | 18.3  |  | 15.8 |  | 14.1 | 
|Europe                                                                    | 0.7   |  | 2.0  |  | 2.0  | 
|                                                                          |       |  |      |  |      | 
|                                                                          | 108.5 |  | 98.1 |  | 90.1 | 
|                                                                          |       |  |      |  |      | 
|Note                                                                      |       |  |      |  |      | 
|This table includes 100 per cent of all shipments through joint ventures. |       |  |      |  |      | 



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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) retain interests. Robe River is the worlds fourth largest
    seaborne trader in iron ore.
       Robe River 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 and Marra Mamba iron ore products which were successfully incorporated
    into the Pilbara Blend during the year.
       Expansion of mine, rail and port operations
    has continued, with the upgrade of Cape Lambert port from 55 Mt/a to a rated
    capacity of 80 Mt/a proceeding on schedule. The port has also been nominated
    as the preferred site for subsequent expansion as part of the upgrade of Pilbara
    capacity to 320 Mt/a, subject to an ongoing feasibility study. 
       In November,
    Rio Tinto and the joint venture partners approved development of the US$901
    million (Rio Tinto share US$478 million) Mesa A/Warramboo mine in the western
    end of the Robe Valley. This followed a lengthy, ultimately successful, process
    to gain environmental approval. The new mines annual production will
    be 20 Mt/a, increasing to 25 Mt/a by 2011, and will be replacement tonnage
    as Mesa Js mine life approaches its end. 
       Robe River primarily exports
    under medium and long term supply contracts with major integrated steel mill
    customers in
Japan, China, Europe, South Korea and Taiwan.

2007 operating performanceThe effect
of cyclones slowed production early in the year at Robe Rivers
    Pannawonica and West Angelas mines, as did a serious derailment which required
    significant track repairs. A two week shutdown of the Cape Lambert dumper also
    affected production, as did delays in commissioning a conveyor system at West
    Angelas. 
       Robe Rivers total production in 2007 was 51.5 million tonnes,
    comprising 25.5 million tonnes from Mesa J, and 26.0 million tonnes from West
    Angelas. Sales were 25.9 million tonnes of Mesa J and 25.6 million tonnes of
    West Angelas products. 
       Sales growth, based on increased production from West
    Angelas, was again fuelled by the growth in the Chinese market, where Robe
    River achieved record total sales of 52.0 million tonnes. Japan remains Robe
    Rivers largest single market, with total shipments in 2007 of 22.6
million tonnes.

Robes total shipments of iron ore
to major markets(million tonnes)

|           | 2007 |  | 2006 |  | 2005 | 
|---------- | ---- |  | ---- |  | ---- | 
|           |      |  |      |  |      | 
|China      | 21.0 |  | 18.5 |  | 17.5 | 
|Japan      | 22.6 |  | 24.7 |  | 26.1 | 
|Other Asia | 2.9  |  | 2.7  |  | 1.7  | 
|Europe     | 5.5  |  | 6.1  |  | 7.3  | 
|           |      |  |      |  |      | 
|           | 52.0 |  | 52.0 |  | 52.6 | 
|           |      |  |      |  |      | 

Iron Ore Company of Canada(Rio Tinto:
  58.7 per cent)RTIO
    operates Iron Ore Company of Canada (IOC) on behalf of shareholders Mitsubishi
    (26.2 per cent) and the Labrador Iron
    Ore Royalty
    Income Fund (15.1 per cent).
    
       IOC is Canadas largest iron ore pellet producer. It operates an open
    pit mine, concentrator and pellet plant at Labrador City, Newfoundland and
    Labrador, together with a 418 kilometre railway to its port facilities in Sept-Îles,
    Quebec. IOC has large quantities of ore reserves with low levels of contaminants.
    
       Products are transported on IOCs railway
to Sept-Îles on the
    St Lawrence Seaway. The port is ice free all year and handles both ocean
    going
    ore carriers and Lakers, providing competitive access to all seaborne pellet
    markets and to the North American Great Lakes region.  IOC exports its concentrate
    and pellet products to major North American, European and Asian
steel makers.IOC employs approximately 2,000
    people and recruited 170 people during the year to offset an increase in
    retirements and to meet greater production
needs.

2007 operating performanceThe demand
for IOCs products strengthened further in 2007 with concentrate
    prices increasing by ten per cent and pellet prices by five per cent over last
    years benchmark prices. 
       Total saleable production was 13.2 million
    tonnes, down from 16.1 million tonnes in 2006. The variation was primarily
    due to a
    seven week labour strike. Pellet production was 11.3 million tonnes (12.7
    million tonnes in 2006) with saleable concentrate being 1.9 million tonnes
    (3.4 million
    tonnes in 2006). Lower production levels coupled with higher oil prices put
    pressure on 2007 unit costs. 
       A labour strike in March/April occurred when
    negotiations broke down over the new collective agreement to replace the
    one that expired
    in February 2007. The strike ended following agreement of a new five year
collective agreement.In
August, IOC announced the approval of US$57 million to expand annual concentrate
      production capacity to 18.4 Mt/a by mid-2008 and to conduct a feasibility
      study to further expand
to 21 Mt/a.



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In March 2008
      IOC announced the approval of US$475 million to increase annual concentrate
      production by some 40 per cent, or seven Mt/a, to 25 Mt/a and annual pellet
      production
by ten per cent, or 1.5 Mt/a, to 14.5 Mt/a over the next five years.

IOCs total shipments of iron ore
  to major markets(million tonnes)

|              | 2007   |  | 2006 |  | 2005 | 
|------------- | ------ |  | ---- |  | ---- | 
|              |        |  |      |  |      | 
|Europe        | 5.210  |  | 5.7  |  | 6.8  | 
|Asia Pacific  | 3.777  |  | 5.4  |  | 3.4  | 
|North America | 4.155  |  | 4.8  |  | 4.8  | 
|              |        |  |      |  |      | 
|              | 13.142 |  | 15.9 |  | 15.0 | 
|              |        |  |      |  |      | 

Mineração Corumbaense Reunida (Corumbá)(Rio
  Tinto: 100 per cent)
Corumbá produced 1.8 million tonnes of lump iron ore in 2007 and sold
1.1 million tonnes to South American, Asian and European customers. Sales were
lower in 2007 due to strong competition for barging freight, barge unloading
delays at Argentine ports and abnormally low river levels during the last quarter.
     Rio Tinto approved investments in additional barging
capacity, port improvements and an ore dryer to develop the
market for Corumbá lump in direct reduction processes, all of which will
come on line during 2008. The feasibility study to expand mine production and
transport logistics to ten Mt/a is nearing completion, as the next step towards
production of 20 Mt/a. Negotiations continued with prospective investors regarding
a steel making project at Corumbá that would consume local iron ore.
       Corumbá has more than 200 million tonnes
  of reserves, and additional mineralisation. There are approximately 650 employees.

HIsmelt®(Rio
      Tinto:
60 per cent)
The HIsmelt®iron making project at Kwinana in Western Australia
    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 (ten per cent), and Chinese steelmaker Shougang Corporation (five
    per cent). The project produced 115,000 tonnes of pig iron and achieved a number
    of production records in 2007, its second year of ramp up as it builds towards
    a planned capacity of 800,000 tonnes per annum. The project was visited by
Chinese president Hu Jintao in September 2007.

IRON ORE GROUP PROJECTS

Hamersley Iron(Rio Tinto: 100 per cent)

Upgrade to 220 Mt/a
    RTIO is on schedule to have 220 Mt/a installed
            capacity in the Pilbara by the end of 2008, achieving a doubling of capacity
            since the beginning of the decade. The second stage of the Pilbara Expansion
            is well advanced with a further upgrade of Dampier Port, Yandicoogina mine
            expansion and Hope Downs stage 1 development now completed. The initial upgrade
            of Cape Lambert Port will complete the major infrastructure upgrades for
            this phase. Additional mine capacity at Hope Downs stage 2 to 30 Mt/a will
  match the capacities of mine, rail and port facilities at 220 Mt/a.

Pilbara 320/420 Mt/a
    A suite of mine and infrastructure projects
      for the expansion of Pilbara capacity to 320 Mt/a is under study. The studies
      include a variety of greenfield and brownfield mine options across the Pilbara,
      expansions to both rail and port and supporting infrastructure, designed
      to bring the Pilbara capacity firstly to 320 Mt/a and then 420 Mt/a. The
      studies also contemplate the use of new technologies including a Perth based
      Remote Operations Centre, and a range of automation options. Underlying this
      work is an aggressive resource evaluation and definition programme, designed
      to ensure that the available mineralisation is delineated and developed with
      optimal sequencing and timing. More than 400,000 metres of exploration drilling
  was completed during 2007 and a further 500,000 metres is planned for 2008.

Robe River Iron Associates(Rio Tinto:
53 per cent)

Mesa A
  The US$901 million Mesa A/Waramboo mine development
  is required to sustain production of Robe Valley pisolite, which would otherwise
  decline with the run down of the Mesa J mineralisation. Pending finalisation
  of plans for the proposed rail spur to the existing line, transition work will
  begin shortly. Production at Mesa A is expected to commence in the first quarter
of 2010, starting at 20 Mt/a, increasing to a 25 Mt/a rate from 2011.

Cape Lambert port
  The first upgrade of Cape Lambert (from 55 Mt/a
  to 80 Mt/a) is well under way. A construction camp for 600 people has been
  established, and works are continuing according to plan with marine piling
and bulk earthworks well



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advanced. The project scope includes extension of the wharf and upgrading of
    shiploading facilities to accommodate four capsize vessels simultaneously as
    well as upgrades to the stockyard with the addition of a new reclaimer. The
    project is scheduled for completion at the end of 2008 with progressive ramp
up during the first half of 2009.

The 320/420 project
Cape Lambert is
also the preferred site for expansion of Pilbara port facilities to 320 Mt/a,
and conceptually to 420 Mt/a. Under
    the early
    planning for the
    320 Mt/a, this would involve construction of a new terminal (Cape Lambert
    West) capable of berthing four capsize ships. That terminal would be extended
    to
    accommodate a further four berths according to the 420 Mt/a concept. Early
    planning has also identified the area to the west of the existing rail line
    for both stockpiles under both 320 and 420 Mt/a upgrade scenarios. This expansion
    plan carries the added benefit of not adding
to Rio Tintos footprint in the area.

Simandou(Rio
      Tinto: 95 per cent) 
  The Simandou project in eastern Guinea, west Africa, is of great strategic significance
  for Rio Tinto. It is a greenfield discovery situated in one of the best undeveloped
  major iron ore provinces in the world. A prefeasibility study is studying the
  mining and transport options needed to bring Simandou into production as quickly
  as possible, with an initial capacity of 70 million tonnes per annum. The deposit
  has great potential in exploration opportunities across the project area. Total
  drilling of 50,000 metres was undertaken at the Pic de Fon and Oueleba sites
  in 2007, with an equivalent amount expected in 2008. Simandou has significant
  brownfield growth capacity, and conceptual development plans are already under
  way on expanding capacity towards 170 million tonnes per annum. These studies
  are scheduled for completion in 2010.
     The International
    Finance Corporation (the private sector arm of the World Bank Group) retains
    a five per cent stake in the project and is working with Rio Tinto to develop
    it in an environmentally and socially sustainable way.
     The project currently
    employs 375 Rio Tinto staff operating from offices in Conakry and Kerouane,
    and construction camps at Canga East and Oueleba in the Mining Concession.
The total workforce, including contractors, is greater than 700.

Orissa, India(Rio
      Tinto: 51 per
cent) 
Orissa is one of the key iron
ore regions of the world. RTIO has a joint venture interest in Rio Tinto Orissa
Mining with
    the state owned
    Orissa Mining Corporation.
    The joint venture holds rights to iron ore leases in Orissa, which it is
    seeking to develop. Although progress has been slow, Rio Tinto remains keen
    to participate
    in the development of the Indian iron ore sector through its joint venture.
    A project team has been established and is working to expedite the development
    of operations in India.
     Rio Tinto has identified India as among the most
    likely economies to follow east Asias development of a greater intensity of
    steel use. Indias economy is expected to maintain its present growth
    rate, thus providing support for an expanding domestic steel industry. Rio
    Tinto has continued discussions
with major domestic steel companies.



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Other operations

Kennecott Land(Rio Tinto: 100 per
    cent)
Kennecott Land was established in 2001 to
  capture value from the non mining land and water rights assets of Kennecott
  Utah Copper. Kennecott Lands holdings are around 53 per cent of the remaining
  undeveloped land in Utahs Salt Lake Valley. Approximately 16,000 hectares
  of the 37,200 hectares owned is developable land and is all within 20 miles
  (32km) of downtown Salt Lake City.
     The initial Daybreak community encompasses
  1,800 hectares and is entitled to develop approximately 20,000 residential
  units and nine million square feet of commercial space. Kennecott Land develops
  the required infrastructure and prepares the land for sale to home builders.
  The project is well advanced, with over 1,650 home sales completed since opening
  in June 2004. At full build out, the community will house 40,000 to 50,000
  residents. Revenues in 2007 were US$48 million.
     Kennecott Land is in the
  process of studying development opportunities for the remaining landholdings.
  Development potential is approximately 163,000 residential units and 58 million
  square feet of commercial space. Securing entitlement is a long term public
  process that will culminate in a plan being submitted for approval by the Salt
  Lake County Council in the next few years.

Sari Gunay(Rio
      Tinto: 70 per cent)
      In November 2007, Rio Tinto signed a final
      and binding sale agreement to divest the whole of its interest in the Sari
      Gunay gold project in western Iran. On the completion of this transaction,
      which is expected in mid 2008, Rio Tinto intends to close its office in Iran
and will cease to have any interests in Iran.

MARKETING

Marketing and sales of the Groups various metal and mineral products
  are handled either by the specific business concerned, or in some cases are
  undertaken at a product group level.
     Rio Tinto has numerous marketing channels, which
include electronic marketplaces, with differing characteristics and pricing mechanisms
depending on the nature of the commodity and markets being served. Rio Tintos
businesses contract their metal and mineral production direct with end users
under both short and long term supply contracts. Long term contracts typically
specify annual volume commitments and an agreed mechanism for determining prices
at prevailing market 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.
     In 2007, Rio Tinto continued to focus on improvements
in its marketing capability, with a small central marketing team based in London
and Australia working collaboratively with business based sales and marketing
teams to disseminate leading marketing practices across the Group. The team supports
the Groups businesses by helping to identify analytical tools, approaches
and strategic frameworks to help identify the value to Rio Tinto of meeting customers needs.

MARINE

Ocean freight
    Ocean freight is an important part of Rio Tintos
    marketing. It is managed by Rio Tinto Marine, with a head office in Melbourne,
    to provide Rio Tinto with a comprehensive capability in all aspects of marine
    transportation, global freight markets and the international regulatory environment.
    In 2007, Rio Tinto Marine handled over 78 million tonnes of dry bulk cargo,
    a 13 per cent increase on 2006 volumes transported.
     Rio Tinto Marine leverages
    the Groups substantial cargo base to obtain a low cost mix of short,
    medium and long term freight cover. It seeks to create value by improving
    the competitive position of the Groups products through freight optimisation,
    and does not seek to trade freight as a stand alone activity. Rio Tinto Marine
    sets and maintains the Groups HSE and vessel assurance standards for
    freight and is one of three equal shareholders in Rightship, a ship vetting
    specialist, promoting safety and efficiency in the global maritime industry.
     During 2007 Rio Tinto Marine took possession of the first of five new bulk
    carriers, the RTM Wakmatha. These vessels will be used principally for carrying
    bauxite from Rio Tinto Alcans mine at Weipa, Queensland, to Gladstone
    for processing. In addition, an order has been placed for the construction
    of three 250,000 deadweight tonne ore carriers to transport iron ore from
    Rio Tintos operations in Western Australia to customers in China and
    elsewhere. These ore carriers will be delivered from late 2012 to help Rio
    Tinto build on its natural freight advantage in Asian exports.

Freight market
    Sea freight rates reached unprecedented levels
    in all segments during 2007. Strong demand for commodities, combined with
    supply constraints and port congestion, resulted in increased long haul trade
    and reduced fleet availability.



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The Baltic
      Dry Index (BDI), an index of dry bulk shipping rates, more than doubled
      in 2007, increasing 110
    per cent during the year. The Capesize vessel segment had the greatest upward
    impact on the BDI, with average daily freight prices increasing by 132 per
    cent during 2007, closing at US$157,128 per day with a November peak
    at US$194,115 per day. The Panamax, Supramax and Handysize indices also
    increased substantially, each registering gains of 93 to 95 per cent during
    2007.     With spot markets at record highs, charterers turned to the period
    market to cover cargoes, pushing timecharter rates higher and increasing
    opportunistic re-let activity. Shipyard order books swelled in the second
    and third quarters of 2007, resulting in a large tranche of new vessel capacity
    for delivery from late 2009 through 2011. Long lead times for new vessels
    has seen
large premiums paid for second hand vessels in all segments.



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Exploration group

STRATEGIC OVERVIEW

The purpose of exploration is to increase
          the value of the Group by discovering or acquiring resources that can augment
  future cash flows.     Adding
  value to a Group the size of Rio Tinto effectively means that exploration programmes
      must regularly
    return what others might call company maker discoveries. These
    are the largest and highest quality mineral deposits that the natural world
    has to offer, called Tier 1 resources.
      Exploration
involves the identification, prioritisation and testing of geological targets.
As less than 0.1 per cent
    of targets will actually deliver a discovery, a continuous flow of opportunities
    is required. Exploration success in Rio Tinto is defined as the discovery
    of a deposit that warrants detailed economic evaluation. Handover of the
    deposit to a product group evaluation team marks the end of the exploration
    phase.
      Greenfield exploration, which aims to establish
new mineral businesses, involves geographic or commodity diversification away
from existing Rio Tinto
    operations. Accountability for greenfield work lies with Rio Tinto Exploration
    (RTX).
     RTX is organised into regional
    multi-commodity teams. This gives the group local presence, an in depth understanding

    of the operating environment and a holistic view of geological terrains.
    At the same time, programmes are prioritised on a global basis so that only
    the best opportunities are pursued.
      There are currently five of these regional
    teams, which are supplemented by the Project Generation Group (PGG). PGG
    provides specialist commercial, technical and generative assistance and also
    co-ordinates all RTX research and development activities.
     At the end of 2007, RTX was actively
    exploring in 30 countries and assessing opportunities in a further 20 for
    a broad range of commodities including bauxite, copper, coking coal, iron
    ore, industrial minerals, diamonds, nickel and uranium. RTX employs about
    250 geoscientists around the world and has a total complement of approximately
    950 people.
     Brownfield
      exploration is directed at sustaining or expanding the value of existing
      Rio Tinto business units.
    Given that resources are the lifeblood of every mining operation, this is
    an essential business activity. Accountability for brownfield programmes
    lies with the business units, with RTX providing technical assistance.
      The
    brownfield environment provides the easiest opportunity for creating value
    through exploration. The reasons for this are clear  Rio Tinto controls
    highly prospective title around its existing operations and infrastructure,
    and economic thresholds are lower than in a greenfield setting. Moreover,
    Tier 1 resources  the giants of the mineral deposit world  tend
  to be found in clusters.

SAFETY

|All injury frequency rate | per 200,000 hours
|------------------------- | -----------------
|                          |                  
|2003                      | 1.30             
|2004                      | 0.95             
|2005                      | 0.55             
|2006                      | 0.88             
|2007                      | 1.10             
|                          |                  

Two greenfield discoveries, the Chapudi thermal coal deposit in South Africa
    and the Kintyre uranium deposit in Western Australia, were transferred from
    RTX to product group evaluation teams. Kintyre is now being offered for sale.
    One Tier 1 brownfield discovery, the Caliwingina North channel iron deposit,
    was transferred to Pilbara Iron.
      Order of magnitude studies continued at the
    Bunder project (diamonds, India) and commenced at the Chilubane and Mutamba
    (ilmenite, Mozambique), Jarandol and Jadar (borates, Serbia) deposits. All
    are scheduled for completion in early to mid 2008. Negotiations continued
      with the Government of Indonesia on the Contract of Work for the Sulawesi
      nickel
project.Significant progress at early
    stage RTX projects in Australia (zircon), Brazil (bauxite), Canada (potash),
    Colombia (bauxite) and the US (nickel) is expected to lead to commencement
    of new order of magnitude studies in the second half of 2008. Several other
    projects are showing early signs of encouragement and could be fast tracked
into this stage.
     Exploration by the La Granja (Peru)
    evaluation team returned significant encouragement with the discovery of
    four new bodies of porphyry copper mineralisation. At the Bingham Canyon
    (US) copper mine, a substantial molybdenum deposit was identified located
    beneath the copper orebody. Adding to this discovery, which is still being
    delineated by deep drilling, was the recognition of new porphyry copper mineralisation
    beneath the southern pit wall. These two new zones of mineralisation point
to further discovery potential.



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On Freeport Block
    A in West Papua (Indonesia), drilling encountered a new zone of copper-gold
    skarn mineralisation at the Gap target located between the Grasberg and Ertsberg
    intrusions. Delineation drilling will be conducted from an exploration drift
    in 2008.On the Heruga
      concession of Entrée
    Gold near Oyu Tolgoi (Mongolia), operator Ivanhoe Mines announced discovery
    of the Heruga porphyry copper-gold deposit. Drill intersections included
    454 metres at 0.50 per cent copper, 1.43 grams per tonne of gold, and 0.02
    per cent molybdenum.  Near
the Eagle deposit (US), drilling by the evaluation team intersected high grade
nickel-copper sulphide mineralisation at three
    satellite prospects. Delineation drilling is planned for 2008.  At Energy
    Resources of Australia, the exploration and evaluation programme focused
    on infill drilling to support the previously announced mine extension, as
    well as the prefeasibility study into a further mine expansion. In 2008,
    attention will return to defining the Ranger 3 Deeps
deposit.

2007 compared with 2006Exploration expenditures
    reported by Rio Tinto include exploration and evaluation spends in both the
    greenfield
      and brownfield environments. Expenditure on brownfield projects reported
      separately in this Annual reportby each of the Rio Tinto product
      groups is included in this summary.Net
  cash expenditure on exploration in 2007 was US$576 million, an increase of US$231 million over
      2006. This primarily reflects the large number of high quality projects
      in the
      exploration and evaluation pipeline, net of US$197 million cash proceeds
      from the sale of the Peñasquito royalty, shares in Anatolia Minerals,
      the Southdown iron ore deposit and various other interests during 2007.
      The pre-tax charge to underlying earnings of US$321 million is net
      of US$253
million of total proceeds from the divestments mentioned above.

2006 compared with 2005Net
    cash expenditure on exploration in 2006 was US$345 million, a US$81 million increase over 2005, reflecting
      an increase in the number of high quality projects in the exploration and
      evaluation pipeline, net of US$23 million cash proceeds from the sale
      of various interests, including Ashton Canada shares. The pre tax charge
      to underlying earnings in 2006 was US$237 million net of US$46
million of total proceeds from divestments.

|Discoveries(Projects transferred to product group evaluation teams) |                              
|------------------------------------------------------------------- | -----------------------------
|Year                                                                | Tier 1 discoveries           
|                                                                    |                              
|2000                                                                | Potasio Rio Colorado (potash)
|2001                                                                | —                            
|2002                                                                | Resolution (copper)          
|2003                                                                | —                            
|2004                                                                | Simandou (iron ore)          
|2005                                                                | La Granja (copper)           
|                                                                    | Caliwingina (iron ore)       
|2006                                                                | —                            
|2007                                                                | Caliwingina North (iron ore) 
|                                                                    |                              
|                                                                    |                              

|                                                                                                                                               | 
|---------------------------------------------------------------------------------------------------------------------------------------------- | 
|Notes                                                                                                                                         
|Tier 1discoveries: Large, high quality deposits
    — the 20 per cent of deposits contributing 80 per cent of global production.              
|Tier 2 discoveries: Smaller or lower quality
        deposits — the 80 per cent of deposits contributing 20 per cent of global
    production.



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The Technology and Innovation group (T&I)
        had its origin in the combination of the Operational and Technical Excellence
        (OTX) organisation and the Groups Improving performance togetherbusiness
        improvement work in the areas of mining, processing, asset management and
      strategic production planning.T&Is
      focus is to be a partner in value delivery with Rio Tinto businesses by:

|• | supporting implementation of leading practice and high value projects;
|- | ----------------------------------------------------------------------
|• | developing and implementing strategic innovation technologies; and    
|• | evaluating the technical risk of major capital and growth projects.   

The group comprises a core team of technology
    professionals and a number of technology centres that develop leading practice
    and drive
    sustainable improvement in the
areas of health, safety and environment (HSE), mining, processing, asset management,
strategic production planning, and project development and evaluation. Key elements
are common and visible measures of operational effectiveness, the improvement
of analytical tools and enhanced functional development of staff capability.
    
       A further centre focuses on step change innovation to confer competitive advantage
in development of orebodies likely to be available to Rio Tinto in the future.

     The total staff in T&I at year end was 387, compared with 368 at year end
2006. The increase was due to the higher level of growth activity characterising
the resource sector.

Health, Safety and EnvironmentThe HSE Centre ensures that strategies and standards are in place to minimise
    HSE risk and drive performance. Activities support their implementation in
    the businesses and report results and performance trends to the board. 
       Specific
    activities during 2007 included embedding the environmental standards and metrics
    within business units, to complement the health and safety standards. The safety
    strategy was reviewed to concentrate on safety leadership, culture and measurement,
    and recognition of performance. This places Rio Tinto as an industry leader
    in terms of performance in these areas. Implementing the product stewardship
    strategy via business systems has benefited market access and competitive advantage.
    Continued development of the HSEQ management systems and the integration of
the Alcan business were also priorities for HSE.

InnovationThe Innovation Centre is designed to drive step change innovation for Rio Tinto
    in the five to ten year time frame. The relevant technologies are in mining,
    processing and
energy.
     The activities in 2007 continued
    to focus on the block cave mining method of particular relevance to the large
    copper orebodies currently under development, remote monitoring in underground
    mining, in pit material sizing and conveying, data fusion in surface mining,
    process advances in ore sorting and comminution and modelling of heap leaching
    processes to enhance metal extraction. 
       A significant commitment by Rio Tinto
    to automation has culminated in a strategic partnership with the Australian
    Centre for Field Robotics (ACFR) at the University of Sydney. This exclusive
    partnership leverages an early mover advantage with Komatsu on driverless
    haul trucks and is a natural extension of other activity which is expected
    to see the first fully integrated, autonomous mine in operation in the Pilbara
in 2010.

MiningThe Mining Technology Centre
addresses the core mine production processes. Specific activities in this area
during 2007 focused
    on continuing
    to establish
    and disseminate leading practice in orebody knowledge, payload management
    in surface mining and reconciliation processes across the operations. Attention
    was also given to further improving Rio Tintos technical capability
in rapid underground development and block cave design.

ProcessingThe Processing Technology
Centre focuses on core metallurgical capability and delivery of processing operations.
Specific
    activities in
    this area during
    2007 focused on the implementation of a structured methodology designed to
    identify specific points of loss (throughput, recovery, and grade), understanding
    underlying causes behind the losses, and the development of projects to reduce
    or eliminate those losses across the Groups processing operations.
    A key enabling activity around the use of Processing Global Metrics for fixed
plants was introduced.

Asset ManagementThe Asset Management
Centre focuses on the effective choice and deployment of the Groups asset base in mining and processing. Activities in 2007
    focused on the continued reliability and performance of physical assets across
    the Group, including the implementation of standards and internal league
    tables for
maintenance of heavy mobile equipment



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such as trucks and shovels. This led to continued significant improvement in
    areas such as tyre life (a further five per cent added to the success of previous
    years), truck utilisation and economic extension of engine and component life.
    The centre also extended the range of its influence in 2007 to the reliability
and performance of fixed plant assets across the Group.

Strategic Production PlanningThe Strategic
Production Planning Centre focuses mainly on a Group wide methodology to ensure
orebodies are developed in the
    optimum
    sequence for the generation
    of maximum value. Specific attention is directed to the enhancement of the
    functional skill of planning staff and to regular review of the life of mine
plans for all the Groups mining operations.

Project Development and EvaluationThe Project Development and Evaluation Centre is the proponent of standards
    and guidelines for all aspects of capital projects, from pre-feasibility through
    to execution and commissioning. This covers major projects as well as minor
    projects implemented within business units. It holds a body of expertise to
    ensure the lessons from previous project developments are a resource to the
    project directors for the next generation of development. 
       Evaluation staff
    are deliberately excluded from involvement in the formulation of major investment
    proposals, and the Evaluation team provides independent review and advice on
    the adequacy of risk identification and mitigation at key points in the approvals
    process. The team is also responsible for overseeing reserve estimation corporate
governance within the Group.

Energy and climate changeThe Group
Chief Scientist monitors emerging global technology trends and identifies opportunities
which could significantly
    enhance the
    Groups operations.
    Particular attention is given towards technologies with the potential for step
    change reductions in the Groups energy and greenhouse gas footprint.
    The Group Chief Scientist also assists product groups in positioning new
    and existing operations for reduced energy consumption, greenhouse gas emissions
and energy costs.

Production Technology ServicesProduction
Technology Services is the core team of technology professionals deployed across
five global offices who provide
    the breadth
    of experience and
    multi disciplinary approach to support existing business activity and pursuit
    of new, profitable growth. They are deployed at the request of business units
    and the technology centres within T&I. Their offices are in Melbourne,
    Brisbane, Perth, Salt Lake City and Montreal. In addition, some staff reside
in London to be readily accessible to the UK headquarters.

2007 compared with 2006The
    charge against net earnings for the T&I group was US$78 million, compared with US$50
    million in 2006. The increase was due to the higher level of activity, reflected
    also
      by higher
      staff numbers, and the continued development and deployment of leading
operational practice across the Group.

2006 compared with 2005The
    charge against net earnings for the group was US$50 million, compared with US$41
    million in 2005. The increase was due to the greater level of activity, reflected
    also in the
addition of staff.



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Financial review

Cash flow

2007 compared with 2006Cash flow from
operations, including dividends from equity accounted units, was a record US$12,569 million, 15 per cent higher than in 2006 due to
    the effect of higher earnings and favourable working capital movements. 
       Tax
    paid for 2007 increased to US$3,421 million, US$622 million higher
    than for 2006 largely due to the delayed tax effect of the increased earnings
    in 2006 compared to 2005 and tax paid by Alcan. Net interest paid of US$489
    million for 2007 was US$361million higher than 2006, arising mostly from
    Alcan acquisition debt arrangement costs and interest paid on the Alcan debt.
    
       The Group invested at record levels, in particular in expansion projects. Expenditure
    on property, plant and equipment and intangible assets was US$4,968 million
    in 2007, an increase of US$980 million over 2006. This included the completion
    of the second phase of the Dampier port and Yandicoogina iron ore mine expansions,
    as well as construction of the Hope Downs iron ore mine in Western Australia,
    the expansion of the Yarwun alumina refinery, the A418 dike construction at
    the Diavik diamond mine and the Madagascar ilmenite mine. The Groups
    ongoing and recently approved capital projects, which will impact future years
    cash flows are on pages 12 to 13. 
       The net cash cost of acquisitions in 2007
    was US$37,526 million, which was net of US$13 million related to disposals.
    Almost all of the acquisition cost related to Alcan. The acquisition was financed
    by US$38 billion of syndicated bank loans. Acquisitions less disposals
    were US$279 million in 2006 mainly relating to the acquisition of an initial
    stake in Ivanhoe Mines. 
       Dividends paid in 2007 of US$1,507 million were
    US$1,066 million lower than dividends paid in 2006 which included a special
    dividend of US$1.5 billion. The share buy back programme was discontinued
    after the announcement of the Alcan acquisition on 12 July 2007: returns to
    shareholders from the on-market buy back of Rio Tinto plc shares in 2007 totalled
    US$1,611 million (net of US$13 million proceeds from the exercise of
    options), compared with US$2,339
million in 2006.

2006 compared with 2005Cash flow from
operations, including dividends from equity accounted units, was US$10,923 million, 36 per cent higher than in 2005. The increase was
    mainly due to increased profits. There was a cash outflow on working capital
    in both years reflecting higher receivables across all product groups due to
    higher metal prices and sales volumes. The cash outflow on inventory was US$454
    million in 2006 compared to US$249 million in 2005, partly due to increased
    operating activity and production
costs.
     Expenditure
      on property, plant and equipment and intangible assets was US$3,988 million in 2006, an
    increase of US$1,434 million over 2005. This included the second phase
    of the Dampier port and Yandicoogina iron ore mine expansions, as well as
    construction of the Hope Downs iron ore mine in Western Australia, the A418
    dike construction at the Diavik diamond mine, the Madagascar ilmenite mine
    and the capacity increases at Rio Tinto Energy America. 
       Tax paid in 2006
    increased to US$2,799 million, US$1,782 million higher than in 2005.
    The increase reflected higher profits including the lag effect of tax payments
    on higher profits from 2005. 
       Acquisitions less disposals were US$279
    million in 2006 mainly relating to the acquisition of an initial stake in
    Ivanhoe Mines. In 2005, there were net proceeds of disposal arising mainly
    from the sale of the Groups
interest in Lihir.
     Dividends paid
      in 2006 of US$2,573
    million were US$1,432 million higher than dividends paid in 2005. These
    included the special dividend totalling US$1.5 billion which was paid
    to shareholders in April 2006. Capital management activity also included
    the on market buyback of Rio Tinto plc shares in 2006, comprising US$2,299
    million from the 20062007 programme and US$95 million in January from
    the 20052006 programme (before deducting US$24 million proceeds
    from the exercise of options). In 2005 an off market buyback of Rio Tinto
    Limited shares returned US$774 million to shareholders and an on market
    buyback of
Rio Tinto plc shares returned US$103 million.

Balance sheetRio Tinto commissioned
expert valuation consultants to advise on the fair values of Alcans assets.
As required under International Financial Reporting Standards (IFRS), the tangible
and intangible assets
    of the acquired business
    have been uplifted to fair value. The residue of the purchase price not allocated
    to specific assets and liabilities has been attributed to goodwill. The provisional
    values incorporated in the 2007 Financial statementswill
    be subject to revision within 12 months of the date of acquisition as permitted
    by the relevant accounting standard, IFRS 3. Details of the Alcan assets acquired
    are included in note 41 to the 2007 Financial statements. 
       The completion
    of the Alcan acquisition was financed under a US$40 billion syndicated
    bank loan at floating interest rates of which US$38 billion was drawn down.
    This, together with the debt held by Alcan on acquisition, resulted in an increase
    in net debt of US$42.8 billion to US$45.2 billion at 31 December 2007
    of which US$8.1 billion is classified as short term borrowings. The US$40
    billion loan is split into four facilities with final maturities ranging
    up to five years. Facilities A and B of this acquisition related debt are
    subject
    to mandatory prepayment to the extent of the net proceeds from disposals
    of assets and from the raising of funds through capital markets, under specific
thresholds



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and conditions. Debt to total capital rose to
    63 per cent and interest cover was 20 times. In addition, the Groups
    share of the third party net debt of equity accounted units totalled US$0.7
    billion at 31 December 2007. US$0.3 billion of this debt is with recourse
    to the Rio Tinto Group.
     Goodwill arising from the Alcan acquisition relating
    to subsidiaries was US$14.5
    billion and that relating to equity accounted units was US$2.8 billion.
    The future economic benefits represented by the goodwill include those associated
    with synergies, future development and expansion projects and the assembled
    workforce. The Group has decided to dispose of Alcan Packaging, which is
    presented in the balance sheet in the lines: Assets held for sale and Liabilities
    of disposal groups held for sale.
    Net assets attributable to Rio Tinto
    shareholders increased by US$6.5 billion. The increase reflected profit
    after tax attributable to Rio Tinto shareholders of US$7.3 billion less
    returns to shareholders of US$2.8 billion comprising US$1.5 billion
    of dividends and US$1.3 billion of share buybacks. In addition, there
    was a positive currency translation effect of US$1.9 billion as the Australian
    dollar, the Canadian dollar and the Euro all strengthened against
the US dollar.

Financial risk management
The Groups policies with regard to financial risk management are clearly
    defined and consistently applied. They are a fundamental part of the Groups
    long term strategy covering areas such as foreign exchange risk, interest rate
    risk, commodity price risk, credit risk and liquidity risk and capital management.
    From 1 January 2008, Rio Tinto Alcan has adopted the Rio Tinto Group policy
    on trading and hedging. The acquisition of Alcan impacted the Groups
    market risk exposures, in particular, increasing the Groups exposure
    to changes in interest rates and the aluminium price.
       The Groups business
    is finding, mining and processing mineral resources, and not trading. Generally,
    the Group only sells commodities it has produced but may purchase commodities
    to satisfy customer contracts from time to time and to balance the loading
    on production facilities. In the long term, natural hedges operate in a number
    of ways to help protect and stabilise earnings and cash flow.
       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 the long term. 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. These natural hedges significantly reduce the
    necessity for using derivatives or other forms of synthetic hedging. Such
    hedging is
    therefore undertaken to a strictly limited degree, as described in the sections
    on currency, interest rate, commodity price exposure and treasury management
    below.     
    The Groups 2007 Financial statementsand
disclosures show the full extent of its financial commitments including debt.
     The risk factors
      to which the Group is subject that are thought to be of particular importance
      are summarised
    on pages 5 to 7.
     The effectiveness of internal control procedures
continues to be a high priority in the Rio Tinto Group. The Boards statement
on internal control is included under Corporate governance on page 150.

Liquidity and capital resourcesThe
Groups total capital is defined as Rio Tintos shareholders funds
    plus amounts attributable to outside equity shareholders plus net debt. The
    Groups over-riding objectives when managing capital are to safeguard
    the business as a going concern; to maximise returns for shareholders and
    benefits for other stakeholders and to maintain an optimal capital structure
    in order
    to reduce the cost of capital.
     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. Rio Tinto plc
    and Rio Tinto Limited continue to maintain solid investment grade credit ratings
    from Moodys and Standard and Poors, despite the credit rating
    downgrade announced on completion of the Alcan acquisition. These ratings
    continue to
    provide access to global debt capital markets in significant depth. Credit
    ratings are not a recommendation to purchase, hold or sell securities, and
    are subject to revision or withdrawal at any time by the ratings organisation.
     Rio Tinto does not have a target debt/equity ratio, but has a policy of maintaining
    a flexible financing structure so as to be able to take advantage of new investment
    opportunities that may arise. Following the acquisition of Alcan, the Group
    has publicly stated an objective to reduce its debt to equity ratio from current
    levels through a targeted asset divestment programme and through operating
    cash flows to a level consistent with a single-A credit rating.
    This policy is balanced against the desire to ensure efficiency in the debt/equity
    structure of the Rio Tinto balance sheet in the longer term through pro-active
capital management programmes.On 12 February 2008 the Group announced the sale of its interest in the Greens
    Creek mine for US$750 million. On 5 March 2008 the Group completed the
    sale of its interest in the Cortez joint venture to its partner for a cash
    consideration of US$1,695 million plus deferred and contingent consideration.
       The Group maintains backup liquidity for its commercial paper programme and
    other debt maturing within 12 months by way of bank standby credit facilities,
    which totalled US$3.7 billion (undrawn) at 31 December 2007. The Groups
    committed bank standby facilities contain no financial undertakings relating
to interest cover and are not



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affected to any material extent (other than an
    increase in interest margin) by a reduction in the Groups credit rating. The main covenant in the
    Rio Tinto group relates to a financial covenant over Corporate debt drawn under
    the Syndicated Acquisition Facility, for which a compliance certificate must
    be produced attesting a certain ratio of Net Borrowings to EBITDA. There are
    no covenants relating to corporate debt which are under negotiation at present.
    The Groups policy is to centralise debt and surplus cash balances wherever
    possible.
       As at 31 December 2007, the Group had contractual cash obligations
    arising in the ordinary course of business
as follows:

|Contractual cash obligations                   |        |  |                    |  |             |  |             |  |         | 
|---------------------------------------------- | ------ |  | ------------------ |  | ----------- |  | ----------- |  | ------- | 
|                                               |        |  | Less  than
      1 |  | Between 1   |  | Between 3   |  | After 5 | 
|                                               | Total  |  | year               |  | and 3 years |  | and 5 years |  | years   | 
|                                               | US$ m  |  | US$ m              |  | US$ m       |  | US$ m       |  | US$ m   | 
|                                               |        |  |                    |  |             |  |             |  |         | 
|Expenditure commitments in relation to:        |        |  |                    |  |             |  |             |  |         | 
|Operating leases                               | 1,782  |  | 283                |  | 517         |  | 468         |  | 514     | 
|Other (mainly capital commitments)             | 3,978  |  | 3,113              |  | 801         |  | 64          |  |        | 
|                                               |        |  |                    |  |             |  |             |  |         | 
|Long term debt and other financial obligations |        |  |                    |  |             |  |             |  |         | 
|Debt (a)                                       | 47,019 |  | 8,263              |  | 21,069      |  | 13,335      |  | 4,352   | 
|Interest payments (b)                          | 9,238  |  | 2,310              |  | 3,184       |  | 1,660       |  | 2,084   | 
|Unconditional purchase obligations (c)         | 7,271  |  | 1,525              |  | 1,571       |  | 1,079       |  | 3,096   | 
|Other (mainly trade creditors)                 | 7,295  |  | 6,144              |  | 639         |  | 363         |  | 149     | 
|                                               |        |  |                    |  |             |  |             |  |         | 
|Total                                          | 76,583 |  | 21,638             |  | 27,781      |  | 16,969      |  | 10,195  | 
|                                               |        |  |                    |  |             |  |             |  |         | 

|Notes
|-----
|(a)  
|(b)  
|(c)  

Information regarding the Groups pension
    commitments and funding arrangements is provided in the Post retirement benefits
    section
    of this Financial review
    and in note 49 to the 2007 Fnancial statements. The level of contributions
    to funded pension plans is determined according to the relevant legislation
    in each jurisdiction in which the Group operates. In some countries there
    are statutory minimum funding requirements while in others the Group has
    developed
    its own policies, sometimes in agreement with the local trustee bodies. The
    size and timing of contributions will usually depend upon the performance
    of investment markets. Depending on the country and plan in question the
    funding
    level will be monitored quarterly, bi-annually or annually and the contribution
    amount amended appropriately. Consequently it is not possible to predict
    with any certainty the amounts that might become payable in 2009 onwards.
    The impact
    on cash flow in 2007 of the Groups pension plans, being the employer
    contributions to defined benefit and defined contribution pension plans, was
    US$246 million. In addition there were contributions of US$30 million
    in respect of unfunded healthcare schemes. Contributions to pension plans for
    2008 are estimated to be around US$220 million higher than for 2007.
    This is predominantly due to the inclusion of the Alcan plans for the full
    year,
    although it is also partly due to changes in funding rules in the US. Healthcare
    plans are unfunded and contributions for future years will be equal to benefit
    payments and therefore cannot be predetermined.
     Information regarding the Groups
    close down and restoration obligations is provided in the relevant section
    of this review and in note 27 to the 2007 Financial statements. 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 relevant
    operation. Generally, the Groups close down and restoration obligations
    to remediate in the long term are not fixed as to amount and timing and are
not therefore included in the above table.
     On the basis
      of the levels of obligations described above, the unused capacity under
      the Groups commercial
    paper and European Medium Term Notes programmes, the Groups anticipated
    ability to access debt and equity capital markets in the future and the level
    of anticipated free cash flow, the Group believes that it has sufficient
    short and long term sources of funding available to meet its working capital
requirements.

Dividends and capital management
Rio
Tintos progressive dividend policy
    aims to increase the US dollar value of dividends over time, without cutting
    them in economic
    downturns.
     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 plc dividends are declared and paid
    in pounds sterling and Rio Tinto Limited dividends are declared and paid
    in Australian dollars, converted at exchange rates applicable to the US dollar
    two days prior to the announcement of dividends. Holders of American Depositary
    Receipts (ADRs) receive a US dollar dividend at the rate declared. Changes
in exchange rates



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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
    total US dollar dividends declared in respect of the previous year.
     The Group
    announced
    a re-basing of its ordinary dividend in February 2007, increasing the full
    year ordinary dividend in respect of 2006 by 30 per cent to 104 US cents.
    The 2007 full year ordinary dividend represents a 31 per cent increase on
    2006.
    In addition, the Group has announced an intention to increase its annual
    dividend by at least 20 per cent in each of 2008 and 2009.
     Final 2007 dividends
    to Rio
    Tinto Limited shareholders will be fully franked. The board expects Rio Tinto
    Limited to be in a position to pay fully franked dividends for the reasonably
    foreseeable future.
     On 2 February 2006 the Group announced a US$4 billion
    capital management programme which was subsequently increased to US$7 billion
    in October 2006. The capital return was comprised of a US$1.5 billion special
    dividend (US$1.10 per share) paid in April 2006 which was paid concurrently
    with the 2005 final ordinary dividend, but did not form part of the Groups
    progressive ordinary dividend policy, and an initial US$2.5 billion share
    buyback programme (increased to US$5.5 billion) to be completed over the
    remaining period to the end of 2007. The programme was suspended on 12 July
    2007 at the time the Alcan offer was announced, by which time US$3.9 billion
    had been completed under the US$7 billion capital management programme,
    bringing the total cash returned to shareholders under announced capital management
    programmes since 2005 to US$6.4
billion.

Treasury management and financial instruments
Treasury
operates 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.
     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
    and cross currency interest rate swaps in conjunction with longer term funds
    raised in the capital markets to achieve a predominantly floating rate obligation
    which is consistent with the Groups interest and exchange rate policies,
    primarily US dollar LIBOR. No material exposure is considered to exist by
    virtue of the possible non performance of the counterparties to financial
    instruments
    held by the Group.
     Derivative contracts are carried at fair value based on
    published price quotations for the period for which a liquid active market
    exists. Beyond this period, Rio Tintos own assumptions
are used.

Off balance sheet arrangements
In the
ordinary course of business, to manage the Groups operations and
    financing, Rio Tinto enters into certain performance guarantees and commitments
    for capital and other expenditure.
     The aggregate amount of indemnities and
    other performance guarantees, on which no material loss is expected, including
    those related to joint ventures and associates, was US$739 million at
    31 December 2007.
     Other commitments include capital expenditure,
operating leases and unconditional
    purchase obligations as set out in the table of contractual cash obligations,
    included in the liquidity and capital resources
section above.

Exchange rates, reporting currencies and currency exposure
Rio
Tintos shareholders equity, 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 Canadian dollars and the Euro are the most important currencies (apart
    from the US dollar) influencing costs. 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 underlying earnings.
     The following sensitivities give the estimated
effect on underlying earnings assuming
    that each exchange rate moved in isolation. The relationship between currencies
    and commodity prices is a complex one and movements in exchange rates can
    cause movements in commodity prices and vice versa. Where the functional
    currency
    of an operation is that of a country for which production of commodities
    is an important feature of the economy, such as the Australian dollar, there
    is
    a certain degree of natural protection against cyclical fluctuations in the
    long term, in that the currency tends to be weak, reducing costs in US dollar
    terms, when commodity prices are low, and vice versa.
     The exchange rate sensitivities
    quoted below include the effect on operating costs of movements in exchange
    rates but exclude the effect of the revaluation of foreign currency financial
    assets and liabilities. They should therefore
be used with care.



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|                      |                |  | Effect on net and   | 
|--------------------- | -------------- |  | ------------------- | 
|                      |                |  | underlying earnings | 
|                      | Average        |  | of 10% change in    | 
|                      | exchange rate  |  | full year average   | 
|                      | for 2007       |  | +/- US$m            | 
|                      |                |  |                     | 
|Australian dollar (a) | 84 US cents    |  | 494                 | 
|Canadian dollar (a)   | 93 US cents    |  | 203                 | 
|Euro                  | 137 US cents   |  | 65                  | 
|Chilean peso          | $1 = 523 pesos |  | 12                  | 
|New Zealand dollar    | 73 US cents    |  | 17                  | 
|South African rand    | 14 US cents    |  | 55                  | 
|UK sterling           | 200 US cents   |  | 24                  | 
|                      |                |  |                     | 

|(a) | The sensitivities in the 2007 column
	    are based on 2007 prices, costs and volumes and assume that all other
	    variables remain
	    constant, except that
    a full years volumes are included
for Alcan where indicated.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 most appropriate currency for borrowing and holding
surplus cash, although a portion of surplus cash may also be held in other currencies,
most notably Australian dollars, Canadian dollars and the Euro. This cash is
held in order to meet short term operational and capital commitments and, for
the Australian dollar, dividend payments. The Group finances its operations primarily
in US dollars, either directly or using cross currency interest rate swaps. A
substantial part of the
Groups US dollar debt is located in subsidiaries having a US functional
currency.
     However,
      certain US dollar debt and other financial assets and liabilities including
      intragroup balances are not held in the functional currency of the relevant
      subsidiary. This results in an accounting exposure to exchange gains and
      losses as the financial assets and liabilities are translated into the
      functional currency of the subsidiary that accounts for those assets and
      liabilities. These
exchange gains and losses are recorded in the Groups income statement except to the extent that they can be taken to equity under the Groups
accounting policy which is explained in note 1 of the 2007 Financial statements. Gains and losses on US dollar net debt and on intragroup balances are excluded from
underlying earnings. Other exchange gains and losses are included in underlying earnings. 
     The Group does not generally believe that active
currency hedging of transactions 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,
typically hedging of capital expenditure and other significant financial items
such as tax and dividends.
There is a legacy of currency forward contracts used to hedge operating cash
flow exposures which were acquired with Alcan and the North companies. Details
of currency derivatives held at 31 December 2007 are set out in note 34 to the 2007 Financial statements. 
     The sensitivities below give the estimated effect
on underlying earnings, net earnings and equity of a ten per cent change in the
full year closing US dollar exchange rate, assuming that each exchange rate moved
in isolation. The sensitivities are based on financial assets and liabilities
held at 31 December
2007, where balances are not denominated in the functional currency of the subsidiary.
A strengthening of the US dollar would result in exchange gains based on financial
assets and financial liabilities held at 31 December 2007. These balances will
not remain constant throughout 2008, however, and therefore these numbers should
be used with care.

|                                      |               |  | Effect on   |   | Of which   |  | Effect of   |  
|------------------------------------- | ------------- |  | ----------- | - | ---------- |  | ----------- | -
|                                      |               |  | net         |   | amount     |  | items       |  
|                                      |               |  | earnings of |   | impacting  |  | impacting   |  
|                                      | Closing       |  | 10%         |   | underlying |  | directly on |  
|                                      | exchange rate |  | change      |   | earnings   |  | equity      |  
|                                      | US cents      |  | US$m        |   | US$m       |  | US$m        |  
|                                      |               |  |             |   |            |  |             |  
|Functional currency of business unit: |               |  |             |   |            |  |             |  
|Australian dollar                     | 88            |  | 204         |   | 99         |  | (20         | )
|Canadian dollar                       | 101           |  | (3          | ) | 53         |  |            |  
|South African rand                    | 15            |  | 14          |   | 12         |  | (4          | )
|Euro                                  | 147           |  | 33          |   | 14         |  | 149         |  
|New Zealand dollar                    | 78            |  | (9          | ) | 3          |  |            |  
|                                      |               |  |             |   |            |  |             |  

|(a) | The sensitivities show the net sensitivity of US dollar exposures in Australian
    dollar functional currency companies, for example, and Australian dollar
    exposures in US dollar functional
currency companies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The sensitivities indicate the effect of a ten per cent strengthening of
    the US dollar against each currency.                                                                                                     

The Group has changed its disclosure of market
  risk sensitive instruments from a tabular basis to a sensitivity analysis basis
  for consistency with the requirements of IFRS 7, the international accounting
  standard on financial instrument disclosure which the Group has adopted in its
  financial statements this year.
       Sensitivities as at 31 December 2006 were as shown below.



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|                                      |               |  |                 |   | Of which   |  |                 |  
|------------------------------------- | ------------- |  | --------------- | - | ---------- |  | --------------- | -
|                                      |               |  |                 |   | amount     |  | Effect of items |  
|                                      |               |  | Effect on net   |   | impacting  |  | impacting       |  
|                                      | Closing       |  | earnings of 10% |   | underlying |  | directly on     |  
|                                      | exchange rate |  | change          |   | earnings   |  | equity          |  
|                                      | US cents      |  | US$m            |   | US$m       |  | US$m            |  
|                                      |               |  |                 |   |            |  |                 |  
|Functional currency of business unit: |               |  |                 |   |            |  |                 |  
|Australian dollar                     | 79            |  | 37              |   | 56         |  | (30             | )
|Canadian dollar                       | 86            |  | (29             | ) | 12         |  | -               |  
|South African rand                    | 14            |  | (6              | ) | 5          |  | -               |  
|New Zealand dollar                    | 71            |  | (15             | ) | 3          |  | -               |  
|                                      |               |  |                 |   |            |  |                 |  

In addition, some US dollar functional currency
    companies are exposed to exchange movements on local currency deferred tax
    balances. The only material exposure is to the Canadian dollar and a ten
    per cent strengthening of the US dollar would reduce underlying earnings
    based on 2007 balances by US$96 million. This would offset the US$53
    million gain shown above. There was no similar exposure at 31 December 2006. 
      The functional currency of many operations within
the Rio Tinto Group is the local currency in the country of operation. Alcans
aluminium and alumina producing operations use a US dollar functional currency
including those in Canada and Australia. Foreign currency gains or losses arising
on translation to US dollars of the net assets of non US functional currency
operations are taken to equity and, with effect from 1 January 2004, recorded
in a currency translation reserve. A weakening of the US dollar would have a
positive effect on equity. The approximate translation effects on the Groups
net assets of ten per cent movements from the year end exchange rates are as
follows:

|                  |               |  | 2007                 | 
|----------------- | ------------- |  | -------------------- | 
|                  |               |  | Effect on net assets | 
|                  | Closing       |  | of 10% change in     | 
|                  | exchange rate |  | closing rate         | 
|                  | US cents      |  | +/- US$m             | 
|                  |               |  |                      | 
|Australian dollar | 88            |  | 1,583                | 
|Euro              | 147           |  | 568                  | 
|Canadian dollar   | 101           |  | 255                  | 
|                  |               |  |                      | 

These net assets will not remain constant, however, and therefore these numbers
should be used with care.

Interest ratesRio Tintos interest rate management policy is generally to borrow and
    invest at floating interest rates. This approach is based on the historical
    correlation between interest rates and commodity prices. In some circumstances,
    an element of fixed rate funding may be considered appropriate. Rio Tinto hedges
    interest rate and currency risk on most of its foreign currency borrowings
    by entering into cross currency interest rate swaps in order to convert fixed
    rate foreign currency borrowings to floating rate US dollar borrowings. At
    the end of 2007, US$4.9 billion (2006: US$1.2 billion) of the Groups
    debt was at fixed rates after taking into account interest rate swaps and finance
    leases. Based on the Groups net debt at 31 December 2007, the effect
    on the Groups net earnings of a half percentage point increase in US
    dollar LIBOR interest rates with all other variables held constant, would be
    a reduction of US$158 million (2006: US$3 million). These balances
    will not remain constant throughout 2008, however, and therefore these numbers
should be used with care.

Commodity pricesThe 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. The Group may hedge certain commitments
    with some of its customers or suppliers. Details of commodity derivatives
    held at 31 December 2007 are set out in note 34 to the 2007 Financial statements.
    The forward contracts to sell copper were entered into as a condition of
    the refinancing of Palabora in 2005. The aluminium forward contracts and
    embedded
    derivatives were acquired with Alcan. 
      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 including iron ore and coal are generally agreed
    annually or for longer periods with customers, although volume commitments
    vary by product.
       Certain products, predominantly copper concentrate, are provisionally
    priced, ie 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. Revenue on provisionally priced
sales is



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recognised based on estimates of fair value of
  the consideration receivable based on forward market prices. At each reporting
  date provisionally priced metal is marked to market based on the forward selling
  price for the period stipulated in the contract. For this purpose, the selling
  price can be measured reliably for those products, such as copper, for which
  there exists an active and freely traded commodity market such as the London
  Metal Exchange and the value of product sold by the Group is directly linked
  to the form in which it is traded on that market. At the end of 2007 the Group
  had 270 million pounds of copper sales (2006: 324 million pounds) that were
  provisionally priced at 304 US cents per pound (2006: 287 US cents per pound).
  The final price of these sales will be determined in 2008. The impact on earnings
  of a ten per cent change in the price of copper for the provisionally priced
  sales would be US$58 million (2006: US$66 million). 
       Approximately 53 per cent of Rio Tintos
    2007 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 Group continued to achieve high prices for
its products in 2007, and its assessment of the economic and demand outlook remains
very
    positive, despite recent unsettled conditions in the financial markets. The
    strong increases seen in global minerals demand are driven by demographic
and economic fundamentals in fast growing countries like China and India, whose
    large populations continue to urbanise. These long term trends are driven
by
    domestic developments in those countries, and are therefore insulated to
a significant extent from any potential near term weakness in western economies. 
       The approximate effect on the Groups underlying
and net earnings of a ten per cent change from the full year average market price
in 2007 for
    the
following products would be:

|              |       |  |              |  | Effect on underlying | 
|------------- | ----- |  | ------------ |  | -------------------- | 
|              |       |  |              |  | and net earnings of  | 
|              |       |  | Average      |  | US$ 10% change in    | 
|              |       |  | market price |  | full year average    | 
|              | Unit  |  | for 2007     |  | +/- US$m             | 
|              |       |  |              |  |                      | 
|Copper        | pound |  | 3.24         |  | 360                  | 
|Aluminium (a) | pound |  | 1.20         |  | 678                  | 
|Gold          | ounce |  | 691          |  | 64                   | 
|Molybdenum    | pound |  | 30           |  | 69                   | 
|Iron ore      | dmtu  |  | n/a          |  | 457                  | 
|              |       |  |              |  |                      | 

|(a) | The above sensitivities are based on 2007
        volumes except that a full year impact from Alcan has been included where
    indicated.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

The sensitivities give the estimated impact on
    net earnings of changes in prices assuming that all other variables remain
    constant. These
    should be used with
    care. As noted previously, the relationship between currencies and commodity
    prices is a complex one and changes in exchange rates can influence commodity
    prices and vice versa. 
       The table below summarises the impact of changes in
    the market price on the following commodity derivatives including those aluminium
    and option contracts embedded in electricity purchase contracts outstanding
    at 31 December 2007. The impact is expressed in terms of the resulting change
    in the Groups net earnings for the year or, where applicable, the change
    in equity. The sensitivities are based on the assumption that the market price
    increases by ten per cent with all other variables held constant. The Groups own
    use contracts are excluded from the sensitivity analysis below as they
    are outside the scope of IAS 39. Own use contracts are contracts to buy or
    sell non financial items that can be net settled but were entered into and
    continue to be held for the purpose of the receipt or delivery of the non financial
    item in accordance with the business units expected purchase, sale
    or usage requirements. 
      These sensitivities should be used with care.
The relationship
    between currencies and commodity prices is a complex one and changes in exchange
rates can influence commodity prices and vice versa.

|          |                      |  | Effect of items    | 
|--------- | -------------------- |  | ------------------ | 
|          |                      |  | impacting directly | 
|          | Effect on underlying |  | on Rio Tinto share | 
|          | and net earnings of  |  | of equity of 10%   | 
|          | 10% increase from    |  | increase from      | 
|          | year end price       |  | year end price     | 
|          | US$m                 |  | US$m               | 
|          |                      |  |                    | 
|Copper    |                     |  | 40                 | 
|Coal      |                     |  | 25                 | 
|Aluminium | 41                   |  | 50                 | 
|          |                      |  |                    | 
|          | 41                   |  | 115                | 
|          |                      |  |                    | 



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Sensitivities as at 31 December 2006 were as
shown below:

|       | Effect on underlying |  | Effect of items    | 
|------ | -------------------- |  | ------------------ | 
|       | and net earnings of  |  | impacting directly | 
|       | 10% increase from    |  | on Rio Tinto share | 
|       | year end price       |  | of equity of 10%   | 
|       |                      |  | increase from      | 
|       |                      |  | year end price     | 
|       | US$m                 |  | US$m               | 
|       |                      |  |                    | 
|Copper |                     |  | 49                 | 
|Coal   |                     |  | 20                 | 
|       |                      |  |                    | 
|       |                     |  | 69                 | 
|       |                      |  |                    | 

Sales revenueThe table below shows
published benchmark prices for Rio Tintos
    commodities for the last three years where these are publicly available, and
    where there is a reasonable degree of correlation between the benchmark and
    Rio Tintos realised prices. The prices set out in the table are the averages
    for each of the calendar years, 2005, 2006 and 2007. The Groups sales
    revenue will not necessarily move in line with these benchmarks for a number
of reasons which are discussed below.

|           |                                               |          | 2007 |  | 2006 |  | 2005 | 
|---------- | --------------------------------------------- | -------- | ---- |  | ---- |  | ---- | 
|Commodity  | Source                                        | Unit     | US$  |  | US$  |  | US$  | 
|           |                                               |          |      |  |      |  |      | 
|Aluminium  | LME                                           | pound    | 1.20 |  | 1.16 |  | 0.86 | 
|Copper     | LME                                           | pound    | 3.24 |  | 3.06 |  | 1.66 | 
|Gold       | LBMA                                          | ounce    | 691  |  | 602  |  | 444  | 
|Iron ore   | Australian benchmark (fines)
    (a)          | dmtu (b) | 0.79 |  | 0.71 |  | 0.55 | 
|Molybdenum | Metals Week: quote for
    dealer oxide price | pound    | 30   |  | 25   |  | 31   | 
|           |                                               |          |      |  |      |  |      | 

|Notes
|-----
|(a)  
|(b)  

The discussion of revenues
      below relates to the Groups
          gross revenue from sales of commodities, including its share of the
      revenue of equity accounted units, as included in the Financial Information
      by
        Business Unit in the 2007 Financial statements.
     The sales revenues
          of the Iron Ore group increased by 27 per cent in 2007 compared with
      2006. There was
            a 9.5 per cent increase in the benchmark price, mainly effective
from 1 April 2007 which resulted in an 11 per cent increase in the average
      Australian iron ore fines benchmark for the calendar year. Sales achieved
      the benchmark
            price throughout the year. The price outlook for the 2008 contract
      year remains
            very positive, with spot prices in China substantially above prevailing
          contract prices. In addition to higher prices, sales revenues at Hamersley
          Iron were
            higher from record production following completion of the second
phase of the Dampier port upgrade and the Tom Price brownfield and Yandicoogina
          JSE
            mine expansions.
     At IOC, volumes were lower as a result of a seven
      week strike in the first and second quarters of the year and this was only
      partly
          mitigated
            by higher prices. 
     The Australian iron ore fines benchmark increased
      by 19 per cent in April 2006. This together with higher volumes at Hamersley
          contributed
            to an increase in the Groups iron ore revenue of 26 per cent
            in 2006 against 2005.
     A significant proportion of Rio Tintos
            coal production is sold under long term contracts. In Australia,
            the prices applying to sales
            under the long term contracts are generally renegotiated annually;
            but prices are fixed at different times of the year and on a variety
            of bases. For these
            reasons, average realised prices will not necessarily reflect the
            movements in any of the publicly quoted benchmarks. Moreover, there
            are significant
            product specification differences between mines. Sales volumes will
            vary during the year and the timing of shipments will also result
            in differences
            between average realised prices and benchmark prices.
     Asian seaborne
            thermal coal prices continued to rise sharply throughout 2007 mainly
            due to supply
            disruptions from key producing countries. Issues relating to infrastructure
            controlled by external parties are likely to maintain market tightness
            for the foreseeable future. Published thermal coal benchmarks in
            Australia improved
            by 33 per cent in the calendar year whilst coking coal benchmarks
            decreased by 13 per cent.
     Revenues of the Groups Australian
            coal operations decreased by three per cent in 2007 with lower thermal
            coal sales largely attributable
            to infrastructure constraints and a severe weather event. In general,
            production at the Australian coal mines continued to be constrained
            by rail and port
            constraints in Queensland and New South Wales and reduced tonnage
            of rail and port allotments in Queensland, which curtailed mined
            production, despite
            the generally favourable market conditions.
     Revenues of the Groups
            Australian coal operations increased by two per cent in 2006. There
            was a sustained increase in the received price for thermal coal.
            This benefit
            was
            largely offset by lower coking coal sales because of market weakness
            and the delay in thermal coal shipments arising from congestion at
            Newcastle. Published market indications for Australian thermal coal
            showed a slight
            increase in thermal coal prices in 2006 and a seven per cent increase
            in
        the coking coal benchmark price.



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In
    the US, published market indications of spot prices for Wyoming Powder River
    Basin
      thermal coal 8800 BTU (0.80
    sulphur) show a decrease of around 20 per cent for the average spot price
    in 2007 compared with 2006. However, Rio Tinto Energy Americas revenues
    increased by nine per cent in 2007 with improved realised prices. Rio Tinto
    Energy America has long term contracts and this increased revenue was primarily
    a result of the replacement of below market legacy contracts with new contracts
    at current market pricing in 2006 and earlier years. Revenues increased by
    19 per cent in 2006 against 2005, with higher realised prices for Powder
    River Basin coal and increased volumes. Despite increased volatility in the
    spot market and a marginal decline in long term sales volumes the market
    sentiment for uranium remained positive through 2007. Supply from a number
    of producers fell short of expectations in 2007 while the outlook for demand
    increased as new-build programmes gathered pace, particularly in China. Higher
    utilisation rates were also experienced in the nuclear industry. These factors
    have contributed to tighter markets and an improvement in the longer term
    outlook for uranium demand.
     Large swings in the spot price, driven by speculative
    behaviour by hedge funds and investors, created a degree of uncertainty in
    the uranium market. The resultant effect was a de-linking of the spot and
    long term prices and a reduction in contracting as fuel buyers monitored
    movements in the market. Despite this, long term prices grew strongly in
    the early part of the year and remained firm thereafter. Information included
    in the RWE NUKEM Inc. Price Bulletin indicated price increases of 99 per
    cent in 2007 and 71 per cent in 2006 for uranium oxide. The large increases
    reported in the Price Bulletin are not fully reflected in the revenues for
    the period because uranium oxide is typically sold on long term contracts
    with pricing determined for several years beyond the commencement of the
    contracts.
     The Groups uranium revenue increased by 69 per cent in 2007
    and 27 per cent in 2006 as a result of higher prices with Rössing, in
    particular, benefiting from positive market conditions and improved pricing.
    Prices at ERA continued to benefit from the gradual replacement of legacy
    contracts with newer contracts written
in an environment of higher prices.The average aluminium price of 120 US cents per
  pound was three per cent above the 2006 average price. Global demand growth
  for 2007 is expected to exceed ten per cent. Rising LME inventories towards
  the end of 2007 and strong growth in global output pushed aluminium prices lower
  in the second half of the year. The Group anticipates strong demand and growing
  supply constraints in China. 
       The Aluminium groups
    sales revenues are from aluminium and related products such as alumina and
    bauxite. Alcans sales revenue for the two months from acquisition,
    which includes revenue from Engineered Products, was US$3,798 million.
    Rio Tinto Aluminiums sales revenue increased by one per cent in 2007
    reflecting higher volume and price for bauxite and aluminium and lower volume
    and price for alumina. Revenue increased by 27 per cent in 2006. Average
    aluminium prices quoted on the LME increased by 35 per cent against 2005
    but achieved spot alumina prices were lower than in 2005.
       The Copper group also produces gold and molybdenum
  as significant co-products. The average copper price of 324 US cents per pound
  was six per cent above the 2006 average price. The gold price averaged US$691
  per ounce, an increase of 15 per cent on the prior year, whilst the average
  molybdenum price was US$30 per pound, an increase of 20 per cent compared
  with 2006. Total Copper Group sales revenues in 2007 increased by 20 per cent
  over 2006. Copper revenues increased by 17 per cent reflecting higher volumes
  at KUC and Escondida as well as higher prices. Gold revenue increased by 69
  per cent with higher volumes at Kennecott Minerals and the Grasberg joint venture.
  Molybdenum revenue was nine per cent higher than in 2006 with lower volumes
  as a result of lower ore grade and higher limestone levels in the orebody partly
  offsetting the improved prices.
     The total Copper group sales revenues in
2006 increased by 46 per cent over 2005. Copper revenues increased by 77 per
cent,
    broadly in line with the 84 per cent increase in the LME price. Lower grades
    and therefore volumes at Freeport more than offset the higher volumes at
the other copper operations. A 22 per cent decrease in gold revenue was also
attributable
    to lower grades at Freeport which outweighed the effect of the 36 per cent
    increase in the gold price. Molybdenum revenue was only six per cent down
on 2005 with record production at KUC offsetting much of the effect of the 20
    per cent fall in price.
     Industrial Minerals sales are made under contract
at
    negotiated prices. Revenue from industrial minerals increased by 11 per cent
    in 2007 and five per cent in 2006. This was mainly attributable to higher
sales volumes of titanium dioxide chloride feedstock.
     Diamonds prices realised
by
    Rio Tinto depend on the size and quality of the diamonds in the product mix. Diamond
sales revenue increased by 22 per cent in 2007 against 2006 with higher
sales
volumes and polished pink tender prices at Argyle, and higher volumes
    at Diavik. The tight supply outlook for rough diamonds is expected to support
    demand in 2008, especially for better quality rough diamonds produced by
Diavik.
    The 22 per cent decrease in Diamond Group revenue in 2006 against 2005 was
    almost wholly attributable to the softer markets experienced by Argyle which
    resulted in surplus rough diamonds being held in inventory at the end of
the
year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Dual listed company reportingAs explained
in detail in the Outline of dual listed companies structure
    and basis of financial statements in the 2007 Financial statements,
    the consolidated financial statements of the Rio Tinto Group deal with the
    results, assets and liabilities of both of the dual listed companies, Rio Tinto
plc and Rio Tinto Limited, and their subsidiaries. In other



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words, Rio Tinto plc and Rio Tinto Limited are
    viewed as a single parent company with their respective shareholders being
    the shareholders
    in that single company.
       The US dollar is the presentation currency used in
    these financial statements, as it most reliably reflects the Groups
    global
business performance.

Ore reserve estimatesRio Tinto 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 Exploration Results, Mineral Resources and Ore Reserves
    of December 2004 (the JORC code). Where relevant, the IFRS financial statements
    are based on the reserves, and in some cases mineral resources, determined
    under the JORC code.
     For the purposes of this combined Annual report on Form
    20-F estimates of ore reserves have been computed in accordance with the
    SECs
    Industry Guide 7, rather than in accordance with the JORC code, and are shown
    on pages 32 to 42. Ore reserves presented in accordance with SEC Industry
    Guide 7 do not exceed the quantities that, it is estimated, could be extracted
    economically
    if future prices were to be in line with the average of historical prices
    for the three years to 30 June 2007, or contracted prices where applicable.
    For
    this purpose, contracted prices are applied only to future sales volumes
    for which the price is predetermined by an existing contract; and the average
    of
    historical prices is applied to expected sales volumes in excess of such
    amounts. Moreover, reported ore reserve estimates have not been increased
    above the
    levels expected to be economic based on Rio Tinto's own long term price assumptions.
    Therefore, a reduction in commodity prices from the three year average historical
    price levels would not necessarily give rise to a reduction in reported ore
reserves.
     There are numerous uncertainties
    inherent in estimating ore reserves and assumptions that are valid at the
    time of estimation may change significantly when new information becomes
    available.
     Changes in the forecast prices of commodities, exchange rates,
    production costs or recovery rates may change the economic status of reserves
    and may, ultimately, result in the reserves being restated. Such changes
    in reserves could impact on depreciation and amortisation rates, asset carrying
    values, deferred stripping calculations and provisions for close down, restoration
and environmental clean up costs.

Acquisition accountingOn the acquisition
of a subsidiary, the purchase method of accounting is used whereby the purchase
consideration is allocated
    to the
    identifiable assets,
    liabilities and contingent liabilities (identifiable net assets) on the basis
    of fair value at the date of acquisition.
     Rio Tinto acquired Alcan Inc during
    the year. The Group commissioned valuation consultants to advise on the fair
    values and asset lives of Alcans assets. The residue of the purchase
    price not allocated to specific assets and liabilities has been attributed
    to goodwill. The provisional values and asset lives incorporated in the 2007
    Financial statementswill be subject to revision within 12 months of
    the date of acquisition as permitted by IFRS
3 Business Combinations.

Asset carrying valuesEvents or changes
in circumstances can give rise to significant impairment charges or reversals
of impairment provisions in
    a particular
    year. In 2007,
    the Groups results included net impairment charges of US$58 million
    (US$113 million after tax and outside shareholders interests). An impairment
    charge was recognised at Argyle, which was partially offset by impairment reversals
    at Palabora and Tarong Coal. In 2006, the Groups results included net
    impairment reversals of US$396 million (US$44 million after tax and
    outside shareholders interests). Impairments were reversed at KUC and IOC,
    which more than offset impairment charges at Argyle and Tarong Coal. There
    were no significant impairment charges or reversals in 2005.
     When such events
    or changes in circumstances impact on a particular asset or cash generating
    unit, its carrying value is assessed by reference to its recoverable amount
    being the higher of fair value less costs to sell and value in use (being the
    net present value of expected future cash flows of the relevant cash generating
    unit). The best evidence of an assets fair value is its value obtained
    from an active market or binding sale agreement. Where neither exists, fair
    value less costs to sell is based on the best information available to reflect
    the amount the Group could receive for the cash generating unit in an arms
    length transaction. In most cases this is estimated using a discounted cash
    flow analysis. The cash flows used in these analyses are particularly sensitive
    to changes in two parameters: exchange rates and commodity selling prices.
    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. 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 and over the last few years favourable changes
    in commodity prices have generally exceeded shifts in exchange rates. Comparing
    average exchange rates in 2007 against those in 2004, the Australian dollar
    strengthened by 14 per cent against the US dollar, the Canadian dollar strengthened
    by 21 percent and the South African rand weakened by eight per cent. In the
    same period, commodity prices rose substantially: for example, copper prices
    increased by 149 per cent, aluminium by 54 per cent and gold by 69 per cent.
   
     Reviews of carrying values relate to cash generating units which, in accordance
    with IAS 36 Impairment
of



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Assets, are identified by dividing an entity into as many largely independent
    cash generating streams as is reasonably practicable. In some cases the business
    units within the product groups consist of several operations with independent
    cash generating streams, which therefore constitute separate cash generating
units. 
     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 mineralised material that does
    not currently qualify for inclusion in proved 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.
     The
      expected
        future cash flows of cash generating units reflect long term mine plans
      which are based on detailed research, analysis and iterative modelling
    to optimise
        the level of return from investment, output and sequence of extraction.
      The plan takes account of all relevant characteristics of the orebody,
    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 for forecasting production
    costs. 
     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 the relevant commodities.
These assessments often differ from current price levels and are updated periodically. 
     In some
            cases, prices applying to some part of the future sales volumes of
    a cash generating unit are predetermined by existing sales contracts. The
    effects
            of such contracts
            are taken into
        account in forecasting future cash flows.
     Cost levels
              incorporated in the cash flow forecasts are based on the current
long term mine plan for the
            cash generating unit. For value in use calculations used in impairment
reviews, recent cost levels are considered, together with expected changes in
costs
            that are compatible with the current condition of the business and
which meet the requirements of IAS 36. IAS 36 includes a number of restrictions
            on the future cash flows that can be recognised in value in use calculations
            in respect of future restructurings and improvement related capital
expenditure. 
      The useful lives of the major assets of a cash
generating unit are usually dependent on the life of the orebody to which they
relate. Thus
    the lives
              of mining properties, and associated smelters, concentrators and
    other long lived processing equipment generally relate to the expected life
    of the orebody.
              The life of the orebody, in turn, is estimated on the basis of
the long term mine plan. 
     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 cash flows,
                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. 
     Value in
                  use and ore reserve estimates are based on the exchange rates
    current at the time of the evaluation. In final feasibility studies and estimates
    of
                  fair value, a forecast of the long term exchange rate is made
    having regard to spot exchange rates, historical data and external forecasts. 
     Forecast
                    cash flows for ore reserve estimation for JORC purposes and
for impairment testing are based on Rio Tintos long term price forecasts. 
     All goodwill
                      and intangible assets that are not yet ready for use or
    have an indefinite life are tested annually for impairment regardless of
    whether there has been
any change in events or circumstances.

Close down, restoration and clean up obligations
Provision
is made for environmental remediation costs when the related environmental disturbance
occurs, based on the net
    present value
of estimated future costs. 
     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. The costs are estimated on the basis of a closure
    plan. The cost estimates are calculated annually during the life of the operation
      to reflect known developments, eg updated cost estimates and revisions
    to
      the estimated lives of operations, and are subject to formal review at
    regular intervals. Although the ultimate cost to be incurred is uncertain,
    the Groups
      businesses estimate their respective costs based on feasibility and engineering
      studies using current restoration standards and techniques. The initial
    closure provisions together with changes, other than those arising from the
    unwind
      of the discount applied in establishing the net present value of the provision,
      are capitalised within property, plant and equipment and depreciated over
the lives of the assets to which they relate.
     Clean up costs result from
        environmental
        damage that was not a necessary consequence of mining, including remediation,
        compensation and penalties. These costs are charged to the income statement.
        Provisions are recognised at the time the damage, remediation process
    and estimated remediation costs become known. Remediation procedures may
    commence
        soon after
        this point in time but may continue for many years depending on the nature
of the disturbance and the remediation techniques. 
     As noted above, the
      ultimate cost of environmental disturbance is uncertain and cost estimates
      can vary
          in response to many factors including changes to the relevant legal
    requirements, the emergence of new restoration techniques or experience at
    other mine
      sites. The expected timing of expenditure can also change, for
example in



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response to changes in ore reserves or production
  rates. As a result there could be significant adjustments to the provision
  for close down and restoration and environmental clean up, which would affect
  future financial
results.

Overburden removal costs
    In open pit mining operations, it is necessary
    to remove overburden and other barren 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. 
     Where a mine operates
several open pits that are regarded as separate operations for the purpose of
mine planning, stripping costs are accounted for separately by reference to the
ore from each separate pit. If, however, the pits are highly integrated for the
purpose of mine planning, the second and subsequent pits are regarded as extensions
of the first pit in accounting for stripping costs. In such cases, the initial
stripping of the second and subsequent pits is considered to be production phase
stripping relating to the combined operation. 
     Stripping of waste materials
continues during the production stage of the mine or pit. Some mining companies
expense these production stage stripping costs as incurred, while others defer
such stripping costs. In operations that experience material fluctuations in
the ratio of waste materials to ore or contained minerals on a year to year basis
over the life of the mine or pit, deferral of stripping costs reduces the volatility
of the cost of stripping expensed in individual reporting periods. Those mining
companies that expense stripping costs as incurred will therefore 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. Stripping costs incurred in the period are deferred to the extent that
the current period ratio exceeds the life of mine or pit 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 or pit ratio. The life of
mine or pit ratio is based on the proved and probable reserves of the mine or
pit and is 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 a more practical basis for matching costs with the related
economic benefits where there are important co-products or where the grade of
the ore is relatively stable from year to year. 
     The life of mine or pit
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 or pit ratio even if they do not affect
the pit design. Changes to the life of mine or pit ratio are accounted for prospectively. 
     In the production stage
of some operations, further development of the mine requires a phase of unusually
high overburden removal activity that is similar in nature to preproduction mine
development. The costs of such unusually high overburden removal activity are
deferred and charged against reported profits in subsequent periods on a units
of production basis. This accounting treatment is consistent with that for stripping
costs incurred during the development phase of a mine or pit, before production
commences. 
     Deferred stripping costs
are included in property, plant and equipment or in investment in equity accounted
units, as appropriate. These form part of the total investment in the relevant
cash 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 operating costs or in the Groups
share of the results of its jointly controlled entities and associates as appropriate. 
     During 2007, production
stage stripping costs incurred by subsidiaries and equity accounted operations
were US$56 million higher than the amounts charged against pre tax profit
(2006: production stage costs exceeded the amounts charged against pre-tax profit
by US$20 million). In addition, US$117 million of deferred stripping
was written off in 2007 as part of the Argyle impairment and there were net impairment
reversals of US$36 million affecting deferred stripping in 2006. The net
book value carried forward in property, plant and equipment and in investments
in jointly controlled entities and associates at 31 December 2007 was US$884
million (2006: US$929 million). 
     Information about the
stripping ratios of the business units, including equity accounted units, that
account for the majority of the deferred stripping balance at 31 December 2007,
along with the 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 | 
|------------------------------------ | ------------------------------- |  | ---------------------------- | 
|                                     |                                 |  |                              | 
|                                     | 2007                            |  | 2006                         | 
|                                     |                                 |  |                              | 
|Kennecott Utah Copper (2019) (a) (b) | 1.99                            |  | 2.04                         | 
|Grasberg Joint Venture (2015) (a)    | 3.47                            |  | 3.01                         | 
|Diavik (2008) (c)                    | 0.42                            |  | 0.89                         | 
|Escondida (2040) (d)                 | 0.07                            |  | 0.08                         | 
|                                     |                                 |  |                              | 

|Notes
|-----
|(a)  
|(b)  
|(c)  
|(d)  



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Borax capitalised stripping costs as part of a distinct period of new development
      during the production stage of the mine. Capitalisation stopped in 2004.
  The capitalised costs will be fully amortised in 2034.

Functional currencyThe determination of functional currency affects
    the carrying value of non current assets included in the balance sheet and,
    as a consequence, the amortisation of those assets included in the income
    statement. It also impacts exchange gains and losses included in the income
    statement.
     The functional currency
for each entity in the Group, and for jointly controlled entities and associates,
is the currency of the primary economic environment in which it operates. For
many of Rio Tintos entities, this is the currency of the country in which
each operates. Alcans aluminium and alumina producing operations use a
US dollar functional currency including those in Canada and Australia. Transactions
denominated in currencies other than the functional currency are converted to
the functional currency at the exchange rate ruling at the date of the transaction
unless hedge accounting applies. Monetary assets and liabilities denominated
in foreign currencies are retranslated at year end exchange rates.
     The US dollar is the
currency in which the Groups Financial statements are presented, as it
most reliably reflects the global business performance of the Group as a whole.
     On consolidation, income
statement items are translated into US dollars at average rates of exchange.
Balance sheet items are translated into US dollars at year end exchange rates.
Exchange differences on the translation of the net assets of entities with functional
currencies other than the US dollar, and any offsetting exchange differences
on net debt hedging those net assets, are recognised directly in the foreign
currency translation reserve.
     Exchange gains and losses
which arise on balances between Group entities are taken to the foreign currency
translation reserve where the intra group balance is, in substance, part of the
Groups net investment in the entity.
     The balance of the foreign
currency translation reserve relating to an operation that is disposed of is
transferred to the income statement at the time of the disposal.
     The Group finances its
operations primarily in US dollars but part of the Groups US dollar debt
is located in subsidiaries having functional currencies other than the US dollar.
Except as noted above, exchange gains and losses relating to such US dollar debt
are charged or credited to the Groups income statement in the year in which
they arise. This means that the impact of financing in US dollars on the Groups
income statement is dependent on the functional currency of the particular subsidiary
where the debt is located. With the above exceptions, and except for derivative
contracts which qualify as cash flow hedges, exchange differences are charged
or credited to the income statement in the year in which they arise.

Deferred tax on fair value adjustmentsOn transition to IFRS with effect from 1 January
    2004, deferred tax was provided in respect of fair value adjustments on acquisitions
    in previous years. No other adjustments were made to the assets and liabilities
    recognised in such prior year acquisitions and, accordingly, shareholders funds
    were reduced by US$720 million on transition to IFRS primarily as a result
    of deferred tax on fair value adjustments to mining rights. In general, these
    mining rights are not eligible for income tax allowances. In such cases,
    the provision for deferred tax was based on the difference between their
    carrying value and their nil income tax base. The existence of a tax base
    for capital gains tax purposes was not taken into account in determining
    the deferred tax provision relating to such mineral rights because it is
    expected that the carrying amount will be recovered primarily through use
    and not from the disposal of the mineral rights. Also, the Group is only
    entitled to a deduction for capital gains tax purposes if the mineral rights
    are sold or formally relinquished.
     For acquisitions after
1 January 2004 provision for such deferred tax on acquisition results in a corresponding
increase in the amounts attributed to acquired assets and/or goodwill under IFRS.

Post retirement benefitsThe difference between the fair value of the plan
    assets (if any) of post retirement plans and the present value of the plan
    obligations is recognised as an asset or liability on the balance sheet.
    The Group has adopted the option under IAS 19 to record actuarial gains and
    losses directly in the Statement of Recognised Income and Expense.
     The most significant
assumptions used in accounting for post retirement plans are the long term rate
of return on plan assets, the discount rate and the mortality assumptions.
     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 income statement. 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
income statement. The mortality assumption is used to project the future stream
of benefit payments, which is then discounted to arrive at the net present value
of liabilities.Valuations are carried out using the projected
    unit method.
     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, ie equity, debt, property
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



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or governments expectations as applicable.
     In particular,
      the Group estimates long term expected returns on equity 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 discount rate used in determining the service
cost and interest cost charged to income is the market yield at the start of
the
    year on high quality corporate bonds. For countries where there is no deep
    market in such bonds the yield on Government bonds is used. For determining
    the present value of obligations shown on the balance sheet, market yields
    at the balance sheet date are used.
      Details of the key assumptions are set
out in note 49 to the 2007 Financial statements. 
     For 2007 the
      charge against income for post retirement benefits net of tax and minorities
      was US$168 million.
    This charge included both pension and post retirement healthcare benefits.
    The charge is net of the expected return on assets which was US$371 million
after tax and minorities.
     In calculating
      the 2007 expense the average future increase in compensation levels was
      assumed to be 4.7
    per cent and this will decrease to 3.7 per cent for 2008 reflecting the increased
    weighting of lower inflation countries following the Alcan acquisition. The
    average discount rate used for the Groups plans in 2007 was 5.4 per
    cent and the average discount rate used in 2008 will be 5.6 per cent reflecting
    the weighted average level of discount rates following the Alcan acquisition.
      The
    average expected long term rate of return on assets used to determine 2007
    pension cost was 6.9 per cent. This will decrease to 6.4 per cent for
    2008. This reduction results mainly from a lower allocation to equities as
    a result of the Alcan acquisition.
       Based on the known changes in assumptions
    noted above and other expected circumstances, the impact of post retirement
    costs on the Groups IFRS net earnings in 2008 would be expected to
    increase by some US$198 million to US$366 million. The main reason
    for this increase is the inclusion of the Alcan pension expense for the full
    year. The actual charge may be impacted by other factors that cannot be predicted,
    such as the effect of changes in benefits and
exchange rates.
     The table below
      sets out the potential change in the Groups 2007 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 a change in one assumption is likely to result in some offset elsewhere.

|                                                                         | IFRS |  
|------------------------------------------------------------------------ | ---- | -
|                                                                         | US$m |  
|                                                                         |      |  
|Sensitivity of Groups 2007
    net earnings to changes in:              |      |  
|Expected return on assets                                                |      |  
| increase of 1 percentage
    point                                     | 39   |  
| decrease of 1 percentage
    point                                     | (39  | )
|Discount rate                                                            |      |  
| increase of 0.5 percentage
    points                                  | 7    |  
| decrease of 0.5 percentage
    points                                  | (6   | )
|Salary increases                                                         |      |  
| increase of 0.5 percentage
    points                                  | (6   | )
| decrease of 0.5 percentage
    points                                  | 6    |  
|Demographic  allowance for
    additional future mortality improvements |      |  
| participants assumed to be
    one year older                          | 7    |  
| participants assumed to be
    one year younger                        | (7   | )
|                                                                         |      |  

Temporary differences related to closure costs and finance leases
Under
the initial recognition rules in paragraphs 15 and 24 of
    IAS 12 Income Taxes, deferred tax is not provided on the initial
    recognition of an asset or liability in a transaction that does not affect
    accounting profit or taxable profit and is not a business combination.
     
    The
    Groups interpretation of these initial recognition rules has the result
    that no deferred tax asset is provided on the recognition of a provision
    for close down and restoration costs and the related asset, or on recognition
    of
    assets held under finance leases and the associated lease liability, except
    where these are recognised as a consequence of business combinations.
      On
    creation of a closure provision, for instance, there is no effect on accounting
    or taxable
    profit because the cost is capitalised. As a result, the initial recognition
    rules would appear to prevent the recognition of a deferred tax asset in
    respect of the provision and of a deferred tax liability in respect of the
    related
    capitalised amount.
      The temporary differences will reverse in future
periods as the closure asset is depreciated and when tax deductible payments
are
    made that are charged against the provision. Paragraph 22 of IAS 12 extends
    the
    initial recognition rules to the reversal of temporary differences on assets
and liabilities to which the initial recognition rules



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apply. Therefore, deferred tax is not recognised
    on the changes in the carrying amount of the asset which result from depreciation
    or from
    the changes in the
    provision resulting from expenditure. When tax relief on expenditure is received
    this will be credited to the income statement as part of the current tax
    charge. The unwind of the discount applied in establishing the present value
    of the
    closure costs does affect accounting profit. Therefore, this unwinding of
    discount results in the recognition of deferred tax assets.
      The application
    of this
    initial recognition exemption has given rise to diversity in practice: some
    companies do provide for deferred tax on closure cost provisions and the
    related capitalised amounts. Deferred tax accounting on initial recognition
    is currently
    the subject of an IASB/FASB convergence project which may at some future
    time require the Group to change this aspect of its deferred tax accounting
    policy.
       If the Group were to provide for deferred tax on closure costs and
  finance leases under IFRS the benefit to underlying and net earnings would
  have been
    US$21 million (2006: US$9 million) and to equity would have been
US$185 million (2006: US$127 million).

US deferred tax potentially recoverable
The
Groups US tax group has alternative minimum tax credits and temporary
    differences that have the potential to reduce tax charges in future years.
    These possible tax assets totalled US$182 million at 31 December
    2007 (2006: US$162 million). Of these, US$119 million were recognised
    as deferred tax assets (2006: US$97 million), leaving US$63 million
    (2006: US$65 million) unrecognised, as recovery was not considered probable.
       During
    2006, updated projections of future taxable profits for the operations that
    form part of Rio Tintos US tax group resulted in the recognition
    of previously unrecognised possible tax assets of US$335 million. Recoveries
    are dependent on future commodity prices, costs, financing arrangements and
    business developments in future years.
       During 2007, principally as a result
    of high commodity prices, US$170 million of these possible tax assets
    were
utilised (2006: US$140 million).

Exploration
Under the Groups accounting policy, exploration
and evaluation expenditure is not capitalised until the point is reached at which
there is a high degree
    of confidence in the projects viability and it is considered probable
    that future economic benefits will flow to the Group.
      The carrying values
    of exploration and evaluation assets are reviewed twice per annum by management
    and the results of these reviews are reported to the Audit committee.
    There may be only mineralised material to form a basis for the impairment
    review. 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 orebodies currently in production
    and will therefore benefit
from existing infrastructure and equipment.

Contingencies
Disclosure is made of material contingent liabilities unless the possibility
  of any loss arising is considered remote. Contingencies are disclosed in note
35 to the 2007 Financial statements.

Underlying earnings
The Group presents Underlying earnings as
    an additional measure to provide greater understanding of the underlying
    business performance
    of
    its operations. The adjustments made to net earnings to arrive at underlying
earnings are explained above in the section on underlying earnings.



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|Item
    6. | Directors, Senior Management and Employees
|----------- | ------------------------------------------
|            |                                           

|Chairman and executive directors |           |              |            
|-------------------------------- | --------- | ------------ | -----------
|                                 | Audit     | Remuneration | Nominations
|                                 | committee | committee    | committee  
|                                 |           |              |            
|                                 |           |              |            
|Chairman                         |           |              |            
|Paul Skinner                     |           |              | •          
|Chief executive                  |           |              |            
|Tom Albanese                     |           |              |            
|Finance director                 |           |              |            
|Guy Elliott                      |           |              |            
|Executive director               |           |              |            
|Dick Evans                       |           |              |            
|Non executive directors          |           |              |            
|Sir David Clementi *             | •         | •            |            
|Vivienne Cox *                   | •         |              |            
|Sir Rod Eddington *              |           |              | •          
|Michael Fitzpatrick *            | •         | •            |            
|Yves Fortier *                   |           |              | •          
|Richard Goodmanson *             |           | •            |            
|Andrew Gould *                   | •         | •            |            
|Lord Kerr of Kinlochard *        | •         |              |            
|David Mayhew                     |           |              | •          
|Sir Richard Sykes *              |           | •            | •          
|Paul Tellier *                   | •         | •            |            
|                                 |           |              |            
|* Independent                    |           |              |            

CHAIRMANPaul SkinnerBA (Hons) (Law), DpBA
     (Business Administration), age 63Appointment and election:Director
              of Rio Tinto plc and Rio Tinto Limited since 2001, he was appointed chairman
              of the Group in 2003. Paul was last re-elected by shareholders in 2005 and
              stands for re-election in 2008. He is chairman of the Nominations committee
              (note c).Skills and experience:Paul
              graduated in law from Cambridge University and in business administration
              from Manchester Business School. 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. During his career he worked in all Shells main
              businesses, including senior appointments in the UK, Greece, Nigeria,
              New Zealand
              and Norway. He was CEO of its global Oil Products business
  from 1999 to 2003.External appointments (current and recent):
             Director
  of Standard Chartered plc since 2003
  Director of the Tetra Laval Group since
  2005
  Director of LAir Liquide
      SA since
  2006
  Chairman of the International Chamber of Commerce
  (UK) since 2005
  Non executive member of the
  Defence Board of the UK Ministry of Defence since 2006
  Member of the board of
  INSEAD business
      school since
       1999
  Director of The Shell Transport
      and
 Trading Company plc from 2000 to 2003

CHIEF
 EXECUTIVE

Tom AlbaneseBS (Mineral Economics),
   MS (Mining Engineering), age 50Appointment and election:Director
            of Rio Tinto plc and Rio Tinto Limited since March 2006. Tom was elected
   by shareholders in 2006 and stands for re-election in 2008.Skills and experience:Tom
            joined Rio Tinto in 1993 on Rio Tintos acquisition of Nerco
            and held a series of management positions before being appointed
            chief
            executive of the Industrial Minerals group in 2000, after which he
            became chief
            executive
            of the Copper group and head of Exploration in 2004. He took over
   as chief executive from



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Leigh Clifford with effect from May 2007.External appointments (current and recent):Director of Ivanhoe Mines Limited from 2006 to 2007
Director of Palabora Mining
Company from 2004 to 2006Member of the Executive Committee of the International Copper Association from
2004 to 2006

Guy ElliottMA (Oxon), MBA (INSEAD),
      age 52 Appointment and election:Finance
            director of Rio Tinto plc and Rio Tinto Limited since 2002. Guy was last
            re-elected by shareholders in 2007.Skills and experience:Guy
            joined the Group in 1980 after gaining an MBA having previously been in investment
            banking. He has subsequently held a variety of commercial and management
            positions, including head of Business Evaluation and president of Rio Tinto
      Brasil.External appointments (current and
        recent):
        Non executive director and member of the
    Audit committee of Cadbury Schweppes plc, since 2007

Dick EvansBS (Industrial Engineering)
            (Oregon State University), MS Management (Stanford Graduate School
  of Business), age 60Appointments and election:Director
            of Rio Tinto plc and Rio Tinto Limited effective 25 October 2007.
            Dick will stand for election by shareholders at the 2008 annual general
            meetings.Skills and experience:Dick
            Evans joined Rio Tinto following the acquisition of Alcan Inc where
        he had held several senior management positions including executive vice
        president
            and had been president and chief executive officer of Alcan from
      2006 to 2007. Prior to Alcan, he has held senior management positions with
      Kaiser
      Aluminum & Chemical Corporation.External appointments (current and recent):
      Director of AbitibiBowater Inc. since 2003 
      Director of the International Aluminium Institute since 2001

Sir David ClementiMA, MBA, FCA,
    age 59Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2003. Sir David was last re-elected
      by shareholders in 2006 (notes a, b and e).Skills and experience:Sir
  David is chairman of Prudential plc, prior to which he was Deputy Governor
  of the Bank of England. His 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.External appointments (current and recent):Chairman of Prudential plc since 2002Member of the Financial Reporting Council between
  2003 and 2007

Vivienne CoxMA (Oxon), MBA (INSEAD),
    age 48Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2005. Vivienne was elected
      by shareholders in 2005 and stands for re-election in 2008. (notes a and
      e).Skills and experience:Vivienne
  is currently executive vice president of BP p.l.c. for Alternative Energy.
  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.External appointments (current and recent):Director of Eurotunnel plc between 2002 and 2004

Sir Rod EddingtonB Eng, M Eng (University
    of Western Australia), D Phil (Oxon), age 58Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2005. Sir Rod was elected
      by shareholders in 2006 (notes c, d and e).Skills and experience:Sir Rod was chief executive of British
        Airways Plc until the end of September 2005. Prior to his role with British
        Airways, Sir Rod was Managing Director of Cathay Pacific Airways from
        1992 until 1996 and Executive Chairman of Ansett Airlines from 1997 until
        2000.



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External appointments (current and recent):Director
of News Corporation plc since 1999
Director of John Swire & Son
Pty Limited since 1997Non executive chairman of JPMorgan Australia and
New Zealand since 2006
Director of CLP Holdings since 2006
Director of Allco Finance
Group Limited since 2006
Chief executive British
Airways Plc from 2000 until 2005Chairman of the EU/Hong Kong Business Co-operation Committee of the Hong Kong
Trade Development Council from 2002 until 2006

Michael FitzpatrickB
      Eng (University
of Western Australia), BA (Oxon), age 55Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2006. Michael was elected by
      shareholders in 2007 (notes a, b and e).Skills
      and experience:Michael sold
      his interest in, and ceased to be a director of, Hastings Funds Management
      Ltd during 2006, the pioneering infrastructure asset management company which
      he founded in 1994. He is chairman of the Victorian Funds Management Corporation,
      which manages funds on behalf of the State of Victoria, and of Treasury Group
      Limited, an incubator of fund management companies. He is chairman of the
      Australian Football League, having previously played the game professionally,
and is a former chairman of the Australian Sports Commission.External appointments (current and recent):Chairman
of the Victorian Funds Management Corporation since 2006
Chairman of Treasury
Group Limited since 2005
Managing director
    of Hastings
    Funds Management
    Ltd from 1994 to 2006
  Director of Pacific Hydro Limited from 1996 to 2004
  Director of Australian Infrastructure
  Fund Limited from 1994 to 2005
  Director of the
    Walter & Eliza Hall Institute of Medical Research
since 2001

Yves FortierCC,
      OQ, QC, LLD, Av
Em, age 72Appointments and election:Director
      of Rio Tinto plc and Rio Tinto Limited effective 25 October 2007. Yves
will stand for election at the 2008 annual general meetings (notes c, d and e).Skills
      and experience:Yves Fortier
      was Ambassador and Permanent Representative of Canada to the United Nations
      from 1988 to 1992. He is chairman and a senior partner of the law firm
      Ogilvy
Renault and was chairman of Alcan from 2002 until 2007.External appointments (current and recent):Chairman of Ogilvy Renault since 1992Chairman
and director of Alcan Inc. from 2002 until 2007
Director of NOVA Chemicals Corporation
since 1998
Governor of
    Hudsons Bay Company
    from 1998 to 2006
  Director of Royal Bank of Canada from 1992 to 2005
  Director
    of Novtel corporation
from 1992 to 2005Trustee of the International Accounting Standards Committee from 2000 to 2006

Richard GoodmansonMBA,
      BEc and BCom,
B Eng (Civil), age 60Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2004. He was elected by shareholders
      in 2005 and stands for re-election in 2008. Richard is chairman of the Committee
      on social and environmental accountability (notes b, d and
e).Skills and experience:Richard
      is executive vice president and chief operating officer of DuPont. During
      his career he has worked at senior levels for McKinsey & Co, PepsiCo
      and America West Airlines, where he was president and CEO. He joined DuPont
      in early 1999 and in his current position has responsibility for a number
      of the global functions, and for the non US operations of DuPont, with
      particular focus on growth in
emerging markets.External appointments (current and recent):Executive vice president and chief operating officer
of DuPont since 1999
Chairman of the United Way of Delaware since 2006 (director
since 2002)
Director of
    the Boise Cascade Corporation
between 2000 and 2004

Andrew GouldBA, FCA, age 61Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2002. Andrew was last re-elected
      by shareholders in 2006. He is also chairman of the Audit committee (notes
      a, b and e).Skills and experience:Andrew 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 has worked in Asia, Europe
      and the US. He joined Schlumberger in 1975. He holds a degree in economic
      history from Cardiff University and qualified as a chartered accountant
with Ernst & Young.External appointments (current and recent):



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Chairman and Chief Executive Officer of Schlumberger Limited since 2003Member
of the Advisory Board of the King Fahd University of Petroleum and Minerals in
Dhahran, Saudi Arabia since 2007
Member of the
    commercialization advisory
    board of Imperial College of Science Technology and Medicine, London since
    2002
  Member of the UK Prime Ministers Council of Science and Technology
from 2004 to 2007

Lord Kerr of KinlochardGCMG,
      MA,
age 66Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2003. He was re-elected by shareholders
      in 2007 (notes a, d and e).Skills and experience:An
      Oxford graduate, Lord Kerr was in the UK Diplomatic Service for 36 years
      and headed it from 1997 to 2002 as Permanent Under Secretary at the Foreign
      Office. On a secondment to the UK Treasury he was principal private secretary
      to two Chancellors of the Exchequer. His foreign service included periods
      in the Soviet Union and Pakistan, and as Ambassador to the European Union
      (1990 to 1995), and the US (1995 to 1997). He has been an independent member
of the House of Lords since 2004.External appointments (current and recent):Deputy Chairman of Royal Dutch Shell plc since 2005Director of The Scottish American Investment Trust
plc since 2002
Advisory Board
member, Scottish Power (Iberdrola) since 2007Director
of The Shell Transport and
    Trading Company plc from 2002 to 2005
  Chairman of the Court and Council of
    Imperial College,
    London since
2005Trustee of the Rhodes Trust since 1997, The National Gallery since 2002, and
the Carnegie Trust for the Universities of Scotland since 2005

David Mayhewage
      67Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited since 2000. He was last re-elected
      by shareholders in 2006 (note c).Skills and experience:David
      joined Cazenove in 1969 from Panmure Gordon. In 1972 he became the firms
      dealing partner and was subsequently responsible for the Institutional Broking
      Department. From 1986 until 2001 he was the partner in charge of the firms
      Capital Markets Department. He became Chairman of Cazenove on incorporation
in 2001 and Chairman of JPMorgan Cazenove in 2005.External appointments (current and recent):Chairman of Cazenove Group Limited (formerly Cazenove
Group plc) since 2001
Chairman
of Cazenove Capital Holdings Limited since 2005

Sir Richard SykesBSc
      (Microbiology), PhD (Microbial Biochemistry), DSc, Kt, FRS, FMedSci, age
      65 Appointment
      and election:Director of Rio Tinto plc and Rio Tinto Limited since
      1997. Sir Richard was appointed the senior non executive director in 2005
      and is chairman of the Remuneration committee. Sir Richard was re-elected
      for a further one year term of office in 2007 and will retire at the conclusion
      of the annual general meetings in 2008 (notes b, c and e).Skills
      and experience:After reading microbiology at the University of London, Sir Richard obtained
      doctorates in microbial chemistry and in science from the University of Bristol
      and the University of London respectively. A former chairman of GlaxoSmithKline
      plc Sir Richard is a Fellow of the Royal Society. He is currently Rector
of Imperial College London.External appointments (current and recent):Director of Eurasian Natural Resources Corporation
plc since 2007
Director of Lonza Group Limited since 2003, Deputy Chairman since
2005
Chairman of the
    Healthcare Advisory Group (Apax Partners Limited) since 2002
  Chairman of
Metabometrix Ltd since 2004
Chairman of Merlion Pharmaceuticals Pte Limited since
2005
Chairman
    of OmniCyte Ltd since 2006
  Chairman of Circassia Ltd since 2007
  Director
of Abraxis BioScience Inc from 2006 to 2007
Director of Bio*One Capital Pte Ltd
    since 2003 
  Rector of Imperial College London since 2001
  Chairman of GlaxoSmithKline
plc between 2000 and 2002Trustee of the Natural History Museum, London between 1996 and 2005 and of the
Royal Botanic Gardens, Kew between 2003 and 2005

Paul Tellierage 68Appointment and election:Director
      of Rio Tinto plc and Rio Tinto Limited effective October 2007. Paul will
      stand for election at the 2008 annual general meetings (notes a, b and e).Skills
      and Experience:Paul was Clerk of the Privy Council Office and Secretary
      to the Cabinet of the Government of Canada from 1985 to 1992 and was president
and chief executive officer of the Canadian National Railway Company



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from 1992 to 2002. Until 2004, he was president and chief executive officer
  of Bombardier Inc.External appointments (Current and recent):Director of Bell Canada since 1996. Director of
    BCE Inc since 1999. 
  Member of the Advisory Board of General Motors of Canada
    since 2005. 
  Trustee, International Accounting Standards Foundation since
  2007.Co-chair of the Prime Minister of Canadas
    Advisory Committee on the Renewal of the Public Service since 2006. 
  President
    and Chief Executive Officer of Bombardier Inc. from 2003 to 2004. Non executive
  Director of Alcan Inc. from 1998 to 2007.Director of McCain Foods since 1996.

|Notes
|-----
|(a)  
|     
|(b)  
|     
|(c)  
|     
|(d)  
|     
|(e)  
|     

DIRECTORS WHO LEFT THE GROUP DURING 2007

Leigh CliffordB
      Eng (Mining), M Eng SciAppointment and election:Director
    of Rio Tinto plc since 1994 and Rio Tinto Limited since 1995, he was appointed
    chief executive in 2000.Skills and experience:Leigh,
    who retired at the conclusion of the 2007 annual general meetings, graduated
    from the University of Melbourne as a mining engineer and gained a Master
    of Engineering Science degree from the same university. 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 was a member of the Coal Industry Advisory Board
    of the International Energy Agency for a number of years and its chairman
    from 1998 to 2000.External appointments (current and recent)
        upon leaving the Group:Director Barclays Bank PLC since 2004Chairman
      of the International Council on Mining & Metals
    since October 2006 Director of Freeport-McMoRan Copper & Gold Inc between
  2000 and 2004 Appointed to Bechtel Board of Counsellors in May 2007

Ashton CalvertAC,
    BSc (Hons) (Tas), DPhil (Oxon), Hon DSc (Tas)Appointment and election:Director
    of Rio Tinto plc and Rio Tinto Limited since 2005. Ashton was re-elected
    by shareholders in 2007 and resigned from the Group due to ill health on
    7 November 2007.Skills and experience:He
    retired as secretary of the Department of Foreign Affairs and Trade of the
    Government of Australia in January 2005 after six and a half years in that
    position. 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 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.External appointments (current and recent)
        upon leaving the Group:Director of Woodside Petroleum Limited between
    2005 and 2007 
    Director of The Australian Trade Commission between 1998 and
    2005Director of The Export Finance and Insurance Corporation
    between 1998 and 2005 
    Director of The Australian Strategic Policy Institute
    between 2001 and 2005

Hugo BagueMA
    (Linguistics), age 47Skills and experience:Hugo
    Bague joined Rio Tinto as Global Head of Human Resources in 2007. Previously
    he worked for six years for Hewlett Packard where he was the global vice
    president Human Resources for the Technology Solutions Group, based in the
    US. Prior to this he worked for Compaq Computers, Nortel Networks and Abbott
    Laboratories based out of Switzerland, France and Germany.External appointments (current and recent):Member of the Advisory Council of United Business
  Institutes in Brussels, Belgium since 1995.



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Preston ChiaroBSc (Hons) (Environmental
Engineering), MEng (Environmental Engineering), age 54Skills and experience:Preston
      was appointed chief executive of the Energy group in 2003 and upon a management
      re-organisation he also assumed responsibility for the Industrials Minerals
      group in November 2007. 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 the Boron operations in California.
He was chief executive of Rio Tinto Borax from 1999 to 2003.External appointments (current and recent):Director
of the World Coal Institute since 2003 (chairman
since 2006) 
Director of Rössing Uranium Limited since 2004Chairman
of the Coal Industry Advisory Board to the International Energy Agency between
2004 and 2006. 
Director of Energy
    Resources of Australia
    Limited between
    2003 and 2006 
  Director of Coal & Allied Industries Limited between 2003
and 2006

Bret ClaytonBA (Accounting), age
46Skills and experience:Bret
      was appointed chief executive of the Copper group in July 2006 and upon a
      management re-organisation he also assumed responsibility for the Diamonds
      group in November 2007. He joined the Group in 1995 and has held a series
      of management positions, including chief financial officer of Rio Tinto Iron
      Ore and president and chief executive officer of Rio Tinto Energy America.
      Prior to joining the Group, Bret worked for PricewaterhouseCoopers for nine
years, auditing and consulting to the mining industry.External appointments (current and recent):Director of Ivanhoe Mines Limited since 2007Member of the executive committee of the International Copper Association since
2006.Member of the Coal Industry Adviser Board to the International Energy Agency
    between 2003 and 2006. 
  Member of the board of directors of the US National
    Mining Association between 2002 and
2006.

Dick Evans, executive
      director, is also a member of the Executive Committee through his position
      of Product
      Group Chief Executive for Rio Tinto Alcan. Dicks biography is shown
on page 115.

Keith JohnsonBSc (Mathematics),
MBA, age 46Skills and experience:Keith
      was appointed Group executive Business Resources during 2007 having been
      chief executive, Diamonds since 2003. He holds degrees in mathematics and
      management and is a Fellow of the Royal Statistical Society. Prior to joining
      Rio Tinto he worked in analytical roles in the UK Treasury, private consulting
      and the oil industry. He joined Rio Tinto in 1991 and has held a series of
      management positions including head of Business Evaluation and managing director
      of Rio Tinto
Aluminium Mining and Refining (formerly Comalco Mining and Refining).External appointments (current and recent):None

Grant ThorneBSc (Hons), PhD, FAus,
IMM, age 58Skills and experience:Grant
      was appointed Group executive Technology and Innovation during 2007. After
      tertiary study in mineral processing and metallurgy at the University of
      Queensland, he joined the Group in 1975 and has held senior operational
    roles in base metals, aluminium and coal. He was Vice-president of Research
    and
      Technology for Comalco from 1994 to 1995. His service has included appointments
      in Australia, Indonesia, Papua New Guinea and the UK. Prior to his current
      appointment, he was Managing Director of Rio Tintos coal business
      in Australia. Grant is a Fellow and Chartered Professional (Management)
      of the
      Australasian Institute
of Mining and Metallurgy.External appointments (current and recent):Member of the Coal Industry Advisory Board to the International Energy Agency
    from 2002 to 2006 Managing Director of Coal and Allied Industries from 2004
    to 2006 President of the
Queensland Resources Council from 2002 to 2004

Sam WalshB Com (Melbourne), age
58Skills and experience:Sam
      was appointed chief executive of the Iron Ore group in 2004. He 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 to 2004 chief executive of the Aluminium group.
      Sam is also a Fellow of the Australian Institute of Management, the Australian
      Institute of Company Directors and the Australasian Institute of Mining and
Metallurgy.External appointments (current and recent):Director of the Committee for Perth Ltd since 2006Director of the Australian Mines and Metals Association, between 2001 and 2005
  
  Director of the Australian Chamber of Commerce and Industry, between 2003 and
2005



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Ben MathewsBA (Hons), FCIS, age
    41Skills and experience:Ben
joined as company secretary of Rio Tinto plc during 2007. Prior to Rio Tinto,
he spent five years with BG Group plc, two of them as company secretary. He has
previously worked for National Grid plc, British American Tobacco plc and PricewaterhouseCoopers
LLP. Ben is a fellow of the Institute of Chartered Secretaries and Administrators.External appointments (current and
        recent):None

Stephen ConsedineB Bus, CPA, age
    46Skills and experience:Stephen
      joined Rio Tinto in 1983 and has held various positions in Accounting, Treasury,
      and Employee Services before becoming company secretary of Rio Tinto Limited
      in 2002. He holds a bachelor of business degree and is a certified practising
    accountant.External appointments (current and
    recent):None

Information on the Groups employees including
    their costs, is in notes 4 and 36 to the 2007 Financial statements.

The Remuneration report to shareholders dated
    24 February 2006 has been reproduced below, except that the page numbers
    have been revised to reflect those in this combined Annual report on Form
    20-F, Tables 3, 4 and 5 have been augmented to show share interests as at
    the latest practicable date.

IntroductionThis report forms part of the Directors report
  and covers the following information: a description of the Remuneration committee
  and its duties;

|• | a description of the policy on directors, executives and company
    secretaries remuneration;                             
|- | ------------------------------------------------------------------------------------------------------------------------------
|• | a summary of the terms of executives service contracts and non executive
    directors letters of appointment;              
|• | details of each executives remuneration and awards under
    long term incentive plans and the link to corporate performance;
|• | details of executives interests in
    Rio Tinto shares; and                                                                 
|• | graphs illustrating Group performance, including
    relative to the HSBC Global Mining Companies Index.                     

Remuneration committeeThe following independent, non executive directors were members of the committee
during 2007:

|• | Sir Richard Sykes (chairman)            
|- | ----------------------------------------
|• | Sir David Clementi                      
|• | Michael Fitzpatrick                     
|• | Richard Goodmanson                      
|• | Andrew Gould                            
|• | Paul Tellier (effective 25 October 2007)

The committee met five times during 2007 and
    members attendance is set
out on page 147. The committees responsibilities are set out in its terms
of reference which have been
approved by the board and may be viewed on Rio Tintos website. They include:

|• | recommending executive remuneration policy to the board;                                                                                                   
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|• | reviewing and determining the remuneration packages of the executive directors, product group chief executives, and
the company secretary of Rio Tinto plc;
|• | reviewing and agreeing the remuneration strategy and conditions of employment for managers other than the executives;                                      
|• | monitoring the effectiveness and appropriateness of general executive remuneration
    policy and practice; and                                            
|• | reviewing the chairmans fees.                                                                                                                             



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The global head of Human Resources, Hugo Bague, and global practice leader
      Remuneration, Jeffery Kortum, attend committee meetings in an advisory
      capacity. As of December 2007, Jane Craighead, global practice leader Total
      Rewards, also attended the meetings in an advisory capacity. The chairman,
      Paul Skinner, the former chief executive, Leigh Clifford and the current
      chief executive, Tom Albanese, participated in meetings at
          the invitation of the committee during 2007, but were not present when
      issues relating to their own remuneration were discussed. Ben Mathews,
      the company secretary of Rio Tinto plc, acts as secretary to the committee,
      but was not present when issues
relating to his remuneration were discussed.
     Kepler Associates, an independent remuneration
consultancy, provided advice on executive remuneration matters to the committee
until November 2007. Apart from providing specialist remuneration advice, Kepler
Associates has no links to the Group.
     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, in addition to that supplied
by Kepler Associates, including publications by remuneration consultants Towers
Perrin, Hay Group, Mercer and Watson Wyatt.

Corporate governanceThe committee reviewed its terms of reference in 2007 and concluded that, in the course of its business, it had covered the main duties set out in the Combined Code on Corporate
          Governance, published by the UK Financial Reporting Council (the Code), and Principle 9 of the Australian Securities Exchange (ASX) Corporate Governance Council Principles and Recommendations (the ASX Principles), and was constituted in accordance
with the requirements of the Code and the ASX Principles.
     The board considered the performance of the committee
and confirmed that the committee had satisfactorily performed the duties set
out in its terms of
reference.
     The 2006 Remuneration report was approved by shareholders
at the 2007 annual general meetings.

Executive remunerationRio
Tinto is subject to a number of different reporting requirements for the contents
of the Remuneration report. The Australian Corporations
            Act and International accounting standards (AASB 124 and IAS 24 respectively)
            both
            require additional disclosures for key management personnel. The Australian Corporations Act also requires certain disclosures in respect of the five highest paid executives below board level. The
          board has considered the definition of key management personnel and has decided that, in addition to the executive and non executive directors, they comprise the product group chief executives and the Group executive Business Resources.
          In 2007, the five highest paid executives below board level in respect of whom disclosures are required were all product group chief executives and the Group executive Business Resources. Throughout this report, the executive directors, product
group chief executives and Group executive Business Resources will collectively be referred to as the executives.

|Board policyRio Tinto operates in global, as well as local markets, where it competes
      for a limited resource of talented 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 deliver very high levels of performance.
This policy is regularly reviewed to take account of changing market, industry
and economic circumstances, as well as developing Group requirements.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

The composition of total remuneration packages is designed to provide an appropriate
  balance between fixed and variable components. This is in line with Rio Tintos
  stated objective of aligning total remuneration with personal and business
  performance. Details of the executives remuneration are set out in Table
  1 on pages 134 to 136. The Groups return to shareholders over the last
  five years is set out in the table on page
128.



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Remuneration components
Base salaryBase salaries are
reviewed annually and adjusted as necessary, taking into account the nature of
the individual executives
            role, external market trends and business and personal performance.
            The committee
            uses a
            range of international companies of a similar size, global reach
            and complexity to
make this comparison.
     Executive remuneration is explicitly related to
business performance through the following long and short term arrangements:

|Short
            term incentive plan (STIP)STIP is a cash bonus plan, designed to
support overall remuneration policy by:
|--------------------------------------------------------------------------------------------------------------------------
|•                                                                                                                         
|•                                                                                                                         

The committee reviews and approves individual performance against
  relevant targets and objectives annually. Executive directors and the Group executive Business Resources STIP
payments are linked to three performance criteria: Group financial performance, Group safety performance, personal performance and, in the case of Dick Evans, who is also a product group executive, product group financial and safety performance.
Product group chief executives STIP payments are linked to Group and product
group financial performance, product group safety performance and personal performance.
Group and product group financial performance is partly measured on an actual
underlying net earnings basis and partly on a basis normalised for fluctuations
in market prices and exchange rates.
       The target level of cash bonus for executives for 2008 is 60 per cent of salary, the same as 2007. Executives may receive up to twice their target (ie, up to
120 per cent of salary) for exceptional performance against all criteria.
     Details relating to STIP awards for 2007 are on pages 128 to 129.

Long term incentives     Shareholders approved two long term incentive plans at the annual general meetings in 2004, the Share Option Plan and the Mining Companies Comparative Plan.
     These
      plans are intended to provide
the committee with a means of linking managements rewards to Group performance. Total shareholder return (TSR) was,
at the time of the introduction, considered the most appropriate measure of a companys
performance for the purpose of share based long term incentives and a TSR performance
measure was therefore applied to both plans.
     In
      2007 the committee introduced a restricted share plan for senior employees
below director level (MSP 2007).
     The long term incentives are not pensionable. As foreshadowed in the 2006 Remuneration report, the committee reviewed the long term incentive structure and
performance criteria during 2007 and 2008. Proposals for changes to the long term incentive structure will be submitted to Shareholders in 2009.
     The existing plans are:

Share Option Plan (SOP)Each year, the 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. The maximum face value grant under the SOP is three times the base salary of the executive based on the average share price over the previous financial year. Under the
SOP, options are granted to purchase shares at a weighted average closing share price over five days preceding the grant. No options are granted at a discount and no amount is paid or payable by the recipient upon grant of the options. Grants made
to executives are set out in Table 5 on pages 141 to 144.
     No options will become exercisable unless the Group has met stretching performance conditions. In addition, before approving any vesting and regardless of
performance against the respective performance conditions, the committee retains discretion to satisfy itself that the TSR performance is a genuine reflection of underlying financial performance.
     Under
      the SOP, vesting is subject
to Rio Tintos TSR equalling or outperforming the HSBC Global Mining Index over a three-year performance period. The
HSBC Global Mining Index covers the mining industry globally. Rio Tintos
TSR is calculated as a weighted average of the TSR of Rio Tinto plc and Rio Tinto
Limited. If TSR performance equals the index, the higher of one third of the
actual grant or 20,000 options may vest. The full grant may vest if the TSR performance
is equal to or greater than the HSBC Global Mining Index plus five per cent per
annum. Between these points, options may vest on a sliding scale, with no options
becoming exercisable for a three year TSR performance below the index.
     Options granted under the 2004 SOP before 31 December 2006 are subject to a single fixed base re-test five years after grant if they do not vest after the
initial three year performance period. Options granted after 31 December 2006 are not subject to any re-test and will lapse if they do not vest at the conclusion of the initial three year performance period.



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Prior
          to any options vesting (subject to the committees discretion described above), the Groups
          TSR performance against the criteria relevant to the SOP is calculated
          independently by Watson
Wyatt.
     If Rio Tinto were subject to a change of control
or a company restructuring, options would vest subject to the satisfaction of
the performance condition measured at the time of the change of control or restructuring.
However, the committee may at its discretion, and with the agreement of participants,
determine that options will be replaced by equivalent new options over shares
of the acquiring
company.
     Where an option holder dies in service, subsisting
option grants vest immediately, regardless of whether the performance conditions
have been satisfied. The estate will have 12 months in which to exercise the
options.
     All option grants made prior to 2004 under the
rules approved by shareholders in 1998 have now vested in full. The SOP grant
made in 2004 was tested against the performance condition in 2007. The performance
condition was not achieved and these options, therefore, did not vest at that
time. The 2004 SOP grant will, in accordance with the SOP Rules, be retested
in 2009.
     The option grant made in 2005 was tested against
the performance condition in 2008. The performance condition was achieved and
these options will vest in
full.
     Options
          may, upon exercise, be satisfied by treasury shares, the issue of new
        shares or the purchase of
        shares in the
      market. Currently it is Rio Tinto
      plcs intention to satisfy exercises by transferring shares from treasury and Rio Tinto Limiteds
intention to satisfy exercises by way of the transfer of existing shares.

Mining Companies Comparative Plan (MCCP)Rio
Tintos performance share plan, the MCCP, provides
            participants with a conditional right to receive shares. The maximum
        face value conditional
            award under the MCCP is two times the base salary of individual participants,
            calculated using the average share price over the previous financial
year. Awards made to executives are set out in Table 4 on pages 139 to 140.
     The conditional awards will only vest if the performance
condition set by the committee is satisfied. In addition the committee retains
discretion to satisfy itself that performance is a genuine reflection of underlying
financial performance.
     In the event of 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 change of control or restructuring.
Additionally, if a performance period is deemed to end during the first 12 months
after the conditional award is made, that award will be reduced pro-rata.
     The
performance condition compares Rio Tintos TSR with the TSR of a comparator
          group of other international mining companies over the same four year
          period.
          The composition of this comparator
      group is reviewed regularly by the committee to ensure that it continues
          to be relevant in a consolidating sector. Due to consolidation in the
          sector,
      the comparator
      group for the 2004 conditional award has
      necessarily been reduced to ten companies (including Rio Tinto). The committee
      has determined that the revised comparator group remained adequate for
          purposes of measuring relative performance and constitutes the best
          basis of comparison
      for the Group. The members of this new group relevant to the 2004 conditional
      awards listed at the bottom of the following ranking table. The members
          of the comparator group for each conditional award is determined by
          the committee
      prior
      to making the
conditional award.
     The
following table shows the percentage of each conditional award made in 2004 which
          will be received
        by those participants
      who were in executive director and product group chief executive roles
      at the date of grant. The vesting is based on Rio Tintos four year
      TSR performance relative to the remaining ten company comparator group
      for
        conditional awards
made in 2004:

|Ranking in the remaining ten company comparator group |     |  |       |  |      |  |      |  |     |  |          | 
|----------------------------------------------------- | --- |  | ----- |  | ---- |  | ---- |  | --- |  | -------- | 
|                                                      | 1st |  | 2nd   |  | 3rd  |  | 4th  |  | 5th |  | 6th-10th | 
|                                                      |     |  |       |  |      |  |      |  |     |  |          | 
|Percentage vesting                                    | 150 |  | 121.3 |  | 92.5 |  | 63.8 |  | 35  |  | —        | 
|                                                      |     |  |       |  |      |  |      |  |     |  |          | 

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

|Ranking of Rio Tinto versus comparator
    companies |             
|---------------------------------------------------- | ------------
|Period                                               | Ranking     
|                                                     |             
|1993	 97                                            | 4 out of 16 
|1994	 98                                            | 4 out of 16 
|1995	 99                                            | 2 out of 16 
|1996	 00                                            | 2 out of 16 
|1997	 01                                            | 2 out of 16 
|1998	 02                                            | 3 out of 16 
|1999	 03                                            | 7 out of 16 
|2000	 04                                            | 11 out of 16
|2001	 05                                            | 10 out of 16
|2002	 06                                            | 10 out of 16
|2003	 07                                            | 5 out of 10 
|                                                     |             



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|Notes
|-----
|1    
|2    

Prior to the vesting of conditional awards, the Groups TSR performance
  against the performance condition contained in the MCCP is calculated independently
  by Watson Wyatt.Awards
  are released to participants as either Rio Tinto plc or Rio Tinto Limited shares
  or as an equivalent amount in cash. In addition, for conditional  awards made
  after 1 January 2004, a cash payment equivalent to the dividends that would
  have accrued on the vested number of shares over the four year period is made
  to those participants who were in executive director and product group chief

executive roles at the date of grant.Awards
          may, upon vesting, be satisfied by treasury shares, the issue of new
        shares or the purchase of shares in the
      market. Currently it is Rio Tinto
      plcs intention to satisfy exercises by transferring shares from treasury and Rio Tinto Limiteds
intention to satisfy exercises by way of the transfer of existing shares.

Management Share Plan 2007 (MSP 2007)This
plan is designed to support the Groups ability to attract and retain key
staff in an increasingly tight and competitive labour market. Under the MSP 2007,
certain senior management may receive a conditional award of shares which is
subject to a time-based vesting condition. Shares to satisfy the awards will
be purchased in the market. Directors are not eligible to participate and no
new shares will be issued to
satisfy awards under this plan.

Proposed changes to incentive arrangements  2009As foreshadowed in the 2006 Remuneration
report, the committee during 2007 and 2008 reviewed the incentive arrangements
for executives and other senior management. This review focussed on evaluation
of the existing incentive arrangements in the context of Rio Tintos overall
remuneration strategy. As a consequence the committee may propose changes to
incentive
arrangements for approval by shareholders in 2009.

Post employment benefits

United KingdomGuy Elliott and Tom Albanese participate
in the non contributory Rio Tinto Pension Fund, a funded occupational pension
scheme approved by HM Revenue & Customs. The Fund provides both defined benefit
and defined contribution benefits. In April 2005, the defined benefit section
of the Fund was closed to new participants.Members
          of the defined benefit section of the Fund who retire early may draw
        a pension reduced by approximately
        four
      per cent a year for each year of early payment. Executives can take their
        pension benefits unreduced for early payment from the age of 60. Spouse
        and dependants pensions
      are also provided. Pensions paid from this section 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.During 2007, there was no requirement for company cash contributions to be paid into the Rio Tinto Pension Fund, although cash contributions are required if
the Company wishes to enhance the benefits for any individual member.Rio Tinto reviewed its pension policy in light of the legislative changes introduced from April 2006. The Rio Tinto Pension Fund was amended to incorporate a
fund specific limit equivalent to the earnings cap for all members previously affected; unfunded benefits continue to be provided, where already promised, on pensionable salary above the fund specific limit.Guy Elliott is accruing a pension of 2.3 per cent of basic salary for each year of service with the Company to age 60. Proportionally lower benefits are
payable on leaving service or retirement prior to the age of 60. The unfunded arrangements described above will be utilised to deliver this promise to the extent not provided by the Fund.Tom
Albanese is accruing a pension payable from normal retirement age of 60 of two
        thirds of basic salary, subject
      to completion of 20 years service
      with the Group, inclusive of benefits accrued under the US pension arrangements. Proportionally lower benefits are payable for shorter service or, if having attained 20 years service,
      retirement is taken prior to the age of 60. His benefits under the Rio
      Tinto Pension Fund are restricted to the fund specific limit, with the
      balance
provided through unfunded arrangements.Dick
Evans has been offered membership of the Rio Tinto International Pension
      Fund, a funded occupational pension
        scheme based in the UK established in accordance with the requirements
        of Section 615
      of the Income Corporation and Taxes Act 1988. His membership will be effective
      from 25 October 2007. The fund provides both defined benefit and defined
        contribution benefits. Dick Evans will be a
      defined contribution member. The Companys contribution will be 20
per cent of basic salary.

AustraliaUntil his retirement on 30 September
2007 Leigh Clifford participated in the Rio Tinto Staff Superannuation Fund,
a



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funded superannuation fund regulated by Australian legislation. The fund provides
  both defined benefit and defined contribution benefits. Leigh Clifford was
  a defined benefit member, accruing lump sums payable on retirement. Retirement
  benefits are limited to a lump sum multiple of up to seven times final basic
  salary at age 62. Proportionally lower benefits are payable on leaving service
  or retirement prior to the age of 62.     Executives are not required
to pay contributions. During 2007, Company cash contributions were paid into
the Rio Tinto Staff Superannuation Fund to fund
members defined benefit and defined contribution benefits.

Other pensionable benefitsFor Australian participants annual STIP
awards are superannuable up to a maximum value of 20 per cent of basic salary.
This results in a defined contribution payment equivalent to 20 per cent of the
superannuable component of STIP and does not impact the defined benefit component.
For the UK executive directors basic pay only is pensionable.Details
of directors pension and superannuation entitlements are set out in Table
2 on page 137.

Performance and non performance related remunerationTotal remuneration is a combination of
fixed and performance related elements, each of which is described in this report.
In addition, some executives have specific arrangements for remuneration outside
these core elements and which are detailed in the service contracts table on
page 127. The total remuneration for executives shown in Table 1 includes these
non performance related items, which are specific to the circumstances of each
executive.     The performance related, or
variable, elements are the short and long term incentive plans, which are linked
to achievement of business and personal 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.     Excluding post employment costs
and expatriate secondment costs, employment costs and other benefits, the proportion
of total direct remuneration provided by way of variable components, assuming
target levels of performance, is approximately 68 per cent for the chief executive,
62 per cent for the finance director, and between 62 per cent and 68 per cent
for the product group chief executives and the Group executive Business Resources.
Variable components comprise the Short Term Incentive Plan, the Share Option
Plan and the Mining Companies Comparative Plan (STIP, SOP and MCCP respectively).     The actual proportion of total
direct remuneration provided by way of variable components is set out in the
table below and may differ from these target percentages depending on company
and personal performance. Fixed pay is represented by base salary, non monetary
and other cash benefits, post employment benefits, other than long term benefits,
termination benefits and voluntary share based awards. Variable pay is made up
of the cash bonus and the values of the share based awards related to company
performance.

|Table showing remuneration mix |               |  |               |  |              | 
|------------------------------ | ------------- |  | ------------- |  | ------------ | 
|                               | Fixed as %    |  | At-risk as %  |  | Options as % | 
|                               | of 2007 total |  | of 2007 total |  | of total     | 
|                               |               |  |               |  |              | 
|Tom Albanese                   | 31.8          |  | 68.2          |  | 6.0          | 
|Leigh Clifford                 | 72.9          |  | 27.1          |  | 12.2         | 
|Guy Elliott                    | 19.6          |  | 80.4          |  | 6.7          | 
|Dick Evans                     | 100           |  |              |  |             | 
|Preston Chiaro                 | 19.2          |  | 80.8          |  | 7.5          | 
|Bret Clayton                   | 42.9          |  | 57.1          |  | 4.9          | 
|Oscar Groeneveld               | 24.0          |  | 76.0          |  | 6.0          | 
|Keith Johnson                  | 21.0          |  | 79.0          |  | 7.1          | 
|Andrew Mackenzie               | 25.8          |  | 74.2          |  | 7.8          | 
|Sam Walsh                      | 19.3          |  | 80.7          |  | 6.4          | 
|                               |               |  |               |  |              | 

Dick Evans did not receive vested incentives in 2007.

Share based remuneration not dependent on performanceExecutives may participate in share and
share option plans that are available to all employees at particular locations
and for which neither grant nor vesting is subject to the satisfaction of a performance
condition. These plans are consistent with standard remuneration practice whereby
employees are offered participation in such plans as part of their employment
to encourage alignment with the long term performance of
the Company.Executives
          employed in the Rio Tinto plc part of the Group may participate in
      the Rio Tinto plc Share Savings
        Plan,
      a savings-related share option plan which is open to employees in the UK
        and elsewhere. Under the plan, participants can save up to £250 per month, or equivalent in local currency, for a maximum of five years. At the end of the savings period participants may exercise an option over
      shares granted at a discount of up to 20 per cent to the market value at the time of grant. The number of options to which participants are entitled is determined by the option price, the savings amount and the length of the savings contract. No
      consideration is paid or payable by the participant on receipt of the options. The UK section of this plan is approved by HM Revenue & Customs
(HMRC). Grants made to executives are set out in Table 5 on pages 141 to 144.Eligible
UK employees, including some of the executives, may also participate in the Rio
Tinto Share



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Ownership Plan, an HMRC approved share incentive plan which was introduced
  in 2002. Under this plan, participating employees can save up to £125
  per month, which the plan administrator invests in Rio Tinto plc shares. The
  Company matches these purchases on a one-for-one basis. In addition, eligible
  employees may receive an annual award of shares up to a maximum of five per
  cent of salary, subject to a cap of £3,000. The Rio Tinto Shared Ownership
  Plan includes restrictions on transfer of shares while the shares are subject
  to the plan.     Executives employed in the
Rio Tinto Limited part of the Group may elect to participate in the Rio Tinto
Limited Share Savings Plan, introduced in 2001, which is similar to the Rio Tinto
plc Share Savings Plan. Grants made to executives are set out in Table 5 on pages
141 to 144. Executives, other than executive directors, may be eligible to participate
in the MSP 2007 as described on page 124. No grants were made to executives during
2007.     Where, under an employee share
plan operated by the Company, participants are the beneficial owners of the shares,
but not the registered owner, the voting rights are normally exercised by the
registered owner at the direction of the participant.



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Service contractsThe following table details the key aspects
of each executives
service contract.

|Service contract table |           |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|---------------------- | --------- |  | -------- | - | --------- | - | ---------- | - | --------- | - | ---------- | - | ---------- | - | --------- | - | ----------
|                       | Tom       |  | Guy      |   | Dick      |   | Leigh      |   | Bret      |   | Preston    |   | Andrew     |   | Keith     |   | Oscar     
|                       | Albanese  |  | Elliott  |   | Evans     |   | Clifford   |   | Clayton   |   | Chiaro     |   | Mackenzie  |   | Johnson   |   | Groeneveld
|                       |           |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|2007 roles held        | Group     |  | Finance  |   | ED &      |   | Group      |   | CEO       |   | CEO        |   | Commenced  |   | Group     |   | Chief     
|and                    | CEO       |  | Director |   | CEO Rio   |   | CEO        |   | Copper &  |   | Energy &   |   | notice     |   | Executive |   | Adviser   
|commencement           | (1/5/07)  |  | (19/6/02 | ) | Tinto     |   | (30/3/04   | ) | Diamonds  |   | Industrial |   | period     |   | Business  |   | (25/10/07 
|dates                  |           |  |          |   | Alcan     |   |            |   | (15/11/07 | ) | Minerals   |   | (15/10/07  | ) | Resources |   |           
|                       | Director  |  |          |   | (25/10/07 | ) | (until     |   |           |   |            |   |            |   | (1/6/07   | ) | CEO       
|                       | of Group  |  |          |   |           |   | retirement |   | CEO       |   | CEO        |   | CEO        |   |           |   | Aluminium 
|                       | Resources |  |          |   |           |   | 30/09/07   | ) | Copper    |   | Energy     |   | Industrial |   | CEO       |   | (1/10/04  
|                       | (7/3/06)  |  |          |   |           |   |            |   | (1/6/06   | ) | (1/9/03    | ) | Minerals   |   | Diamonds  |   |           
|                       |           |  |          |   |           |   |            |   |           |   |            |   | (1/8/04    | ) | (1/3/04   | ) |           
|                       |           |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|Contract date          | 1/5/07    |  | 19/6/02  |   | 25/10/07  |   | 30/3/04    |   | 1/6/06    |   | 30/9/03    |   | 4/5/04     |   | 12/3/04   |   | 1/10/04   
|                       | (contract |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|                       | disclosed |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|                       | 8/5/07)   |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|                       |           |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|Years of service       | 26        |  | 27       |   |          |   | Retired    |   | 13        |   | 16         |   | 3          |   | 16        |   | 33        
|completed              |           |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           
|                       |           |  |          |   |           |   |            |   |           |   |            |   |            |   |           |   |           

|Standard                                          | Pension
    or superannuation fund participation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|contract                                          | Salary
    subject to annual review.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|conditions                                        | May participate
    in Rio Tinto Long Term Incentive Plans (LTIP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|                                                  | Participates in employee car
    scheme in accordance with policy applicable in country of assignment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
|                                                  | Participates in medical benefits
    programs applicable to employees generally in country of origin.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|                                                  | Where applicable, receive expatriate
        secondment packages which may include a housing benefit, repatriation
    andtax equalization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Term                                              | It
        is the Groups policy that executives service contracts generally
        have no fixed term, except for the contractfor
        Dick Evans which has a two year term, but are capable of termination
    giving no less than the notice set outbelow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Notice                                            | 12                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|                                                  | months                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Resignation                                       | Outstanding Long Term Incentive
    awards under the SOP and MCCP are forfeited as is any pro-rata STIP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Retirement                                        | Pro rata STIP paid
      based on portion of performance period worked. LTIPs subject to performance
      test atcompletion of normal performance
      period and options or performance shares may vest at that time to the extentprovided
      by the performance condition. Options or performance shares held for less
      than 12 months at date oftermination
    are reduced pro rata.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Termination bycompany generalincludingredundancy | Rio
      Tinto has retained the right to pay executives in lieu of notice. Given
      the wide variety of circumstancesleading
      to early termination, the executives service contracts do not provide
      explicitly for compensation but, inthe
      event of early termination, including redundancy, it is the Groups
      policy to act fairly in all circumstances.Pre-existing
      entitlements may apply under redundancy policies generally applicable to
      employees in particularregions. Notice
      may be worked or fully or partly paid in lieu, at Company discretion, and
      additional cappedservice-related payments
      may apply. Compensation would not provide reward for poor performance.
      In the eventof termination except
      for cause, the plans provide that STIP would be paid based on the portion
      of theperformance period worked. LTIPs
      would be subject to a performance test at completion of the normalperformance
      period. Options and performance shares may vest at that time to the extent
      provided by theperformance condition.
      Options or performance shares that have been held for less that 12 months
      at the date oftermination would be
    reduced pro-rata. | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Terminationfor
    cause                          | Employment
      may be terminated by the Company without notice and without payment of
      any salaryor compensation in lieu
      of notice. Outstanding awards under the SOP and MCCP are forfeited as isany
    pro rata STIP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|Change ofcontrol                                  | Contractual
      entitlements to severance are not triggered by a change of control. LTIP
      rules approvedby shareholders in 2004
    provide the following in the event of a change of control:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|                                                  | SOP:
      All outstanding performance periods end on the date of change of control
      and options may vestto the extent
    that the performance condition has been satisfied at that date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|                                                  | MCCP: All outstanding performance
      periods end on the date of change of control and performanceshares
      may vest to the extent that the performance condition has been satisfied
      at that date. If aperformance period
    ends within 12 months of grant, and vested awards will be reduced pro rata.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 



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Shareholding policyIn 2002, the committee decided that it
would be appropriate to encourage executives to build up a shareholding, aiming
to reach a holding equal in value to two times base salary over five years. Details
of executives share interests in the Group are set out in Table 3 on page
138.

Share dealing policyExecutives participate in long term incentive
plans which involve the awarding of Rio Tinto securities at a future date. The
board has a policy prohibiting an executive from limiting his or her exposure
to risk in relation to the securities. This is contained in the Rules for
dealing in Rio Tinto securities which is available on the companies website.
All employees subject to the Rules receive regular training and information about
this prohibition. The grants of shares and options under the plans are conditional
upon compliance with the Rules.

REMUNERATION PAID IN 2007

Performance of Rio Tinto and individual executives2007 was another year of strong performance
for the Group.     The effect of this performance
on shareholder wealth, as measured by TSR, is detailed in the table below and
the relationship between TSR and executive remuneration is discussed in the Executive
remuneration and Remuneration components sections above.

|Rio Tinto shareholder return 2003-2007 |             |  |               |  |                      |  |                          |  |        |  |       |  |      |  |       | 
|-------------------------------------- | ----------- |  | ------------- |  | -------------------- |  | ------------------------ |  | ------ |  | ----- |  | ---- |  | ----- | 
|Year                                   | Dividends   |  | Share price  |  | Share price         |  | Total shareholder return | 
|                                       | per share   |  | Rio Tinto plc |  | Rio Tinto Limited A$ |  |                          |  |        |  | (TSR) | 
|                                       | paid during |  | £ (pence)     |  |                      |  | (US$)                    |  |        |  |       |  |      | 
|                                       | the year    |  |               |  |                      |  |                          |  |        |  |       |  |      |  |       | 
|                                       | (US cents   |  |               |  |                      |  |                          |  |        |  | plc   |  | Ltd  |  | Group | 
|                                       | per share)  |  | 1Jan          |  | 31Dec                |  | 1Jan                     |  | 31Dec  |  | %     |  | %    |  | %     | 
|                                       |             |  |               |  |                      |  |                          |  |        |  |       |  |      |  |       | 
|2007                                   | 116.0       |  | 2,718         |  | 5,317                |  | 74.30                    |  | 133.95 |  | 99.5  |  | 82.9 |  | 91.8  | 
|2006                                   | 191.5       |  | 2,655         |  | 2,718                |  | 69.00                    |  | 74.30  |  | 6.3   |  | 12.2 |  | 7.6   | 
|2005                                   | 83.5        |  | 1,533         |  | 2,655                |  | 39.12                    |  | 69.00  |  | 77.5  |  | 81.3 |  | 78.4  | 
|2004                                   | 66.0        |  | 1,543         |  | 1,533                |  | 37.54                    |  | 39.12  |  | 1.7   |  | 7.4  |  | 13.0  | 
|2003                                   | 60.5        |  | 1,240         |  | 1,543                |  | 33.95                    |  | 37.54  |  | 27.9  |  | 14.7 |  | 24.8  | 
|                                       |             |  |               |  |                      |  |                          |  |        |  |       |  |      |  |       | 

Rio Tinto Group and product group performance
  during 2007, and over relevant performance periods ending at 31 December 2007,
  impacted executives remuneration as follows:

|Share based awards
|------------------
|•                 
|•                 

Annual cash bonusCash bonuses (STIP) in respect of
the 2007 performance period, to be paid in March 2008, are set out in Table 1
on pages 134 to 136 and the percentages awarded to each executive is set out
in the table on page 130. These bonuses were approved by the committee on the
basis of delivered performance against financial, safety and personal (including
operational and strategic) targets and objectives for each executive.Financial performance was assessed against underlying earnings targets for the Group and product groups as relevant and established by the committee at the
commencement of the performance period. The potential impact of fluctuations in exchange rates and some prices are outside the control of the Group. The committee therefore compares, on an equal weighting basis, both actual results and underlying
performance. This approach is designed to ensure that the annual bonus reflects financial results and addresses underlying performance excluding the impact of prices and exchange rates. The committee retains discretion to consider underlying
business performance in deciding STIP awards.The safety measures included Group or relevant product group lost time injury frequency rates (LTIFR) and overall assessment of progress against improvement
targets in other safety measures, including all injury frequency rates (AIFR). These measures are chosen as they reflect the priority of safety at all Rio Tinto operations.Personal performance targets and objectives were established for each executive at the start of the performance period. These comprise a balanced set of
measures for each individual that reflect current operational performance, as well as progress on initiatives and projects designed to grow the value of each business unit and the Rio Tinto portfolio.



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The targets and objectives chosen enable personal performance and the benefit
  accruing to shareholders in the long term to be mirrored
in each of the executives at risk remuneration.     To achieve linkage between
business/financial and personal/non financial performance and remuneration, each
executive directors and the Group executive Business Resources STIP payment
is calculated as a percentage of salary in accordance with the formula set out
below:

|       |   |                      |  |                          |  
|------ | - | -------------------- |  | ------------------------ | -
|       |   | Business / financial |  | Personal / non financial |  
|       |   | (score = 0% to 133%) |  | (score = 0% to 133%)     |  
|Target |   |                      |  |                          |  
|STIP   | x | 75% weight           |  | 25% weight               | x
|(60%)  |   | Group                |  | Group                    |  
|       |   | net earnings         |  | safety performance       |  
|       |   |                      |  |                          |  

For each product group chief executive, STIP payments are calculated as a percentage of salary in accordance with the formula set out below:

|       |   |                      |  |                          |   |               |  |                  | 
|------ | - | -------------------- |  | ------------------------ | - | ------------- |  | ---------------- | 
|       |   | Business / financial |  | Personal / non financial |  
|       |   | (score = 0% to 133%) |  | (score = 0% to 133%)     |  
|Target |   |                      |  |                          |   |               |  |                  | 
|STIP   | x | 40% weight           |  | 60% weight               | x | 25% weight    |  | 75% weight       | 
|(60%)  |   | Group                |  | Product group            |   | Product group |  | Personal targets | 
|       |   | financial results    |  | financial results        |   | safety        |  | and objectives   | 
|       |   |                      |  |                          |   |               |  |                  | 

Strong Group financial performance for 2007 resulted in a STIP score at 106
  per cent of target for this component. Financial performance for each product
  group varied and the Remuneration committeeapproved STIP scores ranging
  from 70 per cent of target to 133 per cent of target (maximum is 133 per cent)
  for this component.Group safety performance resulted in the Remuneration committee approving a score of 100 per cent of target (maximum is 133 per cent) for this component.
Product group safety performance varied and STIP scores ranged from 85 per cent of target to 150 per cent of target (where 150 per cent is the maximum achievable) for this component.Consequently, total STIP awards for executives ranged from 13 per cent to 93 per cent of salary (10.8 per cent to 77.5 per cent of maximum).
     Each of the results set out below therefore reflect
the above, strong operational performance and portfolio initiatives to secure
future value for the business across the Group:

Tom AlbaneseThe committee assessed personal performance
as above target and the overall STIP award was 141.6 per cent of target (70.8
per cent of maximum).

Guy ElliottThe committee assessed personal performance as above target and the overall STIP award was 136.6 per cent of target (68.3 per cent of maximum).

Dick EvansNot eligible to participate in Rio Tinto STIP for 2007.

Preston ChiaroThe committee assessed product group financial and
safety performance as below target and personal performance as on target. The
overall STIP award was 83.3 per cent of target (41.6 per  cent of maximum).
     The
committee awarded a special bonus in light of substantial additional portfolio
responsibilities during the last quarter of 2007. For this pro-rata bonus, product
group financial performance was assessed as below target and
safety and personal performance was on target. The overall pro rata STIP award
was 93.1 per cent of target (46.5 per cent of pro rata maximum).

Bret ClaytonThe committee assessed product group financial and
personal performance as above target and safety performance as below target.
The overall STIP award was 125 per cent of target (62.5 per  cent of maximum).
     The
committee awarded a special bonus in light of substantial additional portfolio
responsibilities during the last quarter of 2007. For this pro rata bonus product
group financial and personal performance as above target and
safety performance as below target. The overall pro rata STIP award was 123.1
per cent of target (61.5 per cent of pro rata maximum).

Leigh CliffordLeigh Clifford retired on 30 September 2007 and is eligible to receive a pro rata bonus for the proportion of the performance period worked prior to retirement. The pro rata bonus is
based on personal performance to the date of



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retirement and Group financial and safety performance for the year.      The committee assessed personal performance as above target and the overall STIP award was 118.4 per cent of target (59.2 per cent of maximum) for the period
worked.

Oscar GroeneveldThe committee assessed product group financial performance as below target,
  personal performance as above target and safety performance as on target. The
  overall STIP award was 105 per
cent of target (52.5 per cent of maximum).

Keith JohnsonThe committee assessed pro rata product group financial and personal performance
  as above target and product group safety performance as below target. The overall
  STIP award was 118.3 per
cent of target (59.1 per cent of maximum).

Andrew MackenzieThe committee assessed product group financial and safety performance as well
  as personal performance as below target. The overall STIP award was 21.6 per
  cent of target (10.8 per cent of
maximum).

Sam WalshThe committee assessed product group financial performance as slightly below
  target and safety and personal performance as above target. The overall STIP
  award was 126.6 per cent of
target (63.3 per cent of maximum).

RetentionTom Albanese and Oscar Groeneveld were each awarded a conditional one-off three
  year retention bonus in October 2004, prior to their appointments as an executive
  director and product group chief executive Aluminium respectively, with a view
  to retaining their services. These retention bonuses of 100 per cent of salary
  as at 1 March 2007 were paid in October 2007. The values for Tom Albanese and
  Oscar Groeneveld were US$1,232,232 and US$1,195,766 respectively. These
  amounts have been expensed over the three year period on an accrual basis,
  adjusted for exchange rate fluctuations and reported in Table 1 under Other
  long term benefits as
US$477,000 for Tom Albanese and US$478,000 for Oscar Groeneveld.

Share based payment  long term incentives granted in
2007Options over either Rio Tinto plc or Rio Tinto Limited shares, as appropriate,
  were granted to each executive except Dick Evans under the SOP on 13 March
  2007. The committee reviewed the performance condition applicable to this grant
  and confirmed that vesting will be dependent on Rio Tintos TSR relative
  to the HSBC Global Mining Index over a three year performance period. Details
  of all options outstanding under SOP are included in Table 5 on pages 141 to
  144.      A conditional
          award of performance shares in either Rio Tinto plc or Rio Tinto Limited
          shares was made to each
        executive except Dick Evans under the MCCP on 13 March 2007. The committee
        reviewed the
      performance condition applicable to the conditional award and confirmed
      that vesting will be dependent on Rio Tintos TSR relative to 15 other
mining companies.
     The percentages of maximum bonuses made to executives in respect of 2007 and long term incentive grants vested in respect of performance periods which ended
on 31 December 2007, as well as the percentages forfeited because the relevant company or individual did not meet the performance criteria required for full vesting, are as follows:

Bonuses and grants made during or in respect of 2007

|                 | STIP Cash1 |  | SOP Options2 |  | MCCP Shares3 | 
|---------------- | ---------- |  | ------------ |  | ------------ | 
|                 |            |  |              |  |              | 
|                 | % of       |  | % of         |  | %            | 
|                 | maximum    |  | maximum      |  | vested       | 
|                 | vested     |  | forfeited    |  |              | 
|                 |            |  |              |  |              | 
|Leigh Clifford4  | 59.2       |  | 40.8         |  | 100          | 
|Guy Elliott      | 68.3       |  | 31.7         |  | 100          | 
|Tom Albanese     | 70.8       |  | 29.2         |  | 100          | 
|Preston Chiaro   | 42.6       |  | 57.4         |  | 100          | 
|Bret Clayton     | 62.1       |  | 37.9         |  | 100          | 
|Oscar Groeneveld | 52.5       |  | 47.5         |  | 100          | 
|Keith Johnson    | 59.1       |  | 40.9         |  | 100          | 
|Andrew Mackenzie | 10.8       |  | 89.2         |  | 100          | 
|Sam Walsh        | 63.3       |  | 36.7         |  | 100          | 
|                 |            |  |              |  |              | 



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|Notes
|-----
|1.   
|2.   
|3.   
|4.   

Minimum and maximum total bonuses and grants
      2008The potential maximum and minimum total
        value of bonuses and the face value share and option based compensation
        for the 2008 financial year are set out below.

|                 | STIP Cash1Potential |  | SOP          |  | MCCP        | 
|---------------- | ------------------- |  | ------------ |  | ----------- | 
|                 | range of bonus      |  | Options(% of |  | Shares(% of | 
|                 | payments in March   |  | March 2008   |  | March 2008  | 
|                 | 2009 in respect of  |  |              |  | salary)2,3  | 
|                 |                     |  | 2008         |  |             | 
|                 |                     |  |              |  |             | 
|                 | Min                 |  | Max          |  | Min         | 
|                 |                     |  |              |  |             | 
|Tom Albanese     |                    |  | £1,089,000   |  |            | 
|Dick Evans       |                    |  | US$4,792,500 |  |            | 
|Guy Elliott      |                    |  | £810,600     |  |            | 
|Preston Chiaro   |                    |  | US$870,000   |  |            | 
|Bret Clayton     |                    |  | US$840,000   |  |            | 
|Oscar Groeneveld |                    |  | A$1,920,000  |  |            | 
|Keith Johnson    |                    |  | £504,000     |  |            | 
|Andrew Mackenzie |                    |  | £522,000     |  |            | 
|Sam Walsh        |                    |  | A$1,770,000  |  |            | 
|                 |                     |  |              |  |             | 
|                 |                     |  |              |  |             | 

|Notes
|-----
|1.   
|2.   
|3.   
|4.   

OTHER DISCLOSURES

Executives external
  and other appointmentsExecutives may be invited to become non executive directors
              of other companies. It is Rio Tintos policy that such appointments can broaden their experience and knowledge, to the
            benefit of the Group. This policy limits each executives external
            directorships to one FTSE 100 company or equivalent and they are
            not allowed to take on
  the chairmanship of another FTSE 100 company or equivalent. 
     Consequently,
            where there is no likelihood that such directorships will give rise
        to a conflict of interest,
          the board will
        normally give consent to the appointment. The executive is permitted
to retain the fees earned. In the course of the year Leigh Clifford received
        US$53,000 and Guy Elliott US$47,000
  in respect of their non Rio Tinto related directorships. 
     Executives
            have agreed to waive any fees receivable from subsidiary and associated
            companies. One executive
          director
        waived US$12,910 during the period
  (2006: US$1,390).

Company secretary remunerationThe remuneration policy described above applies
    to the company secretary of each of Rio Tinto plc and Rio Tinto Limited.
    They participate in the same performance based remuneration arrangements
    as the executives. The individual performance measures for the Company secretaries annual
    cash bonus comprise Group and personal measures. Their personal measures
    reflect the key responsibilities of the company secretarial role and include
    ensuring compliance with regulatory requirements, oversight of good corporate
    governance practice and the provision of corporate secretarial services.

Chairman and non executive director remuneration 
  Remuneration policyReflecting the boards focus on long term
  strategic direction and corporate performance rather than short term results,
  remuneration for the chairman and non executive directors is structured with
  a fixed fee component only, details of which are set out below and in the table
  on page 132. The board as a whole determines non executive directors fees,
  although non executive directors do not vote on any changes to their own fees.
  Fees reflect the responsibilities and time spent by the directors on the affairs
  of Rio Tinto. To reflect the commitment expected from directors, as well as
  market



|Rio Tinto 2007 Form 20-F | 131
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practice for similar companies, fees for committee
    chairmen and members were reviewed during the year. The new fees which took
    effect from 1 November 2007 are set out in the table below.
     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. The chairman
is not present at any discussion regarding his own remuneration and he does not
participate in the Groups incentive plans or pension arrangements. The
fee for the chairman was reviewed during the year and the revised fee is set
out in the table below.

Letters of appointmentNon executive directors have formal letters
    of appointment setting out their duties and responsibilities. These letters
    are available for inspection at Rio Tinto plcs registered office, prior
    to the annual general meeting and at the meeting itself. Each non executive
    director is appointed subject to subsequent election and periodic re-election
    by shareholders as detailed on page 146. There are no provisions for compensation
    payable on termination of any non executive directors appointment.
     The chairman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, although the appointment
may be terminated by either Rio Tinto or Paul Skinner giving six months notice.
Other than in this case, there is no provision for compensation payable on termination
of his chairmanship or directorship.

Shareholding policyIn 2006, the board recommended that non executive
    directors be encouraged to build up a shareholding equal in value to one
    years base fees. To help facilitate this, the Group put in place a
    non executive directors share purchase plan under which non executive
    directors can elect to invest a proportion of their fees net of tax on a
    regular basis to acquire shares on-market. During the year four directors
    purchased shares using these arrangements. Purchases were suspended following
    an unsolicited approach from BHP Billiton announced on 8 November 2007.

Remuneration componentsThe following table sets out the annual fees
    payable to the chairman and the non executive directors in £/A$,
    as appropriate.

|                                                              | As at       |  | As at       | 
|------------------------------------------------------------- | ----------- |  | ----------- | 
|                                                              | 31 Dec 2007 |  | 31 Dec 2006 | 
|                                                              |             |  |             | 
|Base fees:                                                    |             |  |             | 
|Chairman                                                      | £693,000    |  | £630,000    | 
|Other directors                                               | £70,000     |  | £60,000     | 
|                                                              | A$160,000   |  | A$150,000   | 
|Additional fees:                                              |             |  |             | 
|Senior independent director                                   | £35,000     |  | £35,000     | 
|Audit committee chairman                                      | £30,000     |  | £30,000     | 
|Audit committee member                                        | £15,000     |  | £15,000     | 
|                                                              | A$37,500    |  | $37,500     | 
|Remuneration committee chairman                               | £20,000     |  | £20,000     | 
|Remuneration committee member                                 | £10,000     |  | £10,000     | 
|                                                              | A$25,000    |  | A$25,000    | 
|Nominations committee member                                  | £7,500      |  |            | 
|Committee on social and environmental accountability chairman | £20,000     |  | £20,000     | 
|Committee on social and environmental accountability member   | £7,500      |  | £7,500      | 
|                                                              | A$18,750    |  | A$18,750    | 
|Overseas meeting allowances:                                  |             |  |             | 
|Long distance (flights over                                   | £4,000      |  | £4,000      | 
|10 hours per journey)                                         | A$10,000    |  | A$10,000    | 
|Medium distance (flights of                                   | £2,000      |  | £2,000      | 
|5-10 hours per journey)                                       | A$5,000     |  | A$5,000     | 
|                                                              |             |  |             | 

There were eight scheduled board meetings (2006: eight) and 11 held at short
    notice (2006: one). 
     No additional fee is payable to the chairman of
the Nominations committee.
     Rio Tinto
            does not pay retirement benefits or allowances to the chairman or
non executive directors, nor do any
        of them participate in any of the
        Groups incentive plans. Where the payment of statutory minimum superannuation contributions for Australian non executive directors is required by the Australian superannuation guarantee legislation, these contributions are deducted from the
directors overall fee entitlements.

Remuneration paid during 2007Details of each element of remuneration paid to the chairman and non executive
  directors during 2007 are set out in the table below. Details of the aggregate
  remuneration, calculated in
accordance with the Companies Act 1985, of the

|Rio Tinto 2007 Form 20-F | 132
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directors of the parent companies are set out in note 43 to the2007 financial
statements. No post employment, long term or termination payments were paid
and no share based payments made.

Auditable informationUnder Part 3 of Schedule 7A to the UK Companies Act 1985,
the information included in respect of the non executive directors and the directors short
term employee benefits (excluding employment costs), defined contribution pension
costs and termination benefits in Table 1, 4 and 5 are auditable.     The Australian Securities Investment
Commission issued an order dated 27 January 2006 (and amended on 22 December
2006) under which the information included in the Remuneration report to comply
with paragraph 25 of Australian Accounting Standard AASB 124 Related Party
Disclosures (relating to key management personnel compensation)
is also auditable. This information comprises Tables 1, 3, 4 and 5 and the disclosures
provided under the headings Executive remuneration, Remuneration components,
Remuneration paid in 2007 and Chairman and non executive director remuneration.

Annual general meetingsShareholders will be asked to vote on this Remuneration
report
at the Companies 2008 annual general meetings.

By order of the board

Ben MathewsSecretary
Remuneration committee
5 March 2008



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|Table 1 – Executives and
    non executive directors remuneration |      |  |        |  |      
|------------------------------------------------------------------- | ---- |  | ------ |  | -----
|                                                                    |      |  |        |  |      
|                                                                    |      |  |        |  |      
|                                                                    |      |  |        |  |      
|                                                                    |      |  |        |  |      
|                                                                    |      |  |        |  |      
|                                                                    |      |  |        |  |      
|                                                                    |      |  | Base   |  | Cash 
|                                                                    |      |  | salary |  | bonus
|                                                                    |      |  |        |  |      
|                                                                    |      |  |        |  |      
|Stated in US$0001                                                  |      |  |        |  |      
|Chairman                                                            |      |  |        |  |      
|Paul Skinner11                                                      | 2007 |  | 1,282  |  | —    
|                                                                    | 2006 |  | 1,114  |  | —    
|Non executive directors12                                           |      |  |        |  |      
|Ashton Calvert                                                      | 2007 |  | 121    |  | —    
|                                                                    | 2006 |  | 119    |  | —    
|Sir David Clementi                                                  | 2007 |  | 174    |  | —    
|                                                                    | 2006 |  | 138    |  | —    
|Vivienne Cox                                                        | 2007 |  | 154    |  | —    
|                                                                    | 2006 |  | 129    |  | —    
|Sir Rod Eddington                                                   | 2007 |  | 133    |  | —    
|                                                                    | 2006 |  | 109    |  | —    
|Michael Fitzpatrick                                                 | 2007 |  | 164    |  | —    
|                                                                    | 2006 |  | 74     |  | —    
|Yves Fortier14                                                      | 2007 |  | 32     |  | —    
|                                                                    | 2006 |  | —      |  | —    
|Richard                                                             | 2007 |  | 184    |  | —    
|Goodmanson                                                          |      |  |        |  |      
|                                                                    | 2006 |  | 138    |  | —    
|Andrew Gould                                                        | 2007 |  | 204    |  | —    
|                                                                    | 2006 |  | 156    |  | —    
|Lord Kerr                                                           | 2007 |  | 174    |  | —    
|                                                                    | 2006 |  | 135    |  | —    
|David Mayhew13                                                      | 2007 |  | 150    |  | —    
|                                                                    | 2006 |  | 133    |  | —    
|Sir Richard Sykes                                                   | 2007 |  | 236    |  | —    
|                                                                    | 2006 |  | 202    |  | —    
|Paul Tellier14                                                      | 2007 |  | 35     |  | —    
|                                                                    | 2006 |  | —      |  | —    
|Executive directors                                                 |      |  |        |  |      
|Tom Albanese11                                                      | 2007 |  | 1,494  |  | 1,277
|                                                                    | 2006 |  | 899    |  | 842  
|Leigh Clifford11                                                    | 2007 |  | 1,401  |  | 1,008
|                                                                    | 2006 |  | 1,611  |  | 1,598
|Guy Elliott                                                         | 2007 |  | 1,213  |  | 1,005
|                                                                    | 2006 |  | 1,016  |  | 1,011
|Dick Evans                                                          | 2007 |  | 281    |  | —    
|                                                                    | 2006 |  | —      |  | —    
|Other key management personnel                                      |      |  |        |  |      
|Preston Chiaro                                                      | 2007 |  | 650    |  | 422  
|                                                                    | 2006 |  | 591    |  | 412  
|Bret Clayton                                                        | 2007 |  | 570    |  | 541  
|                                                                    | 2006 |  | 429    |  | 349  
|Oscar Groeneveld                                                    | 2007 |  | 1,261  |  | 877  
|                                                                    | 2006 |  | 962    |  | 839  
|Keith Johnson                                                       | 2007 |  | 781    |  | 558  
|                                                                    | 2006 |  | 663    |  | 644  
|Andrew Mackenzie                                                    | 2007 |  | 861    |  | 111  
|                                                                    | 2006 |  | 737    |  | 723  
|Sam Walsh                                                           | 2007 |  | 1,108  |  | 894  
|                                                                    | 2006 |  | 887    |  | 664  
|                                                                    |      |  |        |  |      



|Rio Tinto 2007 Form 20-F | 134
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|Table
1–Executives and non executive directors remuneration
(continued) |                               |  |            |  |          |  |         |  |          | 
|------------------------------------------------------------------------- | ----------------------------- |  | ---------- |  | -------- |  | ------- |  | -------- | 
|                                                                          | Post
    employment benefits9 |  | Terminat   |  | Total    |  |         |  | Currency | 
|                                                                          |                               |  |            |  | ion      |  | remuner |  |          | 
|                                                                          |                               |  |            |  | benefits |  | ation   |  |          | 
|                                                                          |                               |  |            |  |          |  |         |  |          | 
|                                                                          | Pension                       |  | Other      |  |          |  |         |  |          | 
|                                                                          | and                           |  | post       |  |          |  |         |  |          | 
|                                                                          | superann                      |  | employment |  |          |  |         |  |          | 
|Stated in US$000                                                         | uation                        |  | benefits   |  |          |  |         |  |          | 
|                                                                          |                               |  |            |  |          |  |         |  |          | 
|Chairman                                                                  |                               |  |            |  |          |  |         |  |          | 
|Paul Skinner11                                                            | —                             |  | —          |  | —        |  | 1,476   |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 1,292   |  | 2006     | 
|Non executive directors12                                                 |                               |  |            |  |          |  |         |  |          | 
|Ashton Calvert                                                            | —                             |  | —          |  | —        |  | 163     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 179     |  | 2006     | 
|Sir David Clementi                                                        | —                             |  | —          |  | —        |  | 190     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 153     |  | 2006     | 
|Vivienne Cox                                                              | —                             |  | —          |  | —        |  | 170     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 136     |  | 2006     | 
|Sir Rod Eddington                                                         | —                             |  | —          |  | —        |  | 148     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 130     |  | 2006     | 
|Michael Fitzpatrick                                                       | —                             |  | —          |  | —        |  | 210     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 109     |  | 2006     | 
|Yves Fortier14                                                            | —                             |  | —          |  | —        |  | 32      |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | —       |  | 2006     | 
|Richard Goodmanson                                                        | —                             |  | —          |  | —        |  | 212     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 156     |  | 2006     | 
|Andrew Gould                                                              | —                             |  | —          |  | —        |  | 212     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 171     |  | 2006     | 
|Lord Kerr                                                                 | —                             |  | —          |  | —        |  | 182     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 142     |  | 2006     | 
|David Mayhew13                                                            | —                             |  | —          |  | —        |  | 158     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 148     |  | 2006     | 
|Sir Richard Sykes13                                                       | —                             |  | —          |  | —        |  | 260     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | 217     |  | 2006     | 
|Paul Tellier14                                                            | —                             |  | —          |  | —        |  | 35      |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | —       |  | 2006     | 
|Executive directors                                                       |                               |  |            |  |          |  |         |  |          | 
|Tom Albanese                                                              | 1,706                         |  | —          |  | —        |  | 12,596  |  | 2007     | 
|                                                                          | 707                           |  |            |  |          |  | 3,276   |  | 2006     | 
|Leigh Clifford10                                                          | 364                           |  | —          |  | 817      |  | 7,465   |  | 2007     | 
|                                                                          | 406                           |  | —          |  |          |  | 3,990   |  | 2006     | 
|Guy Elliott                                                               | 560                           |  | —          |  | —        |  | 9,307   |  | 2007     | 
|                                                                          | 707                           |  |            |  |          |  | 2,677   |  | 2006     | 
|Dick Evans                                                                | 56                            |  | —          |  | —        |  | 416     |  | 2007     | 
|                                                                          | —                             |  | —          |  | —        |  | —       |  | 2006     | 
|Other key management personnel                                            |                               |  |            |  |          |  |         |  |          | 
|Preston Chiaro                                                            | 190                           |  | 7          |  | —        |  | 7,414   |  | 2007     | 
|                                                                          | 180                           |  | 5          |  | —        |  | 1,755   |  | 2006     | 
|Bret Clayton                                                              | 82                            |  | 3          |  | —        |  | 4,067   |  | 2007     | 
|                                                                          | 70                            |  | 3          |  | —        |  | 1,509   |  | 2006     | 
|Oscar Groeneveld                                                          | 281                           |  | —          |  | —        |  | 8,807   |  | 2007     | 
|                                                                          | 254                           |  | —          |  | —        |  | 2,316   |  | 2006     | 
|Keith Johnson                                                             | 422                           |  | —          |  | —        |  | 5,961   |  | 2007     | 
|                                                                          | 385                           |  | —          |  | —        |  | 2,007   |  | 2006     | 
|Andrew Mackenzie                                                          | 518                           |  | —          |  | —        |  | 5,554   |  | 2007     | 
|                                                                          | 475                           |  | —          |  | —        |  | 2,302   |  | 2006     | 
|Sam Walsh                                                                 | 290                           |  | —          |  | —        |  | 7,684   |  | 2007     | 
|                                                                          | 252                           |  | —          |  | —        |  | 2,215   |  | 2006     | 
|                                                                          |                               |  |            |  |          |  |         |  |          | 



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Table 1  Executives and non executive directors remuneration
(continued)

|Notes to Table 1
|----------------
|1.              
|2.              
|3.              
|4.              
|5.              
|6.              
|7.              
|8.              
|9.              
|10.             
|11.             
|12.             
|13.             
|14.             



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|Table 2  Executive directors pension entitlements
as at 31 December 2007 |     |           |  |                      |  |          | 
|-------------------------------------------------------------------------- | --- | --------- |  | -------------------- |  | -------- | 
|Defined Benefit pensions                                                   |     |           |  |                      |  |          | 
|                                                                           |     |           |  | Accrued
    benefits |  |          | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           | Age | Years of  |  | At 31                |  | At 31    | 
|                                                                           |     | service   |  | December             |  | December | 
|                                                                           |     | completed |  | 2006                 |  | 2007     | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           |     |           |  |                      |  |          | 
|                                                                           |     |           |  | £000 pa             |  | £000 pa | 
|                                                                           |     |           |  | pension              |  | pension  | 
|                                                                           |     |           |  |                      |  |          | 
|UK directors                                                               |     |           |  |                      |  |          | 
|Tom Albanese2                                                              | 50  | 26        |  | 126                  |  | 183      | 
|Guy Elliott2                                                               | 52  | 27        |  | 335                  |  | 381      | 
|                                                                           |     |           |  |                      |  |          | 

|                    |    |    |  | A$000 |  | A$000 |  | A$000 |  | A$000 |  | A$000 |  | A$000 |  | A$000 |  | A$000 | 
|------------------- | -- | -- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ | 
|                    |    |    |  | Lump   |  | Lump   |  | Lump   |  | Lump   |  |        |  |        |  |        |  |        | 
|                    |    |    |  | sum    |  | sum    |  | sum    |  | sum    |  |        |  |        |  |        |  |        | 
|                    |    |    |  |        |  |        |  |        |  |        |  |        |  |        |  |        |  |        | 
|Australian director |    |    |  |        |  |        |  |        |  |        |  |        |  |        |  |        |  |        | 
|Leigh Clifford4,5   | 60 | 37 |  | 14,559 |  | 15,990 |  | 1,431  |  | 1,139  |  | 14,559 |  | 15,990 |  | 1,431  |  | 1,139  | 
|                    |    |    |  |        |  |        |  |        |  |        |  |        |  |        |  |        | 

|Defined Contribution pension |     |           |  |                       |  |          |  |  |  |  |  |  |  |  |  |  | 
|---------------------------- | --- | --------- |  | --------------------- |  | -------- |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  | Company contributions |  |          |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  |                       |  |          |  |  |  |  |  |  |  |  |  |  | 
|                             | Age | Years of  |  | At 31                 |  | At 31    |  |  |  |  |  |  |  |  |  |  | 
|                             |     | service   |  | December              |  | December |  |  |  |  |  |  |  |  |  |  | 
|                             |     | completed |  | 2006                  |  | 2007     |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  |                       |  |          |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  | US$000               |  | US$000  |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  | pension               |  | pension  |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  |                       |  |          |  |  |  |  |  |  |  |  |  |  | 
|UK directors                 |     |           |  |                       |  |          |  |  |  |  |  |  |  |  |  |  | 
|Dick Evans6                  | 60  |          |  | n/a                   |  | 56       |  |  |  |  |  |  |  |  |  |  | 
|                             |     |           |  |                       |  |          |  |  |  |  |  |  |  |  |  |  | 

|Notes to Table 2
|----------------
|1.              
|2.              
|3.              
|4.              
|5.              
|6.              



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|Table 3  Executives beneficial interests in Rio Tinto
shares |               |  |                   |  |          |  |        |  |        |  |       
|-------------------------------------------------------------- | ------------- |  | ----------------- |  | -------- |  | ------ |  | ------ |  | ------
|                                                               | Rio Tinto plc |  | Rio Tinto Limited |  | Movement | 
|                                                               |               |  |                   |  |          |  |        |  |        |  |       
|                                                               | 1 Jan         |  | 31 Dec            |  | 20 Mar   |  | 1 Jan  |  | 31 Dec |  | 20 Mar
|                                                               | 2007 2        |  | 20073             |  | 2008     |  | 20072  |  | 20073  |  | 2008  
|                                                               |               |  |                   |  |          |  |        |  |        |  |       
|Directors                                                      |               |  |                   |  |          |  |        |  |        |  |       
|Tom Albanese7                                                  | 41,814        |  | 44,970            |  | 56,658   |  |       |  |       |  |      
|Ashton Calvert                                                 |              |  |                  |  |         |  |       |  | 889    |  |      
|Sir David Clementi                                             | 147           |  | 454               |  | 454      |  |       |  |       |  |      
|Leigh Clifford                                                 | 2,100         |  | 2,100             |  |         |  | 91,255 |  | 91,255 |  |      
|Vivienne Cox                                                   | 528           |  | 826               |  | 826      |  |       |  |       |  |      
|Sir Rod Eddington                                              |              |  |                  |  |         |  |       |  |       |  |      
|Guy Elliott6                                                   | 48,033        |  | 49,024            |  | 59,682   |  |       |  |       |  |      
|Dick Evans                                                     | n/a           |  |                  |  |         |  | n/a    |  |       |  |      
|Michael Fitzpatrick                                            |              |  |                  |  |         |  | 2,100  |  | 2,100  |  | 2,100 
|Yves Fortier                                                   | n/a           |  |                  |  |         |  | n/a    |  |       |  |      
|Richard Goodmanson                                             | 677           |  | 2,307             |  | 2,307    |  |       |  |       |  |      
|Andrew Gould                                                   | 1,000         |  | 1,000             |  | 1,000    |  |       |  |       |  |      
|Lord Kerr                                                      | 3,000         |  | 3,000             |  | 3,000    |  |       |  |       |  |      
|David Mayhew                                                   | 2,500         |  | 2,500             |  | 2,500    |  |       |  |       |  |      
|Paul Skinner                                                   | 5,598         |  | 5,696             |  | 5,696    |  |       |  |       |  |      
|Sir Richard Sykes                                              | 2,569         |  | 2,614             |  | 2,614    |  |       |  |       |  |      
|Paul Tellier                                                   | n/a           |  |                  |  |         |  | n/a    |  |       |  |      
|                                                               |               |  |                   |  |          |  |        |  |        |  |       
|Executives                                                     |               |  |                   |  |          |  |        |  |        |  |       
|Preston Chiaro7                                                | 60,927        |  | 62,585            |  | 62,614   |  |       |  |       |  |      
|Bret Clayton7                                                  | 6,867         |  | 8,096             |  | 8,208    |  |       |  |       |  |      
|Oscar Groeneveld                                               | 3,000         |  | 3,000             |  | n/a      |  | 66,790 |  | 36,790 |  | n/a   
|Keith Johnson7                                                 | 17,536        |  | 18,924            |  | 25,212   |  |       |  |       |  |      
|Andrew Mackenzie7                                              | 40,456        |  | 40,639            |  | n/a      |  |       |  |       |  | n/a   
|Sam Walsh                                                      |              |  |                  |  |         |  | 42,322 |  | 42,814 |  | 42,814
|                                                               |               |  |                   |  |          |  |        |  |        |  |       

|Notes to Table 3
|----------------
|1.              
|2.              
|3.              
|4.              
|5.              
|6.              
|7.              
|8.              
|9.              



|Rio Tinto 2007 Form 20-F | 138
|------------------------ | ---

---



Back to Contents

Table 4  Executives awards under
      long term incentive
plans

|                   |             |  |          |   |         | Mining Companies
    Comparative Plan |         | Plan terms and
    conditions |          
|------------------ | ----------- |  | -------- | - | ------- | ------------------------------------- | ------- | ----------------------------- | ---------
|                   |             |  |          |   |         |                                       |         |                               |          
|                   | Conditional |  | Market   |   | 1 Jan   |                                       | Awarded |                               | Lapsed/  
|                   | award       |  | price at |   | 2007    |                                       | 3,5     |                               | cancelled
|                   | granted     |  | award 2  |   |         |                                       |         |                               |          
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   |         |                                       |         |                               |          
|Rio Tinto plc      |             |  |          |   |         |                                       |         |                               |          
|Tom Albanese       | 22 Apr 04   |  | 1,276    | p | 56,015  |                                       |        |                               | 36,410   
|                   | 09 Mar 05   |  | 1,839    | p | 55,951  |                                       |        |                               |         
|                   | 07 Mar 06   |  | 2,630    | p | 45,007  |                                       |        |                               |         
|                   | 13 Mar 07   |  | 2,681    | p |        |                                       | 44,124  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 156,973 |                                       | 44,124  |                               | 36,410   
|                   |             |  |          |   |         |                                       |         |                               |          
|Preston Chiaro     | 22 Apr 04   |  | 1,276    | p | 46,995  |                                       |        |                               | 30,547   
|                   | 09 Mar 05   |  | 1,839    | p | 42,351  |                                       |        |                               |         
|                   | 07 Mar-06   |  | 2,630    | p | 34,182  |                                       |        |                               |         
|                   | 13 Mar 07   |  | 2,681    | p |        |                                       | 25,679  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 123,528 |                                       | 25,679  |                               | 30,547   
|                   |             |  |          |   |         |                                       |         |                               |          
|Bret Clayton       | 22 Apr 04   |  | 1,276    | p | 13,315  |                                       |        |                               | 6,658    
|                   | 09 Mar 05   |  | 1,839    | p | 11,539  |                                       |        |                               |         
|                   | 07 Mar 06   |  | 2,630    | p | 10,767  |                                       |        |                               |         
|                   | 13 Mar 07   |  | 2,681    | p |        |                                       | 22,566  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 35,621  |                                       | 22,566  |                               | 6,658    
|                   |             |  |          |   |         |                                       |         |                               |          
|Guy Elliott        | 22 Apr 04   |  | 1,276    | p | 51,550  |                                       |        |                               | 33,508   
|                   | 09 Mar 05   |  | 1,839    | p | 51,081  |                                       |        |                               |         
|                   | 07 Mar 06   |  | 2,630    | p | 40,670  |                                       |        |                               |         
|                   | 13 Mar 07   |  | 2,681    | p |        |                                       | 30,837  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 143,301 |                                       | 30,837  |                               | 33,508   
|                   |             |  |          |   |         |                                       |         |                               |          
|Keith Johnson      | 22 Apr 04   |  | 1,276    | p | 30,387  |                                       |        |                               | 19,752   
|                   | 09 Mar 05   |  | 1,839    | p | 33,556  |                                       |        |                               |         
|                   | 07 Mar 06   |  | 2,630    | p | 26,508  |                                       |        |                               |         
|                   | 13 Mar 07   |  | 2,681    | p |        |                                       | 19,805  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 90,451  |                                       | 19,805  |                               | 19,752   
|                   |             |  |          |   |         |                                       |         |                               |          
|Andrew Mackenzie   | 22 Apr 04   |  | 1,276    | p | 16,270  |                                       |        |                               | 10,576   
|                   | 09 Mar 05   |  | 1,839    | p | 37,638  |                                       |        |                               |         
|                   | 07 Mar 06   |  | 2,630    | p | 29,413  |                                       |        |                               |         
|                   | 13 Mar 07   |  | 2,681    | p |        |                                       | 21,811  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 83,321  |                                       | 21,811  |                               | 10,576   
|                   |             |  |          |   |         |                                       |         |                               |          
|Rio Tinto 
Limited |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   |         |                                       |         |                               |          
|Leigh Clifford6    | 22 Apr 04   |  | A$ 33.17 |   | 119,581 |                                       |        |                               |         
|                   | 09 Mar 05   |  | A$ 47.39 |   | 113,324 |                                       |        |                               |         
|                   | 07 Mar 06   |  | A$ 69.30 |   | 84,661  |                                       |        |                               |         
|                   | 13 Mar 07   |  | A$134.00 |   |        |                                       | 61,550  |                               | 15,513   
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 317,566 |                                       | 61,550  |                               | 15,513   
|                   |             |  |          |   |         |                                       |         |                               |          
|Oscar Groeneveld   | 22 Apr 04   |  | A$ 33.17 |   | 43,785  |                                       |        |                               | 28,461   
|                   | 09 Mar 05   |  | A$ 47.39 |   | 45,024  |                                       |        |                               |         
|                   | 07 Mar 06   |  | A$ 69.60 |   | 36,460  |                                       |        |                               |         
|                   | 13 Mar 07   |  | A134.00  |   |        |                                       | 26,590  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 125,269 |                                       | 26,590  |                               | 28,461   
|                   |             |  |          |   |         |                                       |         |                               |          
|Sam Walsh          | 22 Apr 04   |  | A$ 33.17 |   | 38,023  |                                       |        |                               | 24,715   
|                   | 09 Mar 05   |  | A$ 47.39 |   | 41,176  |                                       |        |                               |         
|                   | 07 Mar 06   |  | A$ 69.60 |   | 33,655  |                                       |        |                               |         
|                   | 13 Mar 07   |  | A$134.00 |   |        |                                       | 25,103  |                               |         
|                   |             |  |          |   |         |                                       |         |                               |          
|                   |             |  |          |   | 112,854 |                                       | 25,103  |                               | 24,715   
|                   |             |  |          |   |         |                                       |         |                               |          



|Rio Tinto 2007 Form 20-F | 139
|------------------------ | ---

---



Back to Contents

Table 4  Executives awards
        under long term incentive
plans (continued)

|               | Mining Companies
    Comparative Plan |  | Plan terms and
    conditions |  
|-------------- | ------------------------------------- |  | ----------------------------- | -
|               |                                       |  |                               |  
|               | Conditional                           |  | Market                        |  
|               | award                                 |  | price at                      |  
|               | granted                               |  | award2                        |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|Rio Tinto plc  |                                       |  |                               |  
|Tom Albanese   | 09 Mar 05                             |  | 1,839                         | p
|               | 07 Mar 06                             |  | 2,630                         | p
|               | 13 Mar 07                             |  | 2,681                         | p
|               | 10 Mar 08                             |  | 5,255                         | p
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|Preston Chiaro | 09 Mar 05                             |  | 1,839                         | p
|               | 07 Mar-06                             |  | 2,630                         | p
|               | 13 Mar 07                             |  | 2,681                         | p
|               | 10 Mar 08                             |  | 5,255                         | p
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|Bret Clayton   | 09 Mar 05                             |  | 1,839                         | p
|               | 07 Mar 06                             |  | 2,630                         | p
|               | 13 Mar 07                             |  | 2,681                         | p
|               | 10 Mar 08                             |  | 5,255                         | p
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|Guy Elliott    | 09 Mar 05                             |  | 1,839                         | p
|               | 07 Mar 06                             |  | 2,630                         | p
|               | 13 Mar 07                             |  | 2,681                         | p
|               | 10 Mar 08                             |  | 5,255                         | p
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|Dick Evans     | 10 Mar 08                             |  | 5,255                         | p
|               |                                       |  |                               |  
|Keith Johnson  | 09 Mar 05                             |  | 1,839                         | p
|               | 07 Mar 06                             |  | 2,630                         | p
|               | 13 Mar 07                             |  | 2,681                         | p
|               | 10 Mar 08                             |  | 5,255                         | p
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|Rio Tinto      |                                       |  |                               |  
|Limited        |                                       |  |                               |  
|Sam Walsh      | 09 Mar 05                             |  | A$ 47.39                      |  
|               | 07 Mar 06                             |  | A$ 69.60                      |  
|               | 13 Mar 07                             |  | A$134.00                      |  
|               | 10 Mar 08                             |  | A$126.48                      |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  
|               |                                       |  |                               |  

|Notes to Table 4
|----------------
|1.              
|2.              
|3.              
|4.              
|5.              
|6.              



|Rio Tinto 2007 Form 20-F | 140
|------------------------ | ---

---



Back
      to Contents

Table 5  Directors and executives options to acquire Rio
Tinto plc and Rio Tinto Limited shares

|                                 |         |  |         |  |        |  |           |  |             |  | Vested      |  |         |  |          |  |           |  |          |  |             |  |        | 
|-------------------------------- | ------- |  | ------- |  | ------ |  | --------- |  | ----------- |  | ----------- |  | ------- |  | -------- |  | --------- |  | -------- |  | ----------- |  | ------ | 
|                                 |         |  |         |  |        |  |           |  |             |  | and         |  |         |  |          |  | Value of  |  |          |  |             |  |        | 
|                                 |         |  |         |  |        |  |           |  |             |  | exercisable |  |         |  |          |  | options   |  | Market   |  |             |  |        | 
|                                 |         |  |         |  | Vested |  |           |  |             |  | on          |  |         |  |          |  | exercised |  | price on |  | Date from   |  |        | 
|                                 | 1 Jan   |  |         |  | during |  |           |  | Lapsed/     |  | 31 Dec      |  | 31 Dec  |  | Option   |  | during    |  | date of  |  | which first |  | Expiry | 
|                                 | 2007    |  | Granted |  | 2007   |  | Exercised |  | Cancelled10 |  | 2007        |  | 2007    |  | price    |  | 20079     |  | exercise |  | exercisable |  | date   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Rio Tinto plc Share Savings Plan |        
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Tom                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 30 Jun | 
|Albanese                         | 791     |  |        |  |       |  |          |  |            |  |            |  | 791     |  | 2,068p   |  |          |  |         |  | 2012        |  | 2012   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Preston                          |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 5 Jan  | 
|Chiaro                           | 490     |  |        |  | 490    |  | 490       |  |            |  |            |  |        |  | 1,277p   |  | £6,017    |  | 2,505p   |  | 2007        |  | 2007   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 6 Jan  | 
|                                 | 298     |  |        |  |       |  |          |  |            |  |            |  | 298     |  | 2,088p   |  |          |  |         |  | 2009        |  | 2009   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Bret                             |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 5 Jan  | 
|Clayton                          |        |  | 163     |  |       |  |          |  |            |  |            |  | 163     |  | 3,557p   |  |          |  |         |  | 2010        |  | 2010   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Guy                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 30 Jun | 
|Elliott                          | 1,431   |  |        |  |       |  |          |  |            |  |            |  | 1,431   |  | 1,107p   |  |          |  |         |  | 2009        |  | 2009   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Keith                            |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 30 Jun | 
|Johnson                          | 456     |  |        |  |       |  |          |  |            |  |            |  | 456     |  | 2,068p   |  |          |  |         |  | 2010        |  | 2010   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Andrew                           |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 1 Jan       |  | 30 Jun | 
|Mackenzie                        | 1,021   |  |        |  |       |  |          |  |            |  |            |  | 1,021   |  | 1,576p   |  |          |  |         |  | 2011        |  | 2011   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Rio Tinto plc Share Option Plan  |        
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Tom                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 6 Mar       |  | 6 Mar  | 
|Albanese                         | 102,718 |  |        |  |       |  |          |  |            |  | 102,718     |  | 102,718 |  | 1,265.6p |  |          |  |         |  | 2005        |  | 2011   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 13 Mar      |  | 13 Mar | 
|                                 | 125,336 |  |        |  |       |  |          |  |            |  | 125,336     |  | 125,336 |  | 1,458.6p |  |          |  |         |  | 2005        |  | 2012   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|                                 | 139,165 |  |        |  |       |  |          |  |            |  | 139,165     |  | 139,165 |  | 1,263.0p |  |          |  |         |  | 2006        |  | 2013   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 22 Apr      |  | 22 Apr | 
|                                 | 84,020  |  |        |  |       |  |          |  |            |  |            |  | 84,020  |  | 1,329.0p |  |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 9 Mar       |  | 9 Mar  | 
|                                 | 83,926  |  |        |  |       |  |          |  |            |  |            |  | 83,926  |  | 1,826.2p |  |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|                                 | 67,511  |  |        |  |       |  |          |  |            |  |            |  | 67,511  |  | 2,711.2p |  |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 13 Mar      |  | 13 Mar | 
|                                 |        |  | 66,186  |  |       |  |          |  |            |  |            |  | 66,186  |  | 2,701.2p |  |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Preston                          |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|Chiaro                           | 37,160  |  |        |  |       |  |          |  |            |  | 37,160      |  | 37,160  |  | 1,263.0p |  |          |  |         |  | 2006        |  | 2013   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 22 Apr      |  | 22 Apr | 
|                                 | 70,490  |  |        |  |       |  |          |  |            |  |            |  | 70,490  |  | 1,329.0p |  |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 9 Mar       |  | 9 Mar  | 
|                                 | 63,527  |  |        |  |       |  |          |  |            |  |            |  | 63,527  |  | 1,826.2p |  |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|                                 | 51,274  |  |        |  |       |  |          |  |            |  |            |  | 51,274  |  | 2,711.2p |  |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 13 Mar      |  | 13 Mar | 
|                                 |        |  | 38,519  |  |       |  |          |  |            |  |            |  | 38,519  |  | 2,701.2p |  |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Bret                             |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 22 Apr      |  | 22 Apr | 
|Clayton                          | 13,315  |  |        |  |       |  |          |  |            |  |            |  | 13,315  |  | 1,329.0p |  |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 9 Mar       |  | 9 Mar  | 
|                                 | 11,539  |  |        |  |       |  |          |  |            |  |            |  | 11,539  |  | 1,826.2p |  |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|                                 | 10,767  |  |        |  |       |  |          |  |            |  |            |  | 10,767  |  | 2,711.2p |  |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 13 Mar      |  | 13 Mar | 
|                                 |        |  | 33,850  |  |       |  |          |  |            |  |            |  | 33,850  |  | 2,701.2p |  |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 
|Guy                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 13 Mar      |  | 13 Mar | 
|Elliott                          | 61,703  |  |        |  |       |  |          |  |            |  | 61,703      |  | 61,703  |  | 1,458.6p |  |          |  |         |  | 2005        |  | 2012   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|                                 | 97,387  |  |        |  |       |  |          |  |            |  | 97,387      |  | 97,387  |  | 1,263.0p |  |          |  |         |  | 2006        |  | 2013   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 22 Apr      |  | 22 Apr | 
|                                 | 73,700  |  |        |  |       |  |          |  |            |  |            |  | 73,700  |  | 1,329.0p |  |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 9 Mar       |  | 9 Mar  | 
|                                 | 72,972  |  |        |  |       |  |          |  |            |  |            |  | 72,972  |  | 1,826.2p |  |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 7 Mar       |  | 7 Mar  | 
|                                 | 58,100  |  |        |  |       |  |          |  |            |  |            |  | 58,100  |  | 2,711.2p |  |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  | 13 Mar      |  | 13 Mar | 
|                                 |        |  | 44,052  |  |       |  |          |  |            |  |            |  | 44,052  |  | 2,701.2p |  |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |          |  |           |  |          |  |             |  |        | 



|Rio Tinto 2007 Form 20-F | 141
|------------------------ | ---

---



Back to Contents

Table 5  Directors and executives options to acquire Rio
Tinto plc and Rio Tinto Limited shares (continued)

|                                     |         |  |         |  |        |  |           |  |             |  | Vested      |  |         |  |         |   |           |  |          |  |             |  |        | 
|------------------------------------ | ------- |  | ------- |  | ------ |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------- | - | --------- |  | -------- |  | ----------- |  | ------ | 
|                                     |         |  |         |  |        |  |           |  |             |  | and         |  |         |  |         |   | Value of  |  |          |  |             |  |        | 
|                                     |         |  |         |  |        |  |           |  |             |  | exercisable |  |         |  |         |   | options   |  | Market   |  |             |  |        | 
|                                     |         |  |         |  | Vested |  |           |  |             |  | on          |  |         |  |         |   | exercised |  | price on |  | Date from   |  |        | 
|                                     | 1 Jan   |  |         |  | during |  |           |  | Lapsed/     |  | 31	Dec      |  | 31Dec   |  | Option  |   | during    |  | date of  |  | which first |  | Expiry | 
|                                     | 2007    |  | Granted |  | 2007   |  | Exercised |  | Cancelled10 |  | 2007        |  | 2007    |  | price   |   | 20079     |  | exercise |  | exercisable |  | date   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Rio Tinto plc Share Option Plan      |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |            
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Keith                                |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|Johnson                              | 43,500  |  |        |  |       |  |          |  |            |  |            |  | 43,500  |  | 1,329.0 | p |          |  |         |  | 2009        |  | 2014   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                     | 47,937  |  |        |  |       |  |          |  |            |  |            |  | 47,937  |  | 1,826.2 | p |          |  |         |  | 2008        |  | 2015   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                     | 37,869  |  |        |  |       |  |          |  |            |  |            |  | 37,869  |  | 2,711.2 | p |          |  |         |  | 2009        |  | 2016   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     |        |  | 28,294  |  |       |  |          |  |            |  |            |  | 28,294  |  | 2,701.2 | p |          |  |         |  | 2010        |  | 2017   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Andrew                               |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|Mackenzie8                           | 53,769  |  |        |  |       |  |          |  |            |  |            |  | 53,769  |  | 1,826.2 | p |          |  |         |  | 2008        |  | 2015   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                     | 42,019  |  |        |  |       |  |          |  |            |  |            |  | 42,019  |  | 2,711.2 | p |          |  |         |  | 2009        |  | 2016   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     |        |  | 31,159  |  |       |  |          |  |            |  |            |  | 31,159  |  | 2,701.2 | p |           |  |          |  | 2010        |  | 2017   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Rio Tinto Limited Share Savings Plan |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |         
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Leigh                                |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 30	Sep      |  | 31	Mar | 
|Clifford                             | 1,486   |  |        |  | 842    |  |          |  | 644         |  | 842         |  | 842     |  | 29.04   |   |          |  |         |  | 2007        |  | 2008   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Oscar                                |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 1	Jan       |  | 30	Jun | 
|Groeneveld                           | 1,431   |  |        |  |       |  |          |  |            |  |            |  | 1,431   |  | 27.48   |   |          |  |         |  | 2009        |  | 2009   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Sam                                  |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 1	Jan       |  | 30	Jun | 
|Walsh                                | 601     |  |        |  |       |  |          |  |            |  |            |  | 601     |  | 40.92   |   |          |  |         |  | 2009        |  | 2009   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Rio Tinto Limited Share Option Plan  |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |         
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Leigh                                |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   | A$        |  | A4       |  | 28	May      |  | 28	May | 
|Clifford9                            | 52,683  |  |        |  |       |  | 52,683    |  |            |  |            |  |        |  | 23.4382 |   | 4,145,720 |  | 102.13   |  | 2002        |  | 2009   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   | A$        |  | A$       |  | 7	Mar       |  | 7	Mar  | 
|                                     | 59,318  |  |        |  |       |  | 59,318    |  |            |  |            |  |        |  | 24.0690 |   | 4,630,422 |  | 102.13   |  | 2003        |  | 2010   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   | A$        |  | A$       |  | 7	Mar       |  | 7	Mar  | 
|                                     | 29,660  |  |        |  |       |  | 29,660    |  |            |  |            |  |        |  | 24.0690 |   | 2,409,940 |  | 105.32   |  | 2005        |  | 2010   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 6	Mar       |  | 6	Mar  | 
|                                     | 241,430 |  |        |  |       |  |          |  |            |  | 241,430     |  | 241,430 |  | 33.1060 |   |          |  |         |  | 2005        |  | 2011   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     | 208,882 |  |        |  |       |  |          |  |            |  | 208,882     |  | 208,882 |  | 39.8708 |   |          |  |         |  | 2005        |  | 2012   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 7	Mar       |  | 30	Sep | 
|                                     | 254,132 |  |        |  |       |  |          |  |            |  | 254,132     |  | 254,132 |  | 33.3360 |   |          |  |         |  | 2006        |  | 2012   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 22	Apr      |  | 30	Sep | 
|                                     | 179,370 |  |        |  |       |  |          |  |            |  |            |  | 179,370 |  | 34.4060 |   |          |  |         |  | 2009        |  | 2012   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 9	Mar       |  | 30	Sep | 
|                                     | 169,987 |  |        |  |       |  |          |  |            |  |            |  | 169,987 |  | 47.0420 |   |          |  |         |  | 2008        |  | 2012   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 7	Mar       |  | 30	Sep | 
|                                     | 126,992 |  |        |  |       |  |          |  |            |  |            |  | 126,992 |  | 71.0600 |   |          |  |         |  | 2009        |  | 2012   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 13	Mar      |  | 30	Sep | 
|                                     |        |  | 92,325  |  |       |  |          |  | 41,230      |  |            |  | 51,095  |  | 74.5880 |   |          |  |         |  | 2010        |  | 2012   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Oscar                                |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   | A$        |  | A$       |  |             |  | 7	Mar  | 
|Groeneveld                           | 90,080  |  |        |  |       |  | 90,080    |  |            |  |            |  |        |  | 33.3360 |   | 5,466,271 |  | 94.02    |  |             |  | 2013   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|                                     | 62,600  |  |        |  |       |  |          |  |            |  |            |  | 62,600  |  | 34.4060 |   |          |  |         |  | 2009        |  | 2014   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                     | 64,321  |  |        |  |       |  |          |  |            |  |            |  | 64,321  |  | 47.0420 |   |          |  |         |  | 2008        |  | 2015   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                     | 52,086  |  |        |  |       |  |          |  |            |  |            |  | 52,086  |  | 71.0600 |   |          |  |         |  | 2009        |  | 2016   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     |        |  | 37,987  |  |       |  |          |  |            |  |            |  | 37,987  |  | 74.5880 |   |          |  |         |  | 2010        |  | 2017   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Sam                                  |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|Walsh                                | 54,400  |  |        |  |       |  |          |  |            |  |            |  | 54,400  |  | 34.4060 |   |          |  |         |  | 2009        |  | 2014   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                     | 58,823  |  |        |  |       |  |          |  |            |  |            |  | 58,823  |  | 47.0420 |   |          |  |         |  | 2008        |  | 2015   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                     | 48,079  |  |        |  |       |  |          |  |            |  |            |  | 48,079  |  | 71.0600 |   |          |  |         |  | 2009        |  | 2016   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  | A$      |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     |        |  | 35,861  |  |       |  |          |  |            |  |            |  | 35,861  |  | 74.5880 |   |          |  |         |  | 2010        |  | 2017   | 
|                                     |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 



|Rio Tinto 2007 Form 20-F | 142
|------------------------ | ---

---



Back to Contents

Table 5  Directors and executives options to acquire Rio
Tinto plc and Rio Tinto Limited shares (continued)

|                                 |         |  |         |  |        |  |           |  |             |  | Vested      |  |         |  |         |   |           |  |          |  |             |  |        | 
|-------------------------------- | ------- |  | ------- |  | ------ |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------- | - | --------- |  | -------- |  | ----------- |  | ------ | 
|                                 |         |  |         |  |        |  |           |  |             |  | and         |  |         |  |         |   | Value of  |  |          |  |             |  |        | 
|                                 |         |  |         |  |        |  |           |  |             |  | exercisable |  |         |  |         |   | options   |  | Market   |  |             |  |        | 
|                                 |         |  |         |  | Vested |  |           |  |             |  | on          |  |         |  |         |   | exercised |  | price on |  | Date from   |  |        | 
|                                 | 1 Jan   |  |         |  | during |  |           |  | Lapsed/     |  | 20 Mar      |  | 20Mar   |  | Option  |   | during    |  | date of  |  | which first |  | Expiry | 
|                                 | 2008    |  | Granted |  | 2008   |  | Exercised |  | Cancelled10 |  | 2008        |  | 2008    |  | price   |   | 20089     |  | exercise |  | exercisable |  | date   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Rio Tinto plc Share Savings Plan |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |            
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Tom                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 1	Jan       |  | 30	Jun | 
|Albanese                         | 791     |  |        |  |       |  |          |  |            |  |            |  | 791     |  | 2,068   | p |          |  |         |  | 2012        |  | 2012   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Preston                          |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 1	Jan       |  | 6	Jan  | 
|Chiaro                           | 298     |  |        |  |       |  |          |  |            |  |            |  | 298     |  | 2,088   | p |          |  |         |  | 2009        |  | 2009   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Bret                             |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 1	Jan       |  | 5	Jan  | 
|Clayton                          | 163     |  |        |  |       |  |          |  |            |  |            |  | 163     |  | 3,557   | p |          |  |         |  | 2010        |  | 2010   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Guy                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 1	Jan       |  | 30	Jun | 
|Elliott                          | 1,431   |  |        |  |       |  |          |  |            |  |            |  | 1,431   |  | 1,107   | p |          |  |         |  | 2009        |  | 2009   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Keith                            |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 1	Jan       |  | 30	Jun | 
|Johnson                          | 456     |  |        |  |       |  |          |  |            |  |            |  | 456     |  | 2,068   | p |          |  |         |  | 2010        |  | 2010   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Rio Tinto plc Share Option Plan  |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |            
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Tom                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 6	Mar       |  | 6	Mar  | 
|Albanese                         | 102,718 |  |        |  |       |  |          |  |            |  | 102,718     |  | 102,718 |  | 1,265.6 | p |          |  |         |  | 2005        |  | 2011   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                 | 125,336 |  |        |  |       |  |          |  |            |  | 125,336     |  | 125,336 |  | 1,458.6 | p |          |  |         |  | 2005        |  | 2012   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                 | 139,165 |  |        |  |       |  |          |  |            |  | 139,165     |  | 139,165 |  | 1,263.0 | p |          |  |         |  | 2006        |  | 2013   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|                                 | 84,020  |  |        |  |       |  |          |  |            |  |            |  | 84,020  |  | 1,329.0 | p |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                 | 83,926  |  |        |  | 83,926 |  |          |  |            |  | 89,926      |  | 83,926  |  | 1,826.2 | p |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                 | 67,511  |  |        |  |       |  |          |  |            |  |            |  | 67,511  |  | 2,711.2 | p |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                 | 66,186  |  |        |  |       |  |          |  |            |  |            |  | 66,186  |  | 2,701.2 | p |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|                                 |        |  | 73,561  |  |       |  |          |  |            |  |            |  | 73,561  |  | 5,723.2 | p |          |  |         |  | 2011        |  | 2018   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Preston                          |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|Chiaro                           | 37,160  |  |        |  |       |  |          |  |            |  | 37,160      |  | 37,160  |  | 1,263.0 | p |          |  |         |  | 2006        |  | 2013   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|                                 | 70,490  |  |        |  |       |  |          |  |            |  |            |  | 70,490  |  | 1,329.0 | p |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                 | 63,527  |  |        |  | 63,527 |  |          |  |            |  | 63,527      |  | 63,527  |  | 1,826.2 | p |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                 | 51,274  |  |        |  |       |  |          |  |            |  |            |  | 51,274  |  | 2,711.2 | p |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                 | 38,519  |  |        |  |       |  |          |  |            |  |            |  | 38,519  |  | 2,701.2 | p |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|                                 |        |  | 29,354  |  |       |  |          |  |            |  |            |  | 29,354  |  | 5,723.2 | p |          |  |         |  | 2011        |  | 2018   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Bret                             |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|Clayton                          | 13,315  |  |        |  |       |  |          |  |            |  |            |  | 13,315  |  | 1,329.0 | p |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                 | 11,539  |  |        |  | 11,539 |  |          |  |            |  | 11,539      |  | 11,539  |  | 1,826.2 | p |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                 | 10,767  |  |        |  |       |  |          |  |            |  |            |  | 10,767  |  | 2,711.2 | p |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                 | 33,850  |  |        |  |       |  |          |  |            |  |            |  | 33,850  |  | 2,701.2 | p |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|                                 |        |  | 28,342  |  |       |  |          |  |            |  |            |  | 28,342  |  | 5,723.2 | p |          |  |         |  | 2011        |  | 2018   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 
|Guy                              |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|Elliott                          | 61,703  |  |        |  |       |  |          |  |            |  | 61,703      |  | 61,703  |  | 1,458.6 | p |          |  |         |  | 2005        |  | 2012   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                 | 97,387  |  |        |  |       |  |          |  |            |  | 97,387      |  | 97,387  |  | 1,263.0 | p |          |  |         |  | 2006        |  | 2013   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|                                 | 73,700  |  |        |  |       |  |          |  |            |  |            |  | 73,700  |  | 1,329.0 | p |          |  |         |  | 2009        |  | 2014   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                 | 72,972  |  |        |  | 72,972 |  |          |  |            |  | 72,972      |  | 72,972  |  | 1,826.2 | p |          |  |         |  | 2008        |  | 2015   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                 | 58,100  |  |        |  |       |  |          |  |            |  |            |  | 58,100  |  | 2,711.2 | p |          |  |         |  | 2009        |  | 2016   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                 | 44,052  |  |        |  |       |  |          |  |            |  |            |  | 44,052  |  | 2,701.2 | p |          |  |         |  | 2010        |  | 2017   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|                                 |        |  | 36,503  |  |       |  |          |  |            |  |            |  | 36,503  |  | 5,723.2 | p |          |  |         |  | 2011        |  | 2018   | 
|                                 |         |  |         |  |        |  |           |  |             |  |             |  |         |  |         |   |           |  |          |  |             |  |        | 



|Rio Tinto 2007 Form 20-F | 143
|------------------------ | ---

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Table 5  Directors and executives options to acquire Rio
Tinto plc and Rio Tinto Limited shares (continued)

|                                     |        |  |         |  |        |  |           |  |             |  | Vested      |  |        |  |          |   |           |  |          |  |             |  |        | 
|------------------------------------ | ------ |  | ------- |  | ------ |  | --------- |  | ----------- |  | ----------- |  | ------ |  | -------- | - | --------- |  | -------- |  | ----------- |  | ------ | 
|                                     |        |  |         |  |        |  |           |  |             |  | and         |  |        |  |          |   | Value of  |  |          |  |             |  |        | 
|                                     |        |  |         |  |        |  |           |  |             |  | exercisable |  |        |  |          |   | options   |  | Market   |  |             |  |        | 
|                                     |        |  |         |  | Vested |  |           |  |             |  | on          |  |        |  |          |   | exercised |  | price on |  | Date from   |  |        | 
|                                     | 1 Jan  |  |         |  | during |  |           |  | Lapsed/     |  | 20 Mar      |  | 20Mar  |  | Option   |   | during    |  | date of  |  | which first |  | Expiry | 
|                                     | 2008   |  | Granted |  | 2008   |  | Exercised |  | Cancelled10 |  | 2008        |  | 2008   |  | price    |   | 20089     |  | exercise |  | exercisable |  | date   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Rio Tinto plc Share Option Plan      |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |            
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Dick                                 |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|Evans                                |       |  | 60,733  |  |       |  |          |  |            |  |            |  | 60,733 |  | 5,723.2  | p |          |  |         |  | 2011        |  | 2018   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Keith                                |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|Johnson                              | 43,500 |  |        |  |       |  |          |  |            |  |            |  | 43,500 |  | 1,329.0  | p |          |  |         |  | 2009        |  | 2014   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                     | 47,937 |  |        |  | 47,937 |  |          |  |            |  | 47,937      |  | 47,937 |  | 1,826.2  | p |          |  |         |  | 2008        |  | 2015   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                     | 37,869 |  |        |  |       |  |          |  |            |  |            |  | 37,869 |  | 2,711.2  | p |          |  |         |  | 2009        |  | 2016   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     | 28,294 |  |        |  |       |  |          |  |            |  |            |  | 28,294 |  | 2,701.2  | p |          |  |         |  | 2010        |  | 2017   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|                                     |       |  | 22,696  |  |       |  |          |  |            |  |            |  | 22,696 |  | 5,723.2  | p |          |  |         |  | 2011        |  | 2018   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Rio Tinto Limited Share Savings Plan |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |         
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Sam                                  |        |  |         |  |        |  |           |  |             |  |             |  |        |  | A$       |   |           |  |          |  | 1	Jan       |  | 30	Jun | 
|Walsh                                | 601    |  |        |  |       |  |          |  |            |  |            |  | 601    |  | 40.92    |   |          |  |         |  | 2009        |  | 2009   | 
|                                     |       |  |        |  |       |  |          |  |            |  |            |  |       |  |         |   |          |  |         |  |            |  |       | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Rio Tinto Limited Share Option Plan  |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |         
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|Sam                                  |        |  |         |  |        |  |           |  |             |  |             |  |        |  | A$       |   |           |  |          |  | 22	Apr      |  | 22	Apr | 
|Walsh                                | 54,400 |  |        |  |       |  |          |  |            |  |            |  | 54,400 |  | 34.4060  |   |          |  |         |  | 2009        |  | 2014   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  | A$       |   |           |  |          |  | 9	Mar       |  | 9	Mar  | 
|                                     | 58,823 |  |        |  | 58,823 |  |          |  |            |  | 58,823      |  | 58,823 |  | 47.0420  |   |          |  |         |  | 2008        |  | 2015   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  | A$       |   |           |  |          |  | 7	Mar       |  | 7	Mar  | 
|                                     | 48,079 |  |        |  |       |  |          |  |            |  |            |  | 48,079 |  | 71.0600  |   |          |  |         |  | 2009        |  | 2016   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  | A$       |   |           |  |          |  | 13	Mar      |  | 13	Mar | 
|                                     | 35,861 |  |        |  |       |  |          |  |            |  |            |  | 35,861 |  | 74.5880  |   |          |  |         |  | 2010        |  | 2017   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  | A$       |   |           |  |          |  | 10	Mar      |  | 10	Mar | 
|                                     |       |  | 30,523  |  |       |  |          |  |            |  |            |  | 73,561 |  | 134.1760 |   |          |  |         |  | 2011        |  | 2018   | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 
|                                     |        |  |         |  |        |  |           |  |             |  |             |  |        |  |          |   |           |  |          |  |             |  |        | 

|Notes to Table 5
|----------------
|1.              
|2.              
|3.              
|4.              
|5.              
|6.              
|7.              
|8.              
|9.              
|10.             



|Rio Tinto 2007 Form 20-F | 144
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Corporate governance

The directors of Rio Tinto believe that high standards of corporate governance
  are essential to its objective to maximise the overall long term return to
  shareholders through a strategy of investing in large, cost competitive mines
  and businesses. The following describes how this belief 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 on Corporate Governance, published
by the UK Financial Reporting Council (the Code), the Australian Securities Exchange
(ASX) Corporate Governance Principles and Recommendations (the ASX Principles),
and the New York Stock Exchange (NYSE) Corporate Governance Standards (the NYSE
Standards), as well as the Sarbanes-Oxley Act of 2002. See Controls and procedures
on page 169 and other compliance statements on page 150.

Communication     Rio Tinto recognises the
importance of effective communication with shareholders and the wider investment
community.     To ensure that trading in its
securities takes place in an informed market the Group has adopted Continuous
disclosure standardswhich are appended to the Corporate governance
standardsand posted on its website. All information released to the markets
is posted on the website immediately.     In addition to statutory documents,
the website features in-depth information on health, safety and the environment,
as well as general investor information, publications and Group policies. Full
and half year results as well as any major presentations are also webcast. Presentation
material from investor seminars
is also made available on 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 Principles, Rio Tinto Limiteds external auditor attends the annual
general meeting and is available to answer shareholder questions about the conduct
of the audit and the preparation and content of the auditors report. Rio
Tinto Limited shareholders are also able to submit written questions regarding
the statutory audit report to the auditors via the Company. Any questions received
and answers provided are made available to the members at the Rio Tinto Limited
annual general meeting. Rio Tinto plcs auditors attend the annual general
meeting in London and are available to respond to audit related
shareholder questions.     The main channels of communication
with the investment community are through the chairman, chief executive and finance
director, who have regular meetings with the Companies major shareholders.
The senior independent director and other non executive directors are also available
as appropriate.     The Group 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.

The BoardThe 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 this report,
they
are described as the board.     The board currently consists
of 15 directors: the chairman, three executive directors and eleven 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 skills, experience and expertise of each director together with their terms
in office are shown in the biographical details on pages 114 to 118.

The role and responsibilities of the boardThe role of the board is to provide the
Group with good governance and strategic direction. The board also reviews the
Groups control and accountability framework. The directors have agreed
a formal schedule of matters specifically reserved for decision or consideration
by the board, including strategy, major investments and acquisitions. This is
available in the Governance section of the Rio Tintos website at
www.riotinto.com.     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 2007, had eight scheduled and 11 meetings at
short notice. Details of directors attendance at board and committee meetings
is set out on page 147.     The board has regular scheduled
discussions on aspects of the Groups strategy, as well as two separate
strategy review meetings, one half day and one two day meeting, which are dedicated
to in-depth
discussions on Group strategy.     Directors receive timely, regular
and necessary management and other information to enable them to fulfil their
duties and to have access to the advice and services of both company secretaries.
The board has agreed a procedure for directors to obtain independent professional
advice at the Groups expense.In addition
to these formal processes, directors are in regular communication with senior
executives from the



|Rio Tinto 2007 Form 20-F | 145
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product and global support groups, at both 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 make site visits to the Groups operations and to
  meet local staff. The full board also takes the opportunity to combine attendance
  at the annual general meeting in Australia and at the two day strategy review
  meeting with site visits.The chairman
holds regular meetings with non executive directors without the executive directors
being present.

Board performanceThe board completes a formal annual process,
facilitated by external consultants, to evaluate its effectiveness and that of
the board committees and individual directors.Each
directors performance is appraised by the chairman and, in a meeting chaired by the senior independent non executive director, the non executive
          directors assess the chairmans performance, taking into consideration
the views of executive colleagues.The evaluation process aims to cover board dynamics, board capability, board process, board structure, corporate governance, strategic clarity and alignment
and the performance of individual directors. The directors believe that, through this evaluation process, they comply with the requirements of Clause A.6 of the Code, Principle 2 of the ASX Principles, and the NYSE Standards.

IndependenceThe tests of director independence in
the jurisdictions where Rio Tinto has listings are not wholly consistent. The
board has, therefore, adopted a formal policy for the determination of the independence
of directors. This policy, which contains the materiality thresholds approved
by the board, has been posted on the website. Among the key criteria are independence
of management and 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 the Group and the other party to the contract. Applying
these criteria, the board is satisfied that the majority of the non executive
directors: Sir David Clementi, Vivienne Cox, Sir Rod Eddington, Michael Fitzpatrick,
Yves Fortier, Richard Goodmanson, Andrew Gould, Lord Kerr, Sir Richard Sykes
and Paul Tellier are independent.The board is also satisfied that the strength and objectivity of Sir Richard Sykes contribution to the board, as a non executive director since 1997, is
          fully consistent with that of an independent director and so continues to regard him as independent. He was re-elected at the 2007 annual general meetings, to support the board during a period of executive transition, and will retire at the
conclusion of the 2008 annual general meetings. Sir Richard will be replaced by Andrew Gould as the senior independent director and chair of the Remuneration committee.David
Mayhew, who is chairman of one of Rio Tinto plcs stockbrokers, is not
considered independent in accordance with the Code.Paul Skinner was, until his appointment as chairman in 2003, an independent non executive director in compliance with the Code. He also satisfies the tests
for independence under the ASX Principles and the NYSE Standards.The
directors biographies are set out on pages 114 to
118.

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

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

Executive directors other directorshipsExecutive directors are likely to be invited
to become non executive directors of other companies. For full details of the
Group policy and fees, see page 131.

Board committeesThere are four board committees, the Audit
committee, Remuneration committee, Nominations committee and the Committee on
social and environmental accountability. Each committee plays a vital role in
ensuring that high standards of corporate governance are maintained throughout
the Group. Committee terms of reference are reviewed annually by the board and
the committees 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. None
of the executive directors are members of any of these committees.



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The reports of the Audit and Nominations
    committees are on pages 151 to 152 and the report of the Remuneration committee
is on pages 120 to 133.

|Committee membership |                     |  |                     |  |                   | 
|-------------------- | ------------------- |  | ------------------- |  | ----------------- | 
|                     | Audit               |  | Remuneration        |  | Nominations       | 
|                     | committee           |  | committee           |  | committee         | 
|                     |                     |  |                     |  |                   | 
|Chairmen             | Andrew Gould        |  | Sir Richard Sykes   |  | Paul Skinner      | 
|                     |                     |  |                     |  |                   | 
|Members              | Sir David Clementi  |  | Sir David Clementi  |  | Sir Rod Eddington | 
|                     | Vivienne Cox        |  | Michael Fitzpatrick |  | Yves Fortier      | 
|                     | Michael Fitzpatrick |  | Richard Goodmanson  |  | David Mayhew      | 
|                     | Lord Kerr           |  | Andrew Gould        |  | Sir Richard Sykes | 
|                     | Paul Tellier        |  | Paul Tellier        |  |                   | 
|                     |                     |  |                     |  |                   | 

|Notes
|-----
|1    
|2    
|3    
|4    

|                                                                  |            
|----------------------------------------------------------------- | -----------
|                                                                  |            
|Directors attendance at board and committee meetings during
2007 |            
|                                                                  |            
|                                                                  |            
|                                                                  | Board      
|                                                                  |  scheduled
|                                                                  |            
|                                                                  | A          
|                                                                  |            
|Tom Albanese                                                      | 8          
|Ashton Calvert                                                    | 7          
|Sir David Clementi                                                | 8          
|Leigh Clifford                                                    | 3          
|Vivienne Cox                                                      | 8          
|Sir Rod Eddington                                                 | 8          
|Guy Elliott                                                       | 8          
|Dick Evans                                                        | 1          
|Michael Fitzpatrick                                               | 8          
|Yves Fortier                                                      | 1          
|Richard Goodmanson                                                | 8          
|Andrew Gould                                                      | 8          
|Lord Kerr                                                         | 8          
|David Mayhew                                                      | 8          
|Paul Skinner                                                      | 8          
|Sir Richard Sykes                                                 | 8          
|Paul Tellier                                                      | 1          
|                                                                  |            

|Notes
|-----
|A =  
|B =  
|     

|Audit committeeThe Group is required by the Code, the NYSE,
      and the ASX to establish an Audit committee.Each of the Code, the
      NYSE and the ASX lay down rules and guidelines for the composition of the
      committee and the work to be undertaken by it. The Audit committeeis
      governed by a Charter which the committee reviews and assesses each year
      for adequacy and is approved by the board. The Charter is available on
    the website and is summarised below.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------
|In carrying out its responsibilities the committee has full authority to
    investigate all matters that fall within its Charter.
|Accordingly, the committee may:                                                                                                   
|•                                                                                                                                 
|•                                                                                                                                 



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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.
     To ensure
the committee discharges its responsibilities, it meets not less than four times
per year and has a number
of training sessions which may cover new legislation and other relevant information.
The Groups finance director, other senior financial management, external
auditors and internal auditor are available to attend all meetings.
     The Audit committeeis chaired
by Andrew Gould who will be replaced by Sir David Clementi after the 2008 annual
general meetings. The members of the committee are independent and free of any
relationship that would interfere with impartiality in carrying out their responsibilities.
They meet the requirements of the Code, the ASX Principles and the NYSE Code,
as well as the composition, operation and responsibility requirements of the
ASX.

Responsibilities of the directorsThe directors are required 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. This includes preparing
financial statements in accordance with UK company law which give a true and
fair view of the state of the Companys affairs, and preparing a Remuneration
report which includes the information required by Part 3 of Schedule 7A to the
UK Companies Act 1985, the Australian Corporations Act 2001 and Accounting Standard
AASB 124 Related Party Disclosures. 
     To ensure that these requirements
are satisfied, the directors are responsible for establishing and maintaining
adequate internal controls, including disclosure controls and procedures for
financial reporting throughout the Group.
     The directors consider that
the2007 Annual reportand Financial statementspresent
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 judgements and estimates. 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 Principles Recommendation 7.3, this written statement
relies on a sound system of risk management and internal compliance and controls
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 the Group and to prevent and detect fraud and other irregularities. The directors
are also responsible for ensuring that appropriate systems are in place to maintain
and preserve the integrity of the Groups website. Legislation in the UK
governing the preparation and dissemination of financial statements may differ
from current and future legislation in other jurisdictions. The work carried
out by the auditors does not involve consideration of such developments and,
accordingly, the auditors accept no responsibility for any changes, should any
be made, to the financial statements after they are made
available on the website.

Principal auditorsRio 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. Details of these
polices have been set out in the Directors report.
     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 44 to the 2007 Financial statements.

Corporate AssuranceThe Corporate Assurance function provides
independent and objective assurance on the adequacy and effectiveness of the
Groups systems for risk management, internal control, and governance together
with ideas and recommendations to improve those systems. The function has adopted
international auditing standards
set by the Institute of Internal Auditors Inc.
     The function operates independently
of management, under a mandate approved in March 2007 by the Audit committeeand
the Committee on social and environmental accountability(CSEA) and has
full access to all functions, records, property and personnel of the Group.
     This
mandate expands the functions role from traditional financial based internal
audit to cover all risk types. Progressively all assurance activities across
the Group will be consolidated
within Corporate Assurance.
     The head of Corporate Assurance
reports functionally to both the Audit Committeeand CSEA, providing
each committee with information relevant to their specific Charters.
     A risk based approach is used
to focus assurance activities on high risk areas and audit plans are presented



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annually to the Audit Committeeand CSEAfor approval.

Remuneration committeeThe Remuneration committeeis 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 120 to 133, together with details
of the Groups remuneration policies. The committee is chaired by Sir Richard
Sykes who will be replaced by Andrew Gould at the conclusion of the 2008 annual
general meetings.

Nominations committeeThe Nominations committeeis chaired
by the chairman of Rio Tinto, Paul Skinner. The committee is responsible, on
behalf of the board, for ensuring that a suitable process is in place to meet
the recruitment requirements of the board. It reviews the mix, structure and
experience of the board and the desired profiles of potential candidates for
membership. In consultation with external search consultants it oversees the
review and recruitment process to fill vacancies as they arise. The recruitment
process itself includes identification of suitable candidates, followed by a
formal assessment of each candidate, leading to a final selection process. Proposals
for new members are submitted to the full board for approval. On behalf of the
board it also reviews proposals for senior executive appointments and succession
planning.
     The committee further 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.
     Under the Code, two members
of the committee are not considered independent: Paul Skinner, following his
appointment as chairman, and David Mayhew. The Code specifically allows the chairman
to chair the Nominations committee. As stated above, the
board takes the view that Sir Richard continues to be an independent director
and the composition of the committee is therefore
compliant with the Code.

Committee on social and environmental accountabilityThe Committee on social and environmental
accountability, which is chaired by Richard Goodmanson, reviews the effectiveness
of management policies and procedures in place to deliver those standards in
our statement of business practice, The way we work, 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.

Business practice 
Statement of business practiceThe way we workprovides the
directors and all Group employees with a summary of the global policies and controls
in place to help ensure that high governance and business standards are communicated
and maintained throughout the Group. Group businesses then put them into practice
through local codes of conduct and report on their implementation.
     Global policies are adopted
by the board after wide consultation, externally and within the Group. Once adopted,
they are communicated to business units worldwide, together with mandatory standards
and guidance notes to support implementation. Business units are required to
devote the necessary effort by management to implement and report on these policies
and standards.
     The following global policies
are currently in place: access to land; communities; corporate governance; employment;
environment; human rights; information management; occupational health; political
involvement; risk; safety and sustainable development. To complete the suite
of policies, the following are being revised: business integrity; information
systems security management and information technology; internal controls and
reporting; and transparency. Each of these policies is supported by standards
expanding on the minimum expectations on topics such as antitrust, continuous
disclosure, compliance, cultural heritage and health, safety and the environment.
Many of these standards are supplemented by guidance notes. These policies and
standards apply to all Rio Tinto managed businesses.
     Where the Group does not have
operating responsibility for a business, Rio Tintos policies are communicated
to its business partners and they are encouraged to adopt similar policies of
their
own.

Whistle blowing programmeThere
is also a Groupwide 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 or 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.

Sustainable developmentRio
Tintos report on Sustainable development follows the guidelines of the
Global Reporting Initiative and the Association of British Insurers. This report
can be found in the2007 Annual report. Details of the Groups overall
and individual businesses social and environmental performance continue
to be published on the website.



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Dealing in Rio Tinto securitiesThe Group has a policy in place to govern
the dealing in Rio Tinto securities by directors, executives 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 website.

COMPLIANCE STATEMENTS

The CodeBy virtue of its UK listing, Rio Tinto
is required to disclose whether it has complied with the provisions set out in
Section 1 of the Code and to provide an explanation where it does
not.
     Rio Tinto confirms that it
has continued to comply fully with the detailed provisions of Section 1 of the
Code.

ASX PrinciplesPursuant to the Listing Rules of the ASX,
Rio Tinto is required to report the extent to which it complies with the ASX
Principles and the reasons for any non compliance.
     Rio Tinto confirms that it
has continued to comply fully with the ASX Principles.

NYSE StandardsRio Tinto plc, as a foreign issuer with
American Depositary Shares listed on the NYSE, is obliged by the NYSE Standards
to disclose any significant ways in which its practices of corporate governance
differ from the NYSE standards.
     The Company has reviewed the
NYSE Standards and believes that its practices are broadly consistent with them,
with one exception. The NYSE 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 149. 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.

New Zealand Stock ExchangeRio Tinto Limited is also listed on the
New Zealand Stock Exchange (NZX) which has introduced a Corporate Governance
Best Practice Code (the NZX Code). As an overseas listed issuer on the NZX, Rio
Tinto Limited is deemed to comply generally with the NZX Listing Rules, including
the NZX Code, while it remains listed on the ASX. Whilst the ASX Principles and
the NZX Code are substantially the same, there may be some ASX Principles or
other ASX corporate governance rules which differ materially from the NZXs
corporate governance rules or the NZX Code. The ASX Principles and other corporate
governance
rules can be found on the ASX website: www.asx.com.au.

Going concernThe directors report that the financial
statements have been prepared on a going concern basis as they have satisfied
themselves that the Companies and the Group are a going concern with adequate
financial resources to continue in operational existence for the foreseeable
future.

Boards statement on internal controlRio
Tintos overriding objective is to maximise the overall long term return
to shareholders through a strategy of investing in large, cost competitive mines
and businesses. The directors recognise that creating shareholder return is the
reward for taking and accepting risk. A description of some of the risks is found
on pages 5 to 7 in Risk factors.
     The directors
are responsible
for the Groups system of internal controls 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.
The directors confirm that they have completed their annual review for 2007.
Due to the limitations inherent in any such system, this is designed to manage
rather than eliminate risk and to provide reasonable but not absolute assurance
against material misstatement or loss. 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.
     The directors have established
a process for identifying, evaluating and managing the material business risks
faced by the Group. This process was in place during 2007 and up to and including
the date of approval of the2007 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.
     Two
of the Groups management committees, the Executive committee and the Disclosures
and procedures committee regularly review reports related to the Groups
control framework. This information is presented to the Audit committee to enable
its members to assess the effectiveness of the internal controls and the management
of material business risk. In addition, the board and its committees monitor
the Groups material business risks on an ongoing basis.



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These reports and risk management processes satisfy Recommendation 7.2 of the
ASX Principles.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.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, are operating effectively and are designed to capture and evaluate failings and weaknesses, if any exist, and take prompt action as appropriate. The results of this process are reviewed by the Executive
      committee, then presented to the Audit committee and the board as a further part of their review of the Groups
      internal controls. This process is continually reviewed and strengthened
as appropriate.The
Group has material investments in a number of jointly controlled entities and
associates.
        Where Rio Tinto
        does not have managerial control, it cannot guarantee that local management
        of mining
      and related assets will comply with Rio Tinto standards or objectives.
      Accordingly, the review of their internal controls is less comprehensive
      than that of
the Groups managed operations.

Controls and proceduresSee controls and procedures on page 169 for details
of the Groups disclosure controls and procedures, managements report
on internal control over financial reporting and changes in internal control
over financial reporting.

REPORT OF THE AUDIT COMMITTEE

The Audit committeemet seven times in 2007. It monitors developments
  in corporate governance in the UK, Australia and the US, to ensure the Group
  continues to apply high and appropriate standards.
     The Audit committeecharter
is
subject to regular discussion and review.The committee reviews the independence of the external auditors on an annual basis and their effectiveness to ensure that the Group continues to receive an
      efficient and unbiased service. The committee advised the directors that it is satisfied that the provision of non audit services by the external auditors during 2007 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 separately with management, the external auditors and the internal auditor.

Financial expertThe committee reviewed the SEC requirements for audit
committees financial experts and the Code and ASX Principles requirement
that at least one committee member should have recent and relevant financial
experience. The committee recommended to the board that Michael Fitzpatrick,
Andrew Gould and Sir David Clementi be identified as the committees financial
experts in the 2007 Annual report.The commitee has also concluded that
Michael Fitzpatrick, Andrew Gould and Sir David Clementi possess the requisite
skills, experience and background to qualify for the purpose of clause C.3.1
of the Code.

2007 Financial statementsThe committee has reviewed and discussed with management
the Groups audited financial statements for the year ended 31 December
2007.The committee 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 International Standard on Auditing (UK and Ireland)
    260, Communication of Audit Matters with those charged with governance (ISA 260),
    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 ISA 260.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 approved.

Andrew Gould(Chairman)Sir
David Clementi
Vivienne Cox
Michael Fitzpatrick
Lord Kerr
Paul Tellier



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REPORT OF THE NOMINATIONS COMMITTEE

The Nominations committees activities during 2007 covered executive
  and non executive succession and appointments. Tom Albanese succeeded Leigh
  Clifford as chief executive in May 2007. Following the acquisition of Alcan
  Inc., Yves Fortier, Paul Tellier and Dick Evans were appointed directors with
  effect from 25 October 2007. Dick Evans also became the Chief executive of
  the combined aluminium group, Rio Tinto Alcan.Each of the new directors bring extensive North American and international business experience to the board. A short biography of each is set out on pages
114 to 118.As part of his annual performance assessment of individual directors, Paul Skinner, who is chairman of the committee, has also reviewed the time committed by
directors to Group business and confirmed this to be appropriate in each case.

Paul Skinner(Chairman)Sir
Rod Eddington
Yves Fortier
David Mayhew
Sir Richard Sykes



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|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 or natural person. Except as discussed
  in the Chairmans statement on page 48, Rio Tinto plc does not know of
  any arrangements which may result in a change in its control. As of 20 March
  2008, the total amount of the voting securities owned by the directors of Rio
  Tinto plc as a group was 134,737 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 158 to 161, is not directly or indirectly owned or controlled
  by another corporation or by any government. As of 20 March 2008, the only person
  known to Rio Tinto Limited as beneficially 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 37.45
  per cent of its issued capital. Except as discussed in the Chairmans statement
  on page 48, Rio Tinto Limited does not know of any arrangements which may result
  in a change in its control. As of 20 March 2008 the total amount of the voting
  securities owned by the directors of Rio Tinto Limited as a group was 2,100
  shares representing less than one per cent of the number in issue.
     Directors interests in Group
voting securities are shown in Table 3 on page 138. 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 pages 158 to 161, the Groups major shareholders
have the same voting and
other rights as other shareholders.
     As at 20 March 2008 there were 263
shareholders who had registered addresses in the US holding 160,442 shares in
Rio Tinto plc, and 264 who had registered addresses in the US holding 323,215
shares in Rio Tinto Limited.

SUBSTANTIAL SHAREHOLDERS

Under the UK Disclosure and Transparency Rules and the Australian Corporations
  Act, any shareholder of Rio Tinto plc with voting rights of three per cent
  or more or any person with voting power of five per cent or more in Rio Tinto
  Limited, is required to provide the companies with notice. Excluding the interest
  held by Tinto Holdings Australia Pty Limited in Rio Tinto Limited, the shareholders
  who have provided such, or an
equivalent, notice are:

|Rio Tinto plc                    | Date of     |  | Number of   |  | Percentage    | 
|-------------------------------- | ----------- |  | ----------- |  | ------------- | 
|                                 | notice      |  | shares      |  | of issued     | 
|                                 |             |  |             |  | share capital | 
|                                 |             |  |             |  |               | 
|Barclays PLC                     | 12 Jul 2006 |  | 42,129,019  |  | 4.02          | 
|The Capital Group Companies, Inc | 13 Jun 2006 |  | 41,031,494  |  | 3.90          | 
|AXA S.A.                         | 29 Jan 2008 |  | 48,493,873  |  | 4.86          | 
|Shining Prospect Pte. Ltd        | 2 Feb 2008  |  | 119,705,134 |  | 12.00         | 
|Legal & General plc              | 18 Mar 2008 |  | 49,923,595  |  | 5.00          | 
|                                 |             |  |             |  |               | 



|Rio Tinto Limited         | Date of     |  | Number of |  | Percentage      | 
|------------------------- | ----------- |  | --------- |  | --------------- | 
|                          | notice      |  | Shares 1  |  | of issued       | 
|                          |             |  |           |  | share capital 1 | 
|                          |             |  |           |  |                 | 
|Shining Prospect Pte. Ltd | 4 Feb 2008  |  |          |  |                | 
|Alcoa Inc                 | 13 Feb 2008 |  |          |  |                | 
|                          |             |  |           |  |                 | 

|Notes
|-----
|1.   
|2.   
|3.   



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ANALYSIS OF ORDINARY SHAREHOLDERS

As at 22 February 2008

|                                                         |          |  |       |  | Rio Tinto plc |       |       |  |          |  | Rio Tinto Limited | 
|-------------------------------------------------------- | -------- |  | ----- |  | ------------- | ----- | ----- |  | -------- |  | ----------------- | 
|                                                         | No of    |  | %     |  | Shares        |       | %     |  | No of    |  | %                 | 
|                                                         | accounts |  |       |  |               |       |       |  | accounts |  |                   | 
|                                                         |          |  |       |  |               |       |       |  |          |  |                   | 
|1 to 1,000 shares                                        | 37,849   |  | 73.08 |  | 13,898,832    |       | 1.30  |  | 101,921  |  | 83.59             | 
|1,001 to 5,000 shares                                    | 11,307   |  | 21.83 |  | 22,648,550    |       | 2.11  |  | 17,750   |  | 14.56             | 
|5,001 to 10,000 shares                                   | 1,016    |  | 1.96  |  | 6,950,363     |       | 0.65  |  | 1,401    |  | 1.15              | 
|10,001 to 25,000 shares                                  | 544      |  | 1.05  |  | 8,400,701     |       | 0.79  |  | 579      |  | 0.47              | 
|25,001 to 125,000 shares                                 | 560      |  | 1.08  |  | 32,980,105    |       | 3.08  |  | 196      |  | 0.16              | 
|125,001 to 250,000 shares                                | 183      |  | 0.35  |  | 33,914,101    |       | 3.16  |  | 31       |  | 0.02              | 
|250,001 to 1,250,000 shares                              | 210      |  | 0.41  |  | 121,814,991   |       | 11.36 |  | 34       |  | 0.03              | 
|1,250,001 to 2,500,000                                   | 60       |  | 0.12  |  | 105,482,635   |       | 9.84  |  | 8        |  | 0.01              | 
|2,500,001 and over                                       | 61       |  | 0.12  |  | 725,779,627   |       | 67.71 |  | 11       |  | 0.01              | 
|ADRs                                                     |         |  |      |  | 94,920,868    |       | 8.85  |  |         |  |                  | 
|                                                         |          |  |       |  |               |       |       |  |          |  |                   | 
|Publicly held shares                                     | 51,790   |  | 100   |  | 1,071,869,905 |       | 100   |  | 121,931  |  | 100               | 
|Shares held in treasury                                  |          |  |       |  | 74,167,852    |       |       |  |          |  |                   | 
|Tinto Holdings Australia Pty Limited                     |          |  |       |  |               |       |       |  |          |  |                   | 
|                                                         |          |  |       |  |               |       |       |  |          |  |                   | 
|                                                         |          |  |       |  | 1,071,869,905 |       |       |  |          |  | 456,815,943       | 
|                                                         |          |  |       |  |               |       |       |  |          |  |                   | 
|Number of holdings less than marketable parcel of A$500. |          |  |       |  |               | 1,111 |       |  |          |  |                   | 

TWENTY LARGEST REGISTERED SHAREHOLDERS

In accordance with the ASX Listing Rules, below are the names of the twenty
  largest registered holders of Rio Tinto Limited shares and the number of shares
  and the percentage of issued
capital each holds:

Rio Tinto Limited

|   |                                                            |             |  |            | 
|-- | ---------------------------------------------------------- | ----------- |  | ---------- | 
|   |                                                            | Number of   |  | Percentage | 
|   |                                                            | shares      |  | of issued  | 
|   |                                                            |             |  | share      | 
|   |                                                            |             |  | capital    | 
|   |                                                            |             |  |            | 
|1  | Tinto Holdings Australia Pty Limited                       | 171,072,520 |  | 37.45      | 
|2  | HSBC Custody Nominees (Australia) Limited                  | 39,237,31   |  | 8.59       | 
|3  | National Nominees Limited                                  | 35,659,231  |  | 7.81       | 
|4  | JP Morgan Nominees Australia Limited                       | 31,302,302  |  | 6.83       | 
|5  | Citicorp Nominees Pty Limited                              | 15,172,117  |  | 3.32       | 
|6  | ANZ Nominees Limited                                       | 9,488,839   |  | 2.16       | 
|7  | Cogent Nominees Pty Limited                                | 6,240,454   |  | 1.37       | 
|8  | Queensland Investment Corporation                          | 4,341,895   |  | 0.95       | 
|9  | AMP Life Limited                                           | 2,905,395   |  | 0.64       | 
|10 | Merrill Lynch (Australia) Nominees Pty Ltd                 | 2,761,366   |  | 0.60       | 
|11 | UBS Wealth Management Australia Nominees Pty Ltd           | 2,553,987   |  | 0.56       | 
|12 | Australian Foundation Investment Company Limited           | 2,443,414   |  | 0.53       | 
|13 | HSBC Custody Nominees (Australia) Limited                  | 2,269,520   |  | 0.50       | 
|14 | UBS Nominees Pty Ltd                                       | 2,127,402   |  | 0.47       | 
|15 | HSBC Custody Nominees (Australia) Limited                  | 1,985,586   |  | 0.43       | 
|16 | RBC Dexia Investor Services Australia Nominees Pty Limited | 1,777,687   |  | 0.39       | 
|17 | Citicorp Nominees Pty Limited                              | 1,703,340   |  | 0.37       | 
|18 | Citicorp Nominees Pty Limited                              | 1,532,859   |  | 0.34       | 
|19 | Argo Investments Limited                                   | 1,395,843   |  | 0.31       | 
|20 | HSB Custody Nominees (Australia) Limited-GSI ECSA          | 1,240,252   |  | 0.27       | 
|   |                                                            |             |  |            | 
|   |                                                            | 337,471,139 |  | 73.87      | 
|   |                                                            |             |  |            | 

|Notes
|-----
|1    
|2    

RELATED PARTY TRANSACTIONS

Information about material related party transactions of the Rio Tinto Group
is set out in note 45 to the 2007 Financial statements.



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|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 or profitability.Contingencies
are disclosed in note 35 to the 2007 Financial statements.

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 page 158.

Dividend policyThe
aim of Rio Tintos progressive dividend policy is to increase the US dollar
value of ordinary dividends over time, without
cutting them during economic downturns.
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 ordinary dividend for the previous year. Under Rio Tintos
dividend policy, the final ordinary dividend for each year is expected to be
at least equal to the previous interim dividend.

Dividend determinationThe
majority of the Groups sales are transacted in US dollars, making this
the most reliable measure for the Groups global business performance. It
is Rio Tintos main reporting currency and consequently the natural currency
for dividend determination. Dividends determined in US dollars are translated
at exchange rates prevailing two days prior to the announcement and are then
declared payable in sterling by Rio Tinto plc and in Australian dollars by Rio
Tinto Limited.
On request, shareholders of
Rio Tinto plc can elect to receive dividends in Australian dollars and shareholders
of Rio Tinto Limited can elect to receive dividends in sterling. Shareholders
requiring further information should contact Computershare.

2007 dividendsThe 2007 interim and final dividends were
determined at 52.0 US cents and at 84.0 US cents per share respectively and the
applicable translation rates were US$2.0321 and US$1.9476 to the pound
sterling and US$0.8568 and US$0.90305 to the Australian
dollar.Final dividends of 43.13 pence
per share and of 93.02 Australian cents per share will be paid on 11 April 2008.
A final dividend of 336 US cents per Rio Tinto plc ADR (each representing four
shares) will be paid by JPMorgan Chase Bank NA to ADR holders on 14 April 2008.
The tables below set out the
amounts of interim, final and special cash dividends paid or payable on each
share or ADS in respect of each financial year, but before deduction of any withholding
tax.



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|Rio Tinto Group  US cents per share           | 2007   |  | 2006   |  | 2005   |  | 2004   |  | 2003  | 
|---------------------------------------------- | ------ |  | ------ |  | ------ |  | ------ |  | ----- | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Interim                                        | 52.0   |  | 40.0   |  | 38.5   |  | 32.0   |  | 30.0  | 
|Final                                          | 84.0   |  | 64.0   |  | 41.5   |  | 45.0   |  | 34.0  | 
|Special                                        |       |  |       |  | 110.0  |  |       |  |      | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Total                                          | 136.0  |  | 104.0  |  | 190.0  |  | 77.0   |  | 64.0  | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Rio Tinto plc  UK pence per share             | 2007   |  | 2006   |  | 2005   |  | 2004   |  | 2003  | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Interim                                        | 25.59  |  | 21.42  |  | 21.75  |  | 17.54  |  | 18.45 | 
|Final                                          | 43.13  |  | 32.63  |  | 23.35  |  | 23.94  |  | 18.68 | 
|Special                                        |       |  |       |  | 61.89  |  |       |  |      | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Total                                          | 68.72  |  | 54.05  |  | 106.99 |  | 41.48  |  | 37.13 | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Rio Tinto Limited  Australian cents per share | 2007   |  | 2006   |  | 2005   |  | 2004   |  | 2003  | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Interim                                        | 60.69  |  | 52.48  |  | 50.56  |  | 45.53  |  | 45.02 | 
|Final                                          | 93.02  |  | 82.84  |  | 54.86  |  | 58.29  |  | 44.68 | 
|Special                                        |       |  |       |  | 145.42 |  |       |  |      | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Total                                          | 153.71 |  | 135.32 |  | 250.84 |  | 103.82 |  | 89.70 | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Rio Tinto plc  US cents per ADS               | 2007   |  | 2006   |  | 2005   |  | 2004   |  | 2003  | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Interim                                        | 208    |  | 160    |  | 154    |  | 128    |  | 120   | 
|Final                                          | 336    |  | 256    |  | 166    |  | 180    |  | 136   | 
|Special                                        |       |  |       |  | 440    |  |       |  |      | 
|                                               |        |  |        |  |        |  |        |  |       | 
|Total                                          | 544    |  | 416    |  | 760    |  | 308    |  | 256   | 
|                                               |        |  |        |  |        |  |        |  |       | 

Dividend reinvestment plan (DRP)Rio Tinto offers a DRP to registered shareholders,
which provides the opportunity to use cash dividends to purchase Rio Tinto shares
in the market free of commission. See Taxation on page 165 for an explanation
of the tax consequences. Due to local legislation the DRP cannot be extended
to shareholders in the US, Canada and certain other countries. Please contact
Computershare for further information.

POST BALANCE SHEET EVENTS

No significant changes have occurred since the date of the financial statements.

|Item 9. | The Offer and Listing
|------- | ---------------------

MARKET LISTINGS AND SHARE PRICES

Rio Tinto plcThe 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 eight times Normal Market
Size (NMS). Rio Tinto plc has an NMS of 100,000 shares. Publication of



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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. 
     Rio Tinto plc has a sponsored
American Depositary Receipt (ADR) facility with JPMorgan Chase Bank NA (JPMorgan)
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 when JPMorgan became Rio Tinto plcs depository. 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    | 
|                          |                     |  |                   |  |         | 
|2003                      | 1,543               |  | 1,093             |  | 111.35  | 
|2004                      | 1,574               |  | 1,212             |  | 119.39  | 
|2005                      | 2,657               |  | 1,472             |  | 183.29  | 
|2006                      | 3,322               |  | 2,352             |  | 253.33  | 
|2007                      | 5,784               |  | 2,505             |  | 478.35  | 
|                          |                     |  |                   |  |         | 
|Aug 2007                  | 3,445               |  | 2,929             |  | 278.05  | 
|Sep 2007                  | 4,228               |  | 3,430             |  | 343.40  | 
|Oct 2007                  | 4,576               |  | 4,050             |  | 375.00  | 
|Nov 2007                  | 5,685               |  | 4,197             |  | 478.35  | 
|Dec 2007                  | 5,784               |  | 5,012             |  | 477.71  | 
|Jan 2008                  | 5,370               |  | 4,159             |  | 428.30  | 
|Feb 2008                  | 5,850               |  | 5,222             |  | 464.00  | 
|Mar 2008 (to 20 Mar 2008) | 5,807               |  | 4,800             |  | 461.00  | 
|                          |                     |  |                   |  |         | 
|2006                      |                     |  |                   |  |         | 
|First quarter             | 2,981               |  | 2,588             |  | 212.94  | 
|Second quarter            | 3,322               |  | 2,547             |  | 253.33  | 
|Third quarter             | 2,901               |  | 2,352             |  | 216.11  | 
|Fourth quarter            | 3,015               |  | 2,401             |  | 231.15  | 
|                          |                     |  |                   |  |         | 
|2007                      |                     |  |                   |  |         | 
|First quarter             | 2,940               |  | 2,505             |  | 230.60  | 
|Second quarter            | 3,916               |  | 2,888             |  | 311.50  | 
|Third quarter             | 4,228               |  | 2,929             |  | 343.40  | 
|Fourth quarter            | 5,784               |  | 4,050             |  | 478.35  | 
|                          |                     |  |                   |  |         | 

Rio Tinto LimitedRio Tinto Limited shares are listed on
the Australian Securities Exchange (ASX) and the New Zealand Securities 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 had established
a separate ADR programme before the DLC merger in 1995 but the Group did not
believe that there was any benefit in continuing to maintain two separate ADR
programmes and in 2006 decided that, due to the relative size of the Rio Tinto
Limited ADR programme, it should be terminated. In February 2006 formal notice
of termination of the Deposit Agreement was given to JPMorgan and it was terminated
on 10 April 2006, immediately after the payment of the final dividend to the
ADR holders. Any questions concerning holdings of Rio Tinto Limited ADRs should
be directed to the JPMorgan Service Center on 001 (800)
990 1135.
     The following table sets out,
for the periods indicated, the high and low closing sale prices of Rio Tinto
Limited



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shares based upon information provided by the ASX. There is no established
trading market in the US for Rio Tinto Limiteds shares.

|                           |                         |  | A$ per | 
|-------------------------- | ----------------------- |  | ------ | 
|                           | Rio Tinto Limited share | 
|                           | High                    |  | Low    | 
|                           |                         |  |        | 
|2003                       | 37.54                   |  | 28.17  | 
|2004                       | 40.20                   |  | 31.98  | 
|2005                       | 69.10                   |  | 38.82  | 
|2006                       | 87.97                   |  | 65.38  | 
|2007                       | 146.90                  |  | 69.50  | 
|                           |                         |  |        | 
|Aug 2007                   | 93.52                   |  | 81.16  | 
|Sep 2007                   | 108.22                  |  | 93.52  | 
|Oct 2007                   | 113.50                  |  | 104.43 | 
|Nov 2007                   | 145.19                  |  | 108.50 | 
|Dec 2007                   | 146.90                  |  | 128.00 | 
|Jan 2008                   | 134.00                  |  | 101.00 | 
|Feb 2008                   | 137.10                  |  | 121.77 | 
|Mar 2008 (to 20 Mar 2008 ) | 136.00                  |  | 116.29 | 
|                           |                         |  |        | 
|2006                       |                         |  |        | 
|First quarter              | 78.85                   |  | 67.50  | 
|Second quarter             | 87.97                   |  | 70.90  | 
|Third quarter              | 78.56                   |  | 65.38  | 
|Fourth quarter             | 82.00                   |  | 68.01  | 
|                           |                         |  |        | 
|2007                       |                         |  |        | 
|First quarter              | 80.11                   |  | 69.50  | 
|Second quarter             | 101.15                  |  | 77.20  | 
|Third quarter              | 108.22                  |  | 81.16  | 
|Fourth quarter             | 146.90                  |  | 104.43 | 
|                           |                         |  |        | 

As at 20 March 2008, there were 120,552 holders
  of record of Rio Tinto Limited shares. Of these holders, 264 had registered
  addresses in the US and held a total of 323,215 Rio Tinto Limited shares, representing
  approximately 0.071 per cent of the total number of Rio Tinto Limited shares
  issued and outstanding as of such date. 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 holdersADR holders may instruct JPMorgan as to
how the shares represented by their ADRs should be voted.
     Registered holders of ADRs
will have the Annual reportand Summary financial statementsand
interim reports mailed to them at their record address and other ADR holders
can receive the Annual reportand Summary financial statementsand
interim reports on request.
     Rio Tinto is subject to the
US Securities and Exchange Commission (SEC) reporting requirements for foreign
companies. This Form 20-F and other filings can be viewed on the Rio Tinto website
as well as on the SEC website at www.sec.gov

Investment warningPast performance of shares is not necessarily
a guide to future performance. The value of shares and investments and the income
derived from them can go down as well as up, and investors may not get back the
amount they invested.

|Item 10. | Additional Information
|-------- | ----------------------

DUAL LISTED COMPANIES STRUCTURE     In 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. Consistent with the commitments
made to the Australian Government in 1995, the Rio Tinto plc shareholding in
Rio Tinto Limited has been reduced over time and it now stands at approximately
37.5 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



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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 Rio Tinto, as
a Group, aims to comply with the strictest applicable level.
     Consistent with the creation
of a single combined enterprise under the DLC merger, directors of each Company
act in the best interests of Rio Tinto as a whole. When matters may involve a
conflict of interests between the shareholders of each Company they must be approved
under the Class Rights Action approval procedure.
     To ensure that the boards of
both Companies are identical, resolutions to appoint or remove directors must
be put to shareholders of both as a joint electorate as Joint Decisions as described
under Voting rights, and it is a requirement that a person can only be a director
of one Company if that person is also a director of the other Company. So, for
example, if a person was removed as a director of Rio Tinto plc, he or she would
also cease to be a director of Rio Tinto Limited.

Dividend rightsThe 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, 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.
     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 rightsIn 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.



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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 The Australian newspapers. The results of the 2008
  annual
  general meetings may also be obtained on the appropriate shareholder helpline
  (Rio Tinto plc: Freephone 0800 435021; and Rio Tinto Limited: toll free 1800
  813 292).

Rio Tinto plcAt 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 LimitedAt
      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.

Capital distribution rightsIf 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 obligationsThe laws and regulations of
  the UK and Australia impose restrictions and obligations on persons who control
  interests in public quoted companies in excess of defined 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 law 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 either 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



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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.

GuaranteesIn 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 13 April 2007. Rio Tinto Limited adopted a new Constitution by special
    resolution passed on 24 May 2000 and, amended by special resolution on 18
    April 2002, 29 April 2005 and 27 April 2007. The resolutions passed during
    April 2007 were in response to the implementation in the United Kingdom of
    the European Union Directive on Takeover Bids on 20 May 2006. Following the
    DLC merger in 1995 the Group introduced some change of control provisions
    which were designed to ensure that no one could gain control of one Company
    without making an offer to the shareholders of the other. The resolution
    removed certain discretions conferred on the directors by the change of control
    provisions which might have been impacted by the implementation of the Directive
  on Takeover Bids.

IntroductionAs explained on pages 158
  to 161 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 ABN 96 004 458 404.
     No
  holder of shares, which may be held in either certificated or uncertificated
form, will be required to make any additional contributions of capital.

ObjectsThe 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:
|--------------------------------------------------------
|•                                                       
|•                                                       
|•                                                       
|•                                                       
|•                                                       
|•                                                       
|•                                                       



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|•                                                            | 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 allminerals, metals and substances;                                                                                                                                                                               
|•                                                            | to carry on business as proprietors of and
        to purchase, take on, lease or in exchange or otherwise acquire andcontrol mineral and other properties, lands and hereditaments of any tenure,
      mines and other rights or optionsthereon;                                                                                       
|•                                                            | 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 garageproprietors, carriers and hauliers, bankers, storekeepers, wharfingers,
      cartage, storage, building and generalcontractors 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 ofall kinds and merchants generally; and                                                                                                                                                                            
|•                                                            | to guarantee the payment of premiums on any
        sinking fund or endowment policy or policies taken out by anycompany having objects similar to the objects of the Company.                                                                                                                                                           

|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 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;
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | relate to an offer of securities in which
      he may be interested as a holder of securities or as an underwriter;                                                                                                                                                                                 
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 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;                                                                                                          
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | relate to an employee benefit in which the
      director will share equally with other employees; and                                                                                                                                                                                               
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 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
      120 to 133 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.



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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 sharesUnder 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 on a resolution on which the holder of the Special Voting
        Share is entitled to vote shall be decided by a poll, being a written
        vote, and any other resolution shall be decided by a show of hands unless
        a poll 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 pages 159 to 160. A poll may be demanded by any
    of the following:
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|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 under voting rights on pages 159 to 160.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 RightsIf, 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



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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 provisions 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 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:                                                                                                                                                                                                                                                                                                                                                                                      
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|•                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|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 160.

Limitations on Voting and ShareholdingExcept for the provisions of the Foreign
Acquisitions and Takeovers Act 1975 which impose certain conditions on the foreign
ownership of Australian companies, there are no limitations imposed by law, Rio
Tinto plc's Memorandum and Articles of Association or Rio Tinto Limited's Constitution,
on the rights of non residents or foreign persons to hold or vote the Groups
ordinary shares or ADSs that would not apply generally to
all shareholders.

MATERIAL CONTRACT

Rio Tinto plc, Rio Tinto Canada Holding Inc. and Rio Tinto Finance plc entered
  into a facility agreement dated 12 July 2007 (the Facility Agreement)
  with Credit Suisse, Deutsche Bank AG, London Branch, The Royal Bank of Scotland
  plc and Société Générale. The Facility Agreement
  comprises two term facilities and two revolving facilities (including a swingline
  facility) up to a total amount
of US$ 40 billion. The funds made available under the Facility Agreement
will be used, among other things, to finance or refinance, directly or indirectly
the consideration or other amounts payable in respect of the Groups purchase
for
cash of all the outstanding shares of Alcan Inc.Advances
under the term and revolving facilities bear interest at rates per annum equal
      to the margin (which is dependent
on the Groups long term
credit rating as determined by Moody's and Standard & Poors) plus LIBOR plus
any mandatory cost.The
  Facility Agreement contains covenants and restrictions on the Group, including
  that it be required to observe certain customary covenants including but  not
  limited to (i) maintenance of authorisations; (ii) compliance with laws; (iii)
  change of business; (iv) negative pledge (subject to certain carve outs); (v)
  environmental laws and licences; and (vi) subsidiaries incurring financial
  indebtedness.The term facilities are to be repaid on the termination of their respective 364 day (subject to exercise of the extension option), and five year and one
business day terms. No amounts repaid by the Group under the term facilities may be re-borrowed. Facilities B and C will cease to be available one month prior to their respective three year and five year termination dates. All loans made under
Facilities B and C are to be repaid on their respective termination dates.

EXCHANGE CONTROLS

Rio Tinto plcThere are no UK foreign exchange controls
or other restrictions on the import or export of capital or on the payment of
dividends to non resident holders of Rio Tinto plc shares or that affect the
conduct of Rio Tinto plcs operations. The Bank of England, however, administers
financial sanctions against specified targets related to certain
regimes.There
are no restrictions under Rio
Tinto plcs memorandum and articles of association or under UK law that
limit the right of non resident owners to
hold or vote Rio Tinto plc shares.

Rio Tinto LimitedUnder current Australian legislation,
the Reserve Bank of Australia does not restrict the import and export of funds
and no permission is required for the movement of funds into or out of Australia,
except that restrictions apply to certain financial transactions relating to
specified individuals and entities associated with certain regimes.The Department
of Foreign Affairs and Trade has responsibility for the administration of restrictions
relating to



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terrorists and their sponsors, and the former Iraqi regime.     Rio Tinto Limited may be required
to deduct withholding tax from foreign remittances of dividends, to the extent
that they are unfranked, and from payments
of interest.     There are no restrictions under
the constitution of Rio Tinto Limited that limit the right of non residents to
hold or vote Rio Tinto Limited shares.     However acquisitions of interests
in shares in Australian companies by foreign interests are subject to review
and approval by the Treasurer of the Commonwealth of Australia under the Foreign
Acquisitions and Takeovers Act 1975 (the Takeovers Act). The Takeovers Act applies
to any acquisition of 15 per cent or more of the outstanding shares of an Australian
company or to any transaction that results in one non resident, or a group of
associated non residents, controlling 15 per cent or more of an Australian company.
The Takeovers Act also applies to any transaction which results in a group of
non associated non residents controlling 40 per cent or more of an Australian
company. Persons who are proposing such acquisitions or transactions are required
to notify the Treasurer of their intention. The Treasurer has the power to order
divestment in cases where such acquisitions or transactions have already occurred.
The Takeovers Act does not affect the rights of owners whose interests are held
in compliance with the legislation.

TAXATION

UK resident individuals shareholdings in Rio Tinto plc
Taxation of dividendsDividends 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 tax payers 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.

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 taxShareholders who have any queries on capital
gains tax issues are advised to consult their financial adviser.     Details of relevant events
since 31 March 1982 and adjusted values for Rio Tinto plc securities as at that
date are available from the company secretary.

Australian resident individuals shareholdings in Rio Tinto Limited
Taxation
of dividendsThe 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 Australian 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 the Australian 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.



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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 as assessable income.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 taxThe Australian capital gains tax legislation is complex.
If shareholders have acquired shares after 19 September 1985 they may be subject
to capital gains tax on the disposal of those
shares.Generally, disposal of shares held on capital account would give rise to a capital gain or loss. A capital gain arises when the proceeds on disposal are
      greater than the cost base of shares. A capital loss arises when the proceeds on sale are less than the cost base or reduced cost base. Where a capital gain arises on shares held for at least 12 months, individual, trust and superannuation fund
shareholders may be eligible for a capital gains tax discount.Shareholders are advised to seek the advice of an independent taxation consultant on any possible capital gains tax exposure.

|US resident individualsThe 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 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. Future
      changes in legislation may affect the tax consequences of the ownership
      of the Groups ADSs and shares.It is based in
  part on representations by the Groups depositary bank as Depositary 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 domestic corporation,
  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 authorized to control all substantial decisions of the trust.This section
  applies to US holders only if shares or ADSs are held as capital assets for
  tax purposes. This section does not apply to shareholders who are members of
  a special class of holders subject to special rules, including a dealer in
  securities, a trader in securities who elects to use a mark-to-market method
  of accounting for securities holdings, a tax-exempt organisation, a life insurance
  company, a person liable for alternative minimum tax, a person that actually
  or constructively owns ten per cent or more of Rio Tintos voting stock,
  a person that holds shares or ADSs as part of a straddle or a hedging or conversion
  transaction, or a US holder whose functional currency is not the US dollar.This
  section is based on the Internal Revenue Code of 1986, as amended, (the
  Code) 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, and the convention between the United States
  of America and Australia which may affect the tax consequences of the ownership
  of the Groups ADSs and shares. These laws and conventions are subject
  to change, possibly on a retroactive basis.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|US
        holders should consult their own tax adviser regarding the United States
        federal, state and local and foreign and other tax consequences of owning
    and disposing of shares and ADSs in their particular circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|For the purposes of the Conventions and
          of the Code, US holders of ADSs are treated as the owners of the underlying
          shares.The summary describes
  the treatment applicable under the Conventions in force at the date of this
  report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

UK taxation of shareholdings in Rio Tinto plcTaxation of dividendsUS 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 gainsA 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 taxUnder 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



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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 taxTransfers 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 LimitedTaxation of dividendsUS 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.

Capital gainsUS 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 taxAustralia does not impose any gift, estate or inheritance
taxes in relation to gifts of shares or upon the death of a shareholder.

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

US Federal income taxIn general, taking into account the earlier assumptions
that each obligation of the Deposit Agreement and any related agreement will
be performed according to its terms, for United States federal income tax purposes,
if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares
represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares,
generally will not be subject to United States federal income
tax.

Taxation of DividendsUnder the United States federal income tax laws,
and subject to the passive foreign investment company, or PFIC, rules discussed
below, if you are a United States Holder, the gross amount of any dividend the
Group pays out of its current or accumulated earnings and profits (as determined
for United States federal income tax purposes) is subject to United States federal
income taxation. If you are a non-corporate United States Holder, dividends paid
to you in taxable years beginning before January 1, 2011 that constitute qualified
dividend income will be taxable to you at a maximum tax rate of 15% provided
that, in the case of shares or ADSs, you hold the shares or ADSs for more than
60 days during the 121-day period beginning 60 days before the ex-dividend date.
Dividends we pay with respect to the shares or ADSs will generally be qualified
dividend income.
     You must include any Australian tax
withheld from the dividend payment in this gross amount even though you do not
in fact receive it. The dividend is taxable to you when you, in the case of shares,
or the Depositary, in the case of ADSs, receive the dividend, actually or constructively.
The dividend will not be eligible for the dividends-received deduction generally
allowed to United States corporations in respect of dividends received from other
United States corporations. The amount of the dividend distribution that you
must include in your income as a United States Holder will be the U.S. dollar
value of the non-U.S. dollar payments made, determined at the spot UK pound/U.S.
dollar rate (in the case of Rio Tinto plc) or the spot Australian dollar/U.S.
dollar (in the case of Rio Tinto Limited) on the date the dividend distribution
is includible in your income, regardless of whether the payment is in fact converted
into U.S. dollars. Generally, any gain or loss resulting from currency exchange
fluctuations during the period from the date you include the dividend payment
in income to the date you convert the payment into U.S. dollars will be treated
as ordinary income or loss and will not be eligible for the special tax rate
applicable to qualified dividend income. The gain or loss generally will be income
or loss from sources within the United States for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and profits,
as determined for United States federal income tax purposes, will be treated
as a non-taxable return of capital to the extent of your basis in the shares
or ADSs and thereafter as capital gain.
     Subject to certain limitations, any
Australian tax withheld in accordance with the Australia-United States Tax Treaty
and paid over to Australia will be creditable or deductible against your United
States federal income tax liability.



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Special rules apply in determining the foreign tax credit limitation with respect
to dividends that are subject to the maximum 15% tax rate.
     Dividends will be income from sources
outside the United States. Dividends paid in taxable years beginning before January
1, 2007 generally will be passive or financial services income,
and dividends paid in taxable years beginning after December 31, 2006 will, depending
on your circumstances, be passive or general income which,
in either case, is treated separately from other types of income for purposes
of computing the foreign tax credit allowable to you.

Taxation of Capital GainsSubject to the PFIC rules discussed below, if you
are a US holder and you sell or otherwise dispose ofthe Groups
ADSs or shares, you will recognise capital gain or loss for US federal income
tax purposes equal to the difference between the US dollar value of the amount
that you realize and your tax basis, determined in US dollars, in your shares
or ADSs. Capital gain of a non corporate US holder that is recognised in taxable
years beginning before 1 January 2011 is generally taxed at a maximum rate of
15% where the holder has a holding period greater than one year. The gain or
loss will generally be income or loss from sources within the United States for
foreign
tax credit limitation purposes.

Passive Foreign Investment Company (PFIC) RulesWe
believe that the Groups shares or ADSs should not be treated as stock of
PFIC for US federal income tax purposes, but this conclusion is a factual determination
that is made annually and thus may be subject to change. If we were to be treated
as a PFIC, unless the shares or ADSs are marketable stock and a US
Holder elects to be taxed annually on a mark-to-market basis with respect to
the shares or ADSs, gain realized on the sale or other disposition of the shares
or ADSs would in general not be treated as capital gain. Instead, if you are
a US Holder, you would be treated as if you had realized such gain and certain excess
distributions rateably over your holding period for the shares or ADSs
and would be taxed at the highest tax rate in effect for each such year to which
the gain was allocated, together with an interest charge in respect of the tax
attributable to each such year. In addition, dividends that you receive from
us will not be eligible for the special tax rates applicable to qualified dividend
income if we are a PFIC either in the taxable year of the distribution or the
preceding taxable year, but instead will be taxable at rates applicable to ordinary
income.

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 100 F Street NE, Washington, DC 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 quantitative and qualitative disclosures about
  market risk, its policies for currency, interest rate and commodity price exposures,
  and the use of derivative financial instruments are discussed in the Operating
  and financial report on pages 100 to 107. The discussion regarding market risk
  contains certain forward looking statements and attention is drawn to the Cautionary
statement on page 7.

|Item
    12. | Description of Securities other than
    Equity Securities
|------------ | ----------------------------------------------------------

Not applicable.



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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
|-------- | -----------------------

Disclosure controls and proceduresThe
Group maintains disclosure controls and procedures as such term is defined in
Exchange Act Rule 13a-15(e). 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 the Groups disclosure controls and
      procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the
      period covered
        by this report and have concluded that these disclosure controls and
procedures were effective at a reasonable assurance level.

Managements report on internal control over financial
reportingThe common management
of each of Rio Tinto plc and Rio Tinto Limited is responsible for establishing
and maintaining adequate internal
        control over
        financial reporting. The
      Companies internal control over financial reporting is a process designed under the supervision of their common chief executive and finance director to provide reasonable assurance regarding the reliability of financial reporting and the
      preparation and fair presentation of the Groups published financial
statements for external reporting purposes in accordance with IFRS.     Because of its inherent limitations, internal control over financial reporting cannot provide absolute assurance, and may not prevent or detect all
misstatements whether caused by error or fraud, if any, within each of Rio Tinto plc and Rio Tinto Limited.     The
Groups internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable
      detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and
      expenditures are being made only in accordance with authorisations of managemement and directors of each of the Companies; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of
      the Groups assets that could have a material effect on our financial
statements.     Management conducted an assessment of the effectiveness of internal control over financial reporting as of 31 December 2007, based on the Internal
          Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and concluded that it was effective.     Our independent registered public accounting firms, PricewaterhouseCoopers LLP and PricewaterhouseCoopers, the auditors of Rio Tinto plc and Rio Tinto
Limited respectively, independently assessed the effectiveness of the Group's internal control over financial reporting. They have issued an attestation report, which is included on page A-73 of this Annual report on Form 20-F.

Changes in internal control over financial reportingThere were no changes in the internal controls over financial reporting that occurred during the period covered by this Annual report on Form 20-F that have materially affected or are
reasonably likely to materially affect the internal controls over financial reporting of each of Rio Tinto plc and Rio Tinto Limited.

|Item 16A. | Audit Committee Financial Expert
|--------- | --------------------------------

See Corporate governance on page 151 for information regarding the identification
of the Audit committeefinancial expert.



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|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.     The way we workand
the supplementary guidance documents are discussed more fully under Corporate
governance on pages 145 to 152. 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
|--------- | --------------------------------------------------

The remuneration of the Groups principal
    auditors including audit fees, audit related fees, tax fees and all other
    fees, as well as remuneration payable to other accounting firms, has been
    set out in note 44 to the 2007 Financial statements.
     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, other
services pursuant to legislation, taxation services and certain other services
are pre approved. Any engagement of the Groups principal auditors to provide
other permitted services is subject to the specific approval of the Audit
committeeor its chairman.
     Prior to the commencement of each financial year
the Groups finance director and its principal auditors submit to the Audit
committeea schedule of the types of services that are expected to be performed
during the following year for its approval. The Audit committeemay 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.     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 committeemust
approve the engagement.
     The Audit committeeadopted policies for
the pre approval of permitted services provided by the Groups principal
auditors during 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. The directors
are satisfied that the provision of non audit services by PricewaterhouseCoopers
in accordance with this procedure is compatible with the general standard of
independence for auditors imposed by relevant regulations, including the Australian
Corporations Act 2001.

|Item 16D. | Exemptions from the Listing Standards
            for Audit Committees
|--------- | ----------------------------------------------------------------------

Not applicable.



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|Item 16E. | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers
|--------- | --------------------------------------------------------------------------

|                |            |  |                |  |                   |  |           |  |                   |  |                   | 
|--------------- | ---------- |  | -------------- |  | ----------------- |  | --------- |  | ----------------- |  | ----------------- | 
|                |            |  |                |  | Rio Tinto plc     |  |           |  | Rio Tinto Limited |  |                   | 
|                |            |  |                |  |                   |  |           |  |                   |  |                   | 
|Period          | (a) Total  |  | (b) Average    |  | (c) Total number  |  | (a) Total |  | (b) Average       |  | (c) Total number  | 
|                | number of  |  | price          |  | of shares         |  | number of |  | price             |  | of shares         | 
|                | shares     |  | paid per share |  | purchased as part |  | shares    |  | paid per share    |  | purchased as part | 
|                | purchased  |  |                |  | of publicly       |  | purchased |  |                   |  | of publicly       | 
|                |            |  |                |  | announced plans   |  |           |  |                   |  | announced plans   | 
|                |            |  |                |  | or programmes     |  |           |  |                   |  | or programmes     | 
|                |            |  | US$            |  |                   |  |           |  | US$               |  |                   | 
|                |            |  |                |  |                   |  |           |  |                   |  |                   | 
|2007            |            |  |                |  |                   |  |           |  |                   |  |                   | 
|1 Jan to 31 Jan | 5,185,000  |  | 51.12          |  | 5,185,000         |  | 104,741   |  | 57.71             |  | —                 | 
|1 Feb to 28 Feb | 6,600,000  |  | 54.45          |  | 6,600,000         |  | 231,099   |  | 60.82             |  | —                 | 
|1 Mar to 31 Mar | 6,250,000  |  | 52.64          |  | 6,250,000         |  | 79,472    |  | 58.37             |  | —                 | 
|1 Apr to 30 Apr | 2,464,008  |  | 61.02          |  | 2,150,000         |  | 554,049   |  | 69.30             |  | —                 | 
|1 May to 31 May | 2,850,000  |  | 69.66          |  | 2,850,000         |  | 151,687   |  | 77.19             |  | —                 | 
|1 Jun to 30 Jun | 2,475,000  |  | 76.17          |  | 2,475,000         |  | 62,610    |  | 81.63             |  | —                 | 
|1 Jul to 31 Jul | 2,190,000  |  | 80.63          |  | 2,190,000         |  | 17,301    |  | 86.42             |  | —                 | 
|1 Aug to 31 Aug | —          |  | —              |  | —                 |  | 5,160     |  | 75.47             |  | —                 | 
|1 Sep to 30 Sep | 137,859    |  | 73.75          |  | —                 |  | 471,422   |  | 82.02             |  | —                 | 
|1 Oct to 31 Oct | —          |  | —              |  | —                 |  | 17,453    |  | 95.78             |  | —                 | 
|1 Nov to 30 Nov | —          |  | —              |  | —                 |  | 276,005   |  | 105.19            |  | —                 | 
|1 Dec to 31 Dec | —          |  | —              |  | —                 |  | 6,981     |  | 127.04            |  | —                 | 
|                |            |  |                |  |                   |  |           |  |                   |  |                   | 
|Total           | 28,151,867 |  | 59.50          |  | 27,700,000        |  | 1,977,980 |  | 84.87             |  | —                 | 
|                |            |  |                |  |                   |  |           |  |                   |  |                   | 
|2008            |            |  |                |  |                   |  |           |  |                   |  |                   | 
|1 Jan to 31 Jan | —          |  | —              |  | —                 |  | 283,994   |  | 106.59            |  | —                 | 
|1 Feb to 28 Feb | —          |  | —              |  | —                 |  | 499,215   |  | 120.57            |  | —                 | 
|1 Mar to 20 Mar | —          |  | —              |  | —                 |  | 79,472    |  | 58.37             |  | —                 | 
|                |            |  |                |  |                   |  |           |  |                   |  |                   | 

|     
|-----
|Notes
|1.   
|2.   
|3.   
|4.   

No further shares were bought back between
    1 January 2008 and 20 March 2008. During this period, Rio Tinto plc issued
    70,244 shares in connection with employee share plans, and reissued 467,697
    ordinary shares from treasury and Rio Tinto Limiteds registrars purchased
    on market and delivered
810,663 shares.     Awards over 2,195,740 Rio Tinto
plc ordinary shares and 1,932,977 Rio Tinto Limited shares were granted in connection
with employee share plans during 2007, and as at 20 March 2008 there were options
outstanding over 7,227,437 Rio Tinto plc ordinary shares and 5,959,274 Rio Tinto
Limited shares. Upon exercise, options may be satisfied by the issue of new shares,
the purchase of shares on market, or, in the case of Rio Tinto plc, from treasury
shares. 
     There were no changes to the authorised capital
of Rio Tinto plc during the year.



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PART III

|Item 17. | Financial Statements
|-------- | --------------------

Not applicable.

|Item 18. | Financial Statements
|-------- | --------------------

The 2007 Financial statements of the Rio Tinto Group and the separate
  2007 Financial statements of Minera Escondida Limitada (Rio Tinto: 30 per cent),
  which exceeded certain tests of significance under Rule 3-09 of Regulation
  S-X, are included as the A pages in this Annual report on Form
20-F.

|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 and 13 April 2007)                                                                                                                                                                                                                                      
|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, 29 April 2005 and 27
    April 2007)                                                                                                                                                                                                
|2.1     | Facility Agreement, dated 12 July 2007, among Rio Tinto, Credit Suisse, Deutsche
    Bank AG, London Branch,
    The Royal Bank of Scotland plc, and Societe Generale (incorporated by reference
    to Exhibit (b)(1) to the
    Schedule TO-T filed by Rio Tinto plc and Rio Tinto Canada Holding Inc. on
    24 July 2007, File No. 1-10533)                                                             
|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 (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 2004, File No. 1-10533)       
|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*   | Service Agreement dated 4 May 2007 between Mr T Albanese and Rio Tinto London
    Limited                                                                                                                                                                                                                                                                                                                   
|4.02*   | Memorandum effective 1 March 2008 to Service Agreement dated 12 April 2006
    between Mr T Albanese and
    Rio Tinto London Limited                                                                                                                                                                                                                                                                       
|4.03    | Service Agreement dated 30 March 2004 between Mr R L Clifford and Rio Tinto
    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 2004, File No. 1-10533)                                                                                                                                               
|4.04    | Memorandum effective 1 March 2007 to Service Agreement dated 30 March 2004
    between Mr R L Clifford and
    Rio Tinto Limited (incorporated by reference to Exhibit 4.13 of Rio Tinto
    plc's Annual report on Form 20-F for
    the financial year ended 31 December 2006, File No. 1-10533)                                                                                                          
|4.05    | 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)                                                                                                                                          
|4.06*   | Memorandum effective 1 March 2008 to Service Agreement dated 19 June 2002
    between Mr G R Elliott and Rio
    Tinto London Limited                                                                                                                                                                                                                                                                       



|Rio Tinto 2007 Form 20-F | 172
|------------------------ | ---

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|4.07* | Service Agreement dated 25 October 2007 between Mr R B Evans and Rio Tinto
    plc                                                                                                                                                                                    
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.08* | Novation dated 29 January 2008 of Service Agreement dated 25 October 2007
    between Mr R B Evans and Rio
    Tinto plc to Rio Tinto London Limited                                                                                                                  
|4.09* | Memorandum effective 1 March 2008 to Service Agreement dated 25 October 2007
    between Mr R B Evans and
    Rio Tinto London Limited                                                                                                                                
|4.10  | Rio Tinto plc - Share Option Plan 2004 (incorporated by reference to Exhibit
    4.3 of Rio Tintos Registration
    statement on Form S-8, File No. 333-147914)                                                                                                      
|4.11  | Rio Tinto plc - Mining Companies Comparative Plan 2004 (incorporated by reference
    to Exhibit 4.4 of Rio
    Tintos Registration statement on Form S-8, File No. 333-147914)                                                                                      
|4.12  | Rio Tinto Limited - Share Option Plan 2004 (incorporated by reference to
    Exhibit 4.6 of Rio Tintos Registration
    statement on Form S-8, File No. 333-147914)                                                                                                  
|4.13  | Rio Tinto Limited - Mining Companies Comparative Plan 2004 (incorporated
    by reference to Exhibit 4.7 of Rio
    Tintos Registration statement on Form S-8, File No. 333-147914)                                                                                  
|4.14  | 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)                                                                               
|4.15  | 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
    certifications are not deemed filed
    for purpose of Section 18 of the Exchange Act and not incorporated by reference
    in any filing under the
    Securities Act).            
|15.1* | Consent of Independent Accountants to the incorporation of the audit report
    relating to the Rio Tinto Group and
    effectiveness of internal control over financial reporting of the Rio Tinto
    Group by reference in registration
    statements on Form S-8.
|15.2* | Consent of Independent Accountants to the incorporation of the audit report
    relating to Minera Escondida
    Limitada by reference in registration statements on Form S-8.                                                                                        



|Rio Tinto 2007 Form 20-F | 173
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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/ Ben Mathews     |  | /s/ Ben Mathews           
|Name: Ben Mathews   |  | Name: Ben Mathews         
|Title: Secretary    |  | Title: Assistant Secretary
|                    |  |                           
|Date: 31 March 2008 |  | Date: 31 March 2008       



|Rio Tinto 2007 Form 20-F | 174
|------------------------ | ---

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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:

|Adjusted earnings                           |  | An additional measure of earnings reported by Rio Tinto with its UK GAAP
    results which excludes exceptional items of such magnitude that their exclusion
    is necessary to reflect the underlying performance of the Group.
|------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ADR                                         |  | American Depositary Receipt evidencing American Depositary Shares (ADS).                                                                                                                                                         
|Australian dollars                          |  | Australian currency. Abbreviates to A$                                                                                                                                                                                           
|Australian GAAP                             |  | Generally accepted accounting principles in Australia.                                                                                                                                                                           
|AIFRS                                       |  | International Financial Reporting Standards as adopted in Australia.                                                                                                                                                             
|Billion                                     |  | One thousand million.                                                                                                                                                                                                            
|Canadian dollars                            |  | Canadian currency. Abbreviates to C$                                                                                                                                                                                             
|Company/Companies                           |  | Rio Tinto plc and/or Rio Tinto Limited, as the context so requires.                                                                                                                                                              
|DLC merger                                  |  | Dual listed companies merger (1995).                                                                                                                                                                                             
|IFRS                                        |  | International Financial Reporting Standards.                                                                                                                                                                                     
|LBMA                                        |  | London Bullion Market Association.                                                                                                                                                                                               
|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                           |  | Rio Tinto Limited, and, where the context permits, its subsidiaries and associated
    companies.                                                                                                                                
|Rio Tinto Limited Group                     |  | Rio Tinto Limited and its subsidiaries and associated companies.                                                                                                                                                                 
|Rio Tinto Limited shareholders              |  | The holders of Rio Tinto Limited shares.                                                                                                                                                                                         
|Rio Tinto Limited share                     |  | The ordinary shares in Rio Tinto Limited.                                                                                                                                                                                        
|Rio Tinto Limited/
RTL DLC Dividend Share   |  | The DLC Dividend Share in Rio Tinto Limited.                                                                                                                                                                                     
|Rio Tinto Limited/
RTL Special Voting Share |  | The Special Voting Share in Rio Tinto Limited.                                                                                                                                                                                   
|Rio Tinto plc                               |  | Rio Tinto plc and its subsidiaries 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 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 plc shares                        |  | Rio Tinto plc ordinary shares.                                                                                                                                                                                                   
|Rio Tinto plc/
RTP DLC Dividend Share       |  | The DLC Dividend Share of 10p in Rio Tinto plc.                                                                                                                                                                                  
|Rio Tinto plc/
RTP Special Voting Share     |  | 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.       



|Rio Tinto 2007 Form 20-F | 175
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NON MINING DEFINITIONS (continued)

|UK GAAP                          |  | Generally accepted accounting principles in the UK.                                                                                                                                                                                                                                                                                                
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Underlying earnings              |  | An additional measure of earnings reported by Rio Tinto with its IFRS
    results to provide greater understanding of the underlying business performance
    of its operations. This measure is explained in greater detail in the financial
    statements.                                                                                      
|US dollars                       |  | United States currency. Abbreviates to dollars, $ or US$ and US
    cents or USc.                                                                                                                                                                                                                                                                  
|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 and cathode copper         |  | At the final stage of the smelting of copper concentrates, the copper is
    cast into specially shaped slabs called anodes for subsequent refining to
    produce refined cathode copper.                                                                                                                                                         
|Bauxite                          |  | Mainly hydrated aluminium oxides (AL2O3.2H2O).
    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
    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 electro-winning.                                                                                                                                                                                                                                                           
|Classification                   |  | Separating crushed and ground ore into portions of different size particles.                                                                                                                                                                                                                                                                       
|Coking coal                      |  | By virtue of its carbonisation properties, it is used in the manufacture
    of coke, which is used in the steel making process. Also known as metallurgical
    coal.                                                                                                                                                                             
|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. Doré is an
      intermediate product which is subsequently 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.                                                                            
|FOB                              |  | Free on board.                                                                                                                                                                                                                                                                                                                                     
|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 ton.                                                                                                                                                                                      
|Head grade                       |  | The average grade of ore delivered to the mill.                                                                                                                                                                                                                                                                                                    
|Ilmenite                         |  | Mineral composed of iron, titanium and oxygen.                                                                                                                                                                                                                                                                                                     
|Metallurgical coal               |  | By virtue of its carbonisation properties, it is used in the manufacture
    of coke, which is used in the steel making process. Also known as coking
    coal.                                                                                                                                                                                    
|Ore                              |  | A rock from which a metal(s) or mineral(s) can be economically and legally
    extracted.                                                                                                                                                                                                                                                          
|Ore milled                       |  | The quantity of ore processed.                                                                                                                                                                                                                                                                                                                     
|Ore hoisted                      |  | The quantity of ore which is removed from an underground mine for processing.                                                                                                                                                                                                                                                                      
|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.                                 



|Rio Tinto 2007 Form 20-F | 176
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MINING AND TECHNICAL DEFINITIONS (continued)

|Probable ore reserves                         |  | 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.                     
|--------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Proven 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).                                                                                                                                                                                                                                                                                                                                                                            
|Steam coal                                    |  | Also referred to as steaming coal, thermal coal or energy coal. It is used
    as a fuel source in electrical power generation, cement manufacture and various
    industrial applications.                                                                                                                                                                                                                                  
|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 (electro-winning) to recover cathode copper.                                                                                                               
|Tailing                                       |  | The rock wastes which are rejected from a concentrating process after the
    recoverable valuable minerals have been extracted.                                                                                                                                                                                                                                                                                             
|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).                                                                                                                                                                                                                                                                                                                                                                                                  
|                                             
|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                                                                                                                                                                                                                                                                                                                                                                                                   



|Rio Tinto 2007 Form 20-F | 177
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      to Contents

EXCHANGE RATES

The following tables show, for the periods and dates indicated, certain information
  regarding the exchange rates for the pound sterling and Australian dollar,
  based on the Noon Buying Rates for pounds sterling and Australian dollars expressed
in US dollars per £1.00 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    |  |       |  |       | 
|                       |        |  |         |  |      |  |      |  |                        |  |        |  |         |  |       |  |       | 
|2007                   | 1.99   |  | 2.00    |  | 2.11 |  | 1.92 |  | 2007                   |  | 0.878  |  | 0.839   |  | 0.937 |  | 0.772 | 
|2006                   | 1.96   |  | 1.84    |  | 1.98 |  | 1.72 |  | 2006                   |  | 0.788  |  | 0.753   |  | 0.791 |  | 0.706 | 
|2005                   | 1.73   |  | 1.82    |  | 1.93 |  | 1.71 |  | 2005                   |  | 0.734  |  | 0.763   |  | 0.799 |  | 0.727 | 
|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 | 
|                       |        |  |         |  |      |  |      |  |                        |  |        |  |         |  |       |  |       | 

|Note                                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Noon Buying Rate on such dates differed
        slightly from the rates used in the preparation of Rio Tintos 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.



|FINANCIAL CALENDAR |  |                                                                                                                
|------------------ |  | ---------------------------------------------------------------------------------------------------------------
|                   |  |                                                                                                                
|16 January 2008    |  | Fourth quarter 2007 operations review                                                                          
|13 February 2008   |  | Announcement of results for 2007                                                                               
|20 February 2008   |  | Rio Tinto plc and Rio Tinto Limited shares and Rio Tinto plc ADRs quoted ex-dividend for2007 final dividend  
|22 February 2008   |  | Record date for 2007 final dividend for Rio Tinto plc shares and ADRs                                          
|26 February 2008   |  | Record date for 2007 final dividend for Rio Tinto Limited shares                                               
|19 March 2008      |  | Plan notice date for election under the dividend reinvestment plan for the
    2007 final dividend             
|11 April 2008      |  | Payment date for 2007 final dividend to holders of Ordinary shares                                             
|14 April 2008      |  | Payment date for 2007 final dividend for holders of Rio Tinto plc ADRs                                         
|16 April 2008      |  | First quarter 2008 operations review                                                                           
|17 April 2008      |  | Annual general meeting for Rio Tinto plc                                                                       
|24 April 2008      |  | Annual general meeting for Rio Tinto Limited                                                                   
|16 July 2008       |  | Second quarter 2008 operations review                                                                          
|26 August 2008     |  | Announcement of half year results for 2008                                                                     
|3 September 2008   |  | Rio Tinto plc and Rio Tinto Limited shares and Rio Tinto plc ADRs quoted ex-dividend for2008 interim dividend
|5 September 2008   |  | Record date for 2008 interim dividend for Rio Tinto plc shares and ADRs                                        
|9 September 2008   |  | Record date for 2008 interim dividend for Rio Tinto Limited shares                                             
|11 September 2008  |  | Plan notice date for election under the dividend reinvestment plan for the
    2008 interimdividend            
|2 October 2008     |  | Payment date for 2008 interim dividend to holders of Ordinary shares                                           
|3 October 2008     |  | Payment date for 2008 interim dividend for holders of Rio Tinto plc ADRs                                       
|15 October 2008    |  | Third quarter 2008 operations review                                                                           
|January 2009       |  | Fourth quarter 2008 operations review                                                                          
|February 2009      |  | Announcement of results for 2008                                                                               



|Rio Tinto 2007 Form 20-F | 178
|------------------------ | ---

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2007 Financial statements

ContentsPagePrimary
        financial statementsGroup income
        statement
	  A-2Group cash
        flow statement
	  A-3Group balance
        sheet
	  A-4Group statement
        of recognised income and expense (SORIE)
	  A-5Reconciliation
        with Australian IFRS
	  A-6Outline
      of dual listed companies structure and basis of financial statements
	  A-6Notes to
        the 2007 Financial statementsNote
	  1 – Principal
        accounting policies
	  A-7Group
        income statementNote
	  2 – Reconciliation
        of net earnings to underlying earnings
	  A-17Note
	  3 – Net operating
        costs
	  A-17Note
	  4 – Employment
        costs
	  A-18Note

5 – Impairment
        (charges)/reversals
	  A-18Note
	  6 – Share of
        profit after tax of equity accounted units
	  A-19Note
	  7 – Interest
        receivable and payable
	  A-19Note
	  8 – Tax on profit
	  A-19Note
	  9 – Earnings
        per ordinary share
	  A-20Note
	  10 – Dividends
	  A-21Group
        balance sheetNote
	  11 – Goodwill
	  A-22Note
	  12 – Intangible
        assets
	  A-23Note
	  13 – Property,
        plant and equipment
	  A-24Note
	  14 – Investments
        in equity accounted units
	  A-25Note
	  15 – Net debt
        of equity accounted units
	  A-25Note
	  16 – Inventories
	  A-25Note
	  17 – Trade and
        other receivables
	  A-26Note
	  18 – Deferred
        taxation
	  A-27Note
	  19 – Assets held
        for sale
	  A-28Note
	  20 – Other financial
        assets
	  A-28Note
	  21 – Cash and
        cash equivalents
	  A-28Note
	  22 – Borrowings
	  A-29Note
	  23 – Capitalised
        finance leases
	  A-30Note
	  24 – Consolidated
        net debt
	  A-30Note
	  25 – Trade and
        other payables
	  A-31Note
	  26 – Other financial
        liabilities
	  A-31Note
	  27 – Provisions
        (not including taxation)
	  A-32


PageCapital
        and reservesNote
      28 – Share capital
        – Rio Tinto plc
      A-33Note
      29 – Share capital
        – Rio Tinto Limited
      A-33Note
      30 – Changes
        in equity, share premium and reserves
      A-34Additional
        disclosuresNote
      31 – Primary
        segmental analysis (by product group)
      A-36Note
      32 – Secondary
        segmental analysis (by geographical segment)
      A-38Note
      33 – Financial
        risk management
      A-39Note
      34 – Financial
        instruments
      A-44Note
      35 – Contingent
        liabilities and commitments
      A-50Note
      36 – Average
        number of employees
      A-51Note
      37 – Principal
        subsidiaries
      A-52Note
      38 – Principal
        jointly controlled entities
      A-53Note
      39 – Principal
        associates
      A-54Note
      40 – Principal
        jointly controlled assets and other proportionally consolidated units
      A-54Note
      41 – Purchases
        and sales of subsidiaries, joint ventures, associates and other interests
        in businesses
      A-55Note
      42 – Sales agreements
        after the balance sheet date
      A-56Note
      43 – Directors
        and key management remuneration
      A-57Note
      44 – Auditors
        remuneration
      A-58Note
      45 – Related
        party transactions
      A-59Note
      46 – Exchange
        rates in US$
      A-59Note
      47 – Bougainville
        Copper Limited (BCL)
      A-59Note
      48 – Share based
        payments
      A-60Note
      49 – Post retirement
        benefits
      A-65Note

50 –
        Rio Tinto financial information by business unit
      A-69Australian
        Corporations Act – Summary of ASIC relief
      A-72Report
        of independent registered public accounting firms
      A-73




A-1

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| | Group income statementYears ended 31 December
| | ---------------------------------------------
| |                                              

| |                                                                                                  |      |  | 2007    |   | 2006    |   | 2005    |  
| | ------------------------------------------------------------------------------------------------ | ---- |  | ------- | - | ------- | - | ------- | -
| |                                                                                                  | Note |  | US$m    |   | US$m    |   | US$m    |  
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Consolidated sales revenue                                                                       |      |  | 29,700  |   | 22,465  |   | 19,033  |  
| | Net operating costs (excluding line items shown separately)                                      | 3    |  | (20,752 | ) | (13,655 | ) | (12,186 | )
| | Impairment (charges)/reversals                                                                   | 5    |  | (58     | ) | 396     |   | 3       |  
| | Profit on disposal of interests
      in businesses                                              |      |  | 2       |   | 5       |   | 322     |  
| | Exploration and evaluation costs (a)                                                             | 12   |  | (321    | ) | (237    | ) | (250    | )
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Operating profit                                                                                 |      |  | 8,571   |   | 8,974   |   | 6,922   |  
| | Share of profit after tax of equity accounted units                                              | 6    |  | 1,584   |   | 1,378   |   | 776     |  
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Profit before finance items and taxation                                                         |      |  | 10,155  |   | 10,352  |   | 7,698   |  
| | Finance items                                                                                    |      |  |         |   |         |   |         |  
| | Net exchange gains/(losses) on external net debt and intragroup balances                         | 24   |  | 194     |   | 46      |   | (128    | )
| | Net gains/(losses) on currency and interest rate
derivatives not qualifying for hedge accounting |      |  | 57      |   | 35      |   | (51     | )
| | Interest receivable and similar income                                                           | 7    |  | 134     |   | 106     |   | 82      |  
| | Interest payable and similar charges                                                             | 7    |  | (538    | ) | (160    | ) | (173    | )
| | Amortisation of discount                                                                         |      |  | (166    | ) | (139    | ) | (116    | )
| |                                                                                                  |      |  |         |   |         |   |         |  
| |                                                                                                  |      |  | (319    | ) | (112    | ) | (386    | )
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Profit before taxation                                                                           |      |  | 9,836   |   | 10,240  |   | 7,312   |  
| | Taxation                                                                                         | 8    |  | (2,090  | ) | (2,373  | ) | (1,814  | )
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Profit for the year                                                                              |      |  | 7,746   |   | 7,867   |   | 5,498   |  
| |                                                                                                  |      |  |         |   |         |   |         |  
| | – attributable to outside equity shareholders                                                    |      |  | 434     |   | 429     |   | 283     |  
| | – attributable to equity shareholders of Rio Tinto (Net earnings)                                |      |  | 7,312   |   | 7,438   |   | 5,215   |  
| |                                                                                                  |      |  |         |   |         |   |         |  
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Basic earnings per ordinary share                                                                | 9    |  | 568.7   | c | 557.8   | c | 382.3   | c
| | Diluted earnings per ordinary share                                                              | 9    |  | 566.3   | c | 555.6   | c | 381.1   | c
| |                                                                                                  |      |  |         |   |         |   |         |  
| | Dividends paid during the year (US$m)                                                            | 10   |  | 1,507   |   | 2,573   |   | 1,141   |  
| | Dividends per share: paid during the year                                                        |      |  |         |   |         |   |         |  
| | – regular dividends                                                                              | 10   |  | 116.0   | c | 81.5    | c | 83.5    | c
| | – special dividend                                                                               | 10   |  | –       |   | 110.0   | c | –       |  
| | Dividends per share: proposed in the announcement of the results for the year                    |      |  |         |   |         |   |         |  
| | – final dividends  – regular                                                                     | 10   |  | 84.0    | c | 64.0    | c | 41.5    | c
| | – final dividends  – special                                                                     | 10   |  | –       |   | –       |   | 110.0   | c
| |                                                                                                  |      |  |         |   |         |   |         |  

|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Exploration and evaluation costs are stated
      net of gains on disposal of undeveloped properties totalling US$253
      million (2006: US$46 million; 2005: nil)

The notes on pages A-7 to A-71
  form part of these accounts.

A-2

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| | Group cash flow statementYears ended 31 December
| | ------------------------------------------------
| |                                                 

|    |                                                                                    |      |  | 2007    |   | 2006   |   | 2005   |  
|--- | ---------------------------------------------------------------------------------- | ---- |  | ------- | - | ------ | - | ------ | -
|    |                                                                                    | Note |  | US$m    |   | US$m   |   | US$m   |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash flow from consolidated
      operations (a)                                   |      |  | 10,805  |   | 9,196  |   | 7,431  |  
|    | Dividends from equity accounted
      units                                        |      |  | 1,764   |   | 1,727  |   | 600    |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash flow from operations                                                          |      |  | 12,569  |   | 10,923 |   | 8,031  |  
|    | Net interest paid                                                                  |      |  | (489    | ) | (128   | ) | (128   | )
|    | Dividends paid to outside shareholders                                             |      |  | (168    | ) | (193   | ) | (169   | )
|    | Tax paid                                                                           |      |  | (3,421  | ) | (2,799 | ) | (1,017 | )
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash flow from operating
      activities                                          |      |  | 8,491   |   | 7,803  |   | 6,717  |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash used in investing activities                                                  |      |  |         |   |        |   |        |  
|    | (Acquisitions) less disposals
      of subsidiaries, joint ventures and associates | 41   |  | (37,526 | ) | (279   | ) | 321    |  
|    | Purchase of property, plant
      and equipment and intangible assets              |      |  | (5,000  | ) | (3,992 | ) | (2,590 | )
|    | Sales of financial assets                                                          |      |  | 49      |   | 293    |   | 133    |  
|    | Purchases of financial assets                                                      |      |  | (273    | ) | (167   | ) | (231   | )
|    | Other investing cash flows                                                         |      |  | 8       |   | 56     |   | 110    |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash used in investing activities                                                  |      |  | (42,742 | ) | (4,089 | ) | (2,257 | )
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash flow before financing
      activities                                        |      |  | (34,251 | ) | 3,714  |   | 4,460  |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash from/(used in) financing
      activities                                     |      |  |         |   |        |   |        |  
|    | Equity dividends paid to Rio
      Tinto shareholders                              |      |  | (1,507  | ) | (2,573 | ) | (1,141 | )
|    | Own shares purchased from Rio
      Tinto shareholders                             |      |  | (1,624  | ) | (2,370 | ) | (877   | )
|    | Proceeds from issue of ordinary
      shares in Rio Tinto                          |      |  | 13      |   | 31     |   | 100    |  
|    | Additional borrowings                                                              |      |  | 39,195  |   | 483    |   | 388    |  
|    | Repayment of borrowings                                                            |      |  | (1,034  | ) | (1,102 | ) | (893   | )
|    | Other financing cash flows                                                         |      |  | 54      |   | 142    |   | 12     |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Cash from/(used in) financing
      activities                                     |      |  | 35,097  |   | (5,389 | ) | (2,411 | )
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Effects of exchange rates on
      cash and cash equivalents                       |      |  | (27     | ) | 30     |   | (8     | )
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Net increase / (decrease)
      in cash and cash equivalents                       |      |  | 819     |   | (1,645 | ) | 2,041  |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Opening cash and cash equivalents
      less overdrafts                            |      |  | 722     |   | 2,367  |   | 326    |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    | Closing cash and cash equivalents
      less overdrafts                            | 21   |  | 1,541   |   | 722    |   | 2,367  |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|(a) | Cash flow from consolidated
      operations                                       |      |  |         |   |        |   |        |  
|    | Profit for the period                                                              |      |  | 7,746   |   | 7,867  |   | 5,498  |  
|    | Adjustments for:                                                                   |      |  |         |   |        |   |        |  
|    | Taxation                                                                           |      |  | 2,090   |   | 2,373  |   | 1,814  |  
|    | Finance items                                                                      |      |  | 319     |   | 112    |   | 386    |  
|    | Share of profit after
      tax of equity accounted units                          |      |  | (1,584  | ) | (1,378 | ) | (776   | )
|    | Depreciation and amortisation                                                      |      |  | 2,115   |   | 1,509  |   | 1,338  |  
|    | Profit on disposal of
      interests in businesses                                |      |  | (2      | ) | (5     | ) | (322   | )
|    | Impairment charges/(reversals)                                                     | 5    |  | 58      |   | (396   | ) | (3     | )
|    | Provisions                                                                         | 27   |  | 308     |   | 60     |   | 202    |  
|    | Utilisation of provisions                                                          | 27   |  | (162    | ) | (194   | ) | (52    | )
|    | Utilisation of provision for
      post retirement benefits                        |      |  | (121    | ) | (77    | ) | (209   | )
|    | Change in inventories                                                              |      |  | 130     |   | (454   | ) | (249   | )
|    | Change in trade and other receivables                                              |      |  | (385    | ) | (394   | ) | (530   | )
|    | Change in trade and other payables                                                 |      |  | 375     |   | 116    |   | 303    |  
|    | Other items                                                                        |      |  | (82     | ) | 57     |   | 31     |  
|    |                                                                                    |      |  |         |   |        |   |        |  
|    |                                                                                    |      |  | 10,805  |   | 9,196  |   | 7,431  |  
|    |                                                                                    |      |  |         |   |        |   |        |  

The notes on pages A-7 to A-71
  form part of these accounts.

A-3

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| | Group balance
        sheetAt 31 December         
| | --------------------------------------------------
| |                                                   
| |                                                   
| |                                                   
| |                                                   
| | Non-current assets                                
| | Goodwill                                          
| | Intangible assets                                 
| | Property, plant and equipment                     
| | Investments in equity accounted units             
| | Loans to equity accounted units                   
| | Inventories                                       
| | Trade and other receivables                       
| | Deferred tax assets                               
| | Tax recoverable                                   
| | Other financial assets                            
| |                                                   
| |                                                   
| | Current assets                                    
| | Inventories                                       
| | Trade and other receivables                       
| | Assets held for sale                              
| | Loans to equity accounted units                   
| | Tax recoverable                                   
| | Other financial assets                            
| | Cash and cash equivalents                         
| |                                                   
| |                                                   
| | Current liabilities                               
| | Bank overdrafts repayable on demand               
| | Borrowings                                        
| | Trade and other payables                          
| | Liabilities of disposal groups held for sale      
| | Other financial liabilities                       
| | Tax payable                                       
| | Provisions                                        
| |                                                   
| |                                                   
| |                                                   
| | Net current assets                                
| |                                                   
| | Non-current liabilities                           
| | Borrowings                                        
| | Trade and other payables                          
| | Other financial liabilities                       
| | Tax payable                                       
| | Deferred tax liabilities                          
| | Provision for post retirement benefits            
| | Other provisions                                  
| |                                                   
| |                                                   
| |                                                   
| | Net assets                                        
| |                                                   
| | Capital and reserves                              
| | Share capital                                     
| | – Rio Tinto plc                                   
| | – Rio Tinto Limited (excl. Rio Tinto plc interest)
| | Share premium account                             
| | Other reserves                                    
| | Retained earnings                                 
| |                                                   
| | Equity attributable to Rio Tinto shareholders     
| | Attributable to outside equity shareholders       
| |                                                   
| | Total equity                                      
| |                                                   

The notes on pages A-7 to A-71
  form part of these accounts.

A-4

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| | Group statement
    of recognised income and expense (SORIE)                  
| | ------------------------------------------------------------------------------
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| | Currency translation adjustment                                               
| | Cash flow hedge fair value losses                                             
| | Gains on available for sale securities                                        
| | Cash
    flow hedge losses transferred to the income statement                
| | Gains
    on available for sale securities transferred to the income statement
| | Actuarial gains on post retirement benefit plans                              
| | Net tax recoverable recognised directly in equity                             
| |                                                                               
| | Net income recognised directly in equity                                      
| | Profit after tax for the year                                                 
| |                                                                               
| | Total recognised income for the year                                          
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| | Currency translation adjustment                                               
| | Cash flow hedge fair value losses                                             
| | Gains on available for sale securities                                        
| | Cash
    flow hedge losses transferred to the income statement                
| | Gains
    on available for sale securities transferred to the income statement
| | Actuarial gains on post retirement benefit plans                              
| | Net tax recoverable recognised directly in equity                             
| |                                                                               
| | Net income recognised directly in equity                                      
| | Profit after tax for the year                                                 
| |                                                                               
| | Total recognised income for the year                                          
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| |                                                                               
| | Currency translation adjustment                                               
| | Cash flow hedge fair value losses                                             
| | Gains on available for sale securities                                        
| | Cash
    flow hedge losses transferred to the income statement                
| | Gains
    on available for sale securities transferred to the income statement
| | Actuarial
    gains/(losses) on post retirement benefit plans                 
| | Net tax recoverable recognised directly in equity                             
| |                                                                               
| | Net income recognised directly in equity                                      
| | Profit after tax for the year                                                 
| |                                                                               
| | Total recognised income for the year                                          
| |                                                                               

The notes on pages A-7 to A-71
  form part of these accounts.

A-5

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| | Reconciliation
      with Australian IFRS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The Groups financial
      statements have been prepared in accordance with IFRS as adopted by the
      European Union (‘EU IFRS’), which differs in certain respects
      from the version of IFRS that is applicable in Australia (‘Australian
      IFRS’).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Prior to 1 January 2004, the
      Group’s financial statements were prepared in accordance with UK GAAP.
      Under EU IFRS, goodwill on acquisitions prior to 1998, which was eliminated
      directly against equity in the Group’s UK GAAP financial statements,
      has not been reinstated. This was permitted under the rules governing the
      transition to EU IFRS set out in IFRS 1. The equivalent Australian Standard,
      AASB 1, does not provide for the netting of goodwill against equity. As
      a consequence, shareholders’ funds under Australian IFRS include the
      residue of such goodwill, which amounted to US$736 million at 31 December
      2007 (2006: US$740 million).                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Save for the exception described
      above, the Group’s financial statements drawn up in accordance with
      EU IFRS are consistent with the requirements of Australian IFRS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Outline
      of dual listed companies structure and basis of financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The Rio Tinto GroupThese are the financial statements of
      the Rio Tinto Group (the ‘Group’), formed through the merger
      of economic interests (‘merger’) of Rio Tinto plc and Rio Tinto
      Limited, and 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Merger termsOn 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 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 standardsThe financial statements have been drawn
      up in accordance with International Financial Reporting Standards both as
      adopted by the European Union (‘EU IFRS’) and as issued by the
      International Accounting Standards Board (‘IFRS’). The merger
      of economic interests of Rio Tinto plc and Rio Tinto Limited was accounted
      for as a merger under UK GAAP. As permitted under the rules governing the
      transition to EU IFRS, which are set out in IFRS 1, the Group did not restate
      business combinations that occurred before the transition date of 1 January
      2004. As a result, the DLC merger of economic interests described above
      continues to be accounted for as a merger under EU IFRS.                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 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. For accounting purposes Rio Tinto plc
      and Rio Tinto Limited are viewed as a single public parent company (with
      their respective public shareholders being the shareholders in that single
      company). As a result the amounts attributable to both Rio Tinto plc and
      Rio Tinto Limited public shareholders are included in the amounts attributed
      to equity shareholders on the balance sheet, income statement and statement
      of recognised income and expense.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Australian Corporations
      ActThe 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 27 January 2006 (as amended on 22 December 2006).
      The main provisions of the order are that the financial statements are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | For further details
      of the ASIC Class Order relief see page A-72                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



A-6

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Notes to the 2007 Financial statements

|1 | PRINCIPAL ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The basis of preparation and
      accounting policies used in preparing the financial statements for the year
      ended 31 December 2007 are set out
      below.                                                                                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The financial statements are
      prepared in accordance with International Financial Reporting Standards
      both as adopted by the EU (EU IFRS) and as issued by the International
      Accounting Standards Board (IFRS). These standards are subject
      to Interpretationsissued from time
      to time by the International Financial Reporting Interpretations Committee
      (IFRIC).                                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | Basis of preparation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  | The financial statements for
      the year ended 31 December 2007 have been prepared on the basis of all IFRSs
      and Interpretations adopted by the
      European Union that are mandatory for periods ending 31 December 2007 and
      in accordance with applicable United
      Kingdom law, applicable Australian law as amended by the Australian Securities
      and Investments Commission Order dated
      27 January 2006 (as amended on 22 December 2006) and Article 4 of the European
      Union IAS regulation.                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The EU IFRS financial information
      has been drawn up on the basis of accounting policies consistent with those
      applied inthe financial statements
      for the year to 31 December 2006, except for the following:                                                                                                                                                                                                                                                                                                                                                         
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The following interpretations
      and standards were adopted in 2007:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The effect of the above interpretations
      and standards is not material to Group earnings or to shareholders
      funds in the current or prior periods.
      Therefore, prior period information has not been restated.                                                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The Group has not applied the
      following pronouncements: those which are expected to be most relevant to
      the Group are IFRS 8 andIAS 27 (revised).                                                                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | The Group is evaluating the
      impact of the above pronouncements. The effect of the revision to IAS 27
      will depend on the extent of relevant future
      transactions. Otherwise, the above changes are not expected to be material
      to the Groups earnings or to shareholders
      funds.                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | Certain prior year information
      has been reclassified to conform with the current year presentation. Exploration
      andevaluation costs charged against
      income were previously included in Cash used in investing activities
      but are now includedwithin Cash
      flow from operating activities. As a result, exploration and evaluation
      costs expensed of US$273 million havebeen
      reclassified in the comparative figures for full year 2006, within the Cash
      flow statement.                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | Judgements in applying accounting
      policies and key sources of estimation uncertainty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  | Many of the amounts included
      in the financial statements involve the use of judgement and/or estimation.
      These judgements and estimates are
      based on managements best knowledge of the relevant facts and circumstances,
      having regard to previous experience,
      but actual results may differ from the amounts included in the financial
      statements. Information about suchjudgements
      and estimation is contained in the accounting policies and/or the Notes
      to the financial statements, and the key areasare
      summarised below.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | Areas of judgement that have
      the most significant effect on the amounts recognised in the financial statements
      are:                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



A-7

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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Key sources of estimation
        uncertainty that have a significant risk of causing a material adjustment
    to the carrying amounts of  assets and liabilities
    within the next financial year are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(a) | Accounting convention                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The financial information included
      in the financial statements for the year ended 31 December 2007, and for
      the related comparative period, has been prepared under the historical cost
      convention as modified by the revaluation of certain derivative contracts
      and financial assets and liabilities as set out in the notes below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(b) | Basis of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The financial statements consist
      of the consolidation of the accounts of Rio Tinto plc and Rio Tinto Limited
      (together
      the Companies) and their respective subsidiaries (together the
Group).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Subsidiaries:Subsidiaries
      are entities over which the Companies have the power to govern the financial
      and operating policies in order to obtain benefits from their activities.
      Control is presumed to exist where the Companies own more than one half
      of the voting rights (which does not always equate to percentage ownership)
      unless it can be demonstrated that ownership does not constitute control.
      Control does not exist where joint venture partners hold veto rights over
      significant operating and financial decisions. In assessing control, potential
      voting rights that are currently exercisable or convertible are taken into
      account. The consolidated financial statements include all the assets,
      liabilities, revenues, expenses and cash flows of the Companies and their
      subsidiaries after eliminating intercompany balances, transactions and
      unrealised gains. For partly owned subsidiaries, the net assets and net
      earnings attributable to outside shareholders are presented as Amounts
      attributable to outside equity shareholders in the consolidated balance
      sheet and consolidated income
statement.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Associates:An
      associate is an entity, that is neither a subsidiary nor a joint venture,
      over whose operating and financial policies the Group exercises significant
      influence. Significant influence is presumed to exist where the Group has
      between 20 per cent and 50 per cent of the voting rights, but can also
      arise where the Group holds less than 20 per cent if it has the power to
      be actively involved and influential in policy decisions affecting the
      entity. The Groups share of the net assets, post tax 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, which therefore includes any goodwill on acquisition,
      and then, in subsequent periods, adjusting the carrying amount of the investment
      to reflect the Groups share of the associates results less any impairment
      of goodwill and any other changes to the associates net assets such as
    dividends.                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Joint ventures:A
      joint venture is a contractual arrangement whereby two or more parties undertake
      an economic activity that is subject to joint control. Joint control is
      the contractually agreed sharing of control such that significant operating
      and financial decisions require the unanimous consent of the parties sharing
      control. In some situations, joint control exists even though the Group
      has an ownership interest of more than 50 per cent because of the veto rights
      held by joint venture partners. The Group has two types of joint ventures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Jointly controlled entities
        (JCEs):A
      JCE is a joint venture that involves the establishment of a corporation,
      partnership or other entity in which each venturer has a long term interest.
    JCEs are accounted for using the equity accounting method.
        In addition, the carrying value will include
        any long term debt interests that in substance form part of the Groups
    net investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Jointly controlled assets
        (JCAs):A
      JCA is a joint venture in which the venturers have joint control over the
      assets contributed to or acquired for the purposes of the joint venture.
      JCAs do not involve the establishment of a corporation, partnership or
      other entity. This includes situations where the participants derive benefit
      from the joint activity through a share of the production, rather than
      by receiving a share of the results of trading. The Groups proportionate
      interest in the assets, liabilities, revenues, expenses and cash flows
      of JCAs are incorporated into the Groups financial statements under the
    appropriate headings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Group uses the term Equity accounted
    units to refer to associates and jointly controlled entities collectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Where necessary, adjustments are made to
      the results of subsidiaries, joint ventures and associates to bring their
    accounting policies into line with those used by the Group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | On the acquisition of a subsidiary,
      the purchase method of accounting is used whereby the purchase consideration
      is allocated to the identifiable assets, liabilities and contingent liabilities
      (identifiable net assets) of the subsidiary on the basis of fair value
      at the date of acquisition. Provisional fair values allocated at a reporting
    date are finalised within twelve months of the acquisition date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The results of businesses acquired
      during the year are brought into the consolidated financial statements
      from the
      date on which control, joint control or significant influence commences
      and taken out of the financial statements from the date on which control,
    joint control or significant influence ceases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Disposals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Individual non current assets
      or disposal groups (ie groups of assets and liabilities) to be disposed
      of, by sale
      or otherwise in a single transaction, are classified as held for sale
      if
the following criteria are met:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



A-8

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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Disposal groups held for sale
      are carried at the lower of their carrying amount and fair value less costs
      to sell and are presented separately
      on the face of the balance sheet with the related assets and liabilities
      being presented as a single asset and a
      single liability respectively. Comparative balance sheet information is
      not restated. Disposal groups acquired with a view to resale
      are held at fair value determined at the acquisition date and no profits
      or losses are recognised between acquisition date
      and disposal date.                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For a disposal group held
      for sale that continues to be carried at its carrying amount, the profit
      on disposal, calculated as net sales
      proceeds less the carrying amount, is recognised
      in the income statement in the period during which control passes to the
      buyer. Where the fair value less
      costs to sell of a disposal group is lower than the carrying amount, the
      resulting charge is recognised in
      the income statement in the period during
      which the disposal group is classified as held for sale. On classification
      as held for sale, the assets are
      no longer depreciated.                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | If the disposal group or groups
      represent a separate major line of business or geographical area of operations,
      or are part of a single coordinated
      plan to dispose of a separate major line of business or geographical area
      of operations, or are subsidiaries acquired exclusively
      with a view to resale, they are classified as discontinued operations. The
      net results attributable to such discontinued operations
      are shown separately and comparative figures in the income and cash flow
      statements are restated                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(c) | Sales revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Sales revenue comprises sales
      to third parties at invoiced amounts, with most sales being priced ex works,
      free on board (f.o.b.) or cost, insurance
      and freight (c.i.f.). Amounts billed to customers in respect of shipping
      and handling are classed as sales revenue
      where the Group is responsible for carriage, insurance and freight. All
      shipping and handling costs incurred by the Group are
      recognised as operating costs. If the Group is acting solely as an agent,
      amounts billed to customers are offset against the relevant
      costs. Revenue from services is recognised as services are rendered and
      accepted by the customer.   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Sales revenue excludes any
      applicable sales taxes. Mining royalties are presented as an operating cost
      or, where they are in substance a
      profit based tax, within taxes. Co-product revenues are included in sales
      revenue .                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | A large proportion of Group
      production is sold under medium to long term contracts, but sales revenue
      is only recognised on individual sales when
      persuasive evidence exists that all of the following criteria are met:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | These conditions are generally
      satisfied when title passes to the customer. In most instances sales revenue
      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.                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Sales revenue is commonly
      subject to adjustment based on an inspection of the product by the customer.
      In such cases, sales revenue is initially
      recognised on a provisional basis using the Groups best estimate of
      contained metal, and adjusted subsequently.                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Certain products are provisionally
      priced, ie 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.                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Revenue on provisionally priced
      sales is recognised based on estimates of the fair value of the consideration
      receivable based on forward market
      prices. At each reporting date provisionally priced metal is marked to market
      based on the forward selling price for the quotational period stipulated
      in the contract. For this purpose, the selling price can be measured reliably
      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 product sold by the
      Group is directly linked to the form in which it is traded on that market.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The marking to market of provisionally
      priced sales contracts is recorded as an adjustment to sales revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(d) | Currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The functional currency for
      each entity in the Group, and for jointly controlled entities and associates,
      is the currency of the primary economic
      environment in which it operates. For many entities, this is the currency
      of the country in which they operate. Transactions denominated in other currencies
      are converted to the functional currency at the exchange rate ruling at
      the date of the transaction unless
      hedge accounting applies. Monetary assets and liabilities denominated in
      foreign currencies are retranslated at year end exchange
      rates.                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The US dollar is the currency
      in which the Groups Financial statements are presented, as it most
      reliably reflects the global business
      performance of the Group as a whole.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | On consolidation, income statement
      items are translated from the functional currency into US dollars at average
      rates of exchange Balance sheet items
      are translated into US dollars at year end exchange rates. Exchange differences
      on the translation of the net assets
      of entities with functional currencies other than the US dollar, and any
      offsetting exchange differences on net debt hedging those
      net assets, are recognised directly in the foreign currency translation
      reserve via the statement of recognised income and expense.                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Exchange gains and losses
      which arise on balances between Group entities are taken to the foreign
      currency translation reserve where
      the intra group balance is, in substance, part of the Groups net investment
      in the entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The balance of the foreign
      currency translation reserve relating to an operation that is disposed of
      is transferred to the income statement
      at the time of the disposal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



A-9

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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Group finances its operations
      primarily in US dollars but part of the Group’s US dollar debt is located
      in subsidiaries having functional
      currencies other than the US dollar. Except as noted above, exchange gains
      and losses relating to such US dollar debt are
      charged or credited to the Group’s income statement in the year in which
      they arise. This means that the impact of financing in US dollars on the Group’s
      income statement is dependent on the functional currency of the particular
      subsidiary where the debt is located.                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Except as noted
      above, or in note (p) below relating to derivative contracts, all exchange
      differences are charged or credited to the
      income statement in the year in which they
      arise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(e) | Goodwill and intangible
      assets (excluding exploration and evaluation expenditure)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Goodwill represents the difference
         between the cost of acquisition and the fair value of the identifiable
        assets,
      liabilities and contingent liabilities
       acquired. Goodwill is initially determined based on provisional fair values.

      Fair values are finalised within
      12  months of the acquisition date. Goodwill on acquisition of subsidiaries

      is separately disclosed and goodwill on acquisitions
      of associates and JCEs is included within
       investments in equity accounted units. For non wholly owned subsidiaries,

      minority interests are initially
      recorded  based on the minorities’ proportion of the fair values
      for the assets and  liabilities recognised at acquisition.                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | In 1997 and previous years,
      goodwill was eliminated against reserves in the year of acquisition as a
      matter of accounting policy, as
      was then permitted under UK GAAP. Such goodwill
      was not reinstated under subsequent UK accounting standards or on transition
      to IFRS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Goodwill is not amortised; rather
      it is tested annually for impairment. Goodwill is allocated to the cash
      generating unit or group of
      cash generating units expected to benefit
      from the related business combination for the purposes of impairment testing.
      Goodwill impairments
      cannot be reversed.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Intangible assets acquired as
      part of an acquisition of a business are capitalised separately from goodwill
      if the asset is separable or arises
      from contractual or legal rights, and the fair value can be measured reliably
      on initial recognition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Purchased intangible assets
      are initially recorded at cost and finite life intangible assets are amortised
      over their useful economic lives on
      a straight line or units of production basis, as appropriate. Intangible
      assets having indefinite lives and intangible assets that
      are not yet ready for use are not amortised and are reviewed annually for
      impairment.                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Intangible assets are considered
      to have indefinite lives when, based on an analysis of all of the relevant
      factors, there is no foreseeable limit
      to the period over which the asset is expected to generate cash flows for
      the Group. The factors considered in making
      this determination include the existence of contractual rights for unlimited
      terms; or evidence that renewal of the contractual rights
      without significant incremental cost can be expected for indefinite periods
      into the future in view of the Group’s future investment
      intentions. The life cycles of the products and processes that depend on
      the asset are also considered.                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Amortisation is calculated
      on a straight line basis. The following useful lives have been determined
      for the classes of intangible assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Internally generated intangible
      assets and computer software: 2 to 5 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Other intangible assets: 2
      to 20 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Trademarks: 14 to 20 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Patented and non patented technology:
      10 to 20 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Power contracts: 2 to 39 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Other purchase and customer
      contracts: 5 to 15 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(f) | Exploration and evaluation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Exploration and evaluation
      expenditure comprises costs that 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/or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | –
      compiling prefeasibility and feasibility studies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Exploration expenditure relates
      to the initial search for deposits with economic potential. Evaluation expenditure
      arises from a detailed assessment
      of deposits that have been identified as having economic potential.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Expenditure on exploration
      activity is not capitalised.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Capitalisation of evaluation
      expenditure commences when there is a high degree of confidence in the project’s
      viability and hence it is
      probable that future economic benefits will flow to the Group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Such capitalised evaluation
      expenditure is reviewed for impairment at each balance sheet date. In the
      case of undeveloped properties, there
      may be only inferred resources to form a basis for the impairment review.
      The carrying values of these assets are reviewed
      twice per annum by management and the results of these reviews are reported
      to 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Subsequent recovery of the
      resulting carrying value depends on successful development of the area of
      interest or sale of the project. If
      a project does not prove viable, all irrecoverable costs associated with
      the project net of any related impairment provisions
      are written off.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING
      POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(g) | Property, plant
      and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The cost of property,
      plant and equipment comprises its purchase price, any costs directly attributable
      to bringing the asset to the location
      and condition necessary for it to be capable of operating in the manner
      intended by management and the estimated close down
      and restoration costs associated with the asset. 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’.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In open pit mining
      operations, it is necessary to remove overburden and other waste materials
      to access ore from which minerals can
      be extracted economically. The process of mining overburden and waste materials
      is referred to as stripping. During the development
      of a mine (or pit), before production commences, stripping costs are capitalised
      as part of the investment in construction
      of the mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Costs associated
      with commissioning new assets, in the period before they are capable of
      operating in the manner intended by management,
      are capitalised. Development costs incurred after the commencement of production
      are capitalised to the extent they are
      expected to give rise to a future economic benefit. Interest 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 its intended use are complete.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(h) | Deferred stripping                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | As noted above,
      stripping costs incurred in the development of a mine (or pit) before production
      commences are capitalised as part of
      the cost of constructing the mine (or pit) and subsequently amortised over
      the life of the mine (or pit) on a units of production basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Where a mine operates
      several open pits that are regarded as separate operations for the purpose
      of mine planning, stripping costs
      are accounted for separately by reference to the ore from each separate
      pit. If, however, the pits are highly integrated for the
      purpose of mine planning, the second and subsequent pits are regarded as
      extensions of the first pit in accounting for stripping
      costs. In such cases, the initial stripping (ie overburden and other waste
      removal) of the second and subsequent pits is
      considered to be production phase stripping relating to the combined operation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Group’s
      determination of whether multiple pit mines are considered separate or integrated
      operations depends on each mine’s
      specific circumstances. The following factors would point towards the stripping
      costs for the individual pits being accounted for
      separately.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | This additional
      factor would point to an integrated operation in accounting for stripping
      costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | If the designs
      of the second and subsequent pits are significantly influenced by opportunities
      to optimise output from the several
      pits combined, including the co-treatment or blending of the output from
      the pits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The relative importance
      of each of the above factors is considered in each case to determine whether,
      on balance, the stripping costs should
      be attributed to the individual pit or to the combined output from the several
      pits. As this analysis requires judgment, another
      company could make the determination that a mine is separate or integrated
      differently than the Group, even if the fact pattern
      appears to be similar. To the extent the determination is different, the
      resulting accounting would also be different.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Group defers
      stripping costs incurred subsequently, 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 and the effect is material. This is generally
      the case where there are fluctuations in stripping costs over the life of
      the mine (or pit), and the effect is material. 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 (or pit) Ratio.
      Such deferred costs are then charged against reported profits
      to the extent that, in subsequent periods, the current period Ratio falls
      short of the life of mine (or pit) Ratio. The life of mine (or
      pit) Ratio is based on proved and probable reserves of the mine (or pit).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The life of mine
      (or pit) waste-to-ore ratio is a function of the pit design(s) 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 (or pit) Ratio even if they do not affect the pit design(s).
      Changes to the life of mine (or pit) Ratio are accounted for prospectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In the production
      stage of some mines (or pits), further development of the mine (or pit)
      requires a phase of unusually high overburden
      removal activity that is similar in nature to preproduction mine development.
      The costs of such unusually high overburden
      removal activity are deferred and charged against reported profits in subsequent
      periods on a units of production basis. This
      accounting treatment is consistent with that for stripping costs incurred
      during the development phase of a mine (or pit), before production
      commences.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | If the Group were
      to expense production stage 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 operation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Deferred stripping
      costs are included in ‘Mining properties and leases’ within
      property, plant and equipment or in investments in equity
      accounted units, as appropriate. These form part of the total investment
      in the relevant cash 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 net operating costs or in the Group’s
      share of the results of its equity accounted units, as appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                    
|(i) | Depreciation and impairment                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                    
|    | Depreciation of non current
      assets                                                                                                                                                                                                                                           
|    | Property, plant
      and equipment is depreciated over its useful life, or over the remaining
      life of the mine if shorter. The major categories
      of property, plant and equipment are depreciated on a units of production
      and/or straight-line basis as follows:
|    |                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    

| | Buildings           |  | 5 to 50 years.  
| | ------------------- |  | ----------------
| | Plant and equipment |  | 3 to 35 years.  
| | Power assets        |  | 25 to 100 years.
| | Land                |  | Not depreciated.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Residual
      values and useful lives are reviewed, and adjusted if appropriate, at each
      balance sheet date. Changes to the estimated residual
      values or useful lives 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 proved and probable reserves and,
      for some mines, other mineral resources. Such
      non reserve material may be included in depreciation calculations in limited
      circumstances and where there is a high degree of
      confidence in its economic extraction. 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.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Impairment of
      non current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Property,
      plant and equipment and finite life intangible assets are reviewed for impairment
      if there is any indication that the carrying amount
      may not be recoverable. In addition, an impairment loss is recognised for
      any excess of carrying amount over the fair value less
      costs to sell of a non-current asset or disposal group held for sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | When
      a review for impairment is conducted, the recoverable amount is assessed
      by reference to the higher of ‘value in use’ (being the
      net present value of expected future cash flows of the relevant cash generating
      unit) and ‘fair value less costs to sell’. Where there
      is no binding sale agreement or active market, fair value less costs to
      sell is based on the best information available to reflect the
      amount the Group could receive for the cash generating unit in an arm’s
      length transaction. The estimates used for impairment reviews
      are based on detailed mine plans and operating plans, modified as appropriate
      to meet the requirements of IAS 36 ‘Impairment of Assets’. Future
      cash flows are based on estimates of:                                                                                                                                                                                                                                                                                                                               
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 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 proved
      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.                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | The
      expected future cash flows of cash generating units reflect long term mine
      plans which are based on detailed research, analysis
      and iterative modelling to optimise the level of return from investment,
      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 the related production costs.                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | In
      some cases, prices applying to some part of the future sales volumes of
      a cash generating unit are predetermined by existing sales
      contracts. The effects of such contracts are taken into account in forecasting
      future cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Cost
      levels incorporated in the cash flow forecasts are based on the current
      long term mine plan for the cash generating unit. For impairment
      reviews, recent cost levels are considered, together with expected changes
      in costs that are compatible with the current condition
      of the business and which meet the requirements of IAS 36. IAS 36 includes
      a number of restrictions on the future cash flows
      that can be recognised in value in use assessments in respect of future
      restructurings and improvement related capital expenditure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 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 cash flows, to the extent that such risks are not reflected
      in the forecast cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | For
      operations with a functional currency other than the US dollar, the impairment
      review is undertaken in the relevant functional currency.
      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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | When
      calculating ‘value in use’, IAS 36 requires that calculations
      should be based on exchange rates current at the time of the assessment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(j) | Determination of ore reserve
      estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | 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 Exploration Results, Mineral
      Resources and Ore Reserves of December 2004
      (the JORC code). Reserves, and for certain mines, other mineral 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 and clean up 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | There are numerous uncertainties
      inherent in estimating ore reserves, and assumptions that are valid at the
      time of estimation may change
      significantly when new information becomes available. Changes in the forecast
      prices of commodities, exchange rates, production
      costs or recovery rates may change the economic status of reserves and may,
      ultimately, result in the reserves being restated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(k) | 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. Estimated 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 the 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,
      eg revisions to cost estimates and to the
      estimated lives of operations, and are subject to formal review at regular
      intervals.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | 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, the Group’s businesses estimate their respective costs based on feasibility
      and engineering studies using current restoration standards and techniques.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The amortisation or ‘unwinding’
      of the discount applied in establishing the net present value of provisions
      is charged to the income statement
      in each accounting period. The amortisation of the discount is shown as
      a financing cost, rather than as an operating cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The initial closure provision
      together with other movements in the provisions for close down and restoration
      costs, including those resulting from
      new disturbance, updated cost estimates, changes to the estimated lives
      of operations and revisions to discount rates
      are capitalised within property, plant and
      equipment. These costs are then depreciated over the lives of the assets
      to which they relate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Where rehabilitation is conducted
      systematically over the life of the operation, rather than at the time of
      closure, provision is made
      for the estimated outstanding continuous
      rehabilitation work at each balance sheet date and the cost is charged to
      the income statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | 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 income statement. 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. Remediation procedures may commence
      soon after the time the disturbance, remediation process and estimated remediation
      costs become known, but can continue
      for many years depending on the nature of the disturbance and the remediation
      techniques.                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | As noted above, the ultimate
      cost of environmental remediation is uncertain and cost estimates can vary
      in response to many factors including
      changes to the relevant legal requirements, the emergence of new restoration
      techniques or experience at other mine
      sites. The expected timing of expenditure can also change, for example in
      response to changes in ore reserves or production
      rates. As a result there could be significant adjustments to the provision
      for close down and restoration and environmental
      clean up, which would affect future financial results.                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(l) | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Inventories are valued at the
      lower of cost and net realisable value, primarily on a weighted average
      cost basis. Average costs are
      calculated by reference to the cost levels
      experienced in the current month together with those in opening inventory.
      Cost for raw materials and stores
      is purchase price and for partly processed and saleable products is generally
      the cost of production. For this
      purpose the costs of production include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | 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
      it is expensed as incurred. Where the future processing of this ore can
      be predicted with confidence, eg 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 included within non current
      assets. Work in progress inventory includes
      ore stockpiles and other partly processed material. Quantities are assessed
      primarily through surveys and assays.                                                                                                                                                                                                                                                        



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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(m) | Taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Current tax is the tax expected
      to be payable on the taxable income for the year calculated using rates
      that have been enacted or
      substantively enacted by the balance sheet
      date. It includes adjustments for tax expected to be payable or recoverable
      in respect of previous
      periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Temporary differences are the
      difference between the carrying value of an asset or liability and its tax
      base. Full provision is made for
      deferred taxation on all temporary differences
      existing at the balance sheet date with certain limited exceptions. The
      main exceptions to
      this principle are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Deferred tax is provided in
      respect of fair value adjustments on acquisitions. These adjustments may
      relate to assets such as mining rights
      that, in general, are not eligible for income tax allowances. In such cases,
      the provision for deferred tax is based on the difference
      between the carrying value of the asset and its nil income tax base. The
      existence of a tax base for capital gains tax
      purposes is not taken into account in determining
      the deferred tax provision relating to such mineral rights because it is
      expected that the
      carrying amount will be recovered primarily through use and not from the
      disposal of mineral rights. Also, the Group is only entitled to a deduction for capital
      gains tax purposes if the mineral rights are sold or formally relinquished.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Current and deferred tax relating
      to items recognised directly in equity are recognised in equity and not
      in the income statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(n) | Post employment benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | For defined benefit post employment
      plans, the difference between the fair value of the plan assets (if any)
      and the present value of the
      plan liabilities is recognised as an asset or liability on the balance sheet.
      Any asset recognised is restricted, if appropriate, to the
      present value of any amounts the Group expects to recover by way of refunds
      from the plan or reductions in future contributions. Actuarial gains and losses arising
      in the year are taken to the statement of recognised income and expense.
      For this purpose, actuarial gains
      and losses comprise both the effects of changes in actuarial assumptions
      and experience adjustments arising because
      of differences between the previous actuarial assumptions and what has actually
      occurred.                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Other movements in the net
      surplus or deficit are recognised in the income statement, including the
      current service cost, any past
      service cost and the effect of any curtailment
      or settlements. The interest cost less the expected return on assets is
      also charged to the
      income statement. The amount charged to the income statement in respect
      of these plans is included within operating costs or in the Group’s share of the
      results of equity accounted units as appropriate.                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The most significant assumptions
      used in accounting for pension plans are the long term rate of return on
      plan assets, the discount rate and
      the mortality assumptions. 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 income statement. The discount rate is used to determine
      the net present value of future
      liabilities. Each year, the unwinding of the discount on those liabilities
      is charged to the Group’s income statement as the
      interest cost. The mortality assumption is
      used to project the future stream of benefit payments, which is then discounted
      to arrive at
      a net present value of liabilities.                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The values attributed to plan
      liabilities are assessed in accordance with the advice of independent qualified
      actuaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Group’s contributions
      to defined contribution pension plans are charged to the income statement
      in the period to which the contributions
      relate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(o) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Cash and cash equivalents are
      carried in the balance sheet at amortised cost. For the purposes of the
      balance sheet, cash and cash equivalents
      comprise cash on hand, deposits held on call with banks and short term,
      highly liquid investments that are readily
      convertible into known amounts of cash and which are subject to insignificant
      risk of changes in value. For the purposes
      of the cash flow statement, cash
      and cash equivalents are net of bank overdrafts that are repayable on demand.                                                                                                                                                                                                                                                                                                                  



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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(p) | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (i) Financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Group classifies its financial
      assets in the following categories: at fair value through profit or loss,
      loans and receivables, available-for-sale
      and held to maturity investments. The classification depends on the purpose
      for which the financial assets were acquired. Management determines the
      classification of financial assets at initial recognition.                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (a) Financial assets at fair
      value through profit or loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Derivatives are included in
      this category unless they are designated as hedges. Assets in this category
      are classified as current
      assets. Generally, the Group does not acquire
      financial assets for the purpose of selling in the short term.                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Financial assets carried at
      fair value through profit or loss are initially recognised at fair value
      and transaction costs are expensed in
      the income statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (b) Loans and receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Loans and receivables are non
      derivative financial assets with fixed or determinable payments that are
      not quoted in an active market. They
      are classified as current assets or non current assets based on their maturity
      date. Loans and receivables are classified
      as either ‘trade and other receivables’ or ‘other financial
      assets’ in the balance sheet. Loans and receivables are carried at amortised cost less any impairment.                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (c) Available-for-sale financial
      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Available-for-sale financial
      assets are non derivatives that are either designated as available for sale
      or not classified in any of the
      other categories. They are included in non-current
      assets unless the Group intends to dispose of the investment within 12 months of the balance sheet date.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Changes in the fair value of
      financial assets denominated in a currency other than the functional currency
      of the holder and classified
      as available-for-sale are analysed between
      translation differences and other changes in the carrying amount of the
      security. Exchange differences on
      retranslation of the cost of the security and any impairment charges are
      recognised in profit or loss, while other changes in fair value are recognised
      in equity.                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | When financial assets classified
      as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income
      statement within ‘net operating costs’.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Dividends on available-for-sale
      equity instruments are also recognised in the income statement within ‘interest
      receivable and similar income’
      when the Group’s right to receive payments is established.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Financial assets not carried
      at fair value through profit and loss are initially recognised on the transaction
      date at fair value plus transaction
      costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Financial assets are derecognised
      when the investments mature or are sold, and substantially all the risks
      and rewards of ownership have been
      transferred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (ii) Financial liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Borrowings and other financial
      liabilities are recognised initially at fair value, net of transaction costs
      incurred and are subsequently
      stated at amortised initial book value. Any
      difference between the amounts originally received (net of transaction costs)
      and the redemption value is recognised
      in the income statement over the period to maturity using the effective
      interest method.                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (iii) Derivative financial
      instruments and hedge accounting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Group’s policy with
      regard to ‘Financial risk management’ is set out in note 33.
      When the Group enters into derivative contracts these transactions are designed to
      reduce exposures related to assets and liabilities, firm commitments or
      anticipated transactions.                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Commodity based contracts that
      meet the definition of a derivative in IAS 39 but are entered into in accordance
      with the Group’s expected
      purchase or sales requirements are recognised in earnings as described in
      note 1(c) Sales revenue above.                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | All other derivatives are initially
      recognised at their fair value on the date the derivative contract is entered
      into and are subsequently remeasured
      subject to IAS 39 at their fair value at each balance sheet date. The method
      of recognising the resulting gain or loss depends on whether or not the derivative
      is designated as a hedging instrument and, if so, the nature of the item
      being hedged. The Group
      designates certain derivatives as either hedges of the fair value of recognised
      assets or liabilities or of firm commitments (fair value
      hedges) or hedges of highly probable forecast transactions (cash flow hedges).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



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Notes to the 2007 Financial statements

|1   | PRINCIPAL ACCOUNTING
      POLICIEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (iii) Derivative financial
      instruments and hedge accounting continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (iv) Fair value                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | 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 relevant market prices are available, these have been used
      to determine fair values. In other cases, fair values have
      been calculated using quotations from independent financial institutions,
      or by using valuation techniques consistent with general
      market practice applicable to the instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The fair values of the
      various derivative instruments used for hedging purposes are disclosed in
      note 34. Movements on the hedging reserve
      within shareholders’ equity are shown in note 30. The full fair value
      of a derivative that qualifies for hedge accounting is classified
      as a non current asset or liability if the remaining maturity of the hedged
      item is more than 12 months, and as a current asset
      or liability, if the remaining maturity of the hedged item is less than
      12 months.                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (v) Trade receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Trade receivables are
      recognised initially at fair value and are subsequently reduced by any provision
      for impairment. A provision for impairment
      of trade receivables is established when there is objective evidence that
      the Group will not be able to collect all amounts due.
      Indicators of impairment would include financial difficulties of the debtor,
      likelihood of the debtor’s insolvency, default in payment
      or a significant deterioration in credit worthiness.
      Any impairment is recognised in the income statement within net operating
      costs. When a trade receivable is
      uncollectable, it is written off against the allowance account. Subsequent
      recoveries of amounts previously written
      off are credited against net operating costs in the income statement.                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (vi) Trade payables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Trade payables are recognised
      initially at fair value and subsequently measured at amortised cost using
      the effective interest method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(q) | Share based payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The fair value of cash-settled
      share plans is recognised as a liability over the vesting period of the
      awards. Movements in that liability between
      accounting dates are recognised as an expense. The grant date fair value
      of the awards is taken to be the market value of the
      shares at the date of award reduced by a factor for anticipated relative
      Total Shareholder Return (‘TSR’) performance. Fair values
      are subsequently remeasured at each accounting date
      to reflect the number of awards expected to vest based on the current and anticipated TSR performance. If any awards
      are ultimately settled in shares, the liability is transferred direct to
      equity as part of the consideration for
      the equity instruments issued.                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Group’s equity-settled
      share plans are settled either by the issue of shares by the relevant parent
      company, by the purchase of shares on market
      or by the use of shares previously acquired as part of a share buyback.
      The fair value of the share plans is recognised
      as an expense over the expected vesting period with a corresponding entry
      to retained earnings for Rio Tinto plc plans and
      to other reserves for Rio Tinto Limited plans. If the cost of shares acquired
      to satisfy the plans exceeds the expense charged, the excess
      is taken to the appropriate reserve. The fair value of the share plans is
      determined at the date of grant, taking into account any market
      based vesting conditions attached to the award (eg Total Shareholder Return).
      The Group uses fair values provided by independent
      actuaries calculated using a lattice based option valuation model.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Non market based vesting
      conditions (eg earnings per share targets) are taken into account in estimating
      the number of awards likely to vest. The
      estimate of the number of awards likely to vest is reviewed at each balance
      sheet date up to the vesting date, at which
      point the estimate is adjusted to reflect the actual awards issued. No adjustment
      is made after the vesting date even if the awards
      are forfeited or not exercised.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Further information about the
      treatment of individual share based payment plans is provided in note 48.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



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Notes to the 2007 Financial statements

|2 | RECONCILIATION OF NET EARNINGS
	      TO UNDERLYING
EARNINGS
|- | ------------------------------------------------------------
|  |                                                             

| |                                                                                                                      |         |   |          |   | Outside   |   | Net    |   | Net    |   | Net    |  
| | -------------------------------------------------------------------------------------------------------------------- | ------- | - | -------- | - | --------- | - | ------ | - | ------ | - | ------ | -
| |                                                                                                                      | Pre-tax |   | Taxation |   | interests |   | amount |   | amount |   | amount |  
| |                                                                                                                      | 2007    |   | 2007     |   | 2007      |   | 2007   |   | 2006   |   | 2005   |  
| | Exclusions from Underlying earnings                                                                                  | US$m    |   | US$m     |   | US$m      |   | US$m   |   | US$m   |   | US$m   |  
| |                                                                                                                      |         |   |          |   |           |   |        |   |        |   |        |  
| | Profits
	      less losses on disposal of interests in businesses (a)                                                | 2       |   | (1       | ) | –         |   | 1      |   | 3      |   | 311    |  
| | Impairment
	      (charges)/reversals (b) (note 5)                                                                   | (58     | ) | 18       |   | (73       | ) | (113   | ) | 44     |   | 4      |  
| | Exchange
	      differences and gains/(losses) on derivatives:                                                       |         |   |          |   |           |   |        |   |        |   |        |  
| | –
	        Exchange gains/(losses) on US dollar net debt and intragroup
    balances (c)                             | 201     |   | (37      | ) | (8        | ) | 156    |   | (14    | ) | (99    | )
| | –
	      Gains/(losses) on currency and interest ratederivatives
	      not qualifying for hedge accounting (d), (e) | 52      |   | (19      | ) | 1         |   | 34     |   | 30     |   | (40    | )
| | Other
	      exclusions (f)                                                                                          | (308    | ) | 99       |   | –         |   | (209   | ) | 37     |   | 84     |  
| |                                                                                                                      |         |   |          |   |           |   |        |   |        |   |        |  
| | Total
	        excluded from Underlying earnings                                                                     | (111    | ) | 60       |   | (80       | ) | (131   | ) | 100    |   | 260    |  
| |                                                                                                                      |         |   |          |   |           |   |        |   |        |   |        |  
| | Net
	        earnings                                                                                                | 9,836   |   | (2,090   | ) | (434      | ) | 7,312  |   | 7,438  |   | 5,215  |  
| |                                                                                                                      |         |   |          |   |           |   |        |   |        |   |        |  
| | Underlying
	        earnings                                                                                         | 9,947   |   | (2,150   | ) | (354      | ) | 7,443  |   | 7,338  |   | 4,955  |  
| |                                                                                                                      |         |   |          |   |           |   |        |   |        |   |        |  
| |                                                                                                                      |         |   |          |   |           |   |        |   |        |   |        |  

|    | ‘Underlying earnings’ is an alternative
      measure of earnings, which is reported by Rio Tinto to provide greater understanding
      of the underlying business performance of its operations. Underlying earnings
      and Net earnings both represent amounts attributable to Rio Tinto shareholders.
      Items (a) to (f) below are excluded from Net earnings in arriving at Underlying
      earnings.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(a) | Gains and losses arising on the disposal
      of interests in businesses. (Additional information on these disposals is
      included in note 41.)                                                                                                                                                                                                                                                              
|   
|(b) | Charges and credits relating to impairment of
non-current assets other than undeveloped properties.                                                                                                                                                                                                                                                                                                               
|   
|(c) | Exchange gains and losses on US dollar net debt and intragroup balances. This includes amounts relating to equity accounted units.                                                                                                                                                                                                                                                                                
|   
|(d) | Valuation changes on currency and interest rate derivatives which are ineligible for hedge accounting, other than those embedded in commercial contracts.                                                                                                                                                                                                                                                         
|   
|(e) | The currency revaluation of embedded US dollar derivatives contained in contracts held by entities whose functional currency is not the US dollar.                                                                                                                                                                                                                                                                
|   
|(f) | Other credits and charges that, individually,
or in aggregate if of a similar type, are of a nature or size to require exclusion
in order to provide additional insight into underlying business
performance.                                                                                                                                                                                                     
|   
|    | Other charges excluded from Underlying earnings,
in 2007, primarily resulted from the acquisition of Alcan. These include the
non recurring impact of US$213
million on pre-tax profit of revaluing inventories on acquisition based on selling
price, together with integration costs.                                                                                                                           
|   
|   

|3 | NET OPERATING COSTS                                                             
|- | --------------------------------------------------------------------------------
|  |                                                                                 
|  |                                                                                 
|  |                                                                                 
|  |                                                                                 
|  | Raw
	      materials and consumables                                            
|  | Amortisation
	      of intangible assets                                        
|  | Depreciation
	      of property, plant & equipment                              
|  | Employment
    costs                                                            
|  | Repairs
    and maintenance                                                     
|  | Shipping
    costs                                                              
|  | Other
    freight costs                                                         
|  | Decrease
	      / (Increase) in inventories                                     
|  | Royalties                                                                       
|  | Amounts
	      charged by jointly controlled entities mainly for toll processing
|  | Other
    external costs                                                        
|  | Provisions                                                                      
|  | Research
	      and development                                                 
|  | Costs
	      included above qualifying for capitalisation                       
|  | Other
    operating income                                                      
|  |                                                                                 
|  | Net
	        operating costs (excluding items shown separately)                 
|  |                                                                                 
|  |                                                                                 

|(a) | Total net operating costs includes the impact
of Alcan from the period 24 October 2007 to 31 December 2007 totalling US$3,691
million.
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                       
|(b) | Information on auditors’ remuneration is included in note 44.                                                                         



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Notes to the 2007 Financial statements

|4 | EMPLOYMENT COSTS               
|- | -------------------------------
|  |                                
|  |                                
|  |                                
|  |                                
|  | Employment costs               
|  | – Wages and salaries           
|  | – Social security costs        
|  | – Net post retirement cost (a) 
|  | – Share option costs (b)       
|  |                                
|  |                                
|  | Less: charged within provisions
|  |                                
|  |                                
|  |                                
|  |                                

|(a) | Post retirement costs include
      the aggregate service and interest cost of providing post retirement benefits
      under defined benefit plans, net of the
      related expected return on plan assets. Additional detail of the amount
      charged to the income statement in respect
      of post retirement plans, and the treatment of actuarial gains and losses,
      is shown in note 49.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                           
|(b) | Further details of the Group’s share
      options and other share based payment plans are given in note 48.                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                           
|(c) | Employment costs includes the
      impact of Alcan for the period 24 October 2007 to 31 December 2007, amounting
      to US$635 million.                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                           

|  |                                           
|- | ------------------------------------------
|5 | IMPAIRMENT
      (CHARGES) / REVERSALS    
|  |                                           
|  |                                           
|  |                                           
|  |                                           
|  | Cash generating unit                      
|  |                                           
|  | Argyle Diamonds (a)                       
|  | Palabora (b)                              
|  | Tarong coal mine (c)                      
|  | Kennecott Utah Copper (KUC)
      (d)     
|  | Iron Ore Company of Canada
      (IOC) (e)
|  | Other                                     
|  |                                           
|  |                                           
|  |                                           

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The impairment of Argyle in 2006 followed adverse changes in assumptions about future prices, capital and operating costs. The value in use was assessed by reference to cash flows forecast in
real terms and discounted at a pre-tax rate of 8 per cent. The 2006 impairment provision included goodwill of US$223 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | Further deterioration in value during the first
half of 2007, relating mainly to large increases in the estimated capital cost
of Argyle’s underground project, triggered another assessment of  its recoverable
amount. Impairment of property, plant and equipment was assessed by reference
to fair value less costs to sell. The determination of fair value less costs
to sell was based on the estimated amount that would be obtained from sale in

an arms length transaction between knowledgeable and willing parties. This
estimate was derived from discounting projections of cash flows, using valuation
assumptions that a buyer might be expected to apply. The US dollar amount of
the
impairment is US$14 million higher than reported at the half year as a result
of retranslation from Australian dollars at the average exchange rate for the
full year.
|   
|(b) | An increase in the Groups long term copper
price assumption triggered an assessment of the recoverable amount of Palabora.
The value in use was based on cash flows forecast in real terms and discounted
at a pre-tax rate of 12 per cent. This led to a full reversal of the remainder
of the impairment provision recognised in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(c) | During 2006, a continuation of operating losses
triggered an assessment of the recoverable amount of Tarong, one of the Group’s
coal mines in Australia. The value in use was based on cash flows forecast in
real terms and discounted at a pre-tax rate of 8 per cent. During 2007, the sale
of Tarong was announced for an amount that led to full reversal of the remainder
of the provision recognised in the previous year.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(d) | In 2006, an increase in the Groups long
term copper price assumption triggered an assessment of the recoverable amount
of
KUC. The value in use was based on cash flows forecast in real terms and discounted
at a pre-tax rate of 8 per cent. This led to a full reversal of the remainder
of the impairment provision recognised in
2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(e) | In 2006, an increase in the Groups long
term iron ore price assumption triggered an assessment of the recoverable amount
of IOC. The value in use was based on cash flows forecast in real  terms and
discounted at a pre-tax rate of 8 per cent. This led to a full reversal of the
impairment provision recognised in 2002, which had aligned the carrying value
with the value negotiated between shareholders during that year as part of a

financial restructuring exercise.                                                                                                                                                                                                                                                                                                                                                                                            



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Notes to the 2007 Financial statements

|6 | SHARE OF PROFIT AFTER TAX
      OF EQUITY ACCOUNTED UNITS                                  |        |   |       |   |       |  
|- | ------------------------------------------------------------------------------------------ | ------ | - | ----- | - | ----- | -
|  |                                                                                            | 2007   |   | 2006  |   | 2005  |  
|  |                                                                                            | US$m   |   | US$m  |   | US$m  |  
|  |                                                                                            |        |   |       |   |       |  
|  | Sales revenue (a)                                                                          | 3,818  |   | 2,975 |   | 1,709 |  
|  | Operating costs                                                                            | (1,261 | ) | (771  | ) | (504  | )
|  |                                                                                            |        |   |       |   |       |  
|  |                                                                                            |        |   |       |   |       |  
|  | Profit before finance items
      and taxation                                             | 2,557  |   | 2,204 |   | 1,205 |  
|  |                                                                                            |        |   |       |   |       |  
|  | Exchange gains/(losses) on
      external net debt                                         | 7      |   | 3     |   | (17   | )
|  | Losses on currency and interest
      rate derivatives not qualifying for hedge accounting | (5     | ) | –     |   | –     |  
|  | Net interest payable                                                                       | (49    | ) | (45   | ) | (40   | )
|  | Amortisation of discount                                                                   | (9     | ) | (14   | ) | (11   | )
|  |                                                                                            |        |   |       |   |       |  
|  | Profit before taxation                                                                     | 2,501  |   | 2,148 |   | 1,137 |  
|  |                                                                                            |        |   |       |   |       |  
|  | Taxation                                                                                   | (917   | ) | (770  | ) | (361  | )
|  |                                                                                            |        |   |       |   |       |  
|  | Profit for the year (Rio
      Tinto share)                                                | 1,584  |   | 1,378 |   | 776   |  
|  |                                                                                            |        |   |       |   |       |  

|    |                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------
|(a) | The sales revenue of equity accounted units excludes charges by jointly controlled entities to Rio Tinto Group subsidiaries.



|7 | INTEREST RECEIVABLE AND PAYABLE                    |      |  |      |   |      |   |      |  
|- | -------------------------------------------------- | ---- |  | ---- | - | ---- | - | ---- | -
|  |                                                    |      |  | 2007 |   | 2006 |   | 2005 |  
|  |                                                    | Note |  | US$m |   | US$m |   | US$m |  
|  |                                                    |      |  |      |   |      |   |      |  
|  | Interest receivable and similar
      income from: |      |  |      |   |      |   |      |  
|  | – Equity accounted
      units                     |      |  | 28   |   | 27   |   | 19   |  
|  | – Other investments
      (a)                      |      |  | 101  |   | 69   |   | 55   |  
|  |                                                    |      |  |      |   |      |   |      |  
|  |                                                    |      |  | 129  |   | 96   |   | 74   |  
|  | Other interest receivable                          |      |  | 5    |   | 10   |   | 8    |  
|  |                                                    |      |  |      |   |      |   |      |  
|  | Total interest receivable
      and similar income |      |  | 134  |   | 106  |   | 82   |  
|  |                                                    |      |  |      |   |      |   |      |  
|  | Interest payable and similar
      charges (b)     |      |  | (660 | ) | (220 | ) | (201 | )
|  | Amounts capitalised                                | 13   |  | 122  |   | 60   |   | 28   |  
|  |                                                    |      |  |      |   |      |   |      |  
|  | Total interest payable and
      similar charges   |      |  | (538 | ) | (160 | ) | (173 | )
|  |                                                    |      |  |      |   |      |   |      |  

|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Interest income from other investments comprises US$80 million (2006: US$58 million; 2005: US$34 million) of interest income from bank deposits and US$21 million (2006: US$11
million; 2005: US$21 million) from other financial assets.                     
|   
|(b) | Interest payable and similar charges comprises
US$685 million (2006: US$175 million; 2005: US$196 million) of interest
on bank loans and other borrowings and US$25 million gain
(2006: US$45 million loss; 2005: US$5 million loss) from interest rate
swaps.



|8 | TAX ON PROFIT                             |      |  |       |   |       |   |       |  
|- | ----------------------------------------- | ---- |  | ----- | - | ----- | - | ----- | -
|  |                                           |      |  |       |   |       |   |       |  
|  |                                           |      |  | 2007  |   | 2006  |   | 2005  |  
|  |                                           | Note |  | US$m  |   | US$m  |   | US$m  |  
|  |                                           |      |  |       |   |       |   |       |  
|  | UK taxation                               |      |  |       |   |       |   |       |  
|  | Corporation tax at 30%                    |      |  |       |   |       |   |       |  
|  | – Current tax charge                      |      |  | 98    |   | 86    |   | 137   |  
|  | – Deduct: relief
      for overseas taxes |      |  | (98   | ) | (72   | ) | (134  | )
|  | – Deferred tax (credit)/charge            |      |  | (150  | ) | 27    |   | (22   | )
|  |                                           |      |  |       |   |       |   |       |  
|  |                                           |      |  | (150  | ) | 41    |   | (19   | )
|  |                                           |      |  |       |   |       |   |       |  
|  | Australian taxation                       |      |  |       |   |       |   |       |  
|  | Corporation tax at 30%                    |      |  |       |   |       |   |       |  
|  | – Current tax charge                      |      |  | 1,396 |   | 1,517 |   | 1,026 |  
|  | – Deferred tax (credit)/charge            |      |  | (18   | ) | (97   | ) | 30    |  
|  |                                           |      |  |       |   |       |   |       |  
|  |                                           |      |  | 1,378 |   | 1,420 |   | 1,056 |  
|  |                                           |      |  |       |   |       |   |       |  
|  | Other countries taxation                  |      |  |       |   |       |   |       |  
|  | – Current tax charge                      |      |  | 897   |   | 896   |   | 684   |  
|  | – Deferred tax (credit)/charge            |      |  | (35   | ) | 16    |   | 93    |  
|  |                                           |      |  |       |   |       |   |       |  
|  |                                           |      |  | 862   |   | 912   |   | 777   |  
|  |                                           |      |  |       |   |       |   |       |  
|  | Total taxation charge                     |      |  |       |   |       |   |       |  
|  | – Current taxation
      charge           |      |  | 2,293 |   | 2,427 |   | 1,713 |  
|  | – Deferred taxation
      (credit)/charge | 8    |  | (203  | ) | (54   | ) | 101   |  
|  |                                           |      |  |       |   |       |   |       |  
|  |                                           |      |  | 2,090 |   | 2,373 |   | 1,814 |  
|  |                                           |      |  |       |   |       |   |       |  



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Notes
  to the 2007 Financial statements

|8 | TAX ON PROFITcontinued                                                           |        |      |        |      |       |  
|- | -------------------------------------------------------------------------------- | ------ | ---- | ------ | ---- | ----- | -
|  |                                                                                  |        |      |        |      |       |  
|  | 2007                                                                             |        | 2006 |        | 2005 |      
|  |                                                                                  | US$m   |      | US$m   |      | US$m  |  
|  |                                                                                  |        |      |        |      |       |  
|  | Prima facie tax reconciliation                                                   |        |      |        |      |       |  
|  | Profit before taxation                                                           | 9,836  |      | 10,240 |      | 7,312 |  
|  | Deduct: share of profit after
      tax of equity accounted units                | (1,584 | )    | (1,378 | )    | (776  | )
|  |                                                                                  |        |      |        |      |       |  
|  | Parent companies’ and
      subsidiaries’ profit before tax                      | 8,252  |      | 8,862  |      | 6,536 |  
|  | Prima facie tax payable at
      UK and Australian rate of 30%                   | 2,476  |      | 2,659  |      | 1,961 |  
|  | Impact of items excluded in
      arriving at Underlying earnings (c)            | (28    | )    | 201    |      | (102  | )
|  |                                                                                  |        |      |        |      |       |  
|  | Other permanent differences                                                      |        |      |        |      |       |  
|  | Additional recognition of deferred
      tax assets (a)                          | –      |      | (335   | )    | –     |  
|  | Utilisation of previously unrecognised
      deferred tax assets                 | –      |      | (140   | )    | (83   | )
|  | Adjustments to deferred tax
      liabilities following changes in tax rates (b) | (392   | )    | (46    | )    | –     |  
|  | Other tax rates applicable
      outside the UK and Australia                    | 271    |      | 242    |      | 214   |  
|  | Resource depletion and other
      depreciation allowances                       | (173   | )    | (187   | )    | (164  | )
|  | Research, development and other
      investment allowances                      | (81    | )    | (21    | )    | (21   | )
|  | Other                                                                            | 17     |      | –      |      | 9     |  
|  |                                                                                  |        |      |        |      |       |  
|  | Total taxation charge                                                            | 2,090  |      | 2,373  |      | 1,814 |  
|  |                                                                                  |        |      |        |      |       |  

|    |                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The “Additional recognition of deferred
      tax assets” of US$335 million in 2006 reflected improved prospects
      for future earnings from the Group’s US operations.                                       
|   
|(b) | The “Adjustments to deferred tax
      liabilities following changes in tax rates”, totalling US$392
      million (2006: US$46 million; 2005: nil), result largely from a reduction
      in Canadian tax rates.
|   
|(c) | An analysis of the impact on the tax reconciliation
      of items excluded in arriving at Underlying earnings is given below:                                                                                   
|   

| |                                                                                                        | 2007 |   | 2006 |   | 2005 |  
| | ------------------------------------------------------------------------------------------------------ | ---- | - | ---- | - | ---- | -
| |                                                                                                        | US$m |   | US$m |   | US$m |  
| |                                                                                                        |      |   |      |   |      |  
| | Impairment (charges)/reversals                                                                         | (1   | ) | 157  |   | (1   | )
| | Disposal of interests in businesses                                                                    | –    |   | –    |   | (86  | )
| | Exchange gains/(losses) on external debt, intragroup balances and derivatives not designated as hedges | (19  | ) | 55   |   | 11   |  
| | Other exclusions                                                                                       | (8   | ) | (11  | ) | (26  | )
| |                                                                                                        |      |   |      |   |      |  
| |                                                                                                        | (28  | ) | 201  |   | (102 | )
| |                                                                                                        |      |   |      |   |      |  

|    |                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | This tax reconciliation relates to the
      parent companies, subsidiaries and proportionally consolidated units. The
      Group’s share of profit of equity accounted units is net of tax charges
      of US$917 million (2006: US$770 million; 2005: US$361 million).



|9 | EARNINGS PER ORDINARY SHARE                                                                             |         |  |         |  |         | 
|- | ------------------------------------------------------------------------------------------------------- | ------- |  | ------- |  | ------- | 
|  |                                                                                                         | 2007    |  | 2006    |  | 2005    | 
|  |                                                                                                         |         |  |         |  |         | 
|  | Weighted average number of ordinary shares in issue (millions) (b)                                      | 1,285.8 |  | 1,333.4 |  | 1,364.1 | 
|  | Effect of dilutive securities (share options)                                                           | 5.5     |  | 5.4     |  | 4.4     | 
|  |                                                                                                         |         |  |         |  |         | 
|  | Diluted weighted average number
      of ordinary shares in issue (millions) (c)                        | 1,291.3 |  | 1,338.8 |  | 1,368.5 | 
|  |                                                                                                         |         |  |         |  |         | 
|  | Net earnings (US$ millions)                                                                             | 7,312   |  | 7,438   |  | 5,215   | 
|  | Basic earnings per share attributable to ordinary shareholders of Rio Tinto (US cents)                  | 568.7c  |  | 557.8c  |  | 382.3c  | 
|  | Diluted earnings per share attributable to ordinary shareholders of Rio Tinto (US cents) (c)            | 566.3c  |  | 555.6c  |  | 381.1c  | 
|  |                                                                                                         |         |  |         |  |         | 
|  | Underlying earnings (US$ millions)                                                                      | 7,443   |  | 7,338   |  | 4,955   | 
|  | Basic Underlying earnings per share attributable to ordinary shareholders of Rio Tinto (US cents)       | 578.9c  |  | 550.3c  |  | 363.2c  | 
|  | Diluted Underlying earnings per share attributable to ordinary shareholders of Rio Tinto (US cents) (c) | 576.4c  |  | 548.1c  |  | 362.1c  | 
|  |                                                                                                         |         |  |         |  |         | 

|    |                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Underlying earnings per share is calculated
      from underlying earnings, detailed information on which is given in note
      2.                                                                                                                                                                                                        
|   
|(b) | The weighted average number of shares
      is calculated as the average number of Rio Tinto plc shares outstanding
      not held as treasury shares 1,000.1 million (2006: 1,047.7 million) plus
      the average number of Rio Tinto Limited shares outstanding not held by Rio
      Tinto plc of 285.7 million (2006: 285.7 million).
|   
|(c) | For the purposes of calculating diluted
      earnings per share, the effect of dilutive securities is added to the weighted
      average number of shares described in (b) above. This effect is calculated
      under the treasury stock method.                                                                                       



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Notes to the 2007 Financial statements

|10 | DIVIDENDS                                                                                       |            |  |            |  |            | 
|-- | ----------------------------------------------------------------------------------------------- | ---------- |  | ---------- |  | ---------- | 
|   |                                                                                                 | 2007       |  | 2006       |  | 2005       | 
|   |                                                                                                 | US$m       |  | US$m       |  | US$m       | 
|   |                                                                                                 |            |  |            |  |            | 
|   | Rio Tinto plc previous year Final dividend paid (b)                                             | 646        |  | 442        |  | 481        | 
|   | Rio Tinto plc previous year Special dividend paid (b)                                           | –          |  | 1,171      |  | –          | 
|   | Rio Tinto plc Interim dividend paid (b)                                                         | 518        |  | 417        |  | 412        | 
|   | Rio Tinto Limited previous year Final dividend paid (b)                                         | 198        |  | 118        |  | 140        | 
|   | Rio Tinto Limited previous year Special dividend paid (b)                                       | –          |  | 312        |  | –          | 
|   | Rio Tinto Limited Interim dividend paid (b)                                                     | 145        |  | 113        |  | 110        | 
|   |                                                                                                 |            |  |            |  |            | 
|   | Dividends paid during the year                                                                  | 1,507      |  | 2,573      |  | 1,143      | 
|   |                                                                                                 |            |  |            |  |            | 
|   |                                                                                                 | Dividends  |  | Dividends  |  | Dividends  | 
|   |                                                                                                 | per share  |  | per share  |  | per share  | 
|   |                                                                                                 | 2007       |  | 2006       |  | 2005       | 
|   |                                                                                                 |            |  |            |  |            | 
|   | Rio Tinto plc previous year Final and Special (pence) (b)                                       | 32.63p     |  | 85.24p     |  | 23.94p     | 
|   | Rio Tinto plc Interim (pence) (b)                                                               | 25.59p     |  | 21.42p     |  | 21.75p     | 
|   | Rio Tinto Limited previous year Final and
Special – fully franked at 30% (Australian cents) (b) | 82.84c     |  | 200.28c    |  | 58.29c     | 
|   | Rio Tinto Limited Interim  – fully franked
at 30% (Australian cents) (b)                        | 60.69c     |  | 52.48c     |  | 50.56c     | 
|   |                                                                                                 |            |  |            |  |            | 
|   |                                                                                                 |            |  |            |  |            | 
|   |                                                                                                 | Number     |  | Number     |  | Number     | 
|   |                                                                                                 | of shares  |  | of shares  |  | of shares  | 
|   |                                                                                                 | 2007       |  | 2006       |  | 2005       | 
|   |                                                                                                 | (millions) |  | (millions) |  | (millions) | 
|   |                                                                                                 |            |  |            |  |            | 
|   | Rio Tinto plc previous year Final and Special (b)                                               | 1,007.3    |  | 1,063.9    |  | 1,068.0    | 
|   | Rio Tinto plc Interim (b)                                                                       | 996.7      |  | 1,042.7    |  | 1,069.3    | 
|   | Rio Tinto Limited previous
      year Final and Special – fully franked at 30% (b)              | 285.7      |  | 285.7      |  | 311.9      | 
|   | Rio Tinto Limited Interim  – fully franked
at 30% (b)                                           | 285.7      |  | 285.7      |  | 285.4      | 
|   |                                                                                                 |            |  |            |  |            | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The dividends paid in 2007 are based on
      the following US cents per share amounts: 2006 final – 64.0 cents,
      2007 interim – 52.0 cents (2006 dividends paid: 2005 final –
      41.5 cents, 2006 special –110
      cents, 2006 interim – 40.0 cents; 2005 dividends paid: 2004 final
      – 45.0 cents, 2005 interim – 38.5 cents).                                                                                                                                                                            
|   
|(b) | 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.
      The number of shares on which Rio Tinto plc dividends are based excludes
      those held as treasury shares.                                                                                                                                                                                        
|   
|(c) | In addition, the directors of Rio Tinto
      announced a final dividend of 84 US cents per share on 13 February 2008.
      This is expected to result in payments of US$1.1 billion (Rio Tinto
      plc: US$0.8 billion, Rio Tinto Limited US$0.3 billion). The dividends
      will be paid on 11 April 2008 to Rio Tinto plc shareholders on the register
      at the close of business on 22 February 2008 and to Rio Tinto Limited shareholders
      on the register at the close of business on 26 February 2008.
|   
|(d) | 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 2008.                                                                                                                                                                                                                                                                                                                                       
|   
|(e) | The approximate amount of the Rio Tinto
      Limited consolidated tax group’s retained profits and reserves that
      could be distributed as dividends and franked out of credits, that arose
      from net payments of income tax in respect of periods up to 31 December
      200 7 (after deducting franking credits expected to be utilised on the 2007
      final dividend declared), is US$7,759 million.                                                                                                      



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Notes to the 2007 Financial statements

|11 | GOODWILL
|-- | --------

| |                                    | 2007   |   | 2006  |  
| | ---------------------------------- | ------ | - | ----- | -
| |                                    | US$m   |   | US$m  |  
| |                                    |        |   |       |  
| | Net book value                     |        |   |       |  
| | At 1 January                       | 841    |   | 1,020 |  
| | Adjustment on currency translation | 114    |   | 49    |  
| | Additions                          | 14,542 |   | –     |  
| | Disposals                          | –      |   | (5    | )
| | Impairment charges                 | –      |   | (223  | )
| |                                    |        |   |       |  
| | At 31 December                     | 15,497 |   | 841   |  
| |                                    |        |   |       |  
| | – cost                             | 15,758 |   | 1,077 |  
| | – accumulated
      impairment     | (261   | ) | (236  | )
| |                                    |        |   |       |  
| | At 1 January                       |        |   |       |  
| |                                    |        |   |       |  
| | – cost                             |        |   | 1,034 |  
| | – accumulated
      impairment     |        |   | (14   | )
| |                                    |        |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Impairment Tests for GoodwillGoodwill, including that related
      to equity accounted units, is reviewed annually for impairment. The amounts
      as at 31 December 2007 disclosed above include goodwill of US$14,533
      million (2006: nil) relating to the 2007 acquisition of Alcan Inc., goodwill
      relating to Australian Iron Ore of US$437 million (2006: US$394
      million) and goodwill of US$231 million (2006: US$231 million)
      relating to Rio Tinto Energy America (RTEA). Australian Iron Ore comprises
      the business units located in the Pilbara region of Western Australia that
      mine iron ore, namely Robe River and Hamersley Iron.
      The Group acquired Alcan Inc. on 23 October
          2007. The recoverable amount of its provisionally determined goodwill
          has been assessed by reference to fair value less cost to sell, as
          determined from the observable purchase price paid by the Group. The
          allocation of the cost of the acquisition was based on the advice of
          expert valuers. This allocation was determined over the months following
          the acquisition, and no diminution in its value is considered to have
          occurred since the date of acquisition. The allocation of the goodwill
          to cash generating units, will be completed within one year of the
          acquisition.
      The recoverable amount of the goodwill
          relating to Australian Iron Ore has been assessed by reference to value
          in use. Valuations are based on cash flow projections that incorporate
          best estimates of selling prices, ore grades, production rates, future
          capital expenditure and production costs over the life of each mine.
          In line with normal practice in the mining industry, the cash flow
          projections are based on long term mine plans covering the expected
          life of each operation. Therefore, the projections generally cover
          periods well in excess of five years.
      Assumptions about selling prices, operating
          costs, exchange rates, and discount rates are particularly important
          in these valuations.
      Future selling prices and operating costs
          have been estimated in line with the policy in note 1(i). Long term
          average selling prices are forecast taking account of estimates of
          the costs of producers of each commodity. Forecasts of operating costs
          are based on detailed mine plans which take account of all relevant
          characteristics of the ore body.
      Discount rates represent an estimate
          of the rate the market would apply having regard to the time value
          of money and the risks specific to the asset for which the future cash
          flow estimates have not been adjusted. The Group’s weighted average
          cost of capital is used as a start point for determining the discount
          rate with appropriate adjustments for the risk profile of the individual
          cash generating unit. Goodwill relating to Australian Iron Ore has
          been reviewed applying a discount rate of 6.5 per cent to the post-tax
          cash flows expressed in real terms.
      The recoverable amount of the goodwill
        at RTEA has been assessed by reference to fair value less costs to sell.
        The determination of fair value less costs to sell was based on the estimated
        amount that would be obtained from sale in an arms length transaction
        between knowledgeable and willing parties. This estimate was derived by
        discounting projections of cash flows, using valuation assumptions that
        a buyer might be expected to apply.



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Notes to the 2007 Financial statements

|12 | INTANGIBLE ASSETS
|-- | -----------------

| |                                          |                |   |                  |   |            |   |            |   |       |  
| | ---------------------------------------- | -------------- | - | ---------------- | - | ---------- | - | ---------- | - | ----- | -
| |                                          |                |   | Trademark/       |   | Contract   |   |            |   |       |  
| |                                          | Exploration    |   | patented
    and |   | based      |   | Other      |   |       |  
| |                                          | and            |   | non patented     |   | intangible |   | intangible |   |       |  
| |                                          | evaluation (a) |   | technology       |   | assets (b) |   | assets     |   | Total |  
| | Year ended 31 December 2007              | US$m           |   | US$m             |   | US$m       |   | US$m       |   | US$m  |  
| |                                          |                |   |                  |   |            |   |            |   |       |  
| | Net book value                           |                |   |                  |   |            |   |            |   |       |  
| | At 1 January 2007                        | 196            |   | –                |   | –          |   | 188        |   | 384   |  
| | Adjustment on currency translation       | 9              |   | 12               |   | 7          |   | 22         |   | 50    |  
| | Acquisition of subsidiary (note 41)      | 9              |   | 579              |   | 6,867      |   | 12         |   | 7,467 |  
| | Expenditure during year                  | 194            |   | –                |   | –          |   | 209        |   | 403   |  
| | Amortisation for the year                | –              |   | (8               | ) | (28        | ) | (78        | ) | (114  | )
| | Impairment                               | –              |   | –                |   | –          |   | (21        | ) | (21   | )
| | Disposals, transfers and other movements | (256           | ) | –                |   | (1         | ) | (2         | ) | (259  | )
| |                                          |                |   |                  |   |            |   |            |   |       |  
| | At 31 December 2007                      | 152            |   | 583              |   | 6,845      |   | 330        |   | 7,910 |  
| |                                          |                |   |                  |   |            |   |            |   |       |  
| | – cost                                   | 152            |   | 591              |   | 6,874      |   | 566        |   | 8,183 |  
| | – accumulated amortisation               | –              |   | (8               | ) | (29        | ) | (236       | ) | (273  | )
| |                                          |                |   |                  |   |            |   |            |   |       |  

| |                                          |                |  | Trademark/   |  | Contract   |  |            |   |       |  
| | ---------------------------------------- | -------------- |  | ------------ |  | ---------- |  | ---------- | - | ----- | -
| |                                          | Exploration    |  | patented and |  | based      |  | Other      |   |       |  
| |                                          | and            |  | non patented |  | intangible |  | intangible |   |       |  
| |                                          | evaluation (a) |  | technology   |  | assets     |  | assets     |   | Total |  
| | Year ended 31 December 2006              | US$m           |  | US$m         |  | US$m       |  | US$m       |   | US$m  |  
| |                                          |                |  |              |  |            |  |            |   |       |  
| | Net book value                           |                |  |              |  |            |  |            |   |       |  
| | At 1 January 2006                        | 113            |  | –            |  | –          |  | 107        |   | 220   |  
| | Adjustment on currency translation       | 5              |  | –            |  | –          |  | 10         |   | 15    |  
| | Expenditure during year                  | 72             |  | –            |  | –          |  | 118        |   | 190   |  
| | Amortisation for the year                | –              |  | –            |  | –          |  | (27        | ) | (27   | )
| | Disposals, transfers and other movements | 6              |  | –            |  | –          |  | (20        | ) | (14   | )
| |                                          |                |  |              |  |            |  |            |   |       |  
| | At 31 December 2006                      | 196            |  | –            |  | –          |  | 188        |   | 384   |  
| |                                          |                |  |              |  |            |  |            |   |       |  
| | – cost                                   | 196            |  | –            |  | –          |  | 310        |   | 506   |  
| | – accumulated amortisation               | –              |  | –            |  | –          |  | (122       | ) | (122  | )
| |                                          |                |  |              |  |            |  |            |   |       |  
| | At 1 January 2006                        |                |  |              |  |            |  |            |   |       |  
| |                                          |                |  |              |  |            |  |            |   |       |  
| | – cost                                   | 113            |  | –            |  | –          |  | 327        |   | 440   |  
| | – accumulated amortisation               | –              |  | –            |  | –          |  | (220       | ) | (220  | )
| |                                          |                |  |              |  |            |  |            |   |       |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Exploration and evaluation: useful life not determined
until transferred to property, plant & equipment. See note 1(e) for useful
lives relating to the other categories of intangible assets.                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | The Group acquired Alcan Inc. on 23 October 2007.
Alcan Inc. benefits from certain intangible assets including power supply contracts, customer contracts and water rights.
The water rights are expected to contribute to the efficiency and cost effectiveness
of operations for the foreseeable future: accordingly,
these rights are considered to have indefinite lives and are not subject to amortisation. These water rights constitute the
majority of the amounts in the column of the above table entitled ‘Contract based intangible assets’.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The intangible assets with indefinite lives have
been valued based on the advice of expert valuation consultants, and no diminution
in their value is considered to have occurred since the date of acquisition.                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(c) | There are no intangible assets either pledged as security or held under restriction of title.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Exploration and evaluation expenditure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The charge for the year and the net amount of intangible assets capitalised during the year are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                                                                                         | 2007 |   | 2006 |   | 2005 |  
| | --------------------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
| |                                                                                         | US$m |   | US$m |   | US$m |  
| |                                                                                         |      |   |      |   |      |  
| | Cash expenditure in year (net of proceeds on disposal of undeveloped properties) (d)    | 576  |   | 345  |   | 264  |  
| | Changes in accruals (including non-cash proceeds on disposal of undeveloped properties) | (61  | ) | (36  | ) | 24   |  
| | Amount capitalised during year                                                          | (194 | ) | (72  | ) | (38  | )
| |                                                                                         |      |   |      |   |      |  
| | Charge for the year                                                                     | 321  |   | 237  |   | 250  |  
| |                                                                                         |      |   |      |   |      |  

|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | Exploration and evaluation costs are stated net of gains on disposal of undeveloped properties totalling US$253 million (2006: US$46 million; 2005: nil)



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Notes to the 2007 Financial statements

|13 | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------

| |                                                      |                |   |           |   |           |   |          |   |         |  
| | ---------------------------------------------------- | -------------- | - | --------- | - | --------- | - | -------- | - | ------- | -
| |                                                      | Mining         |   | Land      |   | Plant     |   | Capital  |   |         |  
| |                                                      | properties     |   | and       |   | and       |   | works in |   |         |  
| |                                                      | and leases (a) |   | buildings |   | equipment |   | progress |   | Total   |  
| | Year ended 31 December 2007                          | US$m           |   | US$m      |   | US$m      |   | US$m     |   | US$m    |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | Net book value                                       |                |   |           |   |           |   |          |   |         |  
| | At 1 January 2007                                    | 6,127          |   | 2,540     |   | 10,839    |   | 2,701    |   | 22,207  |  
| | Adjustment on currency translation                   | 511            |   | 261       |   | 1,163     |   | 266      |   | 2,201   |  
| | Capitalisation of additional closure costs (note 27) | 284            |   | –         |   | –         |   | 9        |   | 293     |  
| | Interest capitalised (b)                             | –              |   | –         |   | 91        |   | 31       |   | 122     |  
| | Acquisition of subsidiary (note 41)                  | 598            |   | 4,415     |   | 11,485    |   | 1,784    |   | 18,282  |  
| | Other additions                                      | 207            |   | 169       |   | 1,754     |   | 2,462    |   | 4,592   |  
| | Depreciation for the year                            | (496           | ) | (191      | ) | (1,314    | ) | –        |   | (2,001  | )
| | Impairment (charges)/reversals                       | (203           | ) | 11        |   | 297       |   | (189     | ) | (84     | )
| | Disposals                                            | (12            | ) | (33       | ) | (38       | ) | –        |   | (83     | )
| | Transfers and other movements (c)                    | 484            |   | (183      | ) | 1,428     |   | (1,611   | ) | 118     |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | At 31 December 2007                                  | 7,500          |   | 6,989     |   | 25,705    |   | 5,453    |   | 45,647  |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | – cost                                               | 11,280         |   | 8,952     |   | 38,015    |   | 5,813    |   | 64,060  |  
| | – accumulated depreciation                           | (3,780         | ) | (1,963    | ) | (12,310   | ) | (360     | ) | (18,413 | )
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | Fixed assets held under finance leases (d)           | –              |   | 30        |   | 42        |   | –        |   | 72      |  
| | Other fixed assets pledged as security (e)           | 31             |   | –         |   | 1,792     |   | –        |   | 1,823   |  
| |                                                      |                |   |           |   |           |   |          |   |         |  

| |                                                      | Mining         |   | Land      |   | Plant     |   | Capital  |   |         |  
| | ---------------------------------------------------- | -------------- | - | --------- | - | --------- | - | -------- | - | ------- | -
| |                                                      | properties     |   | and       |   | and       |   | works in |   |         |  
| |                                                      | and leases (a) |   | buildings |   | equipment |   | progress |   | Total   |  
| | Year ended 31 December 2006                          | US$m           |   | US$m      |   | US$m      |   | US$m     |   | US$m    |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | Net book value                                       |                |   |           |   |           |   |          |   |         |  
| | At 1 January 2006                                    | 5,224          |   | 2,019     |   | 8,678     |   | 1,699    |   | 17,620  |  
| | Adjustment on currency translation                   | 261            |   | 88        |   | 411       |   | 105      |   | 865     |  
| | Capitalisation of additional closure costs (note 27) | 619            |   | –         |   | –         |   | –        |   | 619     |  
| | Interest capitalised (b)                             | 5              |   | –         |   | 3         |   | 52       |   | 60      |  
| | Other additions                                      | 436            |   | 194       |   | 986       |   | 2,278    |   | 3,894   |  
| | Depreciation for the year (a)                        | (432           | ) | (159      | ) | (891      | ) | –        |   | (1,482  | )
| | Impairment (charges)/reversals                       | (166           | ) | 90        |   | 752       |   | (2       | ) | 674     |  
| | Disposals                                            | (25            | ) | (13       | ) | (50       | ) | (21      | ) | (109    | )
| | Transfers and other movements (c)                    | 205            |   | 321       |   | 950       |   | (1,410   | ) | 66      |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | At 31 December 2006                                  | 6,127          |   | 2,540     |   | 10,839    |   | 2,701    |   | 22,207  |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | – cost                                               | 9,166          |   | 4,454     |   | 21,553    |   | 2,835    |   | 38,008  |  
| | – accumulated depreciation                           | (3,039         | ) | (1,914    | ) | (10,714   | ) | (134     | ) | (15,801 | )
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | At 1January 2006                                     |                |   |           |   |           |   |          |   |         |  
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | – cost                                               | 7,686          |   | 3,824     |   | 19,382    |   | 1,838    |   | 32,730  |  
| | – accumulated depreciation                           | (2,462         | ) | (1,805    | ) | (10,704   | ) | (139     | ) | (15,110 | )
| |                                                      |                |   |           |   |           |   |          |   |         |  
| | Fixed assets held under finance leases (d)           | –              |   | 39        |   | 38        |   | –        |   | 77      |  
| | Other fixed assets pledged as security (e)           | 35             |   | –         |   | 1,154     |   | –        |   | 1,189   |  
| |                                                      |                |   |           |   |           |   |          |   |         |  

|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Mining properties at 31 December 2007 include
deferred stripping costs of US$718 million (2006: US$778 million). Amortisation
of deferred stripping costs of US$34 million (2006:
US$40 million; 2005: US$4 million) is included within ‘Depreciation
for the year’.
|   
|(b) | Interest is capitalised at a rate based on the
Group’s cost of borrowing or at the rate on project specific debt, where
applicable.                                                                                                                                 
|   
|(c) | ‘Transfers and other movements’ includes reclassifications between categories.                                                                                                                                                                                      
|   
|(d) | The finance leases under which these assets are held are disclosed in note 23.                                                                                                                                                                                      
|   
|(e) | Excludes assets held under finance leases. Fixed assets pledged as security represent amounts pledged as collateral against US$291 million (2006: US$339 million) of loans, which are
included in note 22.                                                          
|   
|(f) | At 31 December 2007 the net balance sheet amount for land and buildings includes freehold US$6,821 million (2006:US$2,445 million); long leasehold US$163 million (2006: US$92
million); and short leasehold US$5 million (2006: US$3 million).                     



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Notes to the 2007 Financial statements

|14 | INVESTMENTS IN EQUITY ACCOUNTED
      UNITS   |        |   |        |  
|-- | --------------------------------------------- | ------ | - | ------ | -
|   |                                               |        |   |        |  
|   |                                               | 2007   |   | 2006   |  
|   | Summary balance sheet (Rio
      Tinto share) | US$m   |   | US$m   |  
|   |                                               |        |   |        |  
|   | Rio Tinto’s share of assets                   |        |   |        |  
|   | Non-current assets (c)                        | 9,462  |   | 3,654  |  
|   | Current assets                                | 1,643  |   | 1,029  |  
|   |                                               |        |   |        |  
|   |                                               | 11,105 |   | 4,683  |  
|   |                                               |        |   |        |  
|   | Rio Tinto’s share of liabilities              |        |   |        |  
|   | Current liabilities                           | (1,154 | ) | (763   | )
|   | Non-current liabilities                       | (2,913 | ) | (1,685 | )
|   |                                               |        |   |        |  
|   |                                               | (4,067 | ) | (2,448 | )
|   |                                               |        |   |        |  
|   | Rio Tinto’s share of net assets               | 7,038  |   | 2,235  |  
|   |                                               |        |   |        |  

|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Further details of investments in jointly
      controlled entities and associates are set out in notes 38 and 39.                                                                                                                                                       
|   
|(b) | At 31 December 2007, the quoted value
      of the Group’s share in associates having shares listed on recognised stock
      exchanges was US$410 million (2006: US$368 million).                                                                                       
|   
|(c) | Investments in equity accounted units
      at 31 December 2007 include goodwill of US$2,822 million (2006: US$39
      million), which primarily relates to Alcan Inc. and is based on a provisional
      allocation of the cost of the acquisition on 23 October 2007.
|   

|15 | NET DEBT OF EQUITY ACCOUNTED
      UNITS (EXCLUDING AMOUNTS DUE TO RIO TINTO)
|-- | -----------------------------------------------------------------------------

| |                                              |            |  |           |   |            |  |           |  
| | -------------------------------------------- | ---------- |  | --------- | - | ---------- |  | --------- | -
| |                                              |            |  | Rio Tinto |   |            |  | Rio Tinto |  
| |                                              | Rio Tinto  |  | share of  |   | Rio Tinto  |  | share of  |  
| |                                              | percentage |  | net debt  |   | percentage |  | net debt  |  
| |                                              | 2007       |  | 2007      |   | 2006       |  | 2006      |  
| |                                              | %          |  | US$m      |   | %          |  | US$m      |  
| |                                              |            |  |           |   |            |  |           |  
| | Jointly controlled entities                  |            |  |           |   |            |  |           |  
| | Minera Escondida Limitada                    | 30.0       |  | 285       |   | 30.0       |  | 300       |  
| | Sohar Aluminium Company L.L.C.               | 20.0       |  | 205       |   | –          |  | –         |  
| | Queensland Alumina Limited
      (QAL)       | 80.0       |  | 29        |   | 38.6       |  | 44        |  
| | Halco Mining Inc.                            | 45.0       |  | 39        |   | –          |  | –         |  
| | Alcan Ningxia Aluminum Company
      Limited | 50.0       |  | 39        |   | –          |  | –         |  
| |                                              |            |  |           |   |            |  |           |  
| | Associates                                   |            |  |           |   |            |  |           |  
| | Tisand (Pty) Limited                         | 49.0       |  | 100       |   | 49.0       |  | 100       |  
| | Port Waratah Coal Services                   | 27.6       |  | 150       |   | 27.6       |  | 122       |  
| | Mineracao Rio do Norte S.A.                  | 12.5       |  | 23        |   | –          |  | –         |  
| |                                              |            |  |           |   |            |  |           |  
| | Other equity accounted units                 | –          |  | (157      | ) | –          |  | (107      | )
| |                                              |            |  |           |   |            |  |           |  
| |                                              |            |  | 713       |   |            |  | 459       |  
| |                                              |            |  |           |   |            |  |           |  

|    |                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In accordance with IAS 28 and IAS 31,
      the Group includes its net investment in equity accounted units in its consolidated
      balance sheet. This investment is net of the Group’s share of the
      net debt of such units, which is set out above.
|   
|(b) | Some of the debt of equity accounted units
      is subject to financial and general covenants.                                                                                                                                                              
|   
|(c) | At 31 December 2007, US$255 million
      of the debt shown above is with recourse to Rio Tinto. This was part of
      the subsidiary acquired during the year.                                                                                             
|   

|16 | INVENTORIES
|-- | -----------

| |                                                    | 2007  |  | 2006  | 
| | -------------------------------------------------- | ----- |  | ----- | 
| |                                                    | US$m  |  | US$m  | 
| |                                                    |       |  |       | 
| | Raw materials and purchased
      components       | 1,078 |  | 448   | 
| | Consumable stores                                  | 1,054 |  | 581   | 
| | Work in progress                                   | 1,727 |  | 459   | 
| | Finished goods and goods for
      resale          | 1,701 |  | 1,151 | 
| |                                                    |       |  |       | 
| |                                                    | 5,560 |  | 2,639 | 
| |                                                    |       |  |       | 
| | Comprising:                                        |       |  |       | 
| | Expected to be used within
      one year          | 5,382 |  | 2,540 | 
| | Expected to be used after more
      than one year | 178   |  | 99    | 
| |                                                    |       |  |       | 
| |                                                    | 5,560 |  | 2,639 | 
| |                                                    |       |  |       | 



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Notes to the 2007 Financial statements

|17 | TRADE AND OTHER RECEIVABLES                                            |             |  |         |   |             |   |         |  
|-- | ---------------------------------------------------------------------- | ----------- |  | ------- | - | ----------- | - | ------- | -
|   |                                                                        |             |  |         |   |             |   |         |  
|   |                                                                        | Non-current |  | Current |   | Non-current |   | Current |  
|   |                                                                        | 2007        |  | 2007    |   | 2006        |   | 2006    |  
|   |                                                                        | US$m        |  | US$m    |   | US$m        |   | US$m    |  
|   |                                                                        |             |  |         |   |             |   |         |  
|   | Trade receivables                                                      | –           |  | 4,927   |   | 56          |   | 2,133   |  
|   | Provision for doubtful debts                                           | –           |  | (70     | ) | (20         | ) | (6      | )
|   | Amounts due from equity accounted
      units                          | –           |  | 249     |   | –           |   | 156     |  
|   | Other debtors                                                          | 266         |  | 900     |   | 35          |   | 479     |  
|   | Pension surpluses (note 49)                                            | 705         |  | 31      |   | 329         |   | 31      |  
|   | Prepayment of tolling charges
      to jointly controlled entities (a) | 555         |  | –       |   | 492         |   | –       |  
|   | Other prepayments and accrued
      income                             | 336         |  | 442     |   | 91          |   | 145     |  
|   |                                                                        |             |  |         |   |             |   |         |  
|   |                                                                        | 1,862       |  | 6,479   |   | 983         |   | 2,938   |  
|   |                                                                        |             |  |         |   |             |   |         |  

|    |                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Rio Tinto Aluminium has made certain prepayments
      to jointly controlled entities for toll processing of bauxite and alumina.
      These prepayments will be charged to Group operating costs as processing
      takes place.                 
|   
|(b) | There is no material element of trade
      and other receivables that is interest bearing.                                                                                                                                                         
|   
|(c) | Due to their short term maturities, the
      fair value of trade and other receivables approximates to their carrying
      value.                                                                                                                 
|   
|    | As of 31 December 2007, trade receivables
      of US$70 million (2006: US$56 million) were impaired. The amount
      of impairment was US$70 million (2006: US$26 million). The ageing
      of these receivables is greater than 90 days overdue.
|   
|    | As of 31 December 2007, trade receivables
      of US$364 million (2006: US$46 million) were past due but not impaired.
      The ageing of these receivables is as follows:                                                                        
|   

| |                                                                                                                                                                                                   | 2007 |  | 2006 | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | ---- | 
| |                                                                                                                                                                                                   | US$m |  | US$m | 
| |                                                                                                                                                                                                   |      |  |      | 
| | less than 30 days overdue                                                                                                                                                                         | 270  |  | 31   | 
| | between 30 and 60 days overdue                                                                                                                                                                    | 62   |  | 9    | 
| | between 60 and 90 days overdue                                                                                                                                                                    | 29   |  | 2    | 
| | greater than 90 days                                                                                                                                                                              | 3    |  | 4    | 
| |                                                                                                                                                                                                   |      |  |      | 
| |                                                                                                                                                                                                   |      |  |      | 
| | These relate to a number of
        customers for whom there is no recent history of default and other indicators
      of impairment.                                                           
| |                                                                                                                                                                                                  
| | With respect to trade receivables
        that are neither impaired nor past due, there are no indications as of
    the reporting date that the debtors will not meet their payment obligations.
| |                                                                                                                                                                                                  
| | The carrying amounts of the
      Group’s trade receivables (net of provisions for doubtful debts) are denominated
      in the followingcurrencies:                                              |     
| |                                                                                                                                                                                                   |      |  |      | 

| |                                                                                                                                                                                                                                                             | 2007  |  | 2006  | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- |  | ----- | 
| |                                                                                                                                                                                                                                                             | US$m  |  | US$m  | 
| |                                                                                                                                                                                                                                                             |       |  |       | 
| | United States dollar                                                                                                                                                                                                                                        | 3,329 |  | 1,713 | 
| | Sterling                                                                                                                                                                                                                                                    | 134   |  | 2     | 
| | Australian dollar                                                                                                                                                                                                                                           | 90    |  | 101   | 
| | Canadian dollar                                                                                                                                                                                                                                             | 13    |  | 43    | 
| | South African rand                                                                                                                                                                                                                                          | 25    |  | 31    | 
| | Euro                                                                                                                                                                                                                                                        | 904   |  | 55    | 
| | Japanese yen                                                                                                                                                                                                                                                | 97    |  | 118   | 
| | New Zealand dollar                                                                                                                                                                                                                                          | 17    |  | 27    | 
| | Other                                                                                                                                                                                                                                                       | 248   |  | 73    | 
| |                                                                                                                                                                                                                                                             |       |  |       | 
| | Total                                                                                                                                                                                                                                                       | 4,857 |  | 2,163 | 
| |                                                                                                                                                                                                                                                             |       |  |       | 
| |                                                                                                                                                                                                                                                             |       |  |       | 
| | The provision for doubtful
      trade receivables increased by US$44 million in 2007, of which US$40
      million was due to the acquisition
      of Alcan Inc. and US$4 million from increases in provisions charged
      within other external costs.



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Notes to the 2007 Financial statements

|18 | DEFERRED TAXATION
|-- | -----------------

| |                                      | 2007  |   | 2006  |  
| | ------------------------------------ | ----- | - | ----- | -
| |                                      | US$m  |   | US$m  |  
| |                                      |       |   |       |  
| | At 1 January                         | 2,114 |   | 2,142 |  
| | Adjustment on currency translation   | 278   |   | 97    |  
| | Deferred tax of acquired companies   | 3,954 |   | –     |  
| | Credited to the income statement     | (203  | ) | (54   | )
| | Credited to SORIE (a)                | (203  | ) | (94   | )
| | Other movements (b)                  | (39   | ) | 23    |  
| |                                      |       |   |       |  
| | At 31 December                       | 5,901 |   | 2,114 |  
| |                                      |       |   |       |  
| | Comprising:                          |       |   |       |  
| | – deferred tax liabilities
      (c) | 6,486 |   | 2,339 |  
| | – deferred tax assets
      (c)      | (585  | ) | (225  | )
| |                                      |       |   |       |  

| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Deferred tax balances for which there is
      a right of offset within the same jurisdiction are presented net on the
      face of the balance sheet as permitted by IAS12. The closing deferred tax
      liabilities and assets, prior to this offsetting of balances, are shown
      below.
| |                                                                                                                                                                                                                                                                                                  

| |                                                    |      |   |            |   | Other      |   |        |   |        |  
| | -------------------------------------------------- | ---- | - | ---------- | - | ---------- | - | ------ | - | ------ | -
| |                                                    | UK   |   | Australian |   | countries’ |   | Total  |   | Total  |  
| |                                                    | tax  |   | tax        |   | tax        |   | 2007   |   | 2006   |  
| |                                                    | US$m |   | US$m       |   | US$m       |   | US$m   |   | US$m   |  
| |                                                    |      |   |            |   |            |   |        |   |        |  
| | Deferred tax liabilities
      arising from:       |      |   |            |   |            |   |        |   |        |  
| | Accelerated capital allowances                     | 96   |   | 1,986      |   | 6,479      |   | 8,561  |   | 3,181  |  
| | Post retirement benefits                           | 118  |   | 3          |   | 4          |   | 125    |   | 94     |  
| | Unremitted earnings                                | –    |   | –          |   | 330        |   | 330    |   | 226    |  
| | Other temporary differences                        | 3    |   | 275        |   | 318        |   | 596    |   | 121    |  
| |                                                    |      |   |            |   |            |   |        |   |        |  
| |                                                    | 217  |   | 2,264      |   | 7,131      |   | 9,612  |   | 3,622  |  
| |                                                    |      |   |            |   |            |   |        |   |        |  
| | Deferred tax assets arising
      from:            |      |   |            |   |            |   |        |   |        |  
| | Capital allowances                                 | –    |   | –          |   | –          |   | –      |   | (100   | )
| | Provisions                                         | (112 | ) | (542       | ) | (1,141     | ) | (1,795 | ) | (735   | )
| | Post retirement benefits                           | (76  | ) | (2         | ) | (861       | ) | (939   | ) | (285   | )
| | Tax losses                                         | (162 | ) | –          |   | (706       | ) | (868   | ) | (301   | )
| | Other temporary differences                        | –    |   | (109       | ) | –          |   | (109   | ) | (87    | )
| |                                                    |      |   |            |   |            |   |        |   |        |  
| |                                                    | (350 | ) | (653       | ) | (2,708     | ) | (3,711 | ) | (1,508 | )
| |                                                    |      |   |            |   |            |   |        |   |        |  
| | (Credited)/charged to the
      income statement   |      |   |            |   |            |   |        |   |        |  
| | (Decelerated)/accelerated capital
      allowances | 9    |   | 165        |   | (266       | ) | (92    | ) | 280    |  
| | Provisions                                         | (7   | ) | (192       | ) | (20        | ) | (219   | ) | (5     | )
| | Post retirement benefits                           | 1    |   | (1         | ) | 59         |   | 59     |   | 16     |  
| | Tax losses utilised/(generated)                    | (148 | ) | –          |   | 43         |   | (105   | ) | (280   | )
| | Tax on unremitted earnings                         | –    |   | –          |   | 34         |   | 34     |   | (2     | )
| | Other temporary differences                        | (5   | ) | 10         |   | 115        |   | 120    |   | (63    | )
| |                                                    |      |   |            |   |            |   |        |   |        |  
| |                                                    | (150 | ) | (18        | ) | (35        | ) | (203   | ) | (54    | )
| |                                                    |      |   |            |   |            |   |        |   |        |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The amounts credited directly to the SORIE
      relate to tax relief on share options, provisions for tax on exchange differences
      on intragroup loans qualifying for reporting as part of the net investment
      in subsidiaries, on cash flow hedges and on actuarial gains and losses on
      pension schemes and post retirement healthcare plans.                                    
|   
|(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 equity
      accounted unit to which it relates.                                                                                                                                                                 
|   
|(c) | The deferred tax liability of US$6,486
      million (2006: US$2,339 million) includes US$6,238 million (2006:
      US$1,764 million) due in more than one year. The deferred tax asset
      of US$585 million (2006: US$225 million) includes US$240 million
      (2006: US$139 million) receivable in more than one year.                                                                     
|   
|(d) | US$1,360 million (2006: US$763
      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, the majority of which relate to capital losses, recovery
      of which depends on realisation of capital gains in future years.                                             
|   
|(e) | Deferred tax is not recognised on the
      unremitted earnings of overseas subsidiaries and jointly controlled entities
      where the Group is able to control the timing of the remittance and it is
      probable that there will be no remittance in the foreseeable future. If
      these earnings were remitted, tax of US$1,921 million (2006: US$1,711
      million) would be payable.
|   
|(f) | There is a limited time period for the
      recovery of US$62 million (2006: nil) of tax losses which have been
      recognised as deferred tax assets in the accounts.                                                                                                                                                                                                                          



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Notes to the 2007 Financial statements

|19 | ASSETS HELD FOR SALE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Assets and liabilities held for sale comprise
      the Alcan Packaging group and the Tarong Coal mine, which was in the Energy
      product group. In the announcement of Rio Tinto’s offer for Alcan on 12
      July 2007, it was stated that Rio Tinto and Alcan had agreed to divest
      the Packaging business of Alcan. As the Packaging group was acquired with
      a view to resale, its results are excluded from the Group Income Statement.
      The Tarong mine was sold on 31 January 2008 for an amount in excess of
    its carrying value.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|20 | OTHER FINANCIAL ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|    |                                                                                                                                                                 |             |  |         |  |             |  |         | 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- |  | ------- |  | ----------- |  | ------- | 
|    |                                                                                                                                                                 | Non-current |  | Current |  | Non-current |  | Current | 
|    |                                                                                                                                                                 | 2007        |  | 2007    |  | 2006        |  | 2006    | 
|    |                                                                                                                                                                 | US$m        |  | US$m    |  | US$m        |  | US$m    | 
|    |                                                                                                                                                                 |             |  |         |  |             |  |         | 
|    | Currency and commodity contracts:
      designated as hedges                                                                                                    | 34          |  | 100     |  | 42          |  | 36      | 
|    | Derivatives and embedded derivatives
      not related to net debt: not designated as hedges (a)                                                                | –           |  | 480     |  | –           |  | 122     | 
|    | Derivatives related to net
      debt                                                                                                                           | –           |  | 39      |  | 3           |  | 352     | 
|    | US Treasury bonds                                                                                                                                               | 21          |  | –       |  | 20          |  | –       | 
|    | Equity shares and quoted funds                                                                                                                                  | 53          |  | 321     |  | 125         |  | 51      | 
|    | Other investments, including
      loans                                                                                                                        | 472         |  | –       |  | 184         |  | –       | 
|    | Other liquid resources (non-cash
      equivalent)                                                                                                              | –           |  | 6       |  | –           |  | 6       | 
|    |                                                                                                                                                                 |             |  |         |  |             |  |         | 
|    |                                                                                                                                                                 | 580         |  | 946     |  | 374         |  | 567     | 
|    |                                                                                                                                                                 |             |  |         |  |             |  |         | 
|    |                                                                                                                                                                
|(a) | Derivatives and embedded derivatives
      not designated as hedges include amounts of US$117 million (2006: US$82
      million) which mature beyond one year.

|    |                                                                                                                                    |       |   |      |  
|--- | ---------------------------------------------------------------------------------------------------------------------------------- | ----- | - | ---- | -
|21  | CASH AND CASH EQUIVALENTS                                                                                                          |       |   |      |  
|    |                                                                                                                                    |       |   |      |  
|    |                                                                                                                                    | 2007  |   | 2006 |  
|    |                                                                                                                                    | US$m  |   | US$  |  
|    |                                                                                                                                    |       |   |      |  
|    | Cash at bank and in hand                                                                                                           | 579   |   | 555  |  
|    | Short term bank deposits                                                                                                           | 1,066 |   | 181  |  
|    |                                                                                                                                    |       |   |      |  
|    |                                                                                                                                    | 1,645 |   | 736  |  
|    |                                                                                                                                    |       |   |      |  
|    | Bank overdrafts repayable on
      demand (unsecured)                                                                              | (104  | ) | (14  | )
|    |                                                                                                                                    |       |   |      |  
|    | Balance per Group cash flow
      statement                                                                                        | 1,541 |   | 722  |  
|    |                                                                                                                                    |       |   |      |  
|    |                                                                                                                                   
|(a) | Cash and cash equivalents include
      US$93 million (2006: US$55 million) for which there are restrictions
      on remittances.



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Notes to the 2007 Financial statements

|22 | BORROWINGS                      |                                                                    |      |        |             |       |         |       |             |       |        
|-- | ------------------------------- | ------------------------------------------------------------------ | ---- | ------ | ----------- | ----- | ------- | ----- | ----------- | ----- | -------
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   |                                 |                                                                    |      |        | Non-current |       | Current |       | Non-current |       | Current
|   |                                 |                                                                    |      |        | 2007        |       | 2007    |       | 2006        |       | 2006   
|   |                                 |                                                                    | Note |        | US$m        |       | US$m    |       | US$m        |       | US$m   
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   | Borrowings at
      31 December |                                                                    |      |        |             |       |         |       |             |       |        
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   | Syndicated bank
      loans (a) |                                                                    |      | 33,263 |             | 4,466 |         | –     |             | –     |        
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   | Other bank loans                |                                                                    |      | 97     |             | 1,749 |         | 157   |             | 156   |        
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   | Commercial paper                |                                                                    |      | –      |             | 644   |         | –     |             | –     |        
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   | Other loans                     |                                                                    |      |        |             |       |         |       |             |       |        
|   |                                 | Finance leases                                                     | 23   |        | 104         |       | 19      |       | 96          |       | 25     
|   |                                 | Rio Tinto Finance (USA) Limited
      Bonds 2.625% 2008(d) swapped |      |        | –           |       | 596     |       | 586         |       | –      
|   |                                 | Rio Tinto Finance (USA) Limited
      Bonds 7.125% 2013            |      |        | 100         |       | –       |       | 100         |       | –      
|   |                                 | Colowyo Coal Company L.P. Bonds
      9.56% 2011                   |      |        | 32          |       | 8       |       | 40          |       | 7      
|   |                                 | Colowyo Coal Company L.P. Bonds
      10.19% 2016                  |      |        | 100         |       | –       |       | 100         |       | –      
|   |                                 | Alcan, Inc. Debentures 6.25%
      due 2008                        |      |        | –           |       | 203     |       | –           |       | –      
|   |                                 | Alcan, Inc. Debentures 6.45%
      due 2011                        |      |        | 415         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Global Notes 4.875%
      due 2012(d) swapped          |      |        | 489         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Global Notes 4.50%
      due 2013                      |      |        | 476         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Global Notes 5.20%
      due 2014                      |      |        | 492         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Global Notes 5.00%
      due 2015(d) swapped           |      |        | 479         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Debentures 7.25%
      due 2028                        |      |        | 110         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Debentures 7.25%
      due 2031                        |      |        | 441         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Global Notes 6.125%
      due 2033                     |      |        | 736         |       | –       |       | –           |       | –      
|   |                                 | Alcan, Inc. Global Notes 5.75%
      due 2035                      |      |        | 280         |       | –       |       | –           |       | –      
|   |                                 | European Medium Term Notes (c)                                     |      |        | 384         |       | 76      |       | 430         |       | 1,195  
|   |                                 | Other secured loans                                                |      |        | 346         |       | 27      |       | 241         |       | 7      
|   |                                 | Other unsecured loans                                              |      |        | 270         |       | 321     |       | 257         |       | 100    
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        
|   | Total borrowings                |                                                                    |      | 38,614 |             | 8,109 |         | 2,007 |             | 1,490 |        
|   |                                 |                                                                    |      |        |             |       |         |       |             |       |        

|    |                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In support of its acquisition
      of Alcan Inc., the Group arranged for US$40 billion in term loans and
      revolving credit facilities, which were
      fully underwritten and subsequently syndicated (the ‘Syndicated bank
      loans’). The Syndicated bank loans are divided into
      four facilities, as follows:

| |                                |                  |  |                 |  |                 |  |              | 
| | ------------------------------ | ---------------- |  | --------------- |  | --------------- |  | ------------ | 
| |                                | Facility A       |  | Facility B      |  | Facility C      |  | Facility D   | 
| |                                |                  |  |                 |  |                 |  |              | 
| | Facility amount (US$ billions) | 15               |  | 10              |  | 5               |  | 10           | 
| | Type                           | Term Loan        |  | Revolving       |  | Revolving       |  | Term Loan    | 
| |                                |                  |  | Credit Facility |  | Credit Facility |  |              | 
| | Due                            | October 2008 (b) |  | October 2010    |  | October 2012    |  | October 2012 | 
| | Repayment                      | Bullet           |  | Bullet          |  | Bullet          |  | Bullet       | 
| |                                |                  |  |                 |  |                 |  |              | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | As at 31 December 2007, facilities A, B and D have been fully drawn, and US$2.14 billion remains undrawn on facility C. The amounts outstanding under these facilities are shown net of the
unamortised costs of obtaining the facilities.                                                                                                                                                                                                                                          
|   
|    | Facilities A and B are subject to mandatory prepayment to the extent of the net proceeds from disposals of assets and from the raising of funds through capital markets, under specific thresholds
and conditions.                                                                                                                                                                                                                                                                  
|   
|(b) | The Group has the option to extend final maturity on the outstanding balance of Facility A for an additional year.                                                                                                                                                                                                                                                                                                                                                                  
|   
|(c) | Rio Tinto has a US$10 billion (2006: US$3
billion) European Medium Term Note (EMTN) programme for the issuance of debt,
of which approximately US$0.4 billion was drawn down at 31
December 2007 (2006: US$1.6 billion). The Group’s EMTNs are swapped to US
dollars. The fair value of currency swaps at 31 December 2007 was a liability
of US$7 million. Details of the major currency swaps are shown in note 34
(d). In 2007,
other EMTNs of US$31 million relate to Alcan Inc.
|   
|(d) | US$1.2 billion of these fixed rate borrowings shown is swapped to floating rates. The fair value of the interest rate swap at 31 December 2007 was US$31 million.                                                                                                                                                                                                                                                                                                                   
|   
|(e) | The Group’s borrowings of US$46.7 billion
(2006: US$3.5 billion) include some US$4.7 billion (2006: US$0.7
billion) which relates to borrowings of subsidiaries that are without  recourse
to the Group, some of which are subject to various financial and general covenants
with which the respective borrowers are in compliance as of 31 December 2007.                                                                                                                         



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Notes to the 2007 Financial statements

|23 | CAPITALISED FINANCE LEASES                |      |   |      |  
|-- | ----------------------------------------- | ---- | - | ---- | -
|   |                                           |      |   |      |  
|   |                                           | 2007 |   | 2006 |  
|   |                                           | US$m |   | US$m |  
|   |                                           |      |   |      |  
|   | Present value of minimum lease payments   |      |   |      |  
|   | Total minimum lease payments              | 129  |   | 141  |  
|   | Effect of discounting                     | (6   | ) | (20  | )
|   |                                           |      |   |      |  
|   |                                           | 123  |   | 121  |  
|   |                                           |      |   |      |  
|   |                                           |      |   |      |  
|   | Payments under capitalised finance leases |      |   |      |  
|   | Due within one year                       | 19   |   | 25   |  
|   | Between 1 year and 5 years                | 67   |   | 52   |  
|   | More than 5 years                         | 37   |   | 44   |  
|   |                                           |      |   |      |  
|   |                                           | 123  |   | 121  |  
|   |                                           |      |   |      |  

|   |                                                              |          |   |          |  
|-- | ------------------------------------------------------------ | -------- | - | -------- | -
|24 | CONSOLIDATED NET DEBT                                        |          |   |          |  
|   |                                                              |          |   |          |  
|   |                                                              | Net debt |   | Net debt |  
|   |                                                              | 2007     |   | 2006     |  
|   |                                                              | US$m     |   | US$m     |  
|   |                                                              |          |   |          |  
|   | Analysis of changes in consolidated net debt                 |          |   |          |  
|   | At 1 January                                                 | (2,437   | ) | (1,313   | )
|   | Adjustment on currency translation                           | (223     | ) | (56      | )
|   | Exchange gains credited to the income statement              | 136      |   | 38       |  
|   | Gains on derivatives related to net debt                     | 11       |   | 44       |  
|   | Debt of acquired companies                                   | (5,465   | ) | –        |  
|   | Cash movements excluding exchange movements                  | (37,332  | ) | (1,146   | )
|   | Other movements                                              | 158      |   | (4       | )
|   |                                                              |          |   |          |  
|   | At 31 December                                               | (45,152  | ) | (2,437   | )
|   |                                                              |          |   |          |  
|   |                                                              |          |   |          |  
|   |                                                              |          |   |          |  
|   | Reconciliation to balance sheet categories                   |          |   |          |  
|   | Borrowings (note 22)                                         | (46,723  | ) | (3,497   | )
|   | Bank overdrafts repayable on demand (note 21)                | (104     | ) | (14      | )
|   | Cash and cash equivalents (note 21)                          | 1,645    |   | 736      |  
|   | Other liquid resources (note 20)                             | 6        |   | 6        |  
|   | Derivatives related to net debt (note 34)                    | 24       |   | 332      |  
|   |                                                              |          |   |          |  
|   | Balances per above                                           | (45,152  | ) | (2,437   | )
|   |                                                              |          |   |          |  
|   |                                                              |          |   |          |  
|   |                                                              |          |   |          |  
|   | Exchange gains on US dollar net debt and intragroup balances |          |   |          |  
|   | Exchange gains on US dollar net debt                         | 163      |   | 38       |  
|   | Exchange gains/(losses) on intragroup balances               | 11       |   | (5       | )
|   | Exchange losses on loans from equity accounted units         | (2       | ) | –        |  
|   | Exchange gain on settlement of dividend                      | 22       |   | 13       |  
|   |                                                              |          |   |          |  
|   | Credited to income statement                                 | 194      |   | 46       |  
|   |                                                              |          |   |          |  

|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Further information relating to the currency and
interest rate exposures arising from net debt and related derivatives is given
in note 34 on Financial Instruments.



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Notes to the 2007 Financial statements

|25 | TRADE AND OTHER PAYABLES
|-- | ------------------------
|   |                         

| |                                              | Non-current |  | Current |  | Non-current |  | Current | 
| | -------------------------------------------- | ----------- |  | ------- |  | ----------- |  | ------- | 
| |                                              | 2007        |  | 2007    |  | 2006        |  | 2006    | 
| |                                              | US$m        |  | US$m    |  | US$m        |  | US$m    | 
| |                                              |             |  |         |  |             |  |         | 
| | Trade creditors                              | –           |  | 3,145   |  | –           |  | 1,291   | 
| | Amounts owed to equity accounted
      units | –           |  | 219     |  | –           |  | 143     | 
| | Other creditors (a)                          | 176         |  | 575     |  | 190         |  | 212     | 
| | Employee entitlements                        | –           |  | 915     |  | –           |  | 187     | 
| | Royalties and mining taxes                   | –           |  | 325     |  | –           |  | 264     | 
| | Accruals and deferred income                 | 126         |  | 1,481   |  | 107         |  | 595     | 
| | Government grants deferred                   | 201         |  | 7       |  | 65          |  | 1       | 
| |                                              |             |  |         |  |             |  |         | 
| |                                              | 503         |  | 6,667   |  | 362         |  | 2,693   | 
| |                                              |             |  |         |  |             |  |         | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | ‘Other creditors’ include
        deferred consideration  of US$209 million (2006: US$179 million)
        relating to certain assets  acquired. 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 other accounts payable and accruals

      are non interest bearing.
|   
|(b) | Due to their short term maturities, the
      fair value of trade and other payables approximates to their carrying value.                                                                                                                                                                                                                                                                                                    
|   

|26 | OTHER FINANCIAL LIABILITIES
|-- | ---------------------------
|   |                            

| |                                                                            | Non-current |  | Current |  | Non-current |  | Current | 
| | -------------------------------------------------------------------------- | ----------- |  | ------- |  | ----------- |  | ------- | 
| |                                                                            | 2007        |  | 2007    |  | 2006        |  | 2006    | 
| |                                                                            | US$m        |  | US$m    |  | US$m        |  | US$m    | 
| |                                                                            |             |  |         |  |             |  |         | 
| | Forward commodity contracts:
      designated as hedges                    | 490         |  | 283     |  | 214         |  | 162     | 
| | Derivatives related to net
      debt                                      | 6           |  | 9       |  | 19          |  | 4       | 
| | Other derivatives and embedded
      derivatives: not designated as hedges | –           |  | 537     |  | –           |  | 27      | 
| | Other financial liabilities                                                | –           |  | 49      |  | –           |  | –       | 
| |                                                                            |             |  |         |  |             |  |         | 
| |                                                                            | 496         |  | 878     |  | 233         |  | 193     | 
| |                                                                            |             |  |         |  |             |  |         | 

|    |                                                                                        
|--- | ---------------------------------------------------------------------------------------
|(a) | Detailed information relating to other
      financial liabilities is given in note 34.



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Notes to the 2007 Financial
  statements

|27 | PROVISIONS
    (NOT INCLUDING TAXATION)
|-- | ---------------------------------------
|   |                                        

| |                                                                  | Pensions   |   |              |   | Close down    |   |       |   |        |   |       |  
| | ---------------------------------------------------------------- | ---------- | - | ------------ | - | ------------- | - | ----- | - | ------ | - | ----- | -
| |                                                                  | and post   |   | Other        |   | and           |   |       |   |        |   |       |  
| |                                                                  | retirement |   | employee     |   | restoration/  |   |       |   | Total  |   | Total |  
| |                                                                  | healthcare |   | entitlements |   | environmental |   | Other |   | 2007   |   | 2006  |  
| |                                                                  | US$m       |   | US$m         |   | US$m          |   | US$m  |   | US$m   |   | US$m  |  
| |                                                                  |            |   |              |   |               |   |       |   |        |   |       |  
| | At 1 January                                                     | 770        |   | 393          |   | 3,359         |   | 146   |   | 4,668  |   | 4,186 |  
| | Adjustment on currency translation                               | 59         |   | 36           |   | 211           |   | 14    |   | 320    |   | 113   |  
| | Amounts capitalised                                              | –          |   | –            |   | 293           |   | –     |   | 293    |   | 619   |  
| | Acquisition of subsidiary (note
      41)                        | 2,550      |   | 126          |   | 1,518         |   | 444   |   | 4,638  |   | –     |  
| | Charged/(credited) to profit:                                    |            |   |              |   |               |   |       |   |        |   |       |  
| | – new
    provisions                                             | –          |   | 1            |   | 9             |   | 9     |   | 19     |   | 25    |  
| | – increases
      to existing provisions                         | 102        |   | 259          |   | 127           |   | 10    |   | 498    |   | 277   |  
| | – unused
      amounts reversed                                  | –          |   | (5           | ) | (200          | ) | (4    | ) | (209   | ) | (242  | )
| | Amortisation of discount                                         | –          |   | 1            |   | 164           |   | 1     |   | 166    |   | 137   |  
| | Utilised in year                                                 | (119       | ) | (49          | ) | (82           | ) | (33   | ) | (283   | ) | (271  | )
| | Transfer
        to liabilities of disposal groups held for sale | –          |   | (12          | ) | (124          | ) | –     |   | (136   | ) | –     |  
| | Liability incurred as a result
      of acquisition              | –          |   | –            |   | –             |   | 189   |   | 189    |   | –     |  
| | Actuarial gains recognised
      in equity                       | (87        | ) | –            |   | –             |   | –     |   | (87    | ) | (245  | )
| | Transfers and other movements                                    | –          |   | –            |   | (4            | ) | (54   | ) | (58    | ) | 69    |  
| |                                                                  |            |   |              |   |               |   |       |   |        |   |       |  
| | At 31 December                                                   | 3,275      |   | 750          |   | 5,271         |   | 722   |   | 10,018 |   | 4,668 |  
| |                                                                  |            |   |              |   |               |   |       |   |        |   |       |  
| | Balance sheet analysis:                                          |            |   |              |   |               |   |       |   |        |   |       |  
| | Current                                                          | 80         |   | 304          |   | 215           |   | 184   |   | 783    |   | 366   |  
| | Non-current                                                      | 3,195      |   | 446          |   | 5,056         |   | 538   |   | 9,235  |   | 4,302 |  
| |                                                                  |            |   |              |   |               |   |       |   |        |   |       |  
| | Total                                                            | 3,275      |   | 750          |   | 5,271         |   | 722   |   | 10,018 |   | 4,668 |  
| |                                                                  |            |   |              |   |               |   |       |   |        |   |       |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The main assumptions
      used to determine the provision for pensions and post retirement healthcare,
      and other information, including the
      expected level of future funding payments in respect of those arrangements,
      are given in note 49.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b) | The provision
          for other employee entitlements includes a provision for long service
          leave
      of US$107 million (2006:US$86
      million), based on the relevant entitlements in certain Group operations.
      It also includes the provisions relating to the Group’s cash-settled share-based
      payment plans of US$219 million (2006: US$43 million), which are
      described in note 48.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(c) | The Group’s
          policy on close down and restoration costs is described in note 1(k).
          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 relevant operation.
      Remaining lives of mines and infrastructure
      range from 1 to over 50 years with an average, weighted by closure provision,
      of around 19
      years. Although the ultimate cost to be incurred is uncertain, the Group’s
      businesses estimate their respective costs based on feasibility
      and engineering studies using current restoration standards and techniques.
      Provisions of US$5,271 million (2006: US$3,359
      million) for close down and restoration costs and environmental clean up
      obligations, include estimates of the effect of future
      inflation and have been adjusted to reflect risk. These estimates have been
      discounted to their present value at an average rate
      of approximately five per cent per annum, being an estimate of the long
      term, risk free, pre-tax cost of borrowing. Excluding the effects
      of future inflation, and before discounting, this provision is equivalent
      to some US$8.1 billion (2006:US$4.7 billion). 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(d) | Some US$214 million (2006:
      US$50 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
      clean up 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 ground water in the
      vicinity of the Bingham Canyon mine. A remedial investigation and feasibility
      study on the South Zone ground water contamination,
      completed in March 1998, identified a range of alternative measures to address
      this issue. Additional studies
      were conducted to refine the workable alternatives.
      A remedial design document was completed in 2002. A joint proposal and related
      agreements with the State of Utah Natural Resource Damage Trustee, the State
      of Utah and the Jordan Valley Water
      Conservancy District were approved in 2004. KUC entered into a formal agreement
      with the EPA in 2007 on the remedial
      action. The provision was reduced by US$101 million during 2007 (2006:
      US$37 million) following a reassessment of the expected
      cost of remediation to reflect recent experience. The ultimate cost of remediation
      remains uncertain, being dependent on
      the responsiveness of the contamination to pumping and acid neutralisation.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(f) | Other provisions deal
          with a variety of issues and include US$191 million relating to
          the Rio Tinto Alcan Foundation commitment in
      Canada, involving payments of C$200 million over a five year period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(g) | Provisions for close
          down, restoration and environmental obligations increased by US$279
          million in 2006 as the result of a reduction
          in the discount rate. Of this amount, US$221 million is included in
      ‘Amounts capitalised’.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



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Notes to the 2007 Financial statements

|28 | SHARE CAPITAL – RIO TINTO
      PLC
|-- | -----------------------------------

| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | ------------------------------------------------- | ------------------------------------------------- | ------ | ---------- | -------- | ---------- | -------- | ---- |  | ---- |  | ---- | 
| |                                                   | 2007                                              |        | 2006       |          | 2005       |          | 2007 |  | 2006 |  | 2005 | 
| |                                                   | Number (m)                                        |        | Number (m) |          | Number (m) |          | US$m |  | US$m |  | US$m | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | Issued and fully
      paid up share capital      |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | At 1 January                                      | 1,071.49                                          |        | 1,071.02   |          | 1,068.02   |          | 172  |  | 172  |  | 172  | 
| | Ordinary shares
      issued (a)                  | 0.31                                              |        | 1.27       |          | 3.00       |          | –    |  | –    |  | –    | 
| | Own shares purchased
      and cancelled (b)      | –                                                 |        | (0.80      | )        | –          |          | –    |  | –    |  | –    | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | At 31 December                                    | 1,071.80                                          |        | 1,071.49   |          | 1,071.02   |          | 172  |  | 172  |  | 172  | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | –                                                 | shares repurchased
      and held in treasury (b) | 74.55  |            | 47.82    |            | 2.60     |      |  |      |  |      | 
| | –                                                 | shares held by
      public                       | 997.25 |            | 1,023.67 |            | 1,068.42 |      |  |      |  |      | 
| | –                                                 | Special Voting
      share of 10p (d)             | 1 only |            | 1 only   |            | 1 only   |      |  |      |  |      | 
| | –                                                 | DLC Dividend Share
      of 10p (d)               | 1 only |            | 1 only   |            | 1 only   |      |  |      |  |      | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | Shares held
      by public                       |                                                   |        |            |          |            |          |      |  |      |  |      | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | At 1 January                                      | 1,023.67                                          |        | 1,068.42   |          | 1,068.02   |          |      |  |      |  |      | 
| | Ordinary shares
      issued (a)                  | 0.31                                              |        | 1.27       |          | 3.00       |          |      |  |      |  |      | 
| | Own shares purchased
      and cancelled (b)      | –                                                 |        | (0.80      | )        | –          |          |      |  |      |  |      | 
| | Shares reissued
      from treasury               | 0.97                                              |        | 1.12       |          | –          |          |      |  |      |  |      | 
| | Shares repurchased
      and held in treasury (b) | (27.70                                            | )      | (46.34     | )        | (2.60      | )        |      |  |      |  |      | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | At 31 December                                    | 997.25                                            |        | 1,023.67   |          | 1,068.42   |          |      |  |      |  |      | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | Unissued share
      capital                      |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | Ordinary shares
      of 10p each                 | 349.43                                            |        | 349.74     |          | 350.21     |          | 51   |  | 51   |  | 51   | 
| | Equalisation Share
      of 10p (d)               | 1 only                                            |        | 1 only     |          | 1 only     |          | –    |  | –    |  | –    | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 
| | Total authorised
      share capital              | 1,421.23                                          |        | 1,421.23   |          | 1,421.23   |          | 223  |  | 223  |  | 223  | 
| |                                                   |                                                   |        |            |          |            |          |      |  |      |  |      | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | 311,458 Ordinary shares were issued, and
      969,435 Ordinary shares reissued from treasury during the year resulting
      from the exercise of options under Rio Tinto plc employee share based payment
      plans at contracted prices between 808.8p and 2,799p (2006: 2,382,591 shares
      issued at prices between 808.8p and 1,925p).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(b) | At the 2007 annual general meeting, the
      shareholders renewed the general authority for the Company to buy back up
      to ten per cent of its Ordinary shares of 10p each for a further period
      of 12 months. The share buyback programme was suspended on 12 July 2007
      at the time the Alcan offer was announced. Rio Tinto is seeking renewal
      of this approval at its annual general meeting in 2008. During the year
      to 31 December 2007, 27,700,000 shares were bought back and held in treasury
      (2006: 46,340,000) at an average buy back price of £30.05 per share
      (2006: £27.27). No shares were cancelled during the year ended 31 December
      2007 (2006: 800,000 shares bought back at an average buy back price of £27.36
      and cancelled). The total consideration paid was US$1,648 million (2006:
      US$2,394 million).
|   
|(c) | The aggregate consideration received for
      shares issued during 2007 was US$13 million (2006: US$31 million).
      The aggregate consideration received for treasury shares reissued was US$24
      million (2006: US$24 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(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) | Information relating to share options
      and other share based incentive schemes is given in note 48 on share based
      payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   

|29 | SHARE CAPITAL – RIO TINTO
      LIMITED
|-- | ---------------------------------------
|   |                                        

| |                                           | 2007       |  | 2006       |  | 2005       |   | 2007  |  | 2006  |  | 2005  |  
| | ----------------------------------------- | ---------- |  | ---------- |  | ---------- | - | ----- |  | ----- |  | ----- | -
| |                                           | Number (m) |  | Number (m) |  | Number (m) |   | US$m  |  | US$m  |  | US$m  |  
| |                                           |            |  |            |  |            |   |       |  |       |  |       |  
| | Share capital account                     |            |  |            |  |            |   |       |  |       |  |       |  
| | At 1 January                              | 285.75     |  | 285.75     |  | 311.90     |   | 1,099 |  | 1,019 |  | 1,133 |  
| | Adjustment on currency translation        |            |  |            |  |            |   | 120   |  | 80    |  | (65   | )
| | Own shares purchased (a)                  | –          |  | –          |  | (27.29     | ) | –     |  | –     |  | (83   | )
| | Share issues (b)                          | –          |  | –          |  | 1.14       |   | –     |  | –     |  | 34    |  
| |                                           |            |  |            |  |            |   |       |  |       |  |       |  
| | At 31 December                            | 285.75     |  | 285.75     |  | 285.75     |   | 1,219 |  | 1,099 |  | 1,019 |  
| |                                           |            |  |            |  |            |   |       |  |       |  |       |  
| | Share capital held by Rio Tinto
      plc | 171.07     |  | 171.07     |  | 171.07     |   |       |  |       |  |       |  
| | – Special Voting share of 10p
      (c)   | 1 only     |  | 1 only     |  | 1 only     |   |       |  |       |  |       |  
| | – DLC Dividend Share of 10p
      (c)     | 1 only     |  | 1 only     |  | 1 only     |   |       |  |       |  |       |  
| |                                           |            |  |            |  |            |   |       |  |       |  |       |  
| | Total share capital (c)                   | 456.82     |  | 456.82     |  | 456.82     |   |       |  |       |  |       |  
| |                                           |            |  |            |  |            |   |       |  |       |  |       |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In May 2006, shareholders authorised Rio
      Tinto Limited to buy back ordinary shares during the following 12 months
      whether on market or via off-market buy back tenders, but only to the extent
      that such purchases would not exceed 28.5 million Rio Tinto Limited shares
      during that 12 month period. Rio Tinto Limited is also authorised to buy
      back Rio Tinto Limited shares held by Tinto Holdings Australia Pty Limited
      (a wholly owned subsidiary of Rio Tinto plc). The share buyback programme
      was suspended on 12 July 2007 at the time the Alcan acquisition was announced.
      Rio Tinto Limited is seeking renewal of these approvals at its annual general
      meeting in 2008.
|   
|    | No shares were bought back during the
      year to 31 December 2007 (2006: nil). During the year to 31 December 2005,
      27,294,139 shares were bought back via an off-market buy back tender at
      a buy back price of A$36.70 per share. The total consideration paid
      was US$774 million. Rio Tinto Limited also bought back 16,367,000 of
      its shares held by the above subsidiary of Rio Tinto plc at the same buy
      back price per share.                                                                                                                                                                                                                                                                       
|   
|(b) | No new shares were issued during 2007
      (2006: nil). The aggregate consideration received for shares issued during
      2005 was US$34 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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Notes to the 2007 Financial statements

|29  | SHARE CAPITAL–RIO
    TINTO LIMITEDcontinued                                                                                                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(c) | 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) | Share options exercised during the year to 31 December 2007 under various Rio Tinto Limited employee share option schemes were satisfied by the on-market purchase of Rio Tinto Limited shares by
a third party on the Group’s behalf.                                                                                                                                                                                    
|   
|(e) | Information relating to share options and other share based incentive schemes is given in note 48 on share based payments.                                                                                                                                                                                                                                                                                                
|   
|   

|30 | CHANGES IN EQUITY, SHARE
    PREMIUM AND RESERVES     
|-- | ------------------------------------------------------
|   |                                                       
|   |                                                       
|   |                                                       
|   |                                                       
|   |                                                       
|   | Summary statement of                                  
|   | changes in equity                                     
|   |                                                       
|   | Opening balance                                       
|   | Total
    recognised income for the year              
|   | Dividends
    (note 10)                               
|   | Own
    shares purchased from Rio Tinto shareholders: 
|   | – Under capital management programme (a)              
|   | – To satisfy share options                            
|   | Ordinary
    shares issued                            
|   | Outside
    interests in acquired companies           
|   | Shares
    issued to outside interests                
|   | Employee
    share options charged to income statement
|   | Other movements                                       
|   |                                                       
|   | Closing balance                                       
|   |                                                       

| |                                                    |              |   |           |   |            |  
| | -------------------------------------------------- | ------------ | - | --------- | - | ---------- | -
| |                                                    |              |   |           |   | Year ended |  
| |                                                    | Attributable |   |           |   | 31         |  
| |                                                    | to           |   |           |   | December   |  
| |                                                    | shareholders |   | Outside   |   | 2005       |  
| |                                                    | of Rio Tinto |   | interests |   | Total      |  
| | Summary statement of changes
      in equity       | US$m         |   | US$m      |   | US$m       |  
| |                                                    |              |   |           |   |            |  
| | Opening balance                                    | 11,967       |   | 733       |   | 12,700     |  
| | Total recognised income for the year               | 4,877        |   | 219       |   | 5,096      |  
| | Dividends (note 10)                                | (1,143       | ) | (169      | ) | (1,312     | )
| | Own shares purchased from Rio Tinto shareholders:  |              |   |           |   |            |  
| | –
        Under capital management programme (a)   | (877         | ) | –         |   | (877       | )
| | –
        To satisfy share options                 | –            |   | –         |   | –          |  
| | Ordinary shares issued                             | 100          |   | –         |   | 100        |  
| | Outside interests in acquired companies            | –            |   | –         |   | –          |  
| | Shares issued to outside interests                 | –            |   | 4         |   | 4          |  
| | Employee share options charged to income statement | 24           |   | –         |   | 24         |  
| | Other movements                                    | –            |   | 4         |   | 4          |  
| |                                                    |              |   |           |   |            |  
| | Closing balance                                    | 14,948       |   | 791       |   | 15,739     |  
| |                                                    |              |   |           |   |            |  
| |                                                    |              |   |           |   |            |  

|(a) | The charge to equity for shares bought back in
2006 included US$288 million in respect of a commitment entered into before
the financial year end to purchase, from a bank, Rio Tinto plc  shares that the
bank could buy in the market during the period up to the preliminary announcement
of the Group’s results. The commitment was settled during 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

| |                                                                                                |        |   |        |   |        |  
| | ---------------------------------------------------------------------------------------------- | ------ | - | ------ | - | ------ | -
| |                                                                                                | Total  |   | Total  |   | Total  |  
| |                                                                                                | 2007   |   | 2006   |   | 2005   |  
| |                                                                                                | US$m   |   | US$m   |   | US$m   |  
| |                                                                                                |        |   |        |   |        |  
| | Share premium account                                                                          |        |   |        |   |        |  
| | At 1 January                                                                                   | 1,919  |   | 1,888  |   | 1,822  |  
| | Premium
    on issues of ordinary shares                                                       | 13     |   | 31     |   | 66     |  
| |                                                                                                |        |   |        |   |        |  
| | At 31 December                                                                                 | 1,932  |   | 1,919  |   | 1,888  |  
| |                                                                                                |        |   |        |   |        |  
| | Retained earnings(a)                                                                           |        |   |        |   |        |  
| | At 1 January                                                                                   | 14,401 |   | 11,893 |   | 8,388  |  
| | Parent and subsidiaries’ profit for the year                                                   | 7,058  |   | 7,440  |   | 4,853  |  
| | Equity
    accounted units’ retained profit for the year                                       | 254    |   | (2     | ) | 362    |  
| | Actuarial gains                                                                                | 135    |   | 338    |   | 179    |  
| | Dividends                                                                                      | (1,507 | ) | (2,573 | ) | (1,143 | )
| | Own
	      shares purchased from Rio Tinto shareholders under capital management
    programme | (1,348 | ) | (2,658 | ) | (794   | )
| | Employee
    share options charged to income statement                                         | 19     |   | 12     |   | 13     |  
| | Tax
    recognised directly in statement of recognised income and expense                      | 21     |   | (45    | ) | 35     |  
| | Other movements                                                                                | –      |   | (4     | ) | –      |  
| |                                                                                                |        |   |        |   |        |  
| | At 31 December                                                                                 | 19,033 |   | 14,401 |   | 11,893 |  
| |                                                                                                |        |   |        |   |        |  



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Notes to the 2007 Financial statement

|30 | CHANGES IN EQUITY, SHARE
    PREMIUM AND RESERVEScontinued                                        
|-- | --------------------------------------------------------------------------------------------------
|   |                                                                                                   
|   |                                                                                                   
|   |                                                                                                   
|   |                                                                                                   
|   |                                                                                                   
|   | Hedging reserves(b)                                                                               
|   | At 1 January                                                                                      
|   | Parent
    and subsidiaries’ net cash flow hedge fair value losses                                
|   | Equity accounted units’ cash flow hedge fair value gains/(losses)                                 
|   | Parent
	      and subsidiaries’ net cash flow hedge losses transferred to the
    income statement
|   | Equity
	      accounted units’ cash flow hedge losses transferred to the income
    statement     
|   | Tax on the above                                                                                  
|   |                                                                                                   
|   | At 31 December                                                                                    
|   |                                                                                                   
|   | Available
    for sale revaluation reserves(c)                                                    
|   | At 1 January                                                                                      
|   | Gains
    on available for sale securities                                                        
|   | Gains
    on available for sale securities transferred to the income statement                    
|   | Tax on the above                                                                                  
|   |                                                                                                   
|   | At 31 December                                                                                    
|   |                                                                                                   
|   | Other reserves(d)                                                                                 
|   | At 1 January                                                                                      
|   | Own
    shares purchased from Rio Tinto shareholders to satisfy share options                     
|   | Employee
    share options: value of services                                                     
|   | Deferred
    tax on share options                                                                 
|   |                                                                                                   
|   | At 31 December                                                                                    
|   |                                                                                                   
|   | Foreign
    currency translation reserve(e)                                                       
|   | At 1 January                                                                                      
|   | Currency
    translation adjustments                                                              
|   | Exchange losses                                                                                   
|   | Currency
    translation reclassified on disposal                                                 
|   | Tax
    on exchange adjustments                                                                   
|   |                                                                                                   
|   | At 31 December                                                                                    
|   |                                                                                                   
|   |                                                                                                   
|   |                                                                                                   
|   | Total
    other reserves per balance sheet                                                        
|   |                                                                                                   
|   |                                                                                                   

|(a) | Retained profit and movements in reserves of subsidiaries include those arising from the Group’s share of proportionally consolidated units.                                                                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | The hedging reserve records gains or losses on
cash flow hedges that are recognised initially in equity, as described in note
1(p).                                                                                                                                                                                                                                                                                 
|   
|(c) | The available for sale revaluation reserves record fair value gains or losses relating to available for sale securities, as described in note 1(p).                                                                                                                                                                                                                                                                 
|   
|(d) | Other reserves record the cumulative amount recognised in respect of options granted but not exercised to acquire shares in Rio Tinto Limited less, where applicable, the cost of shares purchased
to satisfy share options exercised. The estimated effect of unexercised options to acquire shares in Rio Tinto plc is recorded in retained earnings.                                                             
|   
|(e) | Exchange differences arising on the translation
of the Group’s net investment in foreign controlled companies are taken to the
foreign currency translation reserve, as described in note 1(d),  (net of translation
adjustments relating to Rio Tinto Limited share capital).
The cumulative differences relating to an investment would be transferred to
the income statement if the investment were disposed
of.



A-35

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Notes to the 2007 Financial statement

|31 | PRIMARY SEGMENTAL ANALYSIS
    (BY PRODUCT GROUP)                                     
|-- | --------------------------------------------------------------------------------------
|   |                                                                                       
|   |                                                                                       
|   |                                                                                       
|   |                                                                                       
|   | Sales revenue                                                                         
|   | Iron ore                                                                              
|   | Energy                                                                                
|   | Aluminium                                                                             
|   | Copper                                                                                
|   | Diamonds
    and Industrial Minerals                                                  
|   | Other                                                                                 
|   |                                                                                       
|   | Consolidated sales revenue                                                            
|   |                                                                                       
|   |                                                                                       
|   |                                                                                       
|   | Consolidated
    profit before finance items and taxation                             
|   | Iron ore                                                                              
|   | Energy (c)                                                                            
|   | Aluminium                                                                             
|   | Copper (c)                                                                            
|   | Diamonds
    and Industrial Minerals (c)                                              
|   | Exploration and evaluation                                                            
|   | Other                                                                                 
|   |                                                                                       
|   | Operating
    profit (segment result)                                                 
|   |                                                                                       
|   |                                                                                       
|   |                                                                                       
|   | Share
    of profit after tax of equity accounted units                               
|   | Copper                                                                                
|   | Other                                                                                 
|   |                                                                                       
|   | Profit
    before finance items and taxation                                          
|   |                                                                                       
|   |                                                                                       
|   |                                                                                       
|   | Depreciation
      and amortisation 
      (excluding share of equity accounted units)
|   | Iron ore                                                                              
|   | Energy                                                                                
|   | Aluminium                                                                             
|   | Copper                                                                                
|   | Diamonds
    and Industrial Minerals                                                  
|   | Exploration and evaluation                                                            
|   | Other                                                                                 
|   |                                                                                       
|   | Product group total                                                                   
|   |                                                                                       
|   |                                                                                       

|(a) | The product groups shown above reflect
      the Group’s management structure and are the Group’s primary
      segments in accordance with IAS 14. The analysis deals with: the sales revenue,
      profit before finance costs and taxation, and depreciation and amortisation,
      for subsidiary companies and proportionally consolidated units. The amounts
      presented for each product group exclude equity accounted units, but include
      the amounts attributable to outside equity shareholders. The product groups
      are consistent with those identified in the financial information by business
      unit data included in Note 50 on pages A-69 to A-71. However, that information
      includes the results of equity accounted units and presents different financial
      measures. The Alcan businesses are included within the Aluminium product
      group except for Packaging which is classified as held for sale at the year
      end.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | As detailed below, the analysis of profit before finance costs and taxation includes the profit on disposal of interests in businesses (including investments) and impairment (charges)/reversals,
which are excluded from Underlying earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(c) | An analysis of impairment (charges)/reversals
      reported in the operating income of each product group is shown below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   

| |                                                       | Total |   | Total |   | Total |  
| | ----------------------------------------------------- | ----- | - | ----- | - | ----- | -
| |                                                       | 2007  |   | 2006  |   | 2005  |  
| |                                                       | US$m  |   | US$m  |   | US$m  |  
| |                                                       |       |   |       |   |       |  
| | Impairment (charges)/reversals
      by product group |       |   |       |   |       |  
| | Iron Ore                                              | –     |   | 298   |   | –     |  
| | Energy                                                | 145   |   | (188  | ) | (13   | )
| | Aluminium                                             | (9    | ) | –     |   | –     |  
| | Copper                                                | 272   |   | 610   |   | –     |  
| | Diamonds
        and Industrial Minerals              | (466  | ) | (324  | ) | 16    |  
| |                                                       |       |   |       |   |       |  
| |                                                       | (58   | ) | 396   |   | 3     |  
| |                                                       |       |   |       |   |       |  



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Notes to the 2007 Financial statements

|31 | PRIMARY SEGMENTAL ANALYSIS (BY PRODUCT GROUP)continued
|-- | ------------------------------------------------------
|   |                                                       

| |                                                                     | 2007  |  | 2006  |  | 2007    |  | 2006   | 
| | ------------------------------------------------------------------- | ----- |  | ----- |  | ------- |  | ------ | 
| |                                                                     | %     |  | %     |  | US$m    |  | US$m   | 
| |                                                                     |       |  |       |  |         |  |        | 
| | Segment Assets (subsidiaries and proportionally consolidated units) |       |  |       |  |         |  |        | 
| | Iron ore                                                            | 16.4  |  | 33.8  |  | 13,634  |  | 10,151 | 
| | Energy                                                              | 6.7   |  | 16.5  |  | 5,588   |  | 4,965  | 
| | Aluminium                                                           | 61.6  |  | 12.9  |  | 51,192  |  | 3,863  | 
| | Copper                                                              | 6.0   |  | 16.0  |  | 5,012   |  | 4,814  | 
| | Diamonds and Industrial Minerals                                    | 7.6   |  | 17.6  |  | 6,307   |  | 5,260  | 
| | Other                                                               | 1.7   |  | 3.2   |  | 1,353   |  | 959    | 
| |                                                                     |       |  |       |  |         |  |        | 
| | Product group total                                                 | 100.0 |  | 100.0 |  | 83,086  |  | 30,012 | 
| |                                                                     |       |  |       |  |         |  |        | 
| |                                                                     |       |  |       |  |         |  |        | 
| |                                                                     |       |  |       |  |         |  |        | 
| | Equity accounted units(a)                                           |       |  |       |  |         |  |        | 
| | Copper                                                              | 25.3  |  | 58.0  |  | 1,873   |  | 1,385  | 
| | Aluminium                                                           | 72.2  |  | 36.8  |  | 5,346   |  | 878    | 
| | Other                                                               | 2.5   |  | 5.2   |  | 181     |  | 123    | 
| |                                                                     |       |  |       |  |         |  |        | 
| | Total                                                               | 100.0 |  | 100.0 |  | 7,400   |  | 2,386  | 
| |                                                                     |       |  |       |  |         |  |        | 
| | Assets held for sale                                                |       |  |       |  | 7,024   |  | –      | 
| | Deferred tax assets                                                 |       |  |       |  | 585     |  | 225    | 
| | Current tax recoverable                                             |       |  |       |  | 256     |  | 214    | 
| | Pension surpluses                                                   |       |  |       |  | 736     |  | 360    | 
| | Derivative assets                                                   |       |  |       |  | 653     |  | 555    | 
| | Cash and liquid resources                                           |       |  |       |  | 1,651   |  | 742    | 
| |                                                                     |       |  |       |  |         |  |        | 
| | Total assets                                                        |       |  |       |  | 101,391 |  | 34,494 | 
| |                                                                     |       |  |       |  |         |  |        | 

|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The analysis of the Group’s investment in equity accounted units includes loans to equity accounted units, which are shown separately on the face of the balance sheet.

| |                                                                                |       |  |       |  |         |   |         |  
| | ------------------------------------------------------------------------------ | ----- |  | ----- |  | ------- | - | ------- | -
| |                                                                                | 2007  |  | 2006  |  | 2007    |   | 2006    |  
| |                                                                                | %     |  | %     |  | US$m    |   | US$m    |  
| |                                                                                |       |  |       |  |         |   |         |  
| | Segment Liabilities (subsidiaries
      and proportionally consolidated units) |       |  |       |  |         |   |         |  
| | Iron ore                                                                       | 16.9  |  | 21.1  |  | (2,358  | ) | (1,467  | )
| | Energy                                                                         | 10.5  |  | 21.3  |  | (1,462  | ) | (1,480  | )
| | Aluminium                                                                      | 46.2  |  | 10.7  |  | (6,450  | ) | (745    | )
| | Copper                                                                         | 10.1  |  | 23.8  |  | (1,406  | ) | (1,653  | )
| | Diamonds and Industrial Minerals                                               | 7.6   |  | 12.6  |  | (1,055  | ) | (878    | )
| | Other                                                                          | 8.7   |  | 10.5  |  | (1,231  | ) | (730    | )
| |                                                                                |       |  |       |  |         |   |         |  
| | Total                                                                          | 100.0 |  | 100.0 |  | (13,962 | ) | (6,953  | )
| |                                                                                |       |  |       |  |         |   |         |  
| | Liabilities held for sale                                                      |       |  |       |  | (2,632  | ) | –       |  
| | Borrowings and bank overdrafts                                                 |       |  |       |  | (46,827 | ) | (3,511  | )
| | Current tax payable                                                            |       |  |       |  | (560    | ) | (1,110  | )
| | Deferred tax liabilities                                                       |       |  |       |  | (6,486  | ) | (2,339  | )
| | Derivative liabilities                                                         |       |  |       |  | (1,325  | ) | (426    | )
| | Post retirement benefit liabilities                                            |       |  |       |  | (3,275  | ) | (770    | )
| |                                                                                |       |  |       |  |         |   |         |  
| | Total liabilities                                                              |       |  |       |  | (75,067 | ) | (15,109 | )
| |                                                                                |       |  |       |  |         |   |         |  
| |                                                                                |       |  |       |  |         |   |         |  

| |                                                 | 2007  |  | 2006  |  | 2005  |  | 2007   |  | 2006  |  | 2005  |  
| | ----------------------------------------------- | ----- |  | ----- |  | ----- |  | ------ |  | ----- |  | ----- | -
| |                                                 | %     |  | %     |  | %     |  | US$m   |  | US$m  |  | US$m  |  
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  
| | Capital additions(a)                            |       |  |       |  |       |  |        |  |       |  |       |  
| | Iron ore                                        | 7.9   |  | 48.4  |  | 44.0  |  | 2,465  |  | 2,303 |  | 1,291 |  
| | Energy                                          | 1.9   |  | 12.4  |  | 20.6  |  | 583    |  | 591   |  | 604   |  
| | Aluminium                                       | 84.6  |  | 5.3   |  | 5.0   |  | 26,376 |  | 253   |  | 147   |  
| | Copper                                          | 1.0   |  | 15.9  |  | 11.5  |  | 314    |  | 758   |  | 337   |  
| | Diamonds and Industrial Minerals                | 3.3   |  | 14.4  |  | 15.0  |  | 1,027  |  | 688   |  | 441   |  
| | Other                                           | 1.3   |  | 3.6   |  | 3.9   |  | 394    |  | 170   |  | 114   |  
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  
| | Total capital additions                         | 100.0 |  | 100.0 |  | 100.0 |  | 31,159 |  | 4,763 |  | 2,934 |  
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  
| |                                                 |       |  | Note  |  |       |  |        |  |       |  |       |  
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  
| | Analysis of capital additions                   |       |  |       |  |       |  |        |  |       |  |       |  
| | Property, plant & equipment  – cash expenditure |       |  |       |  |       |  | 22,870 |  | 3,800 |  | 2,523 |  
| | Capitalised closure costs and other provisions  |       |  | 13    |  |       |  | 293    |  | 619   |  | 346   |  
| | Capitalised interest                            |       |  | 13    |  |       |  | 122    |  | 60    |  | 28    |  
| | Intangible assets  – cash expenditure           |       |  |       |  |       |  | 7,667  |  | 120   |  | 29    |  
| | Exploration & evaluation capitalised            |       |  | 12    |  |       |  | 203    |  | 72    |  | 38    |  
| | Finance leases taken out                        |       |  |       |  |       |  | –      |  | 2     |  | 64    |  
| | Movement in payables for capital expenditure    |       |  |       |  |       |  | 4      |  | 90    |  | (94   | )
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  
| | Capital additions per above                     |       |  |       |  |       |  | 31,159 |  | 4,763 |  | 2,934 |  
| |                                                 |       |  |       |  |       |  |        |  |       |  |       |  

|    |                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Capital additions represent the total cost incurred
during the period to acquire the non current assets shown above, measured on
an accruals basis, in accordance with IAS 14. Capital additions  include the
relevant non current assets of the acquired companies at the date of acquisition.
These figures exclude capital additions of equity accounted units.



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Notes to the 2007 Financial statements

|32 | SECONDARY SEGMENTAL ANALYSIS (BY
    GEOGRAPHICAL SEGMENT)
|-- | ----------------------------------------------------------
|   |                                                           

| | By destination                                       | 2007  |  | 2006  |  | 2005  |  | 2007   |   | 2006   |   | 2005   |  
| | ---------------------------------------------------- | ----- |  | ----- |  | ----- |  | ------ | - | ------ | - | ------ | -
| |                                                      | %     |  | %     |  | %     |  | US$m   |   | US$m   |   | US$m   |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Gross sales revenue by destination                   |       |  |       |  |       |  |        |   |        |   |        |  
| | North America (a)                                    | 22.6  |  | 21.9  |  | 21.7  |  | 7,582  |   | 5,575  |   | 4,499  |  
| | Europe                                               | 19.8  |  | 17.2  |  | 20.5  |  | 6,641  |   | 4,378  |   | 4,260  |  
| | Japan                                                | 16.8  |  | 19.6  |  | 19.1  |  | 5,633  |   | 4,986  |   | 3,954  |  
| | China                                                | 18.0  |  | 16.0  |  | 15.0  |  | 6,021  |   | 4,062  |   | 3,112  |  
| | Other Asia                                           | 12.2  |  | 13.5  |  | 12.8  |  | 4,105  |   | 3,438  |   | 2,663  |  
| | Australia and New Zealand                            | 5.6   |  | 5.8   |  | 6.7   |  | 1,892  |   | 1,477  |   | 1,400  |  
| | Other                                                | 5.0   |  | 6.0   |  | 4.2   |  | 1,644  |   | 1,524  |   | 854    |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Total                                                | 100.0 |  | 100.0 |  | 100.0 |  | 33,518 |   | 25,440 |   | 20,742 |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Less: share of equity accounted units’ sales revenue |       |  |       |  |       |  | (3,818 | ) | (2,975 | ) | (1,709 | )
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Consolidated sales revenue                           |       |  |       |  |       |  | 29,700 |   | 22,465 |   | 19,033 |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Consolidated sales revenue by destination            |       |  |       |  |       |  |        |   |        |   |        |  
| | North America (a)                                    | 24.5  |  | 23.9  |  | 22.3  |  | 7,262  |   | 5,358  |   | 4,235  |  
| | Europe                                               | 20.3  |  | 17.5  |  | 20.8  |  | 6,027  |   | 3,929  |   | 3,968  |  
| | Japan                                                | 16.9  |  | 19.6  |  | 19.0  |  | 5,012  |   | 4,402  |   | 3,620  |  
| | China                                                | 18.0  |  | 16.2  |  | 15.4  |  | 5,342  |   | 3,648  |   | 2,932  |  
| | Other Asia                                           | 10.9  |  | 12.0  |  | 12.4  |  | 3,238  |   | 2,691  |   | 2,366  |  
| | Australia and New Zealand                            | 6.0   |  | 6.3   |  | 7.0   |  | 1,771  |   | 1,412  |   | 1,336  |  
| | Other                                                | 3.4   |  | 4.5   |  | 3.1   |  | 1,048  |   | 1,025  |   | 576    |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Total                                                | 100.0 |  | 100.0 |  | 100.0 |  | 29,700 |   | 22,465 |   | 19,033 |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Gross sales revenue by country of origin             |       |  |       |  |       |  |        |   |        |   |        |  
| | North America (a)                                    | 29.8  |  | 29.6  |  | 30.8  |  | 9,992  |   | 7,529  |   | 6,397  |  
| | Australia and New Zealand                            | 45.5  |  | 49.9  |  | 51.2  |  | 15,243 |   | 12,703 |   | 10,613 |  
| | South America                                        | 9.5   |  | 10.5  |  | 6.3   |  | 3,195  |   | 2,679  |   | 1,302  |  
| | Africa                                               | 5.9   |  | 5.7   |  | 5.5   |  | 1,975  |   | 1,461  |   | 1,149  |  
| | Indonesia                                            | 1.4   |  | 1.6   |  | 3.4   |  | 461    |   | 396    |   | 702    |  
| | Europe and other countries                           | 7.9   |  | 2.7   |  | 2.8   |  | 2,652  |   | 672    |   | 579    |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Total                                                | 100.0 |  | 100.0 |  | 100.0 |  | 33,518 |   | 25,440 |   | 20,742 |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Less: share of equity accounted units’ sales revenue |       |  |       |  |       |  | (3,818 | ) | (2,975 | ) | (1,709 | )
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  
| | Consolidated sales revenue                           |       |  |       |  |       |  | 29,700 |   | 22,465 |   | 19,033 |  
| |                                                      |       |  |       |  |       |  |        |   |        |   |        |  

| |                                                                                   |                      |  |                         | 
| | --------------------------------------------------------------------------------- | -------------------- |  | ----------------------- | 
| |                                                                                   | Segment
      assets |  | Capital
      additions | 
| |                                                                                   | 2007                 |  | 2006                    | 
| |                                                                                   | US$m                 |  | US$m                    | 
| |                                                                                   |                      |  |                         | 
| | Assets and capital additions
      by location (excluding equity accounted units) |                      |  |                         | 
| | North America (a)                                                                 | 37,522               |  | 10,302                  | 
| | Australia and New Zealand                                                         | 27,931               |  | 17,097                  | 
| | South America                                                                     | 589                  |  | 151                     | 
| | Africa                                                                            | 2,142                |  | 1,168                   | 
| | Indonesia                                                                         | 669                  |  | 605                     | 
| | Europe                                                                            | 14,069               |  | 855                     | 
| | Other countries                                                                   | 900                  |  | 194                     | 
| |                                                                                   |                      |  |                         | 
| |                                                                                   | 83,822               |  | 30,372                  | 
| |                                                                                   |                      |  |                         | 
| | Investments in equity accounted
      units (b)                                   |                      |  |                         | 
| | North America (a)                                                                 | 1,033                |  | 408                     | 
| | Australia and New Zealand                                                         | 2,501                |  | 937                     | 
| | South America                                                                     | 1,567                |  | 993                     | 
| | Other countries                                                                   | 2,299                |  | 48                      | 
| |                                                                                   |                      |  |                         | 
| |                                                                                   | 7,400                |  | 2,386                   | 
| |                                                                                   |                      |  |                         | 
| | Assets held for sale                                                              | 7,024                |  | –                       | 
| | Deferred tax assets                                                               | 585                  |  | 225                     | 
| | Current tax recoverable                                                           | 256                  |  | 214                     | 
| | Derivative assets                                                                 | 653                  |  | 555                     | 
| | Cash and liquid resources                                                         | 1,651                |  | 742                     | 
| |                                                                                   |                      |  |                         | 
| | Total assets                                                                      | 101,391              |  | 34,494                  | 
| |                                                                                   |                      |  |                         | 

|    |                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The United States of America and Canada have been combined to form the ‘North America’ Geographical segment, having regard to the similarity of economic and political conditions in these
countries.
|   
|(b) | This analysis of investments in equity accounted units represents the Group’s share of net assets plus loans to equity accounted units, which are shown separately on the face of the balance
sheet. 



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Notes to the 2007 Financial statements

|33 | FINANCIAL RISK MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Groups policies with regard to
      financial risk management are clearly defined and consistently applied.
      They are a fundamental part of the Groups long term strategy covering
      areas such as foreign exchange risk, interest rate risk, commodity price
      risk, credit risk and liquidity risk and capital management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Generally, the Group only sells commodities
      it has produced but may purchase commodities to satisfy customer contracts
      from time to time and to balance the loading on production facilities. In
      the long term, natural hedges operate in a number of ways to help protect
      and stabilise earnings and cash flow. From 1 January 2008, Rio Tinto Alcan
      has adopted the Rio Tinto Group policy on trading and hedging.                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 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 the long term. These natural hedges significantly reduce the necessity
      for using derivatives or other forms of synthetic hedging. Such hedging
      is therefore undertaken to a strictly limited degree, as described below.
      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.                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Treasury operates 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. Senior management is
      advised of corporate debt and currency, commodity and interest rate derivatives
      through a monthly reporting framework.                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 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 and cross currency interest
      rate swaps in conjunction with longer term funds raised in the capital markets
      to achieve a predominantly floating rate obligation which is consistent
      with the Groups interest rate policy, primarily US dollar LIBOR.                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (i) Foreign exchange risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Rio Tintos shareholders’
      equity, 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 Canadian dollars and the Euro are the most important currencies
      (apart from the US dollar) influencing costs.                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 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 most
      appropriate currency for borrowing and holding surplus cash, although a
      portion of surplus cash may also be held in other currencies, most notably
      Australian dollars, Canadian dollars and the Euro, in order to meet short
      term operational and capital commitments and, for the Australian dollar,
      dividend payments. The Group finances its operations primarily in US dollars,
      either directly or using cross currency interest rate swaps. A substantial
      part of the Group’s US dollar debt is located in subsidiaries having
      a US dollar functional currency.              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Certain US dollar debt and other financial
      assets and liabilities including intragroup balances are not held in the
      functional currency of the relevant subsidiary. This results in an accounting
      exposure to exchange gains and losses as the financial assets and liabilities
      are translated into the functional currency of the subsidiary that accounts
      for those assets and liabilities. These exchange gains and losses are recorded
      in the Group’s income statement except to the extent that they can
      be taken to equity under the Group’s accounting policy which is explained
      in note 1(d). Gains and losses on US dollar net debt and intragroup balances
      are excluded from Underlying earnings. Other exchange gains and losses are
      included in Underlying earnings.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | As noted above, Rio Tinto hedges interest
      rate and currency risk on most of its foreign currency borrowings by entering
      into cross currency interest rate swaps, and/or interest rate swaps when
      required. These have the economic effect of converting fixed rate foreign
      currency borrowings to floating rate US dollar borrowings. See section B
      (d) of note 34 – Financial Instruments for the details of currency
      and interest rate contracts relating to borrowings.                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | After taking into account relevant swap
      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 summarises the net debt by currency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| |                                        | 2007    |   | 2006   |  
| | -------------------------------------- | ------- | - | ------ | -
| | (Net debt)/net funds by
      currency | US$m    |   | US$m   |  
| |                                        |         |   |        |  
| | United States dollar                   | (44,737 | ) | (2,213 | )
| | Australian dollar                      | (256    | ) | (291   | )
| | South African rand                     | 103     |   | 2      |  
| | UK sterling                            | (112    | ) | (30    | )
| | Euro                                   | (150    | ) | 67     |  
| | Canadian dollar                        | (62     | ) | (14    | )
| | Other                                  | 62      |   | 42     |  
| |                                        |         |   |        |  
| | Total                                  | (45,152 | ) | (2,437 | )
| |                                        |         |   |        |  



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Notes
        to the 2007 Financial statements

|33 | FINANCIAL RISK MANAGEMENTcontinued
|-- | ----------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Currency hedging                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The Group does not generally believe that
      active currency hedging of transactions 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, typically hedging of capital expenditures and
      other significant financial items such as tax and dividends. There is a
      legacy of currency forward contracts used to hedge operating cash flow exposures
      which was acquired with Alcan and the North companies. Refer to section
      B ((a) to (d)) of note 34 – Financial Instruments for the currency
      forward and option contracts used to manage the currency risk exposures
      of the Group at 31 December 2007.                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Foreign exchange sensitivity: Risks
      associated with exposure to financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | The sensitivities below derive from the
      estimated impact of a ten per cent change in the full year closing US dollar
      exchange rate on the value of financial instruments. The impact is expressed
      in terms of the effect on net earnings, Underlying earnings and equity ,
      assuming that each exchange rate moves in isolation. The sensitivities are
      based on financial assets and liabilities held at 31 December 2007, where
      balances are not denominated in the functional currency of the subsidiary.
      A strengthening of the US dollar would result in exchange gains based on
      financial assets and financial liabilities held at 31 December 2007. These
      balances will not remain constant throughout 2008, however, and therefore
      these numbers should be used with care.

| |                       |  |          |  |              |   |            |  |                 |  
| | --------------------- |  | -------- |  | ------------ | - | ---------- |  | --------------- | -
| | At 31 December 2007   |  |          |  |              |   |            |  |                 |  
| |                       |  |          |  |              |   |            |  |                 |  
| |                       |  |          |  |              |   | Of which   |  | Impact directly |  
| |                       |  |          |  | Effect on    |   | amount     |  | on equity of    |  
| |                       |  | Closing  |  | net earnings |   | impacting  |  | 10% change      |  
| |                       |  | exchange |  | of 10%       |   | Underlying |  | in full year    |  
| |                       |  | rate     |  | change       |   | earnings   |  | closing rate    |  
| | Functional currency   |  | US cents |  | +/– US$m     |   | +/– US$m   |  | +/– US$m        |  
| |                       |  |          |  |              |   |            |  |                 |  
| | Australian dollar (a) |  | 88       |  | 204          |   | 99         |  | (20             | )
| | Canadian dollar       |  | 101      |  | (3           | ) | 53         |  | –               |  
| | South African rand    |  | 15       |  | 14           |   | 12         |  | (4              | )
| | Euro                  |  | 147      |  | 33           |   | 14         |  | 149             |  
| | New Zealand dollar    |  | 78       |  | (9           | ) | 3          |  | –               |  
| |                       |  |          |  |              |   |            |  |                 |  
| |                       |  |          |  |              |   |            |  |                 |  
| | At 31 December 2006   |  |          |  |              |   |            |  |                 |  
| |                       |  |          |  |              |   |            |  |                 |  
| |                       |  |          |  |              |   | Of which   |  | Impact directly |  
| |                       |  |          |  | Effect on    |   | amount     |  | on equity of    |  
| |                       |  | Closing  |  | net earnings |   | impacting  |  | 10% change      |  
| |                       |  | exchange |  | of 10%       |   | Underlying |  | in full year    |  
| |                       |  | rate     |  | change       |   | earnings   |  | closing rate    |  
| | Functional currency   |  | US cents |  | +/– US$m     |   | +/– US$m   |  | +/– US$m        |  
| |                       |  |          |  |              |   |            |  |                 |  
| | Australian dollar (a) |  | 79       |  | 37           |   | 56         |  | (30             | )
| | Canadian dollar       |  | 86       |  | (29          | ) | 12         |  | –               |  
| | South African rand    |  | 14       |  | (6           | ) | 5          |  | –               |  
| | New Zealand dollar    |  | 71       |  | (15          | ) | 3          |  | –               |  
| |                       |  |          |  |              |   |            |  |                 |  

| |     |                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | The sensitivities
      show the net sensitivity of US$ exposures in A$ functional currency
      companies, for example, and A$ exposures in US$ functional currency
      companies.
| |     |                                                                                                                                                                                       
| | (b) | The sensitivities
      indicate the effect of a 10 per cent strengthening of the US dollar against
      each currency.                                                              

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Interest rate risk refers to the risk
      that the value of a financial instrument or cash flows associated with the
      instruments will fluctuate due to changes in market interest rates. Rio
      Tintos interest rate management policy is generally to borrow and
      invest at floating interest rates. This approach is influenced by the historical
      correlation between interest rates and commodity prices. In some circumstances,
      an element of fixed rate funding may be considered appropriate. As noted
      above, Rio Tinto hedges interest rate and currency risk on most of its foreign
      currency borrowings by entering into cross currency interest rate swaps
      and interest rate swaps in order to convert fixed rate foreign currency
      borrowings to floating rate US dollar borrowings. See section B (d) of note
      34 – Financial Instruments for the details of currency and interest
      rate contracts relating to borrowings. At 31 December 2007, US$4.9 billion
      (2006: US$1.2 billion) of the Groups debt was at fixed rates after
      taking into account interest rate swaps and finance leases.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | A monthly Treasury report is provided
      to senior management which summarises corporate debt exposed to currency
      and interest rate risks and, where applicable, the offsetting derivatives.
      See section B (d) of note 34 – Financial Instruments for the details
      of currency and interest rate contracts relating to borrowings. See note
      22 – Borrowings for the details of debt outstanding at 31 December
      2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



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Notes to the 2007 Financial statements

|33 | FINANCIAL RISK MANAGEMENTcontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Based on net debt and other floating
        rate financial instruments outstanding as at 31 December 2007, the effect
        on net earnings of a half percent movement in US dollar LIBOR interest
        rates, with all other variables held constant, is estimated to be US$158
        million (2006: US$3 million). These balances will not remain constant
        throughout 2008, however, and therefore these numbers should be used
    with care.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (iii)
    Commodity price risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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 base and the Group does
        not generally believe commodity price hedging would provide long term
        benefit to shareholders. The Group may hedge certain commitments with
    some of its customers or suppliers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | 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 (LME) 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 including iron ore and coal are generally
        agreed annually or for longer periods with customers, although volume
    commitments vary by product.                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Certain products, predominantly copper
        concentrate, are ‘provisionally priced’, ie 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. Revenue on provisionally
        priced sales is recognised based on estimates of fair value of the consideration
        receivable based on forward market prices. At each reporting date provisionally
        priced metal is marked to market based on the forward selling price for
        the period stipulated in the contract. For this purpose, the selling
        price can be measured reliably for those products, such as copper for
        which there exists an active and freely traded commodity market such
        as the London Metal Exchange and the value of product sold by the Group
    is directly linked to the form in which it is traded on that market.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The marking to market of provisionally
    priced sales contracts is recorded as an adjustment to sales revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | At the end of 2007, the Group had 270
        million pounds of copper sales (2006: 324 million pounds) that were provisionally
        priced at US$ 304 cents per pound (2006: US$287 cents per pound). The
        final price of these sales will be determined in 2008. A ten per cent
        change in the price of copper realised on the provisionally priced sales
        would increase or reduce net earnings by US$58 million (2006: US$66 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Alcan is the counterparty to certain
        forward metal sales contracts with Novelis, a company which was spun-off
        from Alcan in early 2005. Alcan has in substance fixed the LME price
        for a portion of its future aluminium sales. At 31 December 2007, these
    contracts had a positive fair value of US$45 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Commodity
    price sensitivity: Risks associated with derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The table below summarises the impact
        of changes in the market price on the following commodity derivatives
        including those aluminium and option contracts embedded in electricity
        purchase contracts outstanding at 31 December 2007. The impact is expressed
        in terms of the resulting change in the Group’s net earnings for the
        year or, where applicable, the change in equity. The sensitivities are
        based on the assumption that the market price increases by ten per cent
        with all other variables held constant. The Group’s ‘own use contracts’
        are excluded from the sensitivity analysis below as they are outside
        the scope of IAS 39. Such contracts are to buy or sell non financial
        items that can be net settled but were entered into and continue to be
        held for the purpose of the receipt or delivery of the non financial
        item in accordance with the business unit’s expected purchase, sale or
    usage requirements. 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | These sensitivities should be used with
        care. The relationship between currencies and commodity prices is a complex
        one and changes in exchange rates can influence commodity prices and
    vice versa.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | ------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ | 
| | At 31 December 2007 |  |                                                                                                      |  |                                                                                                                    | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | Products            |  | Effect on Underlying and
      net earnings of 10%
      Increase from year end price
      +/– US$m |  | Effect directly on equity
      attributable to Rio Tinto of 10%
      Increase from year end price
      +/– US$m | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | Copper              |  | –                                                                                                    |  | 40                                                                                                                 | 
| | Coal                |  | –                                                                                                    |  | 25                                                                                                                 | 
| | Aluminium           |  | 41                                                                                                   |  | 50                                                                                                                 | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | Total               |  | 41                                                                                                   |  | 115                                                                                                                | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 

| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | ------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ | 
| | At 31 December 2006 |  |                                                                                                      |  |                                                                                                                    | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | Products            |  | Effect on Underlying and
      net earnings of 10%
      Increase from year end price
      +/– US$m |  | Effect directly on equity
      attributable to Rio Tinto of 10%
      Increase from year end price
      +/– US$m | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | Copper              |  | –                                                                                                    |  | 49                                                                                                                 | 
| | Coal                |  | –                                                                                                    |  | 20                                                                                                                 | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 
| | Total               |  | –                                                                                                    |  | 69                                                                                                                 | 
| |                     |  |                                                                                                      |  |                                                                                                                    | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iv) Credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Credit risk is the risk that a counterparty
        will not meet its obligations under a financial instrument or customer
        contract, leading to a financial loss. The Group is exposed to credit
        risk from its operating activities (primarily from customer receivables)
        and from its financing activities, including deposits with banks and
        financial institutions, foreign exchange transactions and other financial
    instruments.



A-41

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Notes to the 2007 Financial statements

|33 | FINANCIAL RISK MANAGEMENTcontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Credit risks related to receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Customer credit risk is managed by each
      business unit subject to Rio Tinto’s established policy, procedure
      and control relating to customer credit risk management. Credit limits are
      established for all customers based on internal or external rating criteria.
      Where customers are rated by an independent credit rating agency, these
      ratings are used to set credit limits. In circumstances where no independent
      credit rating exists, the credit quality of the customer is assessed based
      on an extensive credit rating scorecard. Outstanding customer receivables
      are regularly monitored and any credit concerns highlighted to senior management.
      High risk shipments to major customers are generally covered by letters
      of credit or other forms of credit insurance.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | At 31 December 2007, the Group had approximately
      140 customers (2006: 75 customers) that owed the Group more than US$5 million
      each and accounted for approximately 81 per cent (2006: 70 per cent) of
      all receivables owing. There were 33 customers (2006: 20 customers) with
      balances greater than US$20 million accounting for just over 48 per cent
      (2006: 34 per cent) of total amounts receivable. A balance of approximately
      US$254 million relates to one customer group.                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The maximum exposure to credit risk at
      the reporting date is the carrying value of each class of financial assets
      mentioned on page A-44. The group does not hold collateral as security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Credit
      risk related to financial instruments and cash deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Credit risk from balances with banks and
      financial institutions is managed by Group Treasury in accordance with a
      Board approved policy. Investments of surplus funds are made only with approved
      counterparties and within credit limits assigned to each counterparty. Counterparty
      credit limits are reviewed by the Rio Tinto Board on an annual basis, and
      may be updated throughout the year subject to approval of the Rio Tinto
      Finance Committee. The limits are set to minimise the concentration of risks
      and therefore mitigate financial loss through potential counterparty failure.                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | No material exposure is considered to
      exist by virtue of the possible non performance of the counterparties to
      financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (v) Liquidity
      and capital risk management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Group’s total capital is defined
      as Rio Tinto’s shareholders’ funds plus funds attributable to
      outside equity shareholders plus net debt, and amounted to US$71 billion
      at 31 December 2007 (31 December 2006: US$22 billion).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Group’s over-riding objectives
      when managing capital are to safeguard the business as a going concern;
      to maximise returns for shareholders and benefits for other stakeholders
      and to maintain an optimal capital structure in order to reduce the cost
      of capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | 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. Rio Tinto plc and Rio Tinto Limited continue to maintain solid investment
      grade credit ratings from Moody’s and Standard and Poors, despite
      the credit rating downgrade announced on completion of the Alcan acquisition.
      These ratings continue to provide access to global debt capital markets
      in significant depth.                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Rio Tinto does not have a target debt/equity
      ratio, but has a policy of maintaining a flexible financing structure so
      as to be able to take advantage of new investment opportunities that may
      arise. Following the acquisition of Alcan, the Group has publicly stated
      an objective to reduce its debt/equity ratio from current levels through
      a targeted asset divestment programme to a level consistent with a single-A
      credit rating. This policy is balanced against the desire to ensure efficiency
      in the debt/equity structure of the Rio Tinto balance sheet in the longer
      term through pro active capital management programmes.                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | On 2 February 2006 the Group announced
      a US$4 billion capital management programme which was subsequently increased
      to US$7 billion in October 2006. The capital return was comprised of a US$1.5
      billion special dividend (US$1.10 per share) paid in April 2006 and an initial
      US$2.5 billion share buyback programme (increased to US$5.5 billion) to
      be completed over the remaining period to the end of 2007. The programme
      was suspended on 12 July 2007 at the time the Alcan offer was announced,
      by which time US$3.9 billion had been returned under the US$7 billion capital
      management programme, bringing the total cash returned to shareholders under
      announced capital management programmes since 2005 to US$6.4 billion.                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Group maintains backup liquidity for
      its commercial paper programmes and other debt maturing within 12 months
      by way of bank standby credit facilities, of which US$3.7 billion was undrawn
      as at 31 December 2007. The Group’s committed bank standby credit
      facilities contain no financial undertakings relating to interest cover
      and are not affected to any material extent (other than an increase in interest
      margin) by a reduction in the Group’s credit rating.                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The main covenant in the Rio Tinto Group
      relates to a financial covenant over corporate debt drawn under the Syndicated
      Acquisition Facility, for which a compliance certificate must be produced
      attesting a certain ratio of Net Borrowings to EBITDA. There are no covenants
      relating to corporate debt which are under negotiation at present.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Group’s policy is to centralise
      debt and surplus cash balances whenever possible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



A-42

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Notes to the 2007 Financial statements

|33 | FINANCIAL RISK
      MANAGEMENTcontinued                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The table below
      analyses the Groups financial liabilities into relevant maturity groupings
      based on the remaining period from the balancesheet
      date to the contractual maturity date. As the amounts disclosed in the table
      are the contractual undiscounted cash flows , thesebalances
      will not necessarily agree with the amounts disclosed in the balance sheet.
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   | At 31 December
      2007                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Financial liabilities                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                   

| |                           |                             |           |   |            |   |          |   |             |   |             |   |             |  
| | ------------------------- | --------------------------- | --------- | - | ---------- | - | -------- | - | ----------- | - | ----------- | - | ----------- | -
| | At 31 December
      2006 |                             |           |   |            |   |          |   |             |   |             |   |            
| |                           |                             |           |   |            |   |          |   |             |   |             |   |            
| |                           |                             |           |   |            |   | Expected |   |             |   |             |   | Total       |  
| |                           |                             | Trade     |   | Borrowings |   | future   |   | Derivatives |   | Other       |   | financial   |  
| |                           |                             | and other |   | before     |   | interest |   | related to  |   | financial   |   | liabilities |  
| |                           |                             | payables  |   | swaps      |   | payments |   | net debt    |   | liabilities |   | 2006        |  
| |                           |                             | US$m      |   | US$m       |   | US$m     |   | US$m        |   | US$m        |   | US$m        |  
| |                           |                             |           |   |            |   |          |   |             |   |             |   |            
| | Financial liabilities     |                             |           |   |            |   |          |   |             |   |             |   |            
| |                           | Within 1 year, or on demand | (2,233    | ) | (1,504     | ) | (148     | ) | (3          | ) | (320        | ) | (4,208      | )
| |                           | Between 1 and 2 years       | –         |   | (723       | ) | (96      | ) | (15         | ) | (288        | ) | (1,122      | )
| |                           | Between 2 and 3 years       | –         |   | (107       | ) | (71      | ) | (2          | ) | (148        | ) | (328        | )
| |                           | Between 3 and 4 years       | –         |   | (478       | ) | (44      | ) | (3          | ) | (43         | ) | (568        | )
| |                           | Between 4 and 5 years       | –         |   | (68        | ) | (39      | ) | –           |   | (31         | ) | (138        | )
| |                           | After 5 years               | –         |   | (631       | ) | (42      | ) | –           |   | (68         | ) | (741        | )
| |                           |                             |           |   |            |   |          |   |             |   |             |   |            
| |                           |                             | (2,233    | ) | (3,511     | ) | (440     | ) | (23         | ) | (898        | ) | (7,105      | )
| |                           |                             |           |   |            |   |          |   |             |   |             |   |            

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Interest payments have been projected using
      interest rates applicable at 31 December, including the impact of interest
      rate swap agreements, where appropriate.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                            
| | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Much of the debt is subject to variable interest rates. Future interest payments are therefore subject to change in line with market rates.                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                            
| | As at 31 December 2007, the Group
      had unutilised standby credit facilities totalling US$3.7 billion (2006:
      US$2.3
      billion). These facilities which have terms of between 4 and 5 years,
      are for back-up support for the Groups commercial paper programmes
      and for general corporate purposes. US$1.6 billion is available to
      be drawn under the US$2.3 billion provided under Bilateral facility
      agreements, while the balance of
US$2.1 billion is available under the US$40 billion syndicated facility
agreement.



A-43

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Notes to the 2007 Financial statements

|34 | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                      
|   | Except where stated, the information
      given below relates to the financial instruments of the parent companies
      and their subsidiaries and proportionally consolidated units, and excludes
      those of equity accounted units. The information is grouped in the following
    sections:

| |                                                           | 
| | --------------------------------------------------------- | 
| | A –Financial
        assets and liabilities
by categories
| | B –Derivative financial instruments                      
| | C –Fair
        values                                   
| |                                                          

| | (A) Financial
      assets and liabilities by categories                  
| | --------------------------------------------------------------------------
| |                                                                           
| | At 31 December 2007                                                       
| |                                                                           
| |                                                                           
| |                                                                           
| |                                                                           
| |                                                                           
| |                                                                           
| |                                                                           
| | Financial Assets                                                          
| | Cash and cash equivalent assets
      (Note 21)                           
| | Trade and other receivables
      (Note 17) (a)                           
| | US Treasury bonds (Note 20)                                               
| | Equity shares and quoted funds
      (Note 20)                            
| | Other investments, including
      loans (Note 20)                        
| | Other liquid resources (Note
      20)                                    
| | Currency and commodity contracts:
      designated as hedges (Note 20)    
| | Currency and commodity contracts:
      not designated as hedges (Note 20)
| | Derivatives related to net
      debt (Note 20)                           
| | Loans to equity accounted units
      including quasi equity loans        
| |                                                                           
| | Total financial assets                                                    
| |                                                                           
| | Financial liabilities                                                     
| | Trade and other payables (Note
      25)(b)                               
| | Short term borrowings and bank
      overdrafts (Note 21 and 22)          
| | Medium and long term borrowings
      (Note 22)                           
| | Deferred consideration (Note
      25)                                    
| | Other financial liabilities
      (Note 26)                               
| |                                                                           
| | Total financial liabilities                                               
| |                                                                           

| |                                                                      |        |   |             |  |            |  |            |   |             |  
| | -------------------------------------------------------------------- | ------ | - | ----------- |  | ---------- |  | ---------- | - | ----------- | -
| | At 31 December 2006                                                  |        |   |             |  |            |  |            |   |             |  
| |                                                                      |        |   |             |  |            |  |            |   |             |  
| |                                                                      |        |   |             |  |            |  |            |   | Other       |  
| |                                                                      |        |   |             |  | Available  |  |            |   | financial   |  
| |                                                                      |        |   | Loans and   |  | for sale   |  | Held at    |   | assets and  |  
| |                                                                      | Total  |   | receivables |  | securities |  | fair value |   | liabilities |  
| |                                                                      | US$m   |   | US$m        |  | US$m       |  | US$m       |   | US$m        |  
| |                                                                      |        |   |             |  |            |  |            |   |             |  
| | Financial Assets                                                     |        |   |             |  |            |  |            |   |             |  
| | Cash and cash equivalent assets (Note 21)                            | 736    |   | 736         |  | –          |  | –          |   | –           |  
| | Trade and other receivables (Note 17) (a)                            | 2,833  |   | 2,833       |  | –          |  | –          |   | –           |  
| | US Treasury bonds (Note 20)                                          | 20     |   | –           |  | 20         |  | –          |   | –           |  
| | Equity shares and quoted funds (Note 20)                             | 176    |   | –           |  | 176        |  | –          |   | –           |  
| | Other investments, including loans (Note 20)                         | 184    |   | 184         |  | –          |  | –          |   | –           |  
| | Other liquid resources (Note 20)                                     | 6      |   | –           |  | –          |  | –          |   | 6           |  
| | Currency and commodity contracts: designated as
hedges (Note 20)     | 78     |   | –           |  | –          |  | –          |   | 78          |  
| | Currency and commodity contracts: not designated
as hedges (Note 20) | 122    |   | –           |  | –          |  | 122        |   | –           |  
| | Derivatives related to net debt (Note 20)                            | 355    |   | –           |  | –          |  | 355        |   | –           |  
| | Loans to equity accounted unit including quasi equity loans          | 379    |   | 379         |  | –          |  | –          |   | –           |  
| |                                                                      |        |   |             |  |            |  |            |   |             |  
| | Total financial assets                                               | 4,889  |   | 4,132       |  | 196        |  | 477        |   | 84          |  
| |                                                                      |        |   |             |  |            |  |            |   |             |  
| | Financial liabilities                                                |        |   |             |  |            |  |            |   |             |  
| | Trade and other payables (Note 25)(b)                                | (2,233 | ) | –           |  | –          |  | –          |   | (2,233      | )
| | Short term borrowings and bank overdrafts (Note 21 and 22)           | (1,504 | ) | –           |  | –          |  | –          |   | (1,504      | )
| | Medium and long term borrowings (Note 22)                            | (2,007 | ) | –           |  | –          |  | –          |   | (2,007      | )
| | Deferred consideration (Note 25)                                     | (179   | ) | –           |  | –          |  | –          |   | (179        | )
| | Other financial liabilities (Note 26)                                | (426   | ) | –           |  | –          |  | (426       | ) | –           |  
| |                                                                      |        |   |             |  |            |  |            |   |             |  
| | Total financial liabilities                                          | (6,349 | ) | –           |  | –          |  | (426       | ) | (5,923      | )
| |                                                                      |        |   |             |  |            |  |            |   |             |  



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Notes to the 2007 Financial statements

| | 34 | FINANCIAL INSTRUMENTScontinued                                                                             |                                                                                                                                                                           
| | -- | ---------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                            |                                                                                                                                                                           
| |    | (a)                                                                                                        | This excludes pension surpluses, prepayment of tolling charges to jointly controlled entities and other prepayments and accrued
income.                                   
| |    | (b)                                                                                                        | Trade and other payables includes trade creditors,
amounts owed to equity accounted units, other creditors excluding deferred
consideration shown separately and accruals.
| |    |                                                                                                            |                                                                                                                                                                           
| |    | (B)                                                                                                        | Derivative financial instruments                                                                                                                                          
| |    |                                                                                                           
| |    | The Group‘s derivatives, including
    embedded derivatives, as at 31 December 2007, are summarised below: |                                                                                                                                                                           
| |    |                                                                                                            |                                                                                                                                                                           
| |    | a) Forward contracts
      relating to operating transactions: designated as hedges                        |                                                                                                                                                                           

| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ---------- | 
| | Assets (note 20)                                                                                                                                                                                                                                                                                                                                                                                                  |  | Total fair |  | Total fair | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  | value      |  | value      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 2007       |  | 2006       | 
| | Buy Australian dollar; sell
      US dollar                                                                                                                                                                                                                                                                                                                                                                       |  | US$m       |  | US$m       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                                                                                                                                                                                  |  | 34         |  | 26         | 
| | Between 1 and 5 years                                                                                                                                                                                                                                                                                                                                                                                             |  | 25         |  | 36         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Total                                                                                                                                                                                                                                                                                                                                                                                                             |  | 59         |  | 62         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Other currency forward contracts                                                                                                                                                                                                                                                                                                                                                                                  |  | 2          |  | –          | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Total currency forward contracts                                                                                                                                                                                                                                                                                                                                                                                  |  | 61         |  | 62         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | The above currency forward
      contracts were acquired with companies purchased in 2000 and were entered
      into by those companies in order to reduce their exposure to the US dollar
      through forecast sales.                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Aluminium forward contracts                                                                                                                                                                                                                                                                                                                                                                                       |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                                                                                                                                                                                  |  | 25         |  | –          | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Total                                                                                                                                                                                                                                                                                                                                                                                                             |  | 25         |  | –          | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Coal (API #2) forward contracts                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                                                                                                                                                                                  |  | 30         |  | 4          | 
| | Between 1 and 5 years                                                                                                                                                                                                                                                                                                                                                                                             |  | 8          |  | –          | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Total                                                                                                                                                                                                                                                                                                                                                                                                             |  | 38         |  | 4          | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Total commodity forward
      contracts                                                                                                                                                                                                                                                                                                                                                                           |  | 63         |  | 4          | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | Total assets related to
      forward contracts designated as hedges                                                                                                                                                                                                                                                                                                                                              |  | 124        |  | 66         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                   |  |            |  |            | 
| | The above aluminium forward
      contracts are net metal sales contracts which are primarily hedging cashflow
      exposures associated with underlying variable third party metal sales contracts.
      These contracts reduce the Companys exposure to movements the aluminium
      price. Coal forward contracts have been entered into in order to reduce
      exposure to movements in the coal price.

| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | - | ---------------- | -
| | Liabilities (note 26)                                                                                                                                                                                                                                                                                                             |  | Total
      fair |   | Total
      fair |  
| |                                                                                                                                                                                                                                                                                                                                   |  | value            |   | value            |  
| |                                                                                                                                                                                                                                                                                                                                   |  | 2007             |   | 2006             |  
| | Copper forward contracts                                                                                                                                                                                                                                                                                                          |  | US$m             |   | US$              |  
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Less than 1 year                                                                                                                                                                                                                                                                                                                  |  | (153             | ) | (149             | )
| | Between 1 and 5 years                                                                                                                                                                                                                                                                                                             |  | (344             | ) | (184             | )
| | More than 5 years                                                                                                                                                                                                                                                                                                                 |  | (34              | ) | (18              | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Total                                                                                                                                                                                                                                                                                                                             |  | (531             | ) | (351             | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Coal (API #2) forward contracts                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Less than 1 year                                                                                                                                                                                                                                                                                                                  |  | (83              | ) | (9               | )
| | Between 1 and 5 years                                                                                                                                                                                                                                                                                                             |  | (39              | ) | (9               | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Total                                                                                                                                                                                                                                                                                                                             |  | (122             | ) | (18              | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Coal (GC NewC) forward contracts                                                                                                                                                                                                                                                                                                  |  |                  |   |                  |  
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Less than 1 year                                                                                                                                                                                                                                                                                                                  |  | (25              | ) | (2               | )
| | Between 1 and 5 years                                                                                                                                                                                                                                                                                                             |  | (9               | ) | (2               | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Total                                                                                                                                                                                                                                                                                                                             |  | (34              | ) | (4               | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Aluminium price exposures embedded
      In electricity purchase contracts                                                                                                                                                                                                                                                        |  | (26              | ) | –                |  
| | Other commodity contracts                                                                                                                                                                                                                                                                                                         |  | (3               | ) | (3               | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Total liabilities designated
      as hedges                                                                                                                                                                                                                                                                                      |  | (716             | ) | (376             | )
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | The above copper forward contracts
      were entered into as a condition of the refinancing of Palabora in 2005,
      and result in a reduction in the Group‘s exposure to movements in
      the copper price. Coal forward contracts have been entered into in order
      to reduce exposure to movements in the coal price.
| |                                                                                                                                                                                                                                                                                                                                   |  |                  |   |                  |  
| | Aluminium price exposures are
      embedded within certain aluminium smelter electricity purchase contracts.
      These contracts reduce the Companys exposure to movements in the aluminium
      price.                                                                                                                     



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Notes to the 2007 Financial statements

|34 | FINANCIAL INSTRUMENTScontinued                                            |            |  |            | 
|-- | ------------------------------------------------------------------------- | ---------- |  | ---------- | 
|   |                                                                           |            |  |            | 
|   | b) Options relating
      to operating transactions: designated as hedges
|   |                                                                           |            |  |            | 
|   | Assets (note 20)                                                          |            |  |            | 
|   |                                                                           | Total      |  | Total      | 
|   |                                                                           | fair value |  | fair value | 
|   |                                                                           | 2007       |  | 2006       | 
|   | Bought A$ call options                                                    | US$m       |  | US$m       | 
|   |                                                                           |            |  |            | 
|   | Less than 1 year                                                          | 10         |  | 8          | 
|   | Between 1 and 5 years                                                     | –          |  | 4          | 
|   |                                                                           |            |  |            | 
|   | Total                                                                     | 10         |  | 12         | 
|   |                                                                           |            |  |            | 

| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The above currency option contracts were
        acquired with companies purchased in 2000 and were entered into by those
        companies in order to reduce their exposure to the US dollar through
        forecast
sales.

| |                                                                  |            |   |            | 
| | ---------------------------------------------------------------- | ---------- | - | ---------- | 
| | Liabilities (note 26)                                            |            |   |            | 
| |                                                                  | Total fair |   | Total fair | 
| |                                                                  | value      |   | value      | 
| |                                                                  | 2007       |   | 2006       | 
| | Aluminium options embedded In electricity
    purchase contracts | US$m       |   | US$m       | 
| |                                                                  |            |   |            | 
| | Less than 1 year                                                 | (7         | ) | –          | 
| | Between 1 and 5 years                                            | (50        | ) | –          | 
| |                                                                  |            |   |            | 
| | Total                                                            | (57        | ) | –          | 
| |                                                                  |            |   |            | 

| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Embedded options exist within an electricity
      purchase contract for a smelter. These derivatives reduce the Companys
      exposure to movements in the aluminium price. A number of put and call options
      were combined to form synthetic forward contracts that weredesignated
      as hedges of variable priced aluminium sales.

| |                                                                                       |      |   |      |  
| | ------------------------------------------------------------------------------------- | ---- | - | ---- | -
| | Reconciliation to Balance
      Sheet categories for derivatives designated as hedges | 2007 |   | 2006 |  
| |                                                                                       | US$m |   | US$m |  
| |                                                                                       |      |   |      |  
| | – non-current assets (note 20)                                                        | 34   |   | 42   |  
| | – current assets (note 20)                                                            | 100  |   | 36   |  
| | – current liabilities (note 26)                                                       | (283 | ) | (162 | )
| | – non-current liabilities (note 26)                                                   | (490 | ) | (214 | )
| |                                                                                       |      |   |      |  
| | Total derivatives designated as hedges, detailed above                                | (639 | ) | (298 | )
| |                                                                                       |      |   |      |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The hedged forecast transactions denominated
        in foreign currencies and the hedged commodity purchase or sales contracts
        are expected to occur in line with the maturity dates of the derivatives
        hedging these particular exposures. Gains and losses recognised in equity
        will be recycled into the income statement in the period during which
        the hedged transaction affects the income statement. Where the hedged
        transaction relates to capital expenditures, the gain or loss on the
        derivative will be recognised in the income statement with in ‘depreciation’
    as the fixed asset is amortised.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Gains and losses recognised in the hedging
        reserve in equity, net of tax and outside interests, for the year to
        31 December 2007 amountedto losses
        of US$102 million including
        equity accounted units (2006:US$124 million) and the amount reclassified
        from equity and included in the income statement for the period amounted
    to US$61 million (2006: US$68 million).                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The ineffective portion recognised in
        the profit or loss that arises from cash flow hedges amounts to a loss
    of US$1 million (2006: nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



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Notes to the 2007 Financial statements

|34 | FINANCIAL INSTRUMENTScontinued
|-- | ------------------------------

| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | c) Forward and option contracts
    relating to operating transactions: not designated as hedges

| |                                                                                                                                                                                                                                                    |            |  |            | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- |  | ---------- | 
| | Assets                                                                                                                                                                                                                                             |            |  |            | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| |                                                                                                                                                                                                                                                    | Total fair |  | Total fair | 
| |                                                                                                                                                                                                                                                    | value      |  | value      | 
| | Forward contracts                                                                                                                                                                                                                                  | 2007       |  | 2006       | 
| | Buy New Zealand dollar; sell US dollar                                                                                                                                                                                                             | US$m       |  | US$        | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                   | 40         |  | 32         | 
| | Between 1 and 5 years                                                                                                                                                                                                                              | 63         |  | 75         | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Total                                                                                                                                                                                                                                              | 103        |  | 107        | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | The above currency forward
      contracts relating to the New Zealand dollar were taken out to manage exposures
      impacting on operating costs.                                                                                              
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Aluminium forward contracts                                                                                                                                                                                                                        |            |  |            | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                   | 225        |  | –          | 
| | Between 1 and 5 years                                                                                                                                                                                                                              | 17         |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Total                                                                                                                                                                                                                                              | 242        |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | The above aluminium forward
      contracts were taken out to manage exposure to movements in the aluminium
      price. These contracts are not designated as hedges as they are predominantly
      offset by other aluminium forward contracts.
| |                                                                                                                                                                                                                                                    |            |  |            | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Buy EUR; sell USD                                                                                                                                                                                                                                  |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                   | 7          |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Buy GBP; sell USD                                                                                                                                                                                                                                  |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                   | 1          |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Total                                                                                                                                                                                                                                              | 8          |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Options embedded in contracts                                                                                                                                                                                                                      |            |  |            | 
| | Aluminium options embedded in electricity
      purchase contracts                                                                                                                                                                                 |            |  |            | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Less than 1 year                                                                                                                                                                                                                                   | 11         |  | –          | 
| | Between 1 and 5 years                                                                                                                                                                                                                              | 56         |  | –          | 
| | More than 5 years                                                                                                                                                                                                                                  | 17         |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Total                                                                                                                                                                                                                                              | 84         |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Others:                                                                                                                                                                                                                                            |            |  |            | 
| | Embedded derivatives                                                                                                                                                                                                                               | 13         |  | 10         | 
| | Other commodity contracts                                                                                                                                                                                                                          | 5          |  | 1          | 
| | Other currency forward contracts and swaps                                                                                                                                                                                                         | 5          |  | 4          | 
| | Other option contracts                                                                                                                                                                                                                             | 20         |  | –          | 
| |                                                                                                                                                                                                                                                    |            |  |            | 
| | Total assets relating to derivatives
      not designated as hedges (note 20)                                                                                                                                                                      | 480        |  | 122        | 
| |                                                                                                                                                                                                                                                    |            |  |            | 

| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | The above aluminium options embedded in
      electricity purchase contracts reduce exposure to movements in the aluminium
      price.



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Notes to the 2007 Financial statements

|34 | FINANCIAL INSTRUMENTScontinued
|-- | ------------------------------

| |                                                                                                                                                                                                                                                    |            |   |            |  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | - | ---------- | -
| | Liabilities                                                                                                                                                                                                                                        |            |   |            |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| |                                                                                                                                                                                                                                                    | Total fair |   | Total fair |  
| |                                                                                                                                                                                                                                                    | value      |   | value      |  
| | Forward contracts                                                                                                                                                                                                                                  | 2007       |   | 2006       |  
| | Aluminium forward contracts                                                                                                                                                                                                                        | US$m       |   | US$m       |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Less than 1 year                                                                                                                                                                                                                                   | (212       | ) | –          |  
| | Between 1 and 5 years                                                                                                                                                                                                                              | (16        | ) | –          |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Total                                                                                                                                                                                                                                              | (228       | ) | –          |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | The above aluminium
      forward contracts were taken out to manage exposure to movements in the
      aluminium price. These contracts are not designated as hedges as they are
      predominantly offset by other aluminium forward contracts.
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Option contracts                                                                                                                                                                                                                                   |            |   |            |  
| | Aluminium options embedded
      in electricity purchase contracts                                                                                                                                                                                 |            |   |            |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Less than 1 year                                                                                                                                                                                                                                   | (39        | ) | –          |  
| | Between 1 and 5 years                                                                                                                                                                                                                              | (161       | ) | –          |  
| | More than 5 years                                                                                                                                                                                                                                  | (59        | ) | –          |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Total                                                                                                                                                                                                                                              | (259       | ) | –          |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Others:                                                                                                                                                                                                                                            |            |   |            |  
| | Other currency derivative contracts                                                                                                                                                                                                                | (5         | ) | –          |  
| | Other embedded derivatives                                                                                                                                                                                                                         | (35        | ) | (26        | )
| | Other commodity contracts                                                                                                                                                                                                                          | (5         | ) | (1         | )
| | Other derivatives                                                                                                                                                                                                                                  | (5         | ) | –          |  
| |                                                                                                                                                                                                                                                    |            |   |            |  
| | Total liabilities relating
      to derivatives not designated as hedges (note 26)                                                                                                                                                                 | (537       | ) | (27        | )
| |                                                                                                                                                                                                                                                    |            |   |            |  

| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | The above aluminium options embedded in
      electricity purchase contracts reduce exposure to movements in the aluminium
      price.

| |                                                              
| | -------------------------------------------------------------
| | d) Currency and
    interest contracts relating to borrowings

| |                                                                                        |            |   |            |  
| | -------------------------------------------------------------------------------------- | ---------- | - | ---------- | -
| |                                                                                        | Total fair |   | Total fair |  
| |                                                                                        | value      |   | value      |  
| |                                                                                        | 2007       |   | 2006       |  
| | Assets                                                                                 | US$m       |   | US$m       |  
| |                                                                                        |            |   |            |  
| | Buy Euro: sell US dollars                                                              |            |   |            |  
| | Less than 1 year                                                                       | –          |   | 338        |  
| |                                                                                        |            |   |            |  
| | Buy Sterling: sell US dollars                                                          |            |   |            |  
| | Less than 1 year                                                                       | –          |   | 6          |  
| | Between 1 and 5 years                                                                  | –          |   | 3          |  
| |                                                                                        |            |   |            |  
| | Liabilities                                                                            |            |   |            |  
| |                                                                                        |            |   |            |  
| | Buy Japanese yen: sell US
      dollars                                                |            |   |            |  
| | Less than 1 year                                                                       | (1         | ) | (3         | )
| |                                                                                        |            |   |            |  
| | Other currency swaps                                                                   | (6         | ) | –          |  
| |                                                                                        |            |   |            |  
| | Total currency swaps                                                                   | (7         | ) | 344        |  
| |                                                                                        |            |   |            |  
| | – designated as
      fair value hedges                                                | (7         | ) | 341        |  
| | – not designated
      as hedges                                                       | –          |   | 3          |  
| |                                                                                        |            |   |            |  
| | Interest contracts relating
      to borrowings: assets                                | 39         |   | 7          |  
| | Interest contracts relating
      to borrowings: liabilities                           | (8         | ) | (19        | )
| |                                                                                        |            |   |            |  
| | Total derivatives related
      to net debt                                            | 24         |   | 332        |  
| |                                                                                        |            |   |            |  
| |                                                                                        |            |   |            |  
| | Reconciliation to Balance
      Sheet categories for currency and interest derivatives | 2007       |   | 2006       |  
| |                                                                                        | US$m       |   | US$m       |  
| |                                                                                        |            |   |            |  
| | – non-current assets
      (note 20)                                                   | –          |   | 3          |  
| | – current assets
      (note 20)                                                       | 39         |   | 352        |  
| | – current liabilities
      (note 26)                                                  | (9         | ) | (4         | )
| | – non-current liabilities
      (note 26)                                              | (6         | ) | (19        | )
| |                                                                                        |            |   |            |  
| | Total currency and interest
      rate contracts, detailed above                       | 24         |   | 332        |  
| |                                                                                        |            |   |            |  



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Notes to the 2007 Financial statements

|34 | FINANCIAL INSTRUMENTScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | These currency contracts
      are used to fix the US dollar value of non US dollar denominated external
      debt. The interest rate contracts
      are used to convert certain fixed
    rate obligations to a floating rate.                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The ineffective
      portion recognised in the profit or loss that arises from fair value hedges
    amounts to a gain of US$1 million ( 2006: nil).                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (C) Fair values                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The carrying values
      and the fair values of Rio Tinto’s financial instruments, other than trade
      and other receivables and payables,
      at 31 December are shown in the
      following table. The fair values of the Group’s cash, short term borrowings
      and loans to jointly controlled entities
      and associates approximate to their carrying values, as a result of their
      short maturity or because they carry floating rates
of interest.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Primary financial instruments held or issued to finance the Group’s operations                                                                                                                                                                                                                                                                                                                                                                                              
|   | US Treasury bonds (note 20)                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Equity shares and quoted funds (note 20)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Other investments
      including loans (note 20)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Cash and cash equivalent assets (note 21)                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Other liquid resources (note 20)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Short term borrowings and bank overdrafts (notes 21 and 22)                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Medium and long term borrowings (note 22)                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Loans to equity accounted
      units including quasi equity                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Deferred consideration (note 25)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Other financial liabilities (note 26)                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Derivatives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



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Notes to the 2007 Financial statements

|35 | CONTINGENT LIABILITIES
    AND COMMITMENTS                                                                    |                       |       |       |     
|-- | ------------------------------------------------------------------------------------------------------------- | --------------------- | ----- | ----- | ----
|   |                                                                                                               |                       |       |       |     
|   |                                                                                                               | 2007                  |       | 2006  |     
|   |                                                                                                               |                       | US$m  |       | US$m
|   |                                                                                                               |                       |       |      
|   | Capital commitments (excluding those related to joint ventures and associates)                                |                       |       |       |     
|   | Contracted capital expenditure: property, plant and equipment                                                 | 2,857                 |       | 1,912 |     
|   | Other commitments                                                                                             | 75                    |       | 163   |     
|   |                                                                                                               |                       |       |      
|   | Capital commitments relating to joint ventures and associates(a)                                              |                       |       |       |     
|   | Capital commitments incurred by the Group                                                                     | 238                   |       | 155   |     
|   | Capital commitments incurred jointly with other venturers (Rio Tinto share)                                   | 808                   |       | 183   |     
|   |                                                                                                               |                       |       |       |     
|   | Operating leases                                                                                              |                       |       |       |     
|   | The aggregate amount
    of minimum lease payments under non-cancellable
    operating leases are as follows:
|   |                                                                                                               |                       |       |       |     
|   |                                                                                                               |                       | 2007  |       | 2006
|   |                                                                                                               |                       | US$m  |       | US$m
|   |                                                                                                               |                       |       |       |     
|   |                                                                                                               | Within 1 year         | 283   |       | 62  
|   |                                                                                                               | Between 1 and 5 years | 985   |       | 123 
|   |                                                                                                               | After 5 years         | 514   |       | 242 
|   |                                                                                                               |                       |       |       |     
|   |                                                                                                               |                       | 1,782 |       | 427 
|   |                                                                                                               |                       |       |       |     

| |                                                                                                                                         |                       |       |      |      
| | --------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----- | ---- | -----
| | Unconditional
      purchase obligations                                                                                                |                       |       |      |      
| | The aggregate amount
      of future payment commitments under unconditional purchase obligations outstanding
      at 31 December was: |                      
| |                                                                                                                                         |                       |       |      |      
| |                                                                                                                                         | 2007                  |       | 2006 |      
| |                                                                                                                                         |                       | US$m  |      | US$m 
| |                                                                                                                                         |                       |       |     
| |                                                                                                                                         | Within 1 year         | 1,525 |      | 903  
| |                                                                                                                                         | Between 1 and 2 years | 814   |      | 713  
| |                                                                                                                                         | Between 2 and 3 years | 757   |      | 498  
| |                                                                                                                                         | Between 3 and 4 years | 561   |      | 343  
| |                                                                                                                                         | Between 4 and 5 years | 518   |      | 317  
| |                                                                                                                                         | After 5 years         | 3,096 |      | 826  
| |                                                                                                                                         |                       |       |     
| |                                                                                                                                         |                       | 7,271 |      | 3,600
| |                                                                                                                                         |                       |       |     

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |  |      | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- |  | ---- | 
| | 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 future payment commitments set out above have not been discounted and
      mainly relate to commitments under ‘take or pay’ power and freight contracts.
      They exclude unconditional purchase obligations of jointly controlled entities
      apart from those relating to the
Group’s tolling arrangements.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2007 |  | 2006 | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | US$m |  | US$m | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |  |      | 
| | Contingent liabilities (excluding those relating to joint ventures and associates)                                                                                                                                                                                                                                                                                                                                                                                                                                 |      |  |      | 
| | Indemnities and other performance guarantees                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 235  |  | 79   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |  |      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |  |      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |  |      | 
| | Contingent liabilities relating to joint ventures and associates(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                |      |  |      | 
| | Share of contingent liabilities of joint ventures                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 6    |  | 5    | 
| | Incurred in relation to interests in joint ventures                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 435  |  | 372  | 
| | Incurred in relation to other venturers’ contingent liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 63   |  | 45   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      |  |      | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Amounts disclosed include those arising as a result of the Group’s investments in both jointly controlled assets and jointly controlled entities.                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(b) | The disagreement with the Australian tax office
relating to certain transactions undertaken in 1997 to acquire franking credits
was settled on 14 June 2007, resulting in an additional tax
charge of US$46 million for the year to 31 December 2007.                                                                                                                                                                                                                                                                                                      
|   
|(c) | There are a number of legal claims currently outstanding
against the Group. No material loss to the Group is expected to result from
these claims. On 22 February 2008, Alcan Inc. and certain of  its subsidiaries
(‘Alcan’) were served with a Statement of Objections by the European
Commission alleging an infringement of Article 82 EC Treaty in relation to the
licensing
of smelter cell technology. Alcan contests the allegation that its conduct has
been anti-competitive and will continue to co-operate with the Commissions
investigation.



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Notes to the 2007 Financial statements

|36 | AVERAGE NUMBER OF EMPLOYEES                 |                                 | 
|-- | ------------------------------------------- | ------------------------------- | 
|   |                                             |                                 | 
|   |                                             | Subsidiaries and proportionally | 
|   |                                             | consolidated units              | 
|   |                                             | 2007                            | 
|   |                                             |                                 | 
|   | The principal locations of employment were: |                                 | 
|   | Australia and New Zealand                   | 14,065                          | 
|   | North America                               | 13,363                          | 
|   | Africa                                      | 5,548                           | 
|   | Europe                                      | 4,623                           | 
|   | South America                               | 1,348                           | 
|   | Indonesia                                   | 2,125                           | 
|   | Other countries                             | 286                             | 
|   | Discontinued operations                     | 5,680                           | 
|   |                                             |                                 | 
|   |                                             | 47,038                          | 
|   |                                             |                                 | 

| |                                             |                        |  |       |  |       | 
| | ------------------------------------------- | ---------------------- |  | ----- |  | ----- | 
| |                                             | Equity accounted units | 
| |                                             | (Rio Tinto share) (a)  | 
| |                                             | 2007                   |  | 2006  |  | 2005  | 
| |                                             |                        |  |       |  |       | 
| | The principal locations of employment were: |                        |  |       |  |       | 
| | Australia and New Zealand                   | 2,289                  |  | 2,192 |  | 1,910 | 
| | North America                               | 376                    |  | 311   |  | 257   | 
| | Africa                                      | 585                    |  | 521   |  | 494   | 
| | Europe                                      | 367                    |  | 507   |  | 529   | 
| | South America                               | 905                    |  | 1,072 |  | 840   | 
| | Other countries                             | 117                    |  | –     |  | –     | 
| |                                             |                        |  |       |  |       | 
| |                                             | 4,639                  |  | 4,603 |  | 4,030 | 
| |                                             |                        |  |       |  |       | 

| |                                             |             |  |        |  |        | 
| | ------------------------------------------- | ----------- |  | ------ |  | ------ | 
| |                                             | Group Total | 
| |                                             | 2007        |  | 2006   |  | 2005   | 
| |                                             |             |  |        |  |        | 
| | The principal locations of employment were: |             |  |        |  |        | 
| | Australia and New Zealand                   | 16,354      |  | 13,828 |  | 11,837 | 
| | North America                               | 13,739      |  | 10,512 |  | 9,632  | 
| | Africa                                      | 6,133       |  | 4,790  |  | 4,452  | 
| | Europe                                      | 4,990       |  | 1,975  |  | 2,033  | 
| | South America                               | 2,253       |  | 1,946  |  | 1,674  | 
| | Indonesia                                   | 2,125       |  | 1,969  |  | 1,920  | 
| | Other countries                             | 403         |  | 225    |  | 306    | 
| | Discontinued operations                     | 5,680       |  | –      |  | –      | 
| |                                             |             |  |        |  |        | 
| |                                             | 51,677      |  | 35,245 |  | 31,854 | 
| |                                             |             |  |        |  |        | 

|    |                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Employee numbers, which represent the average
for the year, include 100 per cent of employees of subsidiary companies. Employee
numbers for proportionally consolidated and equity accounted units are proportional
to the
Group’s interest. Average employee numbers include a part year effect for companies
acquired or disposed of during the year.
|   
|(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.                                                                                                                                                                                                                                                                                                       
|   
|(d) | Rio Tinto Alcan’s employees are shown on a pro rata basis.                                                                                                                                                                                                                                                                                             



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Notes to the 2007 Financial statements

|37 | PRINCIPAL SUBSIDIARIES
|-- | ----------------------

| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | --- | ------------------- | ----- | ---------------- | 
| | At 31 December
      2007                                                                                                                         |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Company and
      country of                                                                                                                      |                                                                                                                                                                                       | Class of           |     | Proportion
      of |       | Group            | 
| | incorporation/operation                                                                                                                           | Principal
      activities                                                                                                                                                            | shares
      held  |     | class
      held %  |       | interest
      % | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Australia                                                                                                                                         |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Argyle Diamond
      Mines                                                                                                                        | Mining
        and processing of diamonds                                                                                                                                             | (a)                |     | 100                 |       | 100              | 
| | Coal & Allied
      Industries Limited                                                                                                            | Coal mining                                                                                                                                                                           | Ordinary           |     | 75.71               |       | 75.71            | 
| | Rio Tinto Aluminium (Holdings)
        Limited                                                                                                    | Bauxite mining; alumina production;
        primary aluminium smelting                                                                                                                | Ordinary           |     | 100                 |       | 100              | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |      
| | Dampier Salt Limited                                                                                                                              | Salt production                                                                                                                                                                       | Ordinary           |     | 68.40               |       | 68.40            | 
| | Energy Resources of Australia Limited                                                                                                             | Uranium mining                                                                                                                                                                        | Class A            |     | 68.39               |       | 68.39            | 
| | Hamersley Iron
      Pty Limited                                                                                                                  | Iron ore mining                                                                                                                                                                       | Ordinary           |     | 100                 |       | 100              | 
| | Queensland
        Coal Pty Limited (b)                                                                                                           | Coal mining                                                                                                                                                                           | Ordinary           |     | 100                 |       | 100              | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Canada                                                                                                                                            |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Iron
        Ore Company of Canada Inc                                                                                                            | Iron
        ore mining; iron ore pellets                                                                                                                                             | Series A &
      E |     | 58.72               |       | 58.72            | 
| | QIT-Fer et Titane
      Inc                                                                                                                       | Titanium dioxide feedstock; high
        purity iron and steel                                                                                                                        | Common shares      |     | 100                 |       | 100              | 
| |                                                                                                                                                   | Class B preference
      shares                                                                                                                                                       |                    | 100 |                     | 100   |                 
| | Alcan Inc. (c)                                                                                                                                    | Bauxite mining;
      alumina refining; production of specialty
      alumina; aluminium smelting, manufacturing and recycling; engineered products; flexible and specialty packaging | Common shares      |     | 100                 |       | 100              | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | France                                                                                                                                            |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Talc de Luzenac
      S.A.                                                                                                                        | Mining, refining and marketing of talc                                                                                                                                                | E 15.25            |     | 100                 |       | 100              | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Indonesia                                                                                                                                         |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | P.T. Kelian Equatorial
      Mining                                                                                                               | Gold mining                                                                                                                                                                           | Ordinary US$1      |     | 90                  |       | 90               | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Namibia                                                                                                                                           |                                                                                                                                                                                       |                    |     |                     | }     |                  | 
| | Rössing Uranium
      Limited (d)                                                                                                                 | Uranium mining                                                                                                                                                                        | B N$1              |     | 71.16               | 68.58 |                 
| |                                                                                                                                                   |                                                                                                                                                                                       | C N10c             |     | 70.59               |       |                 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Papua New Guinea                                                                                                                                  |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Bougainville Copper
      Limited (e)                                                                                                             | Copper and gold
      mining                                                                                                                                                          | Ordinary 1 Kina    |     | 53.58               |       | 53.58            | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | South Africa                                                                                                                                      |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Palabora Mining
      Company Limited                                                                                                             | Copper mining, smelting and refining                                                                                                                                                  | R1                 |     | 72.03               |       | 57.67            | 
| | Richards
      Bay Iron and Titanium (Pty) Limited                                                                                                | Titanium dioxide feedstock; high purity
        iron                                                                                                                                  | R1                 |     | 50.5                |       | 50               | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |      
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | United States
      of America                                                                                                                    |                                                                                                                                                                                       |                    |     |                     |       |                  | 
| | Kennecott Holdings Corporation(including Kennecott Utah Copper,
          Kennecott Minerals, Kennecott
          Land and Kennecott Exploration) | Copper and gold mining, smelting
        and refining, land development and exploration activities                                                                                    | Common US$0.01     |     | 100                 |       | 100              | 
| | Rio Tinto Energy
      America Inc.                                                                                                               | Coal mining                                                                                                                                                                           | Common US$0.01     |     | 100                 |       | 100              | 
| | U.S. Borax Inc.                                                                                                                                   | Mining, refining and marketing of borates                                                                                                                                             | Common US$1        |     | 100                 |       | 100              | 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                 
| |                                                                                                                                                   |                                                                                                                                                                                       |                    |     |                     |       |                  | 



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Notes to the 2007 Financial statements

|37  | PRINCIPAL SUBSIDIARIEScontinued                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                          
|(a) | This entity is unincorporated.                                                                                                                                                                                                                           
|   
|(b) | Queensland Coal Pty Limited is the main
      legal entity that owns the assets of the Tarong mine and also owns the shares
      shown in note 40 of Hail Creek, Blair Athol and Kestrel.                                                               
|   
|(c) | On 23 October 2007, the Rio Tinto Group
      acquired a controlling 79.42 per cent interest in the issued share capital
      of Alcan Inc. The remaining 20.58 per cent was acquired by 14 November 2007.
      See Note 41.                           
|   
|(d) | The Group’s shareholding in Rössing
      Uranium Limited carries 35.54 per cent of the total voting rights. Rössing
      is consolidated by virtue of Board control.                                                                                   
|   
|(e) | The results of Bougainville Copper Limited
      are not consolidated. See note 47.                                                                                                                                                                      
|   
|(f) | 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.
|   
|(g) | The Group’s principal subsidiaries
      are held by intermediate holding companies and not directly by Rio Tinto
      plc or Rio Tinto Limited.                                                                                                        
|   
|(h) | Companies operate mainly in the countries
      in which they are incorporated.                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                          
|38  | PRINCIPAL JOINTLY CONTROLLED ENTITIES                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                          

| | At 31 December 2007                            |                                                                             |             |  |             |  |               |   |            | 
| | ---------------------------------------------- | --------------------------------------------------------------------------- | ----------- |  | ----------- |  | ------------- | - | ---------- | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | Company and country of                         |                                                                             | Number of   |  | Class of    |  | Proportion of |   | Group      | 
| | incorporation/operation                        | Principal activities                                                        | shares held |  | shares held |  | class held %  |   | interest % | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | Australia                                      |                                                                             |             |  |             |  |               |   |            | 
| | Boyne Smelters Limited                         | Aluminium smelting                                                          | 153,679,560 |  | Ordinary    |  | 59.4          |   | 59.4       | 
| | Leichhardt
        Coal Pty. Limited (b)       | Coal mining                                                                 | 20,115,000  |  | Ordinary    |  | 44.7          |   | 44.7       | 
| | Queensland Alumina Limited                     | Alumina production                                                          | 1,769,600   |  | Ordinary    |  | 80            |   | 80         | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | Chile                                          |                                                                             |             |  |             |  |               |   |            | 
| | Minera Escondida
      Limitada (c)            | Copper
        mining and refining                                          |             |  |             |  | 30            |   | 30         | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | China                                          |                                                                             |             |  |             |  |               |   |            | 
| | Alcan Ningxia Aluminium Company Limited        | Aluminium smelting, alloy production, aluminium
        product manufacture | 459,500,000 |  | RBMY        |  | 50            |   | 50         | 
| |                                                |                                                                             |             |  |             |  |               |  
| |                                                |                                                                             |             |  |             |  |               |   |           
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | New Zealand                                    |                                                                             |             |  |             |  |               |   |            | 
| | New Zealand Aluminium Smelters
        Limited | Aluminium smelting                                                          | 24,998,400  |  | Ordinary    |  | 79.36         |   | 79.36      | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | Norway                                         |                                                                             |             |  |             |  |               |   |            | 
| | Sor-Norge Aluminium A.S.                       | Aluminium smelting                                                          | 500,000     |  | Ordinary    |  | 50            |   | 50         | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | Oman                                           |                                                                             |             |  |             |  |               |   |            | 
| | Sohar Aluminium
      Company L.L.C.           | Aluminium
        smelting / power generation                               | 37,500      |  | OMR1        |  | 20            |   | 20         | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | United Kingdom                                 |                                                                             |             |  |             |  |               |   |            | 
| | Anglesey Aluminium Metal Limited               | Aluminium smelting                                                          | 13,387,500  |  | Ordinary £1 |  | 51            |   | 51         | 
| | Hydrogen Energy                                | Alternative energy                                                          | 125,000     |  | Ordinary £1 |  | 50            |   | 50         | 
| |                                                |                                                                             |             |  |             |  |               |   |            | 
| | United States of America                       |                                                                             |             |  |             |  |               |   |            | 
| | Decker                                         | Coal mining                                                                 |             |  | (d)         |  |               |   | 50         | 
| | Halco (Mining) Inc.                            | (e)                                                                         | 4,500       |  | Common      |  | 45            |   | 45         | 
| | Pechiney Reynolds Quebec Inc.                  | (f)                                                                         | 100         |  | Ordinary    |  | 50            | } | 50.3       | 
| |                                                |                                                                             | 1           |  | Preferred   |  | 100           |   |           
| |                                                |                                                                             |             |  |             |  |               |   |            | 

|    |                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Group has joint control of the above operations which, except as disclosed in note (d) below, are independent legal entities. It therefore includes them in its accounts using the equity accounting
technique.                                                                                                                              
|   
|(b) | Leichhardt has a 31.4 per cent interest in the Blair Athol joint venture. As a result, the Group has a further beneficial interest of 14 per cent in addition to its direct interest of 57.2 per cent, which is owned via
a subsidiary of Rio Tinto Limited. The Blair Athol joint venture is disclosed as a jointly controlled asset in note 40.
|   
|(c) | The year end of Minera Escondida is 30 June. However, the amounts included in the consolidated financial statements of Rio Tinto are based on accounts of Minera Escondida that are coterminous with those of the
Group.                                                                                                                         
|   
|(d) | This operation is unincorporated. The joint venture agreement creates an arrangement that is similar in form to a partnership, and it is therefore classified as a jointly controlled entity.                                                                                                                                                    
|   
|(e) | Halco has a 51 per cent interest in Compagnie des Bauxites de Guinée, a Bauxite mine, the core assets of which are located in Guinea.                                                                                                                                                                                                            
|   
|(f) | Pechiney Reynolds Quebec has a 50.1 per cent interest in the Aluminerie de Becancour aluminium smelter, which is located in Canada.                                                                                                                                                                                                              
|   
|(g) | The Group comprises a large number of operations 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
operating assets of the Group.                                                                                                
|   
|(h) | The Group’s principal jointly controlled entities are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.                                                                                                                                                                                             
|   
|(i) | With the exception of (e) and (f) above, all jointly controlled entities operate mainly in the countries in which they are incorporated.                                                                                                                                                                                                         



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Notes to the 2007 Financial statements

|39 | PRINCIPAL ASSOCIATES
|-- | --------------------

| |                               |                                    |               |  |             |  |               |   |            | 
| | ----------------------------- | ---------------------------------- | ------------- |  | ----------- |  | ------------- | - | ---------- | 
| | At 31 December 2007           |                                    |               |  |             |  |               |   |            | 
| |                               |                                    |               |  |             |  |               |   |            | 
| | Company and country of        |                                    | Number of     |  | Class of    |  | Proportion of |   | Group      | 
| | incorporation/operation       | Principal activities               | shares held   |  | shares held |  | class held %  |   | interest % | 
| |                               |                                    |               |  |             |  |               |   |            | 
| | Brazil                        |                                    |               |  |             |  |               |   |            | 
| | Mineração Rio do Norte SA (a) | Bauxite mining                     | 25,000,000    |  | Ordinary    |  | 12.5          | } | 12.0       | 
| |                               |                                    | 47,000,000    |  | Preferred   |  | 11.8          |   |           
| |                               |                                    |               |  |             |  |               |   |            | 
| | Cameroon                      |                                    |               |  |             |  |               |   |            | 
| | Compagnie Camerounaise        | Aluminium smelting                 | 8,114,979,600 |  | XAF         |  | 46.7          |   | 46.7       | 
| | de l’Aluminum                 |                                    |               |  |             |  |               |   |            | 
| |                               |                                    |               |  |             |  |               |   |            | 
| | Canada                        |                                    |               |  |             |  |               |   |            | 
| | Ivanhoe Mines Ltd (b)         | Copper and gold mining             | 37,089,883    |  | Common      |  | 9.95          |   | 9.95       | 
| |                               |                                    |               |  |             |  |               |   |            | 
| | South Africa                  |                                    |               |  |             |  |               |   |            | 
| | Tisand (Pty) Limited          | Ilmenite, rutile and zircon mining | 7,353,675     |  | R1          |  | 49            |   | 50         | 
| |                               |                                    |               |  |             |  |               |   |           
| |                               |                                    |               |  |             |  |               |   |            | 
| | United States of America      |                                    |               |  |             |  |               |   |            | 
| | Cortez (c)                    | Gold mining                        |               |  | (d)         |  |               |   | 40         | 
| |                               |                                    |               |  |             |  |               |   |            | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Mineração Rio do Norte SA
      is accounted for as an associated company because the Group has significant
      influence through representation on its Board of Directors.                                                                                                                                                                                                                                                                                                   
|   
|(b) | Ivanhoe Mines Ltd is accounted for as
      an associated company because the Group has significant influence through
      representation on its Board of Directors and participation in the technical
      committee that will be responsible for its Oyu Tolgoi project. Rio Tinto
      has the ability to increase progressively its stake to 43 per cent over
      the next four years at predetermined prices involving an additional investment
      of US$2 billion.
|   
|(c) | See footnote (a) of note 42.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(d) | This operation is unincorporated.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(e) | The Group’s principal associates
      are held by intermediate holding companies and not directly by Rio Tinto
      plc or Rio Tinto Limited.                                                                                                                                                                                                                                                                                                                                 
|   
|(f) | The Group comprises a large number of
      operations 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 operating assets of the Group.                                                                                                                                                                                                             
|   
|(g) | With the exception of Ivanhoe Mines Ltd,
      the core assets of which are located in Mongolia, all associates operate
      mainly in the countries in which they are incorporated.                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|40  | PRINCIPAL JOINTLY CONTROLLED ASSETS
      AND OTHER PROPORTIONALLY CONSOLIDATED UNITS                                                                                                                                                                                                                                                                                                                                                                                           

| |                                |                                    |            | 
| | ------------------------------ | ---------------------------------- | ---------- | 
| | At 31 December 2007           
| |                                |                                    |            | 
| | Name and country               |                                    | Group      | 
| | of operation                   | Principal activities               | interest % | 
| |                                |                                    |            | 
| | Australia                      |                                    |            | 
| | Tomago Aluminium Joint Venture | Aluminium smelting                 | 51.6       | 
| | Bengalla                       | Coal mining                        | 30.3       | 
| | Blair Athol Coal (b)           | Coal mining                        | 71.2       | 
| | Hail Creek                     | Coal mining                        | 82         | 
| | Kestrel                        | Coal mining                        | 80         | 
| | Mount Thorley                  | Coal mining                        | 60.6       | 
| | Warkworth                      | Coal mining                        | 42.1       | 
| | Northparkes Mine               | Copper/gold mining and processing  | 80         | 
| | Gladstone Power Station        | Power generation                   | 42.1       | 
| | Robe River Iron Associates     | Iron ore mining                    | 53         | 
| | Hope Downs Joint Venture       | Iron ore mining                    | 50         | 
| | HIsmelt®                       | Iron technology                    | 60         | 
| |                                |                                    |            | 
| | Brazil                         |                                    |            | 
| | Consórcio de Alumínio Maranhão | Alumina production                 | 10         | 
| |                                |                                    |            | 
| | Canada                         |                                    |            | 
| | Diavik                         | Mining and processing of diamonds  | 60         | 
| |                                |                                    |            | 
| | Indonesia                      |                                    |            | 
| | Grasberg expansion             | Copper and gold mining             | 40         | 
| |                                |                                    |            | 
| | United States of America       |                                    |            | 
| | Greens Creek (c)               | Silver, gold, zinc and lead mining | 70.3       | 
| |                                |                                    |            | 



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Notes to the 2007 Financial statements

|40  | PRINCIPAL JOINTLY CONTROLLED
      ASSETS AND OTHER PROPORTIONALLY CONSOLIDATED UNITScontinued                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                       
|(a) | The Group comprises a large number of
      operations, and it is not practical to include all of them in this list.
      The list therefore only includes those proportionally consolidated units
      that have a more significant impact on the profit or operating assets of
      the Group.                   
|   
|(b) | The Group has a direct interest of 57.2
      per cent in Blair Athol Coal, and an additional 14 per cent interest through
      its investment in Leichhardt Coal Pty Limited, which is disclosed as a jointly
      controlled entity in note 38.                                                                   
|   
|(c) | See footnote (b) of note 42.                                                                                                                                                                                                                                                                                          
|   
|(d) | The Group’s proportionally consolidated
      units are held by intermediate holding companies and not directly by Rio
      Tinto plc or Rio Tinto Limited.                                                                                                                                                          
|   
|   
|41  | PURCHASES AND SALES OF SUBSIDIARIES,
      JOINT VENTURES, ASSOCIATES AND OTHER INTERESTS IN BUSINESSES                                                                                                                                                                                                               
|   
|    | 2007 Acquisitions                                                                                                                                                                                                                                                                                                     
|   
|    | Alcan acquisition                                                                                                                                                                                                                                                                                                     
|   
|    | On 23 October 2007, the Rio Tinto Group
      acquired a controlling 79.42 per cent interest in the issued share capital
      of Alcan Inc. The remaining 20.58 per cent was acquired by 14 November 2007.
      The total purchase price to acquire Alcan Inc. amounted to US$38.7 billion.                         
|   
|    | Alcan Inc. is the parent company of an
      international group of companies involved in bauxite mining, alumina refining,
      aluminium smelting, engineered products, flexible and specialty packaging,
      as well as related research and development.                                                       
|    |                                                                                                                                                                                                                                                                                                                       
|    | The Group has decided to dispose of Alcan
      Packaging, which is presented in the balance sheet in the lines: ‘Assets
      held for sale’ and ‘Liabilities of disposal groups held for sale’.
      Therefore, the income and cash flow statements for the year exclude amounts
      relating to Alcan Packaging.
|   
|    | The fair values of the identifiable assets
      and liabilities of Alcan Inc. as at the date of acquisition were provisionally
      estimated as follows:                                                                                                                                                           
|   

| |                                                        | IFRS     |   |             |   | Provisional |  
| | ------------------------------------------------------ | -------- | - | ----------- | - | ----------- | -
| |                                                        | carrying |   | Fair value  |   | fair value  |  
| |                                                        | values   |   | adjustments |   | to Group    |  
| |                                                        | US$m     |   | US$m        |   | US$m        |  
| |                                                        |          |   |             |   |             |  
| | Intangible assets                                      | 804      |   | 6,663       |   | 7,467       |  
| | Property, plant & equipment                            | 11,579   |   | 6,703       |   | 18,282      |  
| | Equity method investments                              | 1,415    |   | 2,770       |   | 4,185       |  
| | Inventories                                            | 2,643    |   | 213         |   | 2,856       |  
| | Assets held for sale                                   | 6,984    |   | –           |   | 6,984       |  
| | Cash                                                   | 991      |   | –           |   | 991         |  
| | Deferred tax assets                                    | 223      |   | 5           |   | 228         |  
| | Other assets                                           | 4,353    |   | 231         |   | 4,584       |  
| | Loans and borrowings                                   | (5,580   | ) | 115         |   | (5,465      | )
| | Liabilities of disposal groups held for sale           | (2,642   | ) | –           |   | (2,642      | )
| | Deferred tax liabilities                               | (461     | ) | (3,721      | ) | (4,182      | )
| | Provisions for liabilities and charges                 | (4,581   | ) | (57         | ) | (4,638      | )
| | Other liabilities                                      | (4,265   | ) | (211        | ) | (4,476      | )
| | Minority interest                                      | (55      | ) | –           |   | (55         | )
| | Goodwill                                               | 2,055    |   | 12,478      |   | 14,533      |  
| |                                                        |          |   |             |   |             |  
| | Net attributable assets including goodwill             | 13,463   |   | 25,189      |   | 38,652      |  
| |                                                        |          |   |             |   |             |  
| |                                                        |          |   |             |   |             |  
| |                                                        |          |   |             |   |             |  
| | Total consideration:                                   |          |   |             |   |             |  
| | Cost of shares                                         |          |   |             |   | 37,996      |  
| | Acquisition costs                                      |          |   |             |   | 74          |  
| | Liabilities assumed                                    |          |   |             |   | 132         |  
| | Loans to acquired subsidiary                           |          |   |             |   | 450         |  
| |                                                        |          |   |             |   |             |  
| | Total consideration – Alcan                            |          |   |             |   | 38,652      |  
| |                                                        |          |   |             |   |             |  
| | Other subsidiaries and equity accounted units acquired |          |   |             |   | 54          |  
| |                                                        |          |   |             |   |             |  
| | Total consideration                                    |          |   |             |   | 38,706      |  
| |                                                        |          |   |             |   |             |  
| | Cash outflow on acquisitions:                          |          |   |             |   |             |  
| | Total consideration                                    |          |   |             |   | 38,706      |  
| | Net cash of acquired companies                         |          |   |             |   | (991        | )
| | Liabilities assumed                                    |          |   |             |   | (132        | )
| | Other (including disposal proceeds of US$13 million)   |          |   |             |   | (57         | )
| |                                                        |          |   |             |   |             |  
| | Net acquisitions per cash flow statement               |          |   |             |   | 37,526      |  
| |                                                        |          |   |             |   |             |  



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Notes to the 2007 Financial statements

|41 | PURCHASES AND SALES OF SUBSIDIARIES,
      JOINT VENTURES, ASSOCIATES AND OTHER INTERESTS IN BUSINESSEScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The future economic benefits represented
        by the goodwill include those associated with synergies, future development
        and expansion projects and the
        assembled workforce. As a result of the size of the acquisition and complexity
        of the valuation process, the
        above fair values are provisional. These will be subject to further review
        during the 12 months from the acquisition
    date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | For the period since acquisition, sales
        revenue
of US$3,544 million (excluding equity accounted units) and profit after tax
of US$293 million attributable to
continuing
operations are included in the consolidated income statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The
following pro forma summary presents the Group as if Alcan Inc. had been acquired
on 1 January 2007. The pro forma amounts include
the results of the acquired group, recognising the amortisation of the fair values
attributed to the assets acquired and the interest
expense on debt incurred as a result of the acquisition. The proforma interest
charge for the whole of 2007 on the acquisition
debt has been based on the one month LIBOR rate as at 31 December 2007, of 4.6
per cent. The pro forma amounts do not
take account of synergies anticipated as a result of the acquisition; but include
non recurring costs borne by Alcan Inc.
relating to the acquisition and suffer
the costs of financing assets held for sale. The pro forma information does not
necessarily reflect
the actual results that would have occurred,
nor is it necessarily indicative of future results of operations of the combined
companies.

| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | ----------------------------------------------------------------------------------------- |  | --------- |  | ---------------------- |  | ---------- |  | --------------- | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  |            |  | 2007            | 
| |                                                                                           |  |           |  |                        |  |            |  | US$m            | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | Gross sales revenue                                                                       |  |           |  |                        |  |            |  | 45,590          | 
| | Profit for the year
      (including amounts attributable to outside equity shareholders) |  |           |  |                        |  | 7,727      | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | 2006 Acquisitions                                                                         |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  | Ownership  |  | Date of         | 
| | Name of operation                                                                         |  | Location  |  | Principal activities   |  | acquired % |  | acquisition     | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | Associates                                                                                |  |           |  |                        |  |            |  |                 | 
| | Ivanhoe Mines                                                                             |  | Canada    |  | Copper and gold mining |  | 9.95       |  | 18 October 2006 | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | Proportionally consolidated
      units                                                   |  |           |  |                        |  |            |  |                 | 
| | Hope Downs Joint Venture                                                                  |  | Australia |  | Iron ore mining        |  | 50         |  | 16 March 2006   | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | 2006 Disposals                                                                            |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| |                                                                                           |  |           |  |                        |  | Ownership  |  |                 | 
| |                                                                                           |  |           |  | Principal              |  | disposed   |  | Date of         | 
| | Name of operation                                                                         |  | Location  |  | activities             |  | of %       |  | disposal        | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 
| | Jointly controlled entities                                                               |  |           |  |                        |  |            |  |                 | 
| | Eurallumina SpA                                                                           |  | Italy     |  | Alumina production     |  | 56.16      |  | 2 November 2006 | 
| |                                                                                           |  |           |  |                        |  |            |  |                 | 

|    |                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The aggregate profit on disposal
      of interests in businesses in 2006 was US$5 million (US$3 million
      net of tax). These gains have been excluded from Underlying earnings, as
      shown in note 2.
|    |                                                                                                                                                                                                               
|(b) | The Cash flow statement includes
      the following relating to acquisitions and disposals of interests in businesses:                                                                                       
|    | –                                                                                                                                                                                                             
|    | –                                                                                                                                                                                                             
|   
|(c) | Non cash disposal proceeds
      of US$23 million were received during the year.                                                                                                                              
|   

| | 2005 Disposals            |  |                  |  |             |  |           |  |                  | 
| | ------------------------- |  | ---------------- |  | ----------- |  | --------- |  | ---------------- | 
| |                           |  |                  |  |             |  | Ownership |  |                  | 
| |                           |  |                  |  | Principal   |  | disposed  |  | Date of          | 
| | Name of operation         |  | Location         |  | activities  |  | of %      |  | disposal         | 
| |                           |  |                  |  |             |  |           |  |                  | 
| | Associates                |  |                  |  |             |  |           |  |                  | 
| | Lihir Gold Limited        |  | Papua New Guinea |  | Gold mining |  | 14.46     |  | 30 November 2005 | 
| |                           |  |                  |  |             |  |           |  |                  | 
| | Other investments         |  |                  |  |             |  |           |  |                  | 
| | Labrador Iron Ore Royalty |  |                  |  |             |  |           |  |                  | 
| | Income Fund               |  | Canada           |  | Investing   |  | 19        |  | 30 March 2005    | 
| |                           |  |                  |  |             |  |           |  |                  | 

|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The aggregate profit on disposal
      of interests in businesses in 2005 was US$322 million (US$311 million
      net of tax). These gains were excluded from underlying earnings.
|    |                                                                                                                                                                                    
|(b) | The Cash flow statement included
      proceeds from disposals of interests in businesses as follows:                                                                              
|    | –                                                                                                                                                                                  
|    | –                                                                                                                                                                                  
|   
|   

|42  | SALES AGREEMENTS AFTER THE BALANCE
    SHEET DATE                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(a) | On 5 March2008, the Group completed the
      sale of its interest in the Cortez gold mine (previously in the Copper product
      group) for cash consideration of US$1,695 million. The Group will benefit
      from a deferred additional payment in the event of a significant discovery
      of additional reserves and resources at the Cortez mine and will also retain
      a contingent royalty interest in the future production of the property.                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(b) | On 12 February 2008, the Group announced an agreement
to sell its joint venture interest in the Greens Creek mine to Hecla
Mining Company. Greens Creek, which mines silver, gold, zinc and lead, is currently
part of the Copper product group. The sale
price is US$750 million, comprising a cash component of US$700 million
with the balance in the common stock of the buyer. Closing is subject to customary
conditions, including expiration of the waiting period under the Hart-Scott-Rodino
Act.



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Notes to the 2007 Financial statements

|43 | DIRECTORS’ AND KEY
      MANAGEMENT REMUNERATION                                                                                                   |         |  |         |  |         | 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ------- |  | ------- | 
|   |                                                                                                                                                    |         |  |         |  |         | 
|   | Aggregate remuneration,
      calculated in accordance with the Companies Act 1985, of the directors of
      the parent companies was as follows: |        
|   |                                                                                                                                                    |         |  |         |  |         | 
|   |                                                                                                                                                    | 2007    |  | 2006    |  | 2005    | 
|   |                                                                                                                                                    | US$000 |  | US$000 |  | US$000 | 
|   |                                                                                                                                                    |         |  |         |  |         | 
|   | Emoluments                                                                                                                                         | 11,103  |  | 9,852   |  | 7,523   | 
|   | Long term incentive plans                                                                                                                          | 9,573   |  | 255     |  | 2,298   | 
|   |                                                                                                                                                    |         |  |         |  |         | 
|   |                                                                                                                                                    | 20,676  |  | 10,107  |  | 9,821   | 
|   |                                                                                                                                                    |         |  |         |  |         | 
|   | Pension contributions: defined
      contribution plans                                                                                            | 130     |  | 60      |  | 58      | 
|   | Gains made on exercise of share
      options                                                                                                      | –       |  | 1,260   |  | 5,763   | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For 2007, a total of US$6,607,100
        (2006: US$3,713,900; 2005: US$8,024,100) 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 lump sum entitlement for the highest paid director
        was US$14,014,000 (2006: US$12,124,400 annualised pension value;
    2005: US$712,100 annualised pension value).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | The aggregate remuneration incurred by
        Rio Tinto plc in respect of its directors was US$13,678,000 (2006:
        US$7,296,800; 2005: US$12,270,000). The aggregate pension contribution
        to defined contribution plans
was US$56,000 (2006 and 2005: 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$7,128,500 (2006:
        US$4,130,600; 2005:
US$3,372,000). The aggregate pension contribution to defined contribution
plans was US$74,000 (2006: US$60,000; 2005: US$58,000).                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | During 2007, three directors (2006: three;
        2005: three) accrued retirement benefits under defined benefit arrangements,
        and one director (2006: one; 2005: one) accrued retirement benefits under
        defined contribution
arrangements.                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 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 120 to 144.                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Aggregate compensation, representing
        the expense recognised under IFRS, of the Group’s key management,
    including directors, was as follows:                                                                                                                                                                                                                                                                                                                      

| |                                        |         |  |         |  |         | 
| | -------------------------------------- | ------- |  | ------- |  | ------- | 
| |                                        | 2007    |  | 2006    |  | 2005    | 
| |                                        | US$000 |  | US$000 |  | US$000 | 
| |                                        |         |  |         |  |         | 
| | Short-term employee benefits and costs | 25,826  |  | 20,663  |  | 19,204  | 
| | Post-employment benefits               | 4,480   |  | 3,444   |  | 2,325   | 
| | Other long-term benefits               | 2,537   |  | 737     |  | 737     | 
| | Termination benefits                   | 817     |  | –       |  | 1,129   | 
| | Share-based payments                   | 41,540  |  | 1,631   |  | 12,154  | 
| |                                        |         |  |         |  |         | 
| |                                        | 75,200  |  | 26,475  |  | 35,549  | 
| |                                        |         |  |         |  |         | 

| |                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The figures shown above include employment
      costs which comprise social security and accident premiums in the UK and
      US and payroll taxes in Australia paid by the employer as a direct additional
      cost of hire. In total, they amount to US$2,481,000 and although disclosed
      here, are not included in Table 1 of the Remuneration report.
| |                                                                                                                                                                                                                                                                                                                                                                   
| | More detailed information concerning the
      remuneration of key management is shown in the Remuneration report including
      Tables 1 to 5 on pages 120 to 144.                                                                                                                                                                                              



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Notes to the 2007 Financial statements

|44 | AUDITORS’
      REMUNERATION                                                        
|-- | ------------------------------------------------------------------------------------
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   | Group Auditors’
      remuneration(a)                                               
|   |                                                                                     
|   | Audit services pursuant to
      legislation – fees payable                         
|   | – the audit of the Group’s
      annual accounts                                    
|   | – the audit of the accounts
      of the Group’s subsidiaries (b)                   
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   | Other services                                                                      
|   | – other services supplied
      pursuant to legislation (c)                         
|   | – taxation services (d)                                                             
|   | – other services (e)                                                                
|   |                                                                                     
|   |                                                                                     
|   | Fees in respect of pension
      scheme audits                                      
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   | Remuneration payable
      to other accounting firms(f)                             
|   |                                                                                     
|   | Non-Audit Services                                                                  
|   | – the auditing of accounts
      of the Group’s subsidiaries pursuant to legislation
|   | – taxation services                                                                 
|   | – financial systems design
      and implementation                                 
|   | – internal audit                                                                    
|   | – litigation services                                                               
|   | – other services (g)                                                                
|   |                                                                                     
|   |                                                                                     
|   | Fees in respect of pension
      scheme audits                                      
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     
|   |                                                                                     

|(a) | The remuneration payable to PricewaterhouseCoopers, the Group Auditors, is approved by the Audit committee. The committee sets the policy for the award of non audit work to the auditors and approves 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, together with the Group’s
share of the payments made by proportionally consolidated units.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Fees payable for the ‘audit of the accounts of the Group’s subsidiaries’ includes the statutory audit of subsidiaries and other audit work performed to support the audit of the Group financial statements. This includes
the full costs relating to the 2007 audit of Alcan Inc. and its subsidiaries of US$18.8 million.                                                                                                                                                                                                                   
|   
|(c) | ‘Other services supplied pursuant to legislation’ primarily relates to preparatory work relating to compliance with the Sarbanes-Oxley Act.                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(d) | ‘Taxation services’ includes tax compliance and advisory services, involving the preparation or review of returns for corporation, income, sales and excise taxes; advice on acquisitions; advice on transfer
pricing.                                                                                                                                                                                                                                                                                                                        
|   
|(e) | ‘Other services’ include fees in connection with the acquisition of Alcan Inc., and the Group’s divestment programme.                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(f) | ‘Remuneration payable to other accounting firms’ does not include fees for similar services payable to suppliers of consultancy services other than accountancy firms.                                                                                                                                                                                                                                                                                                                                                                        
|   
|(g) | ‘Other services’ in respect of other accounting firms includes pension fund and payroll administration, advice on accounting matters, secondments of accounting firms’ staff, forensic audit, advisory services in
connection with Section 404 of the Sarbanes-Oxley Act and other consultancy.                                                                                                                                                                                                                                               



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Notes to the 2007 Financial statements

|45 | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                          
|   | Information about material related
    party transactions of the Rio Tinto Group is set out below:                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                          
|   | Subsidiary companies and proportionally
      consolidated unitsDetails of investments in principal subsidiary
      companies are disclosed in note 37.
      Information relating to proportionally consolidated units can be found in
      note 40.                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                          
|   | Equity accounted unitsTransactions and balances with
    equity accounted units are summarised below. Purchases relate largely to
    amounts charged by jointly controlled entities for toll processing of bauxite
    and alumina. Sales relate largely to charges for supply of coal to jointly
    controlled marketing entities for onsale to third party customers.
|   |                                                                                                                                                                                                                                                                                                                                                                          

| |                                                                                | 2007   |   | 2006   |   | 2005   |  
| | ------------------------------------------------------------------------------ | ------ | - | ------ | - | ------ | -
| | Income statement items                                                         | US$m   |   | US$m   |   | US$m   |  
| |                                                                                |        |   |        |   |        |  
| | Purchases from equity accounted units                                          | (1,538 | ) | (1,364 | ) | (1,259 | )
| | Sales to equity accounted units                                                | 1,338  |   | 1,497  |   | 1,296  |  
| |                                                                                |        |   |        |   |        |  
| | Balance sheet items                                                            |        |   |        |   |        |  
| |                                                                                |        |   |        |   |        |  
| | Investments in equity accounted units (note 14) (a)                            | 7,038  |   | 2,235  |   |        |  
| | Loans to equity accounted units                                                | 362    |   | 151    |   |        |  
| | Loans from equity accounted units                                              | (174   | ) | (65    | ) |        |  
| | Trade and other receivables: amounts due from equity accounted units (note 17) | 804    |   | 648    |   |        |  
| | Trade and other payables: amounts due to equity accounted units (note 25)      | (219   | ) | (143   | ) |        |  
| |                                                                                |        |   |        |   |        |  
| | Cash flow statement items                                                      |        |   |        |   |        |  
| |                                                                                |        |   |        |   |        |  
| | (Funding of)/repayments from equity accounted units                            | (216   | ) | (47    | ) | 17     |  
| |                                                                                |        |   |        |   |        |  

|    |                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Further information about investments in equity accounted units is set out in Notes 38 and 39.                                                                        
|   
|    | Pension funds                                                                                                                                                         
|    | Information relating to pension fund arrangements is disclosed in note 49.                                                                                            
|   
|    | Directors and key management                                                                                                                                          
|    | Details of directors’ and key management
      remuneration are set out in note 43 and in the Remuneration report, including Tables 1 to 5, on pages
      120 to 144.
|   

|46 | EXCHANGE RATES IN US$                                                                         
|-- | ----------------------------------------------------------------------------------------------
|   |                                                                                               
|   | The principal exchange rates
    used in the preparation of the 2007 financial statements are:
|   |                                                                                               
|   |                                                                                               
|   |                                                                                               
|   |                                                                                               
|   |                                                                                               
|   | Sterling                                                                                      
|   | Australian dollar                                                                             
|   | Canadian dollar                                                                               
|   | South African rand                                                                            
|   | Euro                                                                                          
|   |                                                                                               
|   |                                                                                               

|47 | 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$1 million for the financial year (2006: US$1 million; 2005: nil). This is based upon actual transactions for the financial year.
The aggregate amount of capital and reserves reported by BCL as at 31 December 2007 was US$147 million (2006: US$129 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 2007, the number of shares in BCL held by the Group, multiplied by the share price, resulted in an amount of US$281 million (2006: US$119 million).



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Notes to the 2007 Financial statements

|48 | SHARE-BASED PAYMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Rio Tinto plc and Rio Tinto Limited (“the
        Companies”) have a number of share-based payment plans, which are described
        in detail in the Remuneration Report on pages 120 to 133. These plans have been accounted
        for in accordance with the fair value recognition provisions of ‘IFRS
        2 Share-based Payment’, which means that IFRS 2 has been applied to all
        grants of employee share-based payments that had not vested as at 1 January
    2004.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The compensation cost that has been recognised
        in income for Rio Tinto’s share-based compensation plans, and related
    liability (for cash-settled plans), are set out in the table below.                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Expense
      recognised for the year |  | Liability
      at the end of the year | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- |  | -------------------------------------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                       |  |                                        | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 2007                                  |  | 2006                                   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | US$m                                  |  | US$m                                   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                       |  |                                        | 
| | Equity-settled plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 39                                    |  | 25                                     | 
| | Cash-settled plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 181                                   |  | 7                                      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                       |  |                                        | 
| | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 220                                   |  | 32                                     | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                       |  |                                        | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                                       |  |                                        | 
| | Lattice-based option
      valuation modelThe fair value of share options
      is estimated as at 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 share returns under the UK and Australian listings. Historical
      data was used to estimate employee forfeiture and cancellation rates within
      the valuation model. Under the Share Option Plans, it is assumed that after
      options have vested, 20 per cent per annum of participants will exercise
      their options when the market price is at least 20 per cent above the exercise
      price of the option. Participants in the Share Savings Plans are assumed
      to exercise their options immediately after vesting. The implied lifetime
      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 zero-coupon government bonds (for
      plc and Limited options respectively) at the date of grant with a term equal
      to the expected term of the options.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Summary of options
      outstandingA summary of the status of the Companies’
      fixed share option plans at 31 December 2007, and changes during the year
      ended 31 December 2007, is presented below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                                                                                                                             |            |  |            |  |             |  |           | 
| | ------------------------------------------------------------------------------------------------------------------------------------------- | ---------- |  | ---------- |  | ----------- |  | --------- | 
| |                                                                                                                                             |            |  | Weighted   |  | Weighted    |  |           | 
| |                                                                                                                                             |            |  | average    |  | average     |  |           | 
| |                                                                                                                                             |            |  | exercise   |  | remaining   |  | Aggregate | 
| |                                                                                                                                             |            |  | price      |  | contractual |  | intrinsic | 
| |                                                                                                                                             |            |  | per option |  | life        |  | value     | 
| |                                                                                                                                             | 2007       |  | 2007       |  | 2007        |  | 2007      | 
| | Options outstanding at 31
      December                                                                                                    | Number     |  | £ / A$     |  | Years       |  | US$m      | 
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| | Rio Tinto plc Share Savings
      Plan (£9 – £36)                                                                                           | 1,419,715  |  | 18.39      |  | 2.1         |  | 99        | 
| | Rio Tinto plc Share Option
      Plan (£8 – £35)                                                                                            | 4,960,203  |  | 18.75      |  | 6.7         |  | 341       | 
| | Rio Tinto Limited Share Savings
      Plan (A$26 – A$79)                                                                                    | 2,634,607  |  | 46.36      |  | 2.3         |  | 202       | 
| | Rio Tinto Limited Share Option
      Plan (A$33 – A$94)                                                                                     | 3,351,754  |  | 50.84      |  | 6.9         |  | 244       | 
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| |                                                                                                                                             | 12,366,279 |  |            |  |             |  | 886       | 
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| |                                                                                                                                            
| | As at 31 December
      2006, there were 12,971,924 options outstanding with an aggregate intrinsic
      value of US$316 million.         
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| | Options exercisable at 31
      December                                                                                                    |            |  |            |  |             |  |           | 
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| | Rio Tinto plc Share Option
      Plan (£8 – £15)                                                                                            | 2,387,532  |  | 13.16      |  | 5.2         |  | 191       | 
| | Rio Tinto Limited Share Option
      Plan (A$33 – A$40)                                                                                     | 1,529,378  |  | 35.21      |  | 5.4         |  | 133       | 
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| |                                                                                                                                             | 3,916,910  |  |            |  |             |  | 324       | 
| |                                                                                                                                             |            |  |            |  |             |  |           | 
| |                                                                                                                                            
| | As at 31 December 2006, there
      were 3,978,543 options exercisable with an aggregate intrinsic value of
      US$118 million.          
| |                                                                                                                                            
| | As at 31 December 2007, no
      options were exercisable under both the Rio Tinto plc and the Rio Tinto
      Limited Share Savings Plans.



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Notes to the 2007 Financial statements

|48 | SHARE-BASED PAYMENTScontinued                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                           
|   | Share Savings Plans                                                                                                                                                                                                                                                                                                                                                                       
|   | Awards under these plans are settled
        in equity and accounted for accordingly. The fair value of each award
        on the day of grant was estimated using a lattice-based option valuation
        model, including allowance for the exercise price being at a discount
        to market price. The key assumptions used in the valuation are noted
    in the following table.

| |                     |                   |               |  |            |  |          |  |            |  |              |  |          | 
| | ------------------- | ----------------- | ------------- |  | ---------- |  | -------- |  | ---------- |  | ------------ |  | -------- | 
| |                     |                   | Risk-free     |  | Expected   |  | Dividend |  | Forfeiture |  | Cancellation |  | Implied  | 
| |                     |                   | interest rate |  | volatility |  | yield    |  | rates      |  | rates        |  | lifetime | 
| |                     |                   | %             |  | %          |  | %        |  | %          |  | %            |  | Years    | 
| |                     |                   |               |  |            |  |          |  |            |  |              |  |         
| | Awards made in 2007 |                   |               |  |            |  |          |  |            |  |              |  |         
| | –                   | Rio Tinto plc     | 5.0           |  | 35.0       |  | 1.5      |  | 5.0        |  | 5.0          |  | 2.2-5.2  | 
| | –                   | Rio Tinto Limited | 6.5           |  | 28.0       |  | 1.4      |  | 5.0        |  | 5.0          |  | 3.2-5.2  | 

| |                                        |           |   |          |  |           |   |          |  |           |   |          | 
| | -------------------------------------- | --------- | - | -------- |  | --------- | - | -------- |  | --------- | - | -------- | 
| |                                        |           |   |          |  |           |   |          |  |           |   |          | 
| | Rio Tinto plc – Share Savings
    Plan |           |   |          |  |           |   |          |  |           |   |          | 
| |                                        |           |   | Weighted |  |           |   | Weighted |  |           |   | Weighted | 
| |                                        |           |   | average  |  |           |   | average  |  |           |   | average  | 
| |                                        |           |   | exercise |  |           |   | exercise |  |           |   | exercise | 
| |                                        |           |   | price    |  |           |   | price    |  |           |   | price    | 
| |                                        | 2007      |   | 2007     |  | 2006      |   | 2006     |  | 2005      |   | 2005     | 
| |                                        | Number    |   | £        |  | Number    |   | £        |  | Number    |   | £        | 
| |                                        |           |   |          |  |           |   |          |  |           |   |          | 
| | Options outstanding at 1 January       | 1,497,463 |   | 14.26    |  | 1,624,492 |   | 11.84    |  | 1,709,069 |   | 10.11    | 
| | Granted                                | 324,170   |   | 30.47    |  | 323,256   |   | 20.72    |  | 393,275   |   | 16.64    | 
| | Forfeited                              | (32,518   | ) | 14.30    |  | (35,953   | ) | 14.06    |  | (32,350   | ) | 10.25    | 
| | Exercised                              | (311,458  | ) | 11.12    |  | (376,802  | ) | 9.59     |  | (334,750  | ) | 9.32     | 
| | Cancellations                          | (36,075   | ) | 20.13    |  | (25,097   | ) | 12.38    |  | (70,027   | ) | 10.98    | 
| | Expired                                | (21,867   | ) | 10.36    |  | (12,433   | ) | 11.72    |  | (40,725   | ) | 9.13     | 
| |                                        |           |   |          |  |           |   |          |  |           |   |          | 
| | Options outstanding at 31 December     | 1,419,715 |   | 18.39    |  | 1,497,463 |   | 14.26    |  | 1,624,492 |   | 11.84    | 
| |                                        |           |   |          |  |           |   |          |  |           |   |          | 

| |                                                                                         |  |       |  |       |  |       | 
| | --------------------------------------------------------------------------------------- |  | ----- |  | ----- |  | ----- | 
| |                                                                                         |  | 2007  |  | 2006  |  | 2005  | 
| |                                                                                         |  | £     |  | £     |  | £     | 
| |                                                                                         |  |       |  |       |  |       | 
| | Weighted average fair value, at date of grant, of options granted during the year (£)   |  | 13.16 |  | 7.93  |  | 8.09  | 
| | Share price, at date of grant, of options granted during the year (£)                   |  | 41.31 |  | 24.63 |  | 22.34 | 
| | Weighted average share price at the time the options were exercised during the year (£) |  | 28.55 |  | 27.86 |  | 16.95 | 

| |                                              |           |   |          |  |           |   |          |  |           |   |          | 
| | -------------------------------------------- | --------- | - | -------- |  | --------- | - | -------- |  | --------- | - | -------- | 
| | Rio Tinto Limited
      – Share Savings Plan
| |                                              |           |   | Weighted |  |           |   | Weighted |  |           |   | Weighted | 
| |                                              |           |   | average  |  |           |   | average  |  |           |   | average  | 
| |                                              |           |   | exercise |  |           |   | exercise |  |           |   | exercise | 
| |                                              |           |   | price    |  |           |   | price    |  |           |   | price    | 
| |                                              | 2007      |   | 2007     |  | 2006      |   | 2006     |  | 2005      |   | 2005     | 
| |                                              | Number    |   | A$       |  | Number    |   | A$       |  | Number    |   | A$       | 
| |                                              |           |   |          |  |           |   |          |  |           |   |          | 
| | Options outstanding at 1 January             | 2,748,026 |   | 36.00    |  | 2,786,301 |   | 30.56    |  | 2,680,986 |   | 27.18    | 
| | Granted                                      | 548,549   |   | 79.27    |  | 494,141   |   | 56.80    |  | 707,144   |   | 40.92    | 
| | Forfeited                                    | (121,590  | ) | 37.05    |  | (81,201   | ) | 30.85    |  | (49,532   | ) | 27.31    | 
| | Exercised                                    | (480,955  | ) | 27.75    |  | (414,201  | ) | 25.65    |  | (407,195  | ) | 27.82    | 
| | Cancellations                                | (39,126   | ) | 41.75    |  | (36,936   | ) | 30.94    |  | (131,498  | ) | 27.34    | 
| | Expired                                      | (20,297   | ) | 27.71    |  | (78       | ) | 25.57    |  | (13,604   | ) | 27.86    | 
| |                                              |           |   |          |  |           |   |          |  |           |   |          | 
| | Options outstanding at 31 December           | 2,634,607 |   | 46.36    |  | 2,748,026 |   | 36.00    |  | 2,786,301 |   | 30.56    | 
| |                                              |           |   |          |  |           |   |          |  |           |   |          | 

| |                                                                                          |        |  |       |  |       | 
| | ---------------------------------------------------------------------------------------- | ------ |  | ----- |  | ----- | 
| |                                                                                          | 2007   |  | 2006  |  | 2005  | 
| |                                                                                          | A$     |  | A$    |  | A$    | 
| |                                                                                          |        |  |       |  |       | 
| | Weighted average fair value, at date of grant, of options granted during the year (A$)   | 34.13  |  | 23.56 |  | 21.62 | 
| | Share price, at date of grant, of options granted during the year (A$)                   | 106.28 |  | 69.25 |  | 56.50 | 
| | Weighted average share price at the time the options were exercised during the year (A$) | 81.13  |  | 74.16 |  | 43.83 | 



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Notes to the 2007 Financial statements

|48 | SHARE-BASED PAYMENTScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Share Option Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Group has a policy of settling these
        awards in equity, although the directors at their discretion can offer
        a cash alternative. The awards are accounted for in accordance with the
        requirements applying to equity-settled, share-based payment transactions.
        The performance conditions in relation to Total Shareholder Return (“TSR”)
        have been incorporated in the measurement of fair value for these 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 key assumptions are noted in the following
    table.

| |                                                                                                                                                                                               |                   |                     |  |            |  |          |  |          |  |          | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------------------- |  | ---------- |  | -------- |  | -------- |  | -------- | 
| |                                                                                                                                                                                               |                   | Risk-free           |  | Expected   |  | Dividend |  | Turnover |  | Implied  | 
| |                                                                                                                                                                                               |                   | interest
      rate |  | volatility |  | yield    |  | rates    |  | lifetime | 
| |                                                                                                                                                                                               |                   | %                   |  | %          |  | %        |  | %        |  | Years    | 
| |                                                                                                                                                                                               |                   |                     |  |            |  |          |  |          |  |          | 
| | Awards made
      in 2007                                                                                                                                                                     |                   |                     |  |            |  |          |  |          |  |         
| | –                                                                                                                                                                                             | Rio Tinto plc     | 5.0                 |  | 34.0       |  | 2.4      |  | 3.0      |  | 5.2      | 
| | –                                                                                                                                                                                             | Rio Tinto Limited | 5.8                 |  | 27.0       |  | 2.2      |  | 3.0      |  | 5.9      | 
| |                                                                                                                                                                                               |                   |                     |  |            |  |          |  |          |  |          | 
| |                                                                                                                                                                                              
| | A summary of the
      status of the Companies’ performance-based share option plans at 31
      December 2007, and changes during the year ended 31 December 2007, is presented
      below.

| |                                       |           |   |          |  |            |   |          |  |            |   |         
| | ------------------------------------- | --------- | - | -------- |  | ---------- | - | -------- |  | ---------- | - | --------
| | Rio Tinto plc – Share Option
    Plan |           |   |          |  |            |   |          |  |            |   |         
| |                                       |           |   | Weighted |  |            |   | Weighted |  |            |   | Weighted
| |                                       |           |   | average  |  |            |   | average  |  |            |   | average 
| |                                       |           |   | exercise |  |            |   | exercise |  |            |   | exercise
| |                                       |           |   | price    |  |            |   | price    |  |            |   | price   
| |                                       | 2007      |   | 2007     |  | 2006       |   | 2006     |  | 2005       |   | 2005    
| |                                       | Number    |   | £        |  | Number     |   | £        |  | Number     |   | £       
| |                                       |           |   |          |  |            |   |          |  |            |   |         
| | Options outstanding at 1 January      | 5,185,847 |   | 16.33    |  | 6,290,155  |   | 13.45    |  | 8,053,292  |   | 12.33   
| | Granted                               | 786,002   |   | 27.29    |  | 931,418    |   | 27.11    |  | 979,593    |   | 18.26   
| | Forfeited                             | (42,211   | ) | 24.73    |  | (63,713    | ) | 25.16    |  | (71,312    | ) | 14.96   
| | Exercised                             | (969,435  | ) | 12.50    |  | (1,972,013 | ) | 11.95    |  | (2,671,418 | ) | 11.80   
| |                                       |           |   |          |  |            |   |          |  |            |   |         
| | Options outstanding at 31 December    | 4,960,203 |   | 18.75    |  | 5,185,847  |   | 16.33    |  | 6,290,155  |   | 13.45   
| |                                       |           |   |          |  |            |   |          |  |            |   |         

| |                                                                                                                                                                                                                                                   |       |  |       |  |       | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- |  | ----- |  | ----- | 
| |                                                                                                                                                                                                                                                   | 2007  |  | 2006  |  | 2005  | 
| |                                                                                                                                                                                                                                                   | £     |  | £     |  | £     | 
| |                                                                                                                                                                                                                                                   |       |  |       |  |       | 
| | Weighted average fair value,
      at date of grant, of options granted during the year (£)                                                                                                                                                       | 6.25  |  | 7.40  |  | 4.09  | 
| | Weighted average share price,
      at date of grant, of options granted during the year (£)                                                                                                                                                      | 27.48 |  | 26.89 |  | 18.25 | 
| | Weighted average share price
      at the time the options were exercised during the year (£)                                                                                                                                                     | 39.25 |  | 29.01 |  | 20.37 | 
| |                                                                                                                                                                                                                                                   |       |  |       |  |       | 
| | In addition to
      the equity-settled options shown above, there were 121,131 cash-settled
      options outstanding at 31 December 2007. The total liability for these awards at 31 December 2007 was US$7 million
      (2006: US$1 million).

| |                                             |           |   |          |  |            |   |          |  |           |   |          | 
| | ------------------------------------------- | --------- | - | -------- |  | ---------- | - | -------- |  | --------- | - | -------- | 
| | Rio Tinto Limited
      – Share Option Plan
| |                                             |           |   | Weighted |  |            |   | Weighted |  |           |   | Weighted | 
| |                                             |           |   | average  |  |            |   | average  |  |           |   | average  | 
| |                                             |           |   | exercise |  |            |   | exercise |  |           |   | exercise | 
| |                                             |           |   | price    |  |            |   | price    |  |           |   | price    | 
| |                                             | 2007      |   | 2007     |  | 2006       |   | 2006     |  | 2005      |   | 2005     | 
| |                                             | Number    |   | A$       |  | Number     |   | A$       |  | Number    |   | A$       | 
| |                                             |           |   |          |  |            |   |          |  |           |   |          | 
| | Options outstanding at 1 January            | 3,540,588 |   | 43.53    |  | 3,959,472  |   | 36.17    |  | 4,073,599 |   | 34.24    | 
| | Granted                                     | 568,638   |   | 75.12    |  | 716,318    |   | 71.06    |  | 669,731   |   | 47.04    | 
| | Forfeited                                   | (20,504   | ) | 71.57    |  | (89,041    | ) | 53.64    |  | (48,880   | ) | 37.60    | 
| | Exercised                                   | (736,968  | ) | 31.88    |  | (1,043,766 | ) | 33.65    |  | (734,978  | ) | 35.30    | 
| | Expired                                     | –         |   | –        |  | (2,395     | ) | 39.87    |  | –         |   | –        | 
| |                                             |           |   |          |  |            |   |          |  |           |   |          | 
| | Options outstanding at 31 December          | 3,351,754 |   | 50.84    |  | 3,540,588  |   | 43.53    |  | 3,959,472 |   | 36.17    | 
| |                                             |           |   |          |  |            |   |          |  |           |   |          | 

| |                                                                                                                                                                                                                                                                                                                       |        |  |       |  |       | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ |  | ----- |  | ----- | 
| |                                                                                                                                                                                                                                                                                                                       | 2007   |  | 2006  |  | 2005  | 
| |                                                                                                                                                                                                                                                                                                                       | A$     |  | A$    |  | A$    | 
| |                                                                                                                                                                                                                                                                                                                       |        |  |       |  |       | 
| | Weighted average fair value, at date of grant, of options granted during the year (A$)                                                                                                                                                                                                                                | 14.37  |  | 17.09 |  | 8.93  | 
| | Weighted average share price, at date of grant, for options granted during the year (A$)                                                                                                                                                                                                                              | 75.57  |  | 70.85 |  | 46.89 | 
| | Weighted average share price at the time the options were exercised during the year (A$)                                                                                                                                                                                                                              | 102.04 |  | 76.64 |  | 49.86 | 
| |                                                                                                                                                                                                                                                                                                                       |        |  |       |  |       | 
| | In addition to the equity-settled
      options shown above, there were 53,369 cash-settled options outstanding
      at 31 December 2007. The total liability for these awards at 31 December
      2007 was US$3 million (2006:
US$2 million).                                                                     
| |                                                                                                                                                                                                                                                                                                                       |        |  |       |  |       | 
| | Share Ownership PlanThe 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. These awards are settled in equity. The total fair
  value of shares awarded
during the year was £1,145,000 (2006: £988,000; 2005: £877,000).



A-62

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Notes to the 2007 Financial statements

|48 | SHARE-BASED PAYMENTScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Mining Companies Comparative PlanAwards under this plan are accounted
    for in accordance with the requirements applying to cash-settled, share based
    payment transactions. If any awards are ultimately settled in shares, the
    liability is transferred direct to equity as the consideration for the equity
    instruments issued. The grant date fair value of the awards is taken to be
    the market value of the shares at the date of award, reduced by 50 per cent
    for anticipated relative TSR performance. In addition, for the valuations
    after 2005, the market value is reduced for non receipt of dividends between
    measurement date and date of vesting (excluding post 2003 awards for executive
    directors and product group CEOs). Forfeitures are assumed prior to vesting
    at three per cent per annum of outstanding awards. In accordance with the
    method of accounting for cash-settled awards, fair values are subsequently
    remeasured each year to reflect the number of awards expected to vest based
    on the
current and anticipated TSR performance.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | A summary of the status of the Companies’
        performance-based share plans at 31 December 2007, and changes during
    the year, is presented below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| | Rio Tinto plc
      – Mining Companies Comparative Plan  
| | ---------------------------------------------------------
| |                                                          
| |                                                          
| |                                                          
| |                                                          
| |                                                          
| |                                                          
| |                                                          
| |                                                          
| |                                                          
| | Non-vested shares at 1 January                           
| | Awarded                                                  
| | Forfeited                                                
| | Failed performance conditions                            
| | Vested                                                   
| |                                                          
| | Non-vested shares at 31 December                         
| |                                                          
| | Weighted-average share price
      at date of vesting (£)

| |                                                                                  |  |       |  |       |  |       | 
| | -------------------------------------------------------------------------------- |  | ----- |  | ----- |  | ----- | 
| |                                                                                  |  | 2007  |  | 2006  |  | 2005  | 
| |                                                                                  |  | £’000 |  | £’000 |  | £’000 | 
| |                                                                                  |  |       |  |       |  |       | 
| | Total fair value of shares issued in settlement of shares vested during the year |  | 457   |  | 529   |  | 134   | 
| | Total cash payments made in settlement of shares vested during the year          |  | 1,003 |  | 1,035 |  | 258   | 
| | Total cash payments made in settlement of shares vested during previous years    |  | –     |  | 1,374 |  | –     | 
| |                                                                                  |  |       |  |       |  |       | 

| | Rio Tinto Limited
      – Mining Companies Comparative Plan
| | -----------------------------------------------------------
| |                                                            
| |                                                            
| |                                                            
| |                                                            
| |                                                            
| |                                                            
| |                                                            
| |                                                            
| |                                                            
| | Non-vested shares at 1 January                             
| | Awarded                                                    
| | Forfeited                                                  
| | Failed performance conditions                              
| | Vested                                                     
| |                                                            
| | Non-vested shares at 31 December                           
| |                                                            
| |                                                            
| | Weighted-average share price
      at date of vesting (A$) 

| |                                                                                  |        |  |        |  |        | 
| | -------------------------------------------------------------------------------- | ------ |  | ------ |  | ------ | 
| |                                                                                  | 2007   |  | 2006   |  | 2005   | 
| |                                                                                  | A$’000 |  | A$’000 |  | A$’000 | 
| |                                                                                  |        |  |        |  |        | 
| | Total fair value of shares issued in settlement of shares vested during the year | 879    |  | 1,136  |  | 342    | 
| | Total cash payments made in settlement of shares vested during the year          | 1,604  |  | 1,060  |  | 394    | 
| |                                                                                  |        |  |        |  |        | 



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Notes to the 2007 Financial statements

|48 | SHARE-BASED PAYMENTScontinued                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Management Share Plan                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Management Share Plan was introduced during 2007 and is described in the Remuneration report on pages 120 to 133. The awards will be settled in equity including the dividends accumulated from date of award to vesting.
The awards are accounted for in accordance with
the requirements applying to equity-settled, share based payment transactions. The fair value of each award on the day
      of grant is set equal to share price on the day of
grant.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Forfeitures are assumed prior to vesting at three per cent per annum of outstanding awards.                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | A summary of the status of the Companies’ fixed share plans at 31 December 2007, and changes during the year, is presented below:                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Rio Tinto plc – Management Share Plan                                                                                                                                                                                                                                                                                                                                                                                                                               
|  

| |                                                                                                                                                                                                                                          |         |   | Weighted   | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | - | ---------- | 
| |                                                                                                                                                                                                                                          |         |   | average    | 
| |                                                                                                                                                                                                                                          |         |   | fair value | 
| |                                                                                                                                                                                                                                          |         |   | at grant   | 
| |                                                                                                                                                                                                                                          |         |   | date       | 
| |                                                                                                                                                                                                                                          | 2007    |   | 2007       | 
| |                                                                                                                                                                                                                                          | Number  |   | £          | 
| |                                                                                                                                                                                                                                          |         |   |            | 
| | Non-vested awards at 1 January                                                                                                                                                                                                           | –       |   | –          | 
| | Awarded                                                                                                                                                                                                                                  | 365,670 |   | 30.09      | 
| | Forfeited                                                                                                                                                                                                                                | (19,382 | ) | 28.33      | 
| | Vested                                                                                                                                                                                                                                   | (2,072  | ) | 27.15      | 
| |                                                                                                                                                                                                                                          |         |   |            | 
| | Non-vested awards at 31 December                                                                                                                                                                                                         | 344,216 |   | 30.20      | 
| |                                                                                                                                                                                                                                          |         |   |            | 
| | Estimated weighted average
      share price of awards vested during the year (£)                                                                                                                                                        |         |   | 43.75      | 
| |                                                                                                                                                                                                                                          |         |   |            | 
| | In addition to the
      equity-settled awards shown above, there were 6,225 cash-settled awards
      outstanding at 31 December 2007. The
      total liability for these awards at 31 December 2007 was less than US$1
      million.
| |                                                                                                                                                                                                                                         
| | Rio Tinto Limited
      – Management Share Plan                                                                                                                                                                                         

| |                                                                              |         |   |            | 
| | ---------------------------------------------------------------------------- | ------- | - | ---------- | 
| |                                                                              |         |   | Weighted   | 
| |                                                                              |         |   | average    | 
| |                                                                              |         |   | fair value | 
| |                                                                              |         |   | at grant   | 
| |                                                                              |         |   | date       | 
| |                                                                              | 2007    |   | 2007       | 
| |                                                                              | Number  |   | A$         | 
| |                                                                              |         |   |            | 
| | Non-vested awards at 1 January                                               | –       |   | –          | 
| | Awarded                                                                      | 282,565 |   | 81.65      | 
| | Forfeited                                                                    | (9,973  | ) | 76.02      | 
| | Vested                                                                       | (1,392  | ) | 74.84      | 
| |                                                                              |         |   |            | 
| | Non-vested awards at 31 December                                             | 271,200 |   | 81.89      | 
| |                                                                              |         |   |            | 
| | Estimated weighted average share price of awards vested during the year (A$) |         |   | 98.69      | 

| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to the equity-settled awards
      shown above, there were 6,850 cash-settled awards outstanding at 31 December
      2007. The total liability for these
      awards at 31 December 2007 was less than US$1 million.



A-64

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Notes to the 2007 Financial statements

|49 | POST RETIREMENT BENEFITS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Description of plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Group operates a number of pension
        and post retirement healthcare plans around the world. Some of these
        plans are defined contribution and some are defined benefit, with assets
        held in separate trustee administered funds. Valuations of these plans
        are produced and updated annually to 31 December by qualified actuaries.
        A number of defined benefit and defined contribution plans were brought
        into the Group as a result of the Alcan acquisition. These plans are
        reflected in this note, except for plans sponsored by the Packaging business.
    Those plans are accounted for as assets or liabilities held for sale.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Pension plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The majority of the Group’s pension obligations
        are in Canada, the UK, the US, Australia and Switzerland, with further
    notable obligations in other European countries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | There are a number of pension arrangements
        in the UK. The defined benefit sections of these arrangements are linked
        to final pay and are closed to new members, with new employees being
        admitted to defined contribution
sections.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In Australia, there are two superannuation
        plans providing defined benefits linked to final pay, typically paid
        in lump sum form. The main plan contains principally defined contribution
        liabilities, but is accounted for as a defined benefit plan as it contains
    characteristics of both types of plan.                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | A number of defined benefit pension plans
        are sponsored by the US and Canadian entities. The main plans are two
        Canadian plans for salaried and bargaining employees. Benefits for salaried
        staff are generally linked to final average pay, while benefits for bargaining
    employees are reviewed in negotiation with unions.                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In Europe, there are defined benefit plans
        in Switzerland, the Netherlands, Germany and France. The largest single
        plan is in Switzerland and provides benefits linked to final average
    pay.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Group also operates a number of unfunded
    defined benefit plans, which are included in the figures below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Post retirement healthcare plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Certain subsidiaries of the Group, mainly
        in the US and Canada, provide health and life insurance benefits to retired
        employees and in some cases to their beneficiaries and covered dependants.
        Eligibility for cover is dependent upon certain age and service criteria.
    These arrangements are unfunded.                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Plan assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The proportions of the total fair value
        of assets in the pension plans for each asset class at the balance sheet
    date were:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                                                                                                                                                                                                                                                                                                                                                                              |        |  |        | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ |  | ------ | 
| |                                                                                                                                                                                                                                                                                                                                                                                              | 2007   |  | 2006   | 
| |                                                                                                                                                                                                                                                                                                                                                                                              |        |  |        | 
| | Equities                                                                                                                                                                                                                                                                                                                                                                                     | 60.2%  |  | 67.2%  | 
| | Bonds                                                                                                                                                                                                                                                                                                                                                                                        | 29.4%  |  | 25.2%  | 
| | Property                                                                                                                                                                                                                                                                                                                                                                                     | 7.2%   |  | 4.3%   | 
| | Other                                                                                                                                                                                                                                                                                                                                                                                        | 3.2%   |  | 3.3%   | 
| |                                                                                                                                                                                                                                                                                                                                                                                              |        |  |        | 
| |                                                                                                                                                                                                                                                                                                                                                                                              | 100.0% |  | 100.0% | 
| |                                                                                                                                                                                                                                                                                                                                                                                              |        |  |        | 
| |                                                                                                                                                                                                                                                                                                                                                                                              |        |  |        | 
| | The assets of the plans are
      generally managed on a day-to-day basis by external specialist fund managers.
      These managers may
      invest in the Group’s securities subject to limits imposed by the
      relevant fiduciary committees and local legislation. The approximate
      total holding of Group securities within the defined benefit plans is US$44
      million.
| |                                                                                                                                                                                                                                                                                                                                                                                              |        |  |        | 
| | Main assumptions (rates per annum)                                                                                                                                                                                                                                                                                                                                                           |        |  |        | 
| | The main assumptions for the valuations
      of the plans are set out below:                                                                                                                                                                                                                                                                                                                |        |  |        | 

| |                                             |      |  |               |  |      |  |        |  |          |  |        |  |             | 
| | ------------------------------------------- | ---- |  | ------------- |  | ---- |  | ------ |  | -------- |  | ------ |  | ----------- | 
| |                                             |      |  |               |  |      |  |        |  |          |  |        |  | Other       | 
| |                                             |      |  |               |  |      |  |        |  |          |  |        |  | (mainly     | 
| |                                             | UK   |  | Australia (a) |  | US   |  | Canada |  | Eurozone |  | Switz. |  | Africa) (b) | 
| |                                             |      |  |               |  |      |  |        |  |          |  |        |  |             | 
| | At 31 December
      2007                  
| | Rate of increase in salaries                | 5.0% |  | 5.5%          |  | 3.9% |  | 3.4%   |  | 2.8%     |  | 2.6%   |  | 7.5%        | 
| | Rate of increase in pensions                | 3.1% |  | 2.7%          |  | –    |  | 0.6%   |  | 2.3%     |  | 0.8%   |  | 5.5%        | 
| | Discount rate                               | 5.9% |  | 5.4%          |  | 6.2% |  | 5.5%   |  | 5.5%     |  | 3.6%   |  | 8.1%        | 
| | Inflation                                   | 3.4% |  | 3.6%          |  | 2.4% |  | 2.2%   |  | 2.3%     |  | 1.4%   |  | 5.5%        | 
| |                                             |      |  |               |  |      |  |        |  |          |  |        |  |             | 
| | At 23 October
      2007 (Alcan plans only)
| | Rate of increase in salaries                | 4.3% |  | 5.0%          |  | 3.9% |  | 3.5%   |  | 2.5%     |  | 2.3%   |  | –           | 
| | Rate of increase in pensions                | 2.7% |  | –             |  | –    |  | 0.8%   |  | 2.0%     |  | 0.8%   |  | –           | 
| | Discount rate                               | 5.8% |  | 5.2%          |  | 6.1% |  | 5.4%   |  | 5.2%     |  | 3.5%   |  | –           | 
| | Inflation                                   | 3.3% |  | 3.5%          |  | 2.4% |  | 2.3%   |  | 2.0%     |  | 1.1%   |  | –           | 
| |                                             |      |  |               |  |      |  |        |  |          |  |        |  |             | 
| | At 31 December
      2006                  
| | Rate of increase in salaries                | 5.1% |  | 5.1%          |  | 3.9% |  | 3.8%   |  | –        |  | –      |  | 6.8%        | 
| | Rate of increase in pensions                | 3.1% |  | 3.1%          |  | –    |  | –      |  | –        |  | –      |  | 4.8%        | 
| | Discount rate                               | 5.2% |  | 5.0%          |  | 5.9% |  | 5.0%   |  | –        |  | –      |  | 7.4%        | 
| | Inflation                                   | 3.1% |  | 3.1%          |  | 2.4% |  | 2.3%   |  | –        |  | –      |  | 4.8%        | 

| | 
| | 

| | (a) The discount rate shown for Australia
      is after tax.                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (b) The assumptions vary by location
      for the ‘Other’ plans. Assumptions shown are for Southern Africa.                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The main financial assumptions used for
      the healthcare plans, which are predominantly in the US, were: discount
      rate: 6.1 per cent (2006: 5.8 per cent), medical trend rate: 7.7 per cent
      reducing to 5.1 per cent by the year 2016 broadly on a straight line basis
      (2006: 8.2 per cent, reducing to 5.2 per cent by the year 2011), claims
      cost based on individual company experience.



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Notes to the 2007 Financial statements

|49 | POST RETIREMENT BENEFITScontinued                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|   | For both the pension and healthcare arrangements
      the post-retirement mortality assumptions allow for future improvements
      in mortality.                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                
|   | The mortality tables used for the main
      arrangements imply that a male aged 60 at the balance sheet date has an
      expected future lifetime of 24 years (2006: 24 years). A male reaching age
      60 20 years after the balance sheet date would have an expected future lifetime
      of 25 years (2006: 25 years).
|   |                                                                                                                                                                                                                                                                                                                                

| |                                             |      |  |           |  |      |  |        |  |          |  |        |  | Other       | 
| | ------------------------------------------- | ---- |  | --------- |  | ---- |  | ------ |  | -------- |  | ------ |  | ----------- | 
| |                                             |      |  |           |  |      |  |        |  |          |  |        |  | (mainly     | 
| | Long term rate of return
      expected:    | UK   |  | Australia |  | US   |  | Canada |  | Eurozone |  | Switz. |  | Africa) (a) | 
| |                                             |      |  |           |  |      |  |        |  |          |  |        |  |             | 
| | At 24 October
      2007 (Alcan plans only)
| | Equities                                    | 7.8% |  | 8.9%      |  | 7.9% |  | 7.7%   |  | 7.8%     |  | 6.6%   |  | –           | 
| | Bonds                                       | 4.9% |  | 5.4%      |  | 5.3% |  | 4.6%   |  | 4.5%     |  | 3.4%   |  | –           | 
| | Property                                    | 6.1% |  | 7.0%      |  | 6.2% |  | 6.0%   |  | 6.1%     |  | 4.9%   |  | –           | 
| | Other                                       | 4.3% |  | 3.6%      |  | 3.2% |  | 3.1%   |  | 3.1%     |  | 2.0%   |  | –           | 
| |                                             |      |  |           |  |      |  |        |  |          |  |        |  |             | 
| | At 1 January 2007                           |      |  |           |  |      |  |        |  |          |  |        |  |             | 
| | Equities                                    | 7.5% |  | 8.7%      |  | 8.1% |  | 7.4%   |  | –        |  | –      |  | 10.7%       | 
| | Bonds                                       | 4.5% |  | 5.2%      |  | 5.2% |  | 4.4%   |  | –        |  | –      |  | 7.4%        | 
| | Property                                    | 5.8% |  | 6.8%      |  | 6.4% |  | 5.7%   |  | –        |  | –      |  | 9.0%        | 
| | Other                                       | 4.2% |  | 3.5%      |  | 3.4% |  | 3.3%   |  | –        |  | –      |  | 5.8%        | 
| |                                             |      |  |           |  |      |  |        |  |          |  |        |  |             | 
| | At 1 January 2006                           |      |  |           |  |      |  |        |  |          |  |        |  |             | 
| | Equities                                    | 7.3% |  | 6.8%      |  | 6.9% |  | 7.1%   |  | –        |  | –      |  | 9.0%        | 
| | Bonds                                       | 4.3% |  | 4.6%      |  | 4.9% |  | 4.3%   |  | –        |  | –      |  | 7.3%        | 
| | Property                                    | 5.7% |  | 5.6%      |  | 5.7% |  | 5.6%   |  | –        |  | –      |  | 8.2%        | 
| | Other                                       | 4.0% |  | 3.2%      |  | 3.4% |  | 3.6%   |  | –        |  | –      |  | 5.5%        | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The assumptions vary by location for the ‘Other’ plans. Assumptions shown are for Southern Africa.                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | The expected rate of return on pension plan assets
is determined as management’s best estimate of the long term returns of the major
asset classes – equities, bonds, property 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 expected rates of
return shown have been reduced to allow for plan expenses including, where appropriate,
taxes incurred within pension plans on investment returns.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | 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.                                                                                                      

| |                                                                                         |          |   |          |   |       |   |       |   |       |  
| | --------------------------------------------------------------------------------------- | -------- | - | -------- | - | ----- | - | ----- | - | ----- | -
| | Total expense recognised
      in the income statement                                  |          |   |          |   |       |   |       |   |       |  
| |                                                                                         | Pension  |   | Other    |   | Total |   | Total |   | Total |  
| |                                                                                         | benefits |   | benefits |   | 2007  |   | 2006  |   | 2005  |  
| |                                                                                         | US$m     |   | US$m     |   | US$m  |   | US$m  |   | US$m  |  
| |                                                                                         |          |   |          |   |       |   |       |   |       |  
| | Current employer service cost
      for Defined Benefits (“DB”)                         | (134     | ) | (11      | ) | (145  | ) | (102  | ) | (90   | )
| | Current employer service cost
        for Defined Contribution benefits within DB plans | (106     | ) | –        |   | (106  | ) | (74   | ) | (69   | )
| | Current employer service cost
      for Defined Contribution plans                      | (40      | ) | –        |   | (40   | ) | (21   | ) | (13   | )
| | Interest cost                                                                           | (482     | ) | (34      | ) | (516  | ) | (314  | ) | (308  | )
| | Expected return on assets                                                               | 550      |   | –        |   | 550   |   | 326   |   | 306   |  
| | Past service cost                                                                       | (7       | ) | 24       |   | 17    |   | (7    | ) | (1    | )
| | Gains on curtailment and settlement                                                     | –        |   | –        |   | –     |   | 3     |   | 8     |  
| |                                                                                         |          |   |          |   |       |   |       |   |       |  
| | Total expense                                                                           | (219     | ) | (21      | ) | (240  | ) | (189  | ) | (167  | )
| |                                                                                         |          |   |          |   |       |   |       |   |       |  

| |                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The above expense is included as an employee
      cost within net operating costs. It includes the pension expense of Alcan
      businesses, excluding Packaging, post
      23 October 2007.
| |                                                                                                                                                                                                
| | Total amount recognised in the statement
      of recognised income and expense                                                                                                                
| |                                                                                                                                                                                                

| |                                                                                               | 2007 |  | 2006 |  | 2005 |  
| | --------------------------------------------------------------------------------------------- | ---- |  | ---- |  | ---- | -
| |                                                                                               | US$m |  | US$m |  | US$m |  
| |                                                                                               |      |  |      |  |      |  
| | Actuarial gain                                                                                | 141  |  | 373  |  | 178  |  
| | Cumulative amount recognised in the statement of recognised income and expense at 31 December | 489  |  | 348  |  | (25  | )
| |                                                                                               |      |  |      |  |      |  

| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | The actuarial gain above includes a US$4
    million loss related to equity accounted units (2006 and 2005: nil).



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Notes to the 2007 Financial statements

|49 | POST RETIREMENT BENEFITScontinued                                 
|-- | ------------------------------------------------------------------
|   |                                                                   
|   | Surpluses/(deficits) in the plans                                 
|   | The following amounts were measured in
    accordance with IAS 19:
|   |                                                                   

| |                                                                  | Pension  |   | Other    |   | Total   |   | Total  |   | Total  |   | Total  |  
| | ---------------------------------------------------------------- | -------- | - | -------- | - | ------- | - | ------ | - | ------ | - | ------ | -
| |                                                                  | benefits |   | benefits |   | 2007    |   | 2006   |   | 2005   |   | 2004   |  
| |                                                                  | US$m     |   | US$m     |   | US$m    |   | US$m   |   | US$m   |   | US$m   |  
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  
| | Total fair value of plan assets                                  | 16,387   |   | –        |   | 16,387  |   | 6,031  |   | 5,115  |   | 4,777  |  
| | Present value of obligations – funded                            | (16,856  | ) | –        |   | (16,856 | ) | (5,847 | ) | (5,315 | ) | (5,118 | )
| | Present value of obligations – unfunded                          | (981     | ) | (1,087   | ) | (2,068  | ) | (597   | ) | (596   | ) | (649   | )
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  
| | Present value of obligations – Total                             | (17,837  | ) | (1,087   | ) | (18,924 | ) | (6,444 | ) | (5,911 | ) | (5,767 | )
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  
| | Unrecognised past service cost                                   | –        |   | (2       | ) | (2      | ) | 3      |   | –      |   | –      |  
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  
| | Aggregate surplus/(deficit) to
    be shown in the balance sheet | (1,450   | ) | (1,089   | ) | (2,539  | ) | (410   | ) | (796   | ) | (990   | )
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  
| | Comprising:                                                      |          |   |          |   |         |   |        |   |        |   |        |  
| | – Deficits                                                       | (2,186   | ) | (1,089   | ) | (3,275  | ) | (770   | ) | (996   | ) | (1,069 | )
| | – Surpluses                                                      | 736      |   | –        |   | 736     |   | 360    |   | 200    |   | 79     |  
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  
| | Net surpluses/(deficits) on pension plans                        | (1,450   | ) | –        |   | (1,450  | ) | 48     |   | (324   | ) | (450   | )
| | Unfunded post retirement healthcare obligation                   | –        |   | (1,089   | ) | (1,089  | ) | (458   | ) | (472   | ) | (540   | )
| |                                                                  |          |   |          |   |         |   |        |   |        |   |        |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The surplus amounts shown above are included
        in the balance sheet as Trade and Other Receivables. Deficits are shown
    in the balance sheet as Provision for post retirement benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Contributions to plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Contributions to pension plans totalled
        US$246 million (2006: US$172 million; 2005: US$192 million).
        These contributions include US$30 million (2006: US$26 million;
        2005: US$20 million) for plans providing purely defined contribution
        benefits (including 401k plans in the US) and US$10 million (2006:
        US$9 million; 2005: US$5 million) to industry-wide or multi-employer
        plans; these are charged against profits and are included in the figures
        for ‘current employer service cost’ shown above. They include contributions
    of Alcan businesses excluding Packaging, post 23 October 2007.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Contributions for other benefits totalled
    US$30 million (2006: US$19 million; 2005: US$26 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Contributions to pension plans for 2008
        are estimated to be around US$220 million higher than for 2007. Of
        this increase, US$140 million is due to the Alcan acquisition with
        most of the remainder relating to new US funding regulations. Healthcare
        plans are unfunded and contributions for future years will be equal to
    benefit payments and therefore cannot be predetermined.                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Movements in the present value of
    the defined benefit obligation and in the fair value of assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The amounts shown below include, where
        appropriate, 100 per cent of the costs, contributions, gains and losses
        in respect of employees who participate in the plans and who are employed
        in operations that are proportionally consolidated or equity accounted.
        Consequently, the costs, contributions, gains and losses do not correspond
        directly to the amounts disclosed above in respect of the Group. Pure
        defined contribution plans and industry-wide plans are excluded from
    the movements below.                                                                                                  

| |                                                                                                                           |          |   |          |   |         |   |        |  
| | ------------------------------------------------------------------------------------------------------------------------- | -------- | - | -------- | - | ------- | - | ------ | -
| |                                                                                                                           | Pension  |   | Other    |   | Total   |   | Total  |  
| |                                                                                                                           | benefits |   | benefits |   | 2007    |   | 2006   |  
| |                                                                                                                           | US$m     |   | US$m     |   | US$m    |   | US$m   |  
| |                                                                                                                           |          |   |          |   |         |   |        |  
| | Change in present value of obligation:                                                                                    |          |   |          |   |         |   |        |  
| | Present value of obligation at start of the year                                                                          | (5,983   | ) | (461     | ) | (6,444  | ) | (5,911 | )
| | Current employer service cost                                                                                             | (261     | ) | (11      | ) | (272    | ) | (206   | )
| | Interest cost                                                                                                             | (482     | ) | (34      | ) | (516    | ) | (314   | )
| | Contributions by plan participants                                                                                        | (190     | ) | –        |   | (190    | ) | (113   | )
| | Experience (loss)/gain                                                                                                    | (73      | ) | 11       |   | (62     | ) | (89    | )
| | Changes in actuarial assumptions: gain                                                                                    | 289      |   | 26       |   | 315     |   | 124    |  
| | Benefits paid                                                                                                             | 542      |   | 30       |   | 572     |   | 361    |  
| | Alcan acquisition                                                                                                         | (11,216  | ) | (651     | ) | (11,867 | ) | –      |  
| | Inclusion/removal of arrangements                                                                                         | –        |   | –        |   | –       |   | 42     |  
| | Past service income/(cost)                                                                                                | (7       | ) | 29       |   | 22      |   | (10    | )
| | Curtailment gains                                                                                                         | –        |   | –        |   | –       |   | 3      |  
| | Currency exchange rate loss                                                                                               | (456     | ) | (26      | ) | (482    | ) | (331   | )
| |                                                                                                                           |          |   |          |   |         |   |        |  
| | Present value of obligation at end of the year                                                                            | (17,837  | ) | (1,087   | ) | (18,924 | ) | (6,444 | )
| |                                                                                                                           |          |   |          |   |         |   |        |  
| |                                                                                                                           |          |   |          |   |         |   |        |  
| | Gains and losses on obligations                                                                                           |          |   |          |   |         |   |        |  
| |                                                                                                                           | 2007     |   | 2006     |   | 2005    |   | 2004   |  
| |                                                                                                                           |          |   |          |   |         |   |        |  
| | Experience
	      gains and (losses): (i.e. variances between the estimate of obligations and
    the subsequent outcome) |          |   |          |   |         |   |        |  
| | (Loss)/gain (US$ million)                                                                                                 | (62      | ) | (89      | ) | 139     |   | (148   | )
| | As a percentage of the present value of the obligations                                                                   | 0%       |   | (1%      | ) | 2%      |   | (3%    | )
| |                                                                                                                           |          |   |          |   |         |   |        |  
| | Change in assumptions gain/(loss) (US$ million)                                                                           | 315      |   | 124      |   | (180    | ) | (429   | )
| |                                                                                                                           |          |   |          |   |         |   |        |  



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Notes to the 2007 Financial statements

|49 | POST RETIREMENT BENEFITScontinued
|-- | ---------------------------------
|   |                                  

| |                                                                         | Pension  |   | Other    |   | Total  |   | Total |  
| | ----------------------------------------------------------------------- | -------- | - | -------- | - | ------ | - | ----- | -
| |                                                                         | benefits |   | benefits |   | 2007   |   | 2006  |  
| |                                                                         | US$m     |   | US$m     |   | US$m   |   | US$m  |  
| |                                                                         |          |   |          |   |        |   |       |  
| | Change in plan assets:                                                  |          |   |          |   |        |   |       |  
| | Fair value of plan assets at
      the start of the year                | 6,031    |   | –        |   | 6,031  |   | 5,115 |  
| | Expected return on plan assets                                          | 550      |   | –        |   | 550    |   | 326   |  
| | Actuarial gain/(loss) on plan
      assets                              | (108     | ) | –        |   | (108   | ) | 338   |  
| | Contributions by plan participants                                      | 190      |   | –        |   | 190    |   | 113   |  
| | Contributions by employer                                               | 233      |   | 30       |   | 263    |   | 189   |  
| | Benefits paid                                                           | (542     | ) | (30      | ) | (572   | ) | (361  | )
| | Alcan acquisition                                                       | 9,617    |   | –        |   | 9,617  |   | –     |  
| | Inclusion/removal of arrangements                                       | –        |   | –        |   | –      |   | (41   | )
| | Currency exchange rate gain                                             | 416      |   | –        |   | 416    |   | 352   |  
| |                                                                         |          |   |          |   |        |   |       |  
| | Fair value of plan assets at
      the end of the year                  | 16,387   |   | –        |   | 16,387 |   | 6,031 |  
| |                                                                         |          |   |          |   |        |   |       |  
| | Actual return on plan assets                                            |          |   |          |   | 442    |   | 664   |  
| |                                                                         |          |   |          |   |        |   |       |  
| |                                                                         | 2007     |   | 2006     |   | 2005   |   | 2004  |  
| |                                                                         |          |   |          |   |        |   |       |  
| | Difference between
      the expected and actual return on plan assets:
| | Gain/(loss) (US$m)                                                      | (108     | ) | 338      |   | 223    |   | 387   |  
| | As a percentage of plan assets                                          | (1%      | ) | 6%       |   | 4%     |   | 8%    |  
| |                                                                         |          |   |          |   |        |   |       |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Post-retirement healthcare – sensitivity
    to changes in assumptions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | An increase of one per cent in the assumed
        medical cost trend rates would increase the aggregate of the current
        service cost and interest cost components of the post retirement healthcare
        expense by US$5 million
(2006 and 2005: US$6 million), and increase the benefit obligation for these
plans by US$89 million (2006: US$73 million; 2005: US$67 million).
A decrease of one per cent in the assumed medical cost trend rates would decrease
the aggregate of the current service cost and interest cost components of the
post retirement healthcare expense by US$5 million (2006 and 2005: US$5
million), and decrease the benefit obligation for these plans by US$77 million
(2006:
US$62 million; 2005: US$56 million).



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Notes to the 2007 Financial statements

|50 | RIO TINTO FINANCIAL INFORMATION BY
      BUSINESS UNIT
|-- | ------------------------------------------------------
|   | Years ended 31 December                               
|   |                                                       

| |                                                                    | Rio      |  | Gross sales
      revenue |   | EBITDA |   | Net earnings |       
| | ------------------------------------------------------------------ | -------- |  | ------------------------- | - | ------ | - | ------------ | ------
| |                                                                    | Tinto    |  | (a)                       |   | (b)    |   | (c)          |       
| |                                                                    | interest |  | 2007                      |   | 2006   |   | 2005         |       
| |                                                                    | %        |  | US$m                      |   | US$m   |   | US$m         |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Iron Ore                                                           |          |  |                           |   |        |   |              |       
| | Hamersley Iron (inc. HIsmelt®)                                     | 100.0    |  | 6,155                     |   | 4,416  |   | 3,387        |       
| | Robe River (d)                                                     | 53.0     |  | 1,640                     |   | 1,379  |   | 1,113        |       
| | Iron Ore Company of Canada                                         | 58.7     |  | 943                       |   | 1,051  |   | 954          |       
| | Rio Tinto Brasil                                                   | 100.0    |  | 61                        |   | 92     |   | 43           |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Product group operations                                           |          |  | 8,799                     |   | 6,938  |   | 5,497        |       
| | Evaluation projects/other                                          |          |  | –                         |   | –      |   | –            |       
| |                                                                    |          |  |                           |   |        |   |              |       
| |                                                                    |          |  | 8,799                     |   | 6,938  |   | 5,497        |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Energy                                                             |          |  |                           |   |        |   |              |       
| | Rio Tinto Energy America                                           | 100.0    |  | 1,560                     |   | 1,428  |   | 1,197        |       
| | Rio Tinto Coal Australia                                           | (e)      |  | 2,272                     |   | 2,344  |   | 2,302        |       
| | Rössing                                                            | 68.6     |  | 486                       |   | 229    |   | 163          |       
| | Energy Resources of Australia                                      | 68.4     |  | 303                       |   | 239    |   | 205          |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Product group operations                                           |          |  | 4,621                     |   | 4,240  |   | 3,867        |       
| | Evaluation projects/other                                          |          |  | –                         |   | –      |   | –            |       
| |                                                                    |          |  |                           |   |        |   |              |       
| |                                                                    |          |  | 4,621                     |   | 4,240  |   | 3,867        |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Aluminium                                                          |          |  |                           |   |        |   |              |       
| | Rio Tinto Aluminium                                                | (f)      |  | 3,511                     |   | 3,493  |   | 2,744        |       
| | Alcan                                                              |          |  | 3,798                     |   | –      |   | –            |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Product group operations                                           |          |  | 7,309                     |   | 3,493  |   | 2,744        |       
| | Evaluation projects/other                                          |          |  | –                         |   | –      |   | –            |       
| |                                                                    |          |  |                           |   |        |   |              |       
| |                                                                    |          |  | 7,309                     |   | 3,493  |   | 2,744        |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Copper                                                             |          |  |                           |   |        |   |              |       
| | Kennecott Utah Copper                                              | 100.0    |  | 3,539                     |   | 2,829  |   | 2,141        |       
| | Escondida                                                          | 30.0     |  | 3,103                     |   | 2,575  |   | 1,239        |       
| | Grasberg joint venture                                             | (g)      |  | 461                       |   | 373    |   | 657          |       
| | Palabora                                                           | 57.7     |  | 689                       |   | 588    |   | 371          |       
| | Kennecott Minerals                                                 | 100.0    |  | 338                       |   | 277    |   | 256          |       
| | Northparkes                                                        | 80.0     |  | 371                       |   | 437    |   | 175          |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Product group operations                                           |          |  | 8,501                     |   | 7,079  |   | 4,839        |       
| | Evaluation projects/other                                          |          |  | –                         |   | –      |   | –            |       
| |                                                                    |          |  |                           |   |        |   |              |       
| |                                                                    |          |  | 8,501                     |   | 7,079  |   | 4,839        |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Diamonds and
      Industrial Minerals                            
| |                                                                    |          |  |                           |   |        |   |              |       
| | Diamonds                                                           | (h)      |  | 1,020                     |   | 838    |   | 1,076        |       
| | Iron and Titanium                                                  |          |  | 1,673                     |   | 1,449  |   | 1,360        |       
| | Rio Tinto Minerals                                                 | (i)      |  | 1,228                     |   | 1,174  |   | 1,127        |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Product group operations                                           |          |  | 3,921                     |   | 3,461  |   | 3,563        |       
| | Evaluation projects/other                                          |          |  | –                         |   | –      |   | –            |       
| |                                                                    |          |  |                           |   |        |   |              |       
| |                                                                    |          |  | 3,921                     |   | 3,461  |   | 3,563        |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Other Operations                                                   |          |  | 367                       |   | 229    |   | 232          |       
| |                                                                    |          |  |                           |   |        |   |              |       
| |                                                                    |          |  | 33,518                    |   | 25,440 |   | 20,742       |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Other items                                                        |          |  |                           |   |        |   |              |       
| | Exploration and evaluation                                         |          |  |                           |   |        |   |              |       
| | Net interest                                                       |          |  |                           |   |        |   |              |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Underlying earnings                                                |          |  |                           |   |        |   |              |       
| | Items excluded from Underlying
      earnings                      |          |  |                           |   |        |   |              |       
| | Less: share of equity accounted
      units sales revenue          |          |  | (3,818                    | ) | (2,975 | ) | (1,709       | )     
| |                                                                    |          |  |                           |   |        |   |              |       
| | Total                                                              |          |  | 29,700                    |   | 22,465 |   | 19,033       |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Depreciation and amortisation
      in subsidiaries                |          |  |                           |   |        |   |              |       
| | Impairment reversal/(charges)                                      |          |  |                           |   |        |   |              |       
| | Depreciation and amortisation
      in equity accounted units      |          |  |                           |   |        |   |              |       
| | Taxation and finance items
      in equity accounted units         |          |  |                           |   |        |   |              |       
| |                                                                    |          |  |                           |   |        |   |              |       
| | Profit
        on ordinary activities before finance items and tax |          |  |                           |   |        |   |              | 10,155
| |                                                                    |          |  |                           |   |        |   |              |       



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Notes to the 2007 Financial statements

|50 | RIO TINTO FINANCIAL INFORMATION
          BY BUSINESS UNITcontinued
|-- | -------------------------------------------------------------------
|   | Years ended 31
        December                                    

| |                                        |                               |   |                                         |   |                            |   |           |  
| | -------------------------------------- | ----------------------------- | - | --------------------------------------- | - | -------------------------- | - | --------- | -
| |                                        | Capital
      expenditure (j) |   | Depreciation
      &
      amortisation |   | Operating assets
      (k) |   | Employees |  
| |                                        | 2007                          |   | 2006                                    |   | 2005                       |   | 2007      |  
| |                                        | US$m                          |   | US$m                                    |   | US$m                       |   | US$m      |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Iron Ore                               |                               |   |                                         |   |                            |   |           |  
| | Hamersley (inc. HIsmelt®)              | 1,597                         |   | 1,700                                   |   | 977                        |   | 352       |  
| | Robe River                             | 241                           |   | 104                                     |   | 165                        |   | 104       |  
| | Iron Ore Company of Canada             | 163                           |   | 151                                     |   | 98                         |   | 78        |  
| | Rio Tinto Brasil                       | 30                            |   | 18                                      |   | 36                         |   | 9         |  
| | Other                                  | 34                            |   | 8                                       |   | 6                          |   | 3         |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| |                                        | 2,065                         |   | 1,981                                   |   | 1,282                      |   | 546       |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Energy                                 |                               |   |                                         |   |                            |   |           |  
| | Rio Tinto Energy America               | 226                           |   | 262                                     |   | 211                        |   | 131       |  
| | Rio Tinto Coal Australia               | 226                           |   | 251                                     |   | 175                        |   | 165       |  
| | Rössing                                | 57                            |   | 38                                      |   | 3                          |   | 13        |  
| | Energy Resources of Australia          | 80                            |   | 31                                      |   | 34                         |   | 50        |  
| | Other                                  | –                             |   | –                                       |   | –                          |   | 3         |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| |                                        | 589                           |   | 582                                     |   | 423                        |   | 362       |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Aluminium                              |                               |   |                                         |   |                            |   |           |  
| | Rio Tinto Aluminium                    | 295                           |   | 236                                     |   | 242                        |   | 303       |  
| | Alcan                                  | 317                           |   | –                                       |   | –                          |   | 315       |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| |                                        | 612                           |   | 236                                     |   | 242                        |   | 618       |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Copper                                 |                               |   |                                         |   |                            |   |           |  
| | Kennecott Utah Copper                  | 282                           |   | 295                                     |   | 171                        |   | 251       |  
| | Escondida                              | 170                           |   | 155                                     |   | 229                        |   | 98        |  
| | Grasberg joint venture                 | 76                            |   | 45                                      |   | 49                         |   | 24        |  
| | Palabora                               | 27                            |   | 18                                      |   | 17                         |   | 41        |  
| | Kennecott Minerals                     | 84                            |   | 78                                      |   | 45                         |   | 24        |  
| | Northparkes                            | 55                            |   | 16                                      |   | 16                         |   | 22        |  
| | Other                                  | 22                            |   | 57                                      |   | 15                         |   | 1         |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| |                                        | 716                           |   | 664                                     |   | 542                        |   | 461       |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Diamonds and
      Industrial Minerals
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Diamonds                               | 525                           |   | 257                                     |   | 208                        |   | 181       |  
| | Iron and Titanium                      | 494                           |   | 252                                     |   | 164                        |   | 119       |  
| | Rio Tinto Minerals                     | 71                            |   | 108                                     |   | 97                         |   | 82        |  
| | Other                                  | 17                            |   | –                                       |   | 3                          |   | –         |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| |                                        | 1,107                         |   | 617                                     |   | 472                        |   | 382       |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Other Operations                       | 37                            |   | 23                                      |   | 25                         |   | 2         |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| |                                        | 5,126                         |   | 4,103                                   |   | 2,986                      |   | 2,371     |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Net assets held for sale (l)           | –                             |   | –                                       |   | –                          |   | –         |  
| | Other items                            | 144                           |   | 174                                     |   | 176                        |   | 54        |  
| | Less: equity accounted units           | (302                          | ) | (289                                    | ) | (382                       | ) | (310      | )
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Total                                  | 4,968                         |   | 3,988                                   |   | 2,780                      |   | 2,115     |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Less: net debt                         |                               |   |                                         |   |                            |   |           |  
| |                                        |                               |   |                                         |   |                            |   |           |  
| | Rio Tinto shareholders’
      equity   |                               |   |                                         |   |                            |   |           |  
| |                                        |                               |   |                                         |   |                            |   |           |  



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Notes to the 2007 Financial statements

|50  | RIO TINTO FINANCIAL INFORMATION BY BUSINESS UNITcontinued                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Years ended 31 December                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Business units have been classified according
      to the Group’s management structure. 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.                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The following changes have been made to
      the way Rio Tinto presents its financial information by business unit.
    Full year 2006 results have been restated accordingly.                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | During 2007, Industrial Minerals and Diamonds
    were combined to form the Diamonds and Industrial Minerals Product group.                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Project evaluation and other costs specifically
      attributable to Product groups are now reported as part of Product group
      earnings. Previously, these were reported centrally in ‘Exploration and
    evaluation’ and ‘Other items’, respectively.                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Capital expenditure by Product group now
    includes capitalised evaluation costs.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(a) | Gross sales revenue includes 100 per cent of subsidiaries’ sales revenue and the Group’s share of the sales revenue of equity accounted units.                                                                                                                                                                                                                                                                                                                                                                            
|   
|(b) | EBITDA of subsidiaries and the Group’s
      share of EBITDA relating to equity accounted units represents profit before:
      tax, net finance items, depreciation and amortisation.                                                                                                                                                                                                                                                                                                                                    
|   
|(c) | Net earnings represent profit after tax for the year attributable to the Rio Tinto Group. Earnings of subsidiaries are stated before finance items but after the amortisation of the discount related to provisions.
Earnings attributable to equity accounted units include interest charges and amortisation of discount. Earnings attributed to business units exclude amounts that are excluded in arriving at Underlying earnings.                                                                                   
|   
|(d) | The Group holds 65 per cent of Robe River Iron Associates, of which 30 per cent is held through a 60 per cent owned subsidiary. The Group’s net beneficial interest is therefore 53 per cent, net of amounts attributable
to outside equity shareholders.                                                                                                                                                                                                                                                                 
|   
|(e) | Includes Rio Tinto’s 75.7 per cent interest in Coal & Allied, which is managed by Rio Tinto Coal Australia, a 100 per cent subsidiary of Rio Tinto.                                                                                                                                                                                                                                                                                                                                                                       
|   
|(f) | Includes Rio Tinto’s interests in
      Rio Tinto Aluminium (100 per cent) and Anglesey Aluminium (51 per cent).                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(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) | Diamonds includes Rio Tinto’s interests in Argyle (100 per cent), Diavik (60 per cent) and Murowa (77.8 per cent).                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(i) | Includes Rio Tinto’s interests in Rio Tinto Borax (100 per cent), Dampier Salt (68.4 per cent) and Luzenac Talc (100 per cent).                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(j) | Capital expenditure comprises the net cash outflow on purchases less disposals of property, plant and equipment, capitalised evaluation costs and purchases less disposals of other intangible assets. The details
provided include 100 per cent of subsidiaries’ capital expenditure and Rio Tinto’s share of the capital expenditure of equity accounted units. Amounts relating to equity accounted units not specifically funded by Rio Tinto are deducted before
arriving at total capital expenditure for the Group.
|   
|(k) | 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 equity accounted units, Rio Tinto’s net investment is shown.                                                                                                                                                                                                                   
|   
|(l) | On this line, operating assets deal with
      Alcan Packaging and other assets held for sale. The remaining data on this
      line relates only to Alcan Packaging.                                                                                                                                                                                                                                                                                                                                                     



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| | Australian
      Corporations Act – Summary of ASIC relief                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Pursuant to section 340 of
      the Corporations Act 2001 (“Corporations Act”), the Australian
      Securities and Investments Commission issued an order dated 27 January 2006
      (as amended on 22 December 2006) that granted relief to Rio Tinto Limited
      from certain requirements of the Corporations Act in relation to the Company’s
      financial statements and associated reports. The order essentially continues
      the relief that has applied to Rio Tinto Limited since the formation of
      the Group’s Dual Listed Companies (“DLC”) structure in
      1995. The order applied to Rio Tinto Limited’s financial reporting
      obligations for financial years and half-years ending between 31 December
      2005 and 31 December 2009 (inclusive).                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | In essence, instead of being
      required under the Corporations Act to prepare consolidated financial statements
      covering only itself and its controlled entities, the order allows Rio Tinto
      Limited to prepare consolidated financial statements in which it, Rio Tinto
      plc and their respective controlled entities are treated as a single economic
      entity. In addition, those consolidated financial statements are to be prepared:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Those consolidated financial
      statements must also be audited in accordance with relevant United Kingdom
      requirements. Rio Tinto Limited must also prepare a directors’ report
      which satisfies the content requirements of the Corporations Act (applied
      on the basis that the consolidated entity for those purposes is the Group),
      except that the order allows Rio Tinto Limited to prepare a separate Remuneration
      report that is merely cross-referenced in the directors’ report, instead
      of including in the Directors’ report the Remuneration report otherwise
      required by the Corporations Act. The separate Remuneration report (see
      pages 120 to 133) must include all the information required to be included
      in a remuneration report under the Corporations Act, as well as the information
      required by AIFRS (namely, AASB 124 ‘Related Party Disclosures’)
      dealing with compensation of directors and executives who are “key
      management personnel”, and certain other disclosures.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Rio Tinto Limited is also required
      to comply generally with the lodgement and distribution requirements of
      the Corporations Act (including timing requirements) in relation to those
      consolidated financial statements (including any concise financial statements),
      the auditor’s report and the directors’ report. The separate
      Remuneration report is also required to be lodged with the Australian Securities
      and Investments Commission at the same time as the consolidated financial
      statements, and Rio Tinto Limited must not distribute or make available
      the Remuneration report without the consolidated financial statements and
      directors’ report. At the Company’s AGM, it is required to allow
      shareholders to vote on a non binding resolution to adopt the Remuneration
      report, on the same basis as would otherwise be required for a Remuneration
      report under the Corporations Act.                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Rio Tinto Limited is not required
      to prepare separate consolidated financial statements solely for it and
      its controlled entities. Rio Tinto Limited is required to prepare and lodge
      parent entity financial statements for itself in respect of each relevant
      financial year, in accordance with the principles and requirements of AIFRS
      (other than in respect of key management personnel compensation disclosures
      under AASB 124, which as noted above are instead incorporated into the separate
      Remuneration report), and to have those statements audited. Those financial
      statements are not required to be laid before the Company’s AGM or
      distributed to shareholders as a matter of course.                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | However, Rio Tinto Limited
      must:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | –                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The parent entity financial
      statements are available for download from the Rio Tinto website at www.riotinto.com.
      Shareholders may also request a copy free of charge by contacting the Rio
      Tinto Limited company secretary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



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| | Report of Independent
    Registered Public Accounting Firms                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | To the Boards of Directors and Shareholders
    of Rio Tinto plc and Rio Tinto Limited:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | In our opinion, the accompanying consolidated
          balance sheets and the related consolidated income statements, consolidated
          statements of cash flows and consolidated statements of recognised
          income and expense present fairly, in all material respects, the financial
          position of the Rio Tinto Group at 31 December 2007 and 31 December
          2006, and the results of its operations and its cash flows for each
          of the three years in the period ended 31 December 2007 in conformity
          with International Financial Reporting Standards as issued by the International
          Accounting Standards Board and in conformity with International Financial
          Reporting Standards as adopted by the European Union. Also in our opinion,
          the Rio Tinto Group maintained, in all material respects, effective
          internal control over financial reporting as of 31 December 2007, based
          on criteria established in ‘Internal Control – Integrated
          Framework’ issued by the Committee of Sponsoring Organizations
          of the Treadway Commission (COSO). The Rio Tinto Group’s management
          is responsible for these financial statements, for maintaining effective
          internal control over financial reporting and for its assessment of
          the effectiveness of internal control over financial reporting, included
          in “Management’s Report on Internal Control over Financial
          Reporting” as set out in item 15 on page 169. Our responsibility
          is to express opinions on these financial statements and on Rio Tinto
          Group’s internal control over financial reporting based on our
          integrated audits (which were integrated audits in 2007 and 2006).
          We conducted our audits in accordance with the standards of the Public
          Company Accounting Oversight Board (United States) and International
          Standards on Auditing (UK and Ireland). Those standards require that
          we plan and perform the audits to obtain reasonable assurance about
          whether the financial statements are free of material misstatement
          and whether effective internal control over financial reporting was
          maintained in all material respects. Our audits of the financial statements
          included examining, on a test basis, evidence supporting the amounts
          and disclosures in the financial statements, assessing the accounting
          principles used and significant estimates made by management, and evaluating
          the overall financial statement presentation. Our audit of internal
          control over financial reporting included obtaining an understanding
          of internal control over financial reporting, assessing the risk that
          a material weakness exists, and testing and evaluating the design and
          operating effectiveness of internal control based on the assessed risk.
          Our audits also included performing such other procedures as we considered
          necessary in the circumstances. We believe that our audits provide
          a reasonable basis for our opinions.
      A companys internal control over
          financial reporting is a process designed to provide reasonable assurance
          regarding the reliability of financial reporting and the preparation
          of financial statements for external purposes in accordance with generally
          accepted accounting principles. A companys internal control over
          financial reporting includes those policies and procedures that (i)
          pertain to the maintenance of records that, in reasonable detail, accurately
          and fairly reflect the transactions and dispositions of the assets
          of the company; (ii) provide reasonable assurance that transactions
          are recorded as necessary to permit preparation of financial statements
          in accordance with generally accepted accounting principles, and that
          receipts and expenditures of the company are being made only in accordance
          with authorisations of management and directors of the company; and
          (iii) provide reasonable assurance regarding prevention or timely detection
          of unauthorised acquisition, use, or disposition of the companys
          assets that could have a material effect on the financial statements.
      Because of its inherent limitations,
          internal control over financial reporting may not prevent or detect
          misstatements. Also, projections of any evaluation of effectiveness
          to future periods are subject to the risk that controls may become
          inadequate because of changes in conditions, or that the degree of
    compliance with the policies or procedures may deteriorate.



| | PricewaterhouseCoopers LLP               |  | PricewaterhouseCoopers                  
| | ---------------------------------------- |  | ----------------------------------------
| | Chartered Accountants                    |  | Chartered Accountants                   
| | London, United Kingdom                   |  | Brisbane, Australia                     
| | 31 March 2008                            |  | 31 March 2008                           
| | In respect of the Board of Directors and |  | In respect of the Board of Directors and
| | Shareholders of Rio Tinto plc            |  | Shareholders of Rio Tinto Ltd           



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Minera Escondida LimitadaFinancial
Statements
June 30, 2007, 2006 and 2005
(With Independent Auditors Report
Thereon)





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Minera Escondida LimitataContents



|1. |  | Independent Auditors Report  | A-76
|-- |  | ----------------------------- | ----
|2. |  | Balance Sheets                | A-77
|3. |  | Statements of Income          | A-79
|4. |  | Statements of Equity          | A-80
|5. |  | Statements of Cash Flows      | A-81
|6. |  | Notes to Financial Statements | A-83

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Independent Auditors Report



The OwnersMinera Escondida Limitada:

We have audited the accompanying balance sheets of Minera Escondida Limitada as of June 30, 2007 and 2006, and the related statements of income, equity, and cash flows for the years ended June 30, 2007, 2006 and 2005.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Minera Escondida Limitada as of June 30, 2007 and 2006, and the results of its operations
and its cash flows for the years ended June 30, 2007, 2006 and 2005 in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG Auditores Consultores Ltda.

Santiago, ChileSeptember 12, 2007



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Minera Escondida Limitada

Balance Sheets
June 30, 2007 and 2006
(in thousands of USD)

|                                                  | 2007      |  | 2006      | 
|------------------------------------------------- | --------- |  | --------- | 
|                                                  |           |  |           | 
|Assets                                            |           |  |           | 
|                                                  |           |  |           | 
|Current assets:                                   |           |  |           | 
|Cash and cash equivalents                         | 127,299   |  | 12,400    | 
|Trade accounts receivable                         | 1,729,031 |  | 1,450,018 | 
|Due from related companies                        | 25,907    |  | 28,544    | 
|Other receivables, including employee receivables | 17,280    |  | 7,125     | 
|Production inventories                            | 178,485   |  | 107,129   | 
|Supplies and spare parts, net                     | 79,594    |  | 50,601    | 
|Other current assets                              | 187,452   |  | 152,758   | 
|                                                  |           |  |           | 
|Total current assets                              | 2,345,048 |  | 1,808,575 | 
|                                                  |           |  |           | 
|Property, plant and mine development, net         | 3,620,235 |  | 3,378,681 | 
|                                                  |           |  |           | 
|Other assets:                                     |           |  |           | 
|Intangible assets, net                            | 53,371    |  | 56,969    | 
|Other assets, net                                 | 166,580   |  | 134,705   | 
|                                                  |           |  |           | 
|Total other assets                                | 219,951   |  | 191,674   | 
|                                                  |           |  |           | 
|Total assets                                      | 6,185,234 |  | 5,378,930 | 
|                                                  |           |  |           | 
|(Continued)                                       |           |  |           | 



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Minera Escondida Limitada

Balance Sheets
June 30, 2007 and 2006
(in thousands of USD)

|                                                | 2007      |  | 2006      | 
|----------------------------------------------- | --------- |  | --------- | 
|                                                |           |  |           | 
|Liabilities and Owners Equity                  |           |  |           | 
|                                                |           |  |           | 
|Current liabilities:                            |           |  |           | 
|Short-term debt                                 | –         |  | 190,000   | 
|Short-term portion of senior unsecured debt     | 85,000    |  | 85,000    | 
|Short-term portion of subordinated owners debt | 48,000    |  | 48,000    | 
|Short-term portion of bonds                     | 19,336    |  | 40,000    | 
|Accounts payable to suppliers                   | 147,502   |  | 152,812   | 
|Due to related companies                        | 40,295    |  | 29,518    | 
|Accrued liabilities and withholdings            | 174,243   |  | 87,015    | 
|Sundry creditors                                | 4,392     |  | 4,061     | 
|Income taxes payable                            | 65,873    |  | 255,088   | 
|Deferred income taxes                           | 40,083    |  | 77,303    | 
|Interest payable                                | 23,089    |  | 18,951    | 
|Financial liabilities                           | 175,955   |  | 187,473   | 
|                                                |           |  |           | 
|Total current liabilities                       | 823,768   |  | 1,175,221 | 
|                                                |           |  |           | 
|Long-term liabilities:                          |           |  |           | 
|Senior unsecured debt                           | 892,500   |  | 827,500   | 
|Subordinated owners debt                       | 314,000   |  | 362,000   | 
|Bonds                                           | –         |  | 18,578    | 
|Sundry creditors                                | 51,136    |  | 55,527    | 
|Accrued employee severance indemnities          | 60,161    |  | 56,360    | 
|Deferred income taxes                           | 236,654   |  | 103,331   | 
|Accruals and reclamation reserve                | 131,558   |  | 96,668    | 
|                                                |           |  |           | 
|Total long-term liabilities                     | 1,686,009 |  | 1,519,964 | 
|                                                |           |  |           | 
|Owners equity:                                 |           |  |           | 
|Paid-in capital                                 | 647,902   |  | 597,902   | 
|Retained earnings                               | 3,027,555 |  | 2,085,843 | 
|                                                |           |  |           | 
|Total owners equity                            | 3,675,457 |  | 2,683,745 | 
|                                                |           |  |           | 
|Total liabilities and owners equity            | 6,185,234 |  | 5,378,930 | 
|                                                |           |  |           | 

Accompanying notes from 1 to 23 are an integral part of these financial statements.



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Minera Escondida Limitada

Statements of Income
June
30, 2007, 2006 and 2005
(in thousands of USD)

|                                          | 2007       |   | 2006       |   | 2005      |  
|----------------------------------------- | ---------- | - | ---------- | - | --------- | -
|                                          |            |   |            |   |           |  
|Operating revenues:                       |            |   |            |   |           |  
|Sales                                     | 9,843,344  |   | 8,073,540  |   | 3,887,684 |  
|Refining and treatment charges            | (626,715   | ) | (762,021   | ) | (390,654  | )
|Concentrate and cathode shipping charges  | (196,036   | ) | (149,716   | ) | (117,264  | )
|                                          |            |   |            |   |           |  
|Net sales                                 | 9,020,593  |   | 7,161,803  |   | 3,379,766 |  
|                                          |            |   |            |   |           |  
|Operating costs and expenses:             |            |   |            |   |           |  
|Cost of products sold                     | (1,408,227 | ) | (1,179,954 | ) | (997,519  | )
|Sales commissions                         | (27,621    | ) | (14,209    | ) | (8,703    | )
|                                          |            |   |            |   |           |  
|Net operating income                      | 7,584,745  |   | 5,967,640  |   | 2,373,544 |  
|                                          |            |   |            |   |           |  
|                                          |            |   |            |   |           |  
|Non-operating income (expense):           |            |   |            |   |           |  
|Interest income                           | 11,748     |   | 10,500     |   | 5,245     |  
|Interest expense                          | (113,792   | ) | (57,391    | ) | (68,550   | )
|Realized fair value change  derivative   | (89,280    | ) | (188,086   | ) | –         |  
|Unrealized fair value change  derivative | 61,801     |   | (95,746    | ) | –         |  
|Exchange loss, net                        | (6,635     | ) | (14,270    | ) | (16,063   | )
|Miscellaneous expenses, net               | (69,399    | ) | (54,588    | ) | (48,089   | )
|                                          |            |   |            |   |           |  
|Non-operating expense                     | (205,557   | ) | (399,581   | ) | (127,457  | )
|                                          |            |   |            |   |           |  
|Income before income taxes                | 7,379,188  |   | 5,568,059  |   | 2,246,087 |  
|Income taxes                              | (1,376,483 | ) | (1,027,534 | ) | (385,101  | )
|                                          |            |   |            |   |           |  
|Net income for the year                   | 6,002,705  |   | 4,540,525  |   | 1,860,986 |  
|                                          |            |   |            |   |           |  

Accompanying notes from 1 to 23 are an integral part of these financial statements.



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Minera Escondida Limitada

Statements of Equity
June
30, 2007, 2006 and 2005
(in thousands of USD)

|                                    |         |  |            |   | Total        |  
|----------------------------------- | ------- |  | ---------- | - | ------------ | -
|                                    |         |  | Retained   |   | stockholders |  
|                                    | Capital |  | earnings   |   | equity       |  
|                                    |         |  |            |   |              |  
|Balance at July 1, 2004             | 531,202 |  | 321,191    |   | 852,393      |  
|Net income                          | –       |  | 1,860,986  |   | 1,860,986    |  
|Capitalization of retained earnings | 16,700  |  | (16,700    | ) | –            |  
|Dividends declared                  | –       |  | (1,070,159 | ) | (1,070,159   | )
|                                    |         |  |            |   |              |  
|Balance at July 30, 2005            | 547,902 |  | 1,095,318  |   | 1,643,220    |  
|Net income                          | –       |  | 4,540,525  |   | 4,540,525    |  
|Capitalization of retained earnings | 50,000  |  | (50,000    | ) | –            |  
|Dividends declared                  | –       |  | (3,500,000 | ) | (3,500,000   | )
|                                    |         |  |            |   |              |  
|Balance at June 30, 2006            | 597,902 |  | 2,085,843  |   | 2,683,745    |  
|Net income                          | –       |  | 6,002,705  |   | 6,002,705    |  
|Capitalization of retained earnings | 50,000  |  | (50,000    | ) | –            |  
|Dividends declared                  | –       |  | (5,010,993 | ) | (5,010,993   | )
|                                    |         |  |            |   |              |  
|Balance at June 30, 2007            | 647,902 |  | 3,027,555  |   | 3,675,457    |  

Accompanying notes from 1 to 23 are an integral part of these financial statements.



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Minera Escondida Limitada

Statements of Cash Flows
June 30, 2007, 2006 and
2005(in thousands of USD)

|                                                | 2007       |   | 2006       |   | 2005       |  
|----------------------------------------------- | ---------- | - | ---------- | - | ---------- | -
|                                                |            |   |            |   |            |  
|Cash flows from operating activities:           |            |   |            |   |            |  
|Cash received from customers                    | 8,587,229  |   | 6,248,350  |   | 3,271,382  |  
|Cash paid to suppliers and employees            | (1,113,194 | ) | (1,048,252 | ) | (932,600   | )
|Interest received                               | 11,748     |   | 10,500     |   | 5,245      |  
|Other Income                                    | 14,595     |   | 6,725      |   | 4,542      |  
|Interest paid                                   | (103,385   | ) | (92,615    | ) | (73,362    | )
|Income taxes paid                               | (1,470,662 | ) | (780,212   | ) | (367,130   | )
|Fair value change  derivative                  | (89,280    | ) | (188,086   | ) | –          |  
|Exploration activities                          | (18,764    | ) | (9,410     | ) | (10,369    | )
|Other expenses paid                             | (30,541    | ) | (26,294    | ) | (28,300    | )
|                                                |            |   |            |   |            |  
|Net cash flows provided by operating activities | 5,787,746  |   | 4,120,706  |   | 1,869,408  |  
|                                                |            |   |            |   |            |  
|Cash flow from investing activities:            |            |   |            |   |            |  
|Proceeds from sale of equipment                 | 939        |   | 1,250      |   | 2,071      |  
|Purchase of property, plant and equipment       | (445,737   | ) | (650,478   | ) | (591,313   | )
|                                                |            |   |            |   |            |  
|Net cash flows used in investing activities     | (444,798   | ) | (649,228   | ) | (589,242   | )
|                                                |            |   |            |   |            |  
|Cash flow from financing activities:            |            |   |            |   |            |  
|Borrowing from banks and financial institutions | 150,000    |   | 190,000    |   | 229,500    |  
|Dividends paid                                  | (5,010,993 | ) | (3,500,000 | ) | (1,070,159 | )
|Principal payments on long-term debt            | (279,056   | ) | (221,744   | ) | (365,500   | )
|Principal payments on bonds                     | (40,000    | ) | (40,000    | ) | (40,000    | )
|Repayments of loans from related parties        | (48,000    | ) | (40,500    | ) | (33,000    | )
|                                                |            |   |            |   |            |  
|Net cash flows used in financing activities     | (5,228,049 | ) | (3,612,244 | ) | (1,279,159 | )
|                                                |            |   |            |   |            |  
|Net cash flows for the year                     | 114,899    |   | (140,766   | ) | 1,007      |  
|                                                |            |   |            |   |            |  
|Cash and cash equivalents at beginning of year  | 12,400     |   | 153,166    |   | 152,159    |  
|                                                |            |   |            |   |            |  
|Cash and cash equivalents at end of year        | 127,299    |   | 12,400     |   | 153,166    |  
|                                                |            |   |            |   |            |  

(Continued)



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Minera Escondida Limitada

Statements of Cash Flows
June 30, 2007, 2006 and
2005
(in thousands of USD)

|                                                                                      | 2007      |   | 2006      |   | 2005      |  
|------------------------------------------------------------------------------------- | --------- | - | --------- | - | --------- | -
|                                                                                      |           |   |           |   |           |  
|Reconciliation
      of net income to net cash flows provided by operating activities
|                                                                                      |           |   |           |   |           |  
|Net income for the year                                                               | 6,002,705 |   | 4,540,525 |   | 1,860,986 |  
|                                                                                      |           |   |           |   |           |  
|Result on sale of assets:                                                             |           |   |           |   |           |  
|(Gain)/Loss from sale of equipment                                                    | (939      | ) | (1,250    | ) | 671       |  
|                                                                                      |           |   |           |   |           |  
|Debits/(credits) to net income
      not representing cash flows:                     |           |   |           |   |           |  
|Depreciation and amortization                                                         | 242,671   |   | 280,324   |   | 209,040   |  
|Net foreign exchange loss                                                             | 6,635     |   | 14,270    |   | 16,063    |  
|Deferred income taxes                                                                 | 96,104    |   | 83,070    |   | 28,663    |  
|                                                                                      |           |   |           |   |           |  
|(Increase)/decrease in current
      assets:                                          |           |   |           |   |           |  
|Trade accounts receivable                                                             | (279,013  | ) | (903,183  | ) | (177,228  | )
|Due from related companies                                                            | 2,637     |   | (3,081    | ) | (25,142   | )
|Other receivables                                                                     | (10,155   | ) | (34,707   | ) | (739      | )
|Production inventories                                                                | (74,125   | ) | (36,782   | ) | (12,226   | )
|Supplies and spare parts, net                                                         | (48,322   | ) | (26,798   | ) | (3,949    | )
|Other current assets                                                                  | (40,873   | ) | (84,539   | ) | 9,918     |  
|                                                                                      |           |   |           |   |           |  
|Increase/(decrease) in current
      liabilities:                                     |           |   |           |   |           |  
|Accounts payable to suppliers                                                         | (5,310    | ) | (47,939   | ) | (33,950   | )
|Due to related companies                                                              | 10,777    |   | 5,499     |   | 12,630    |  
|Accrued liabilities and withholdings                                                  | 91,029    |   | 10,535    |   | 2,672     |  
|Sundry creditors                                                                      | (4,060    | ) | 309       |   | 170       |  
|Income taxes payable                                                                  | (189,215  | ) | 143,766   |   | (13,079   | )
|Financial liabilities                                                                 | (11,518   | ) | 187,473   |   | –         |  
|Other                                                                                 | (1,282    | ) | (6,786    | ) | (5,092    | )
|                                                                                      |           |   |           |   |           |  
|Net cash flows from operating
      activities                                        | 5,787,746 |   | 4,120,706 |   | 1,869,408 |  
|                                                                                      |           |   |           |   |           |  

Accompanying notes from 1 to 23 are an integral part of these financial statements.



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Minera Escondida Limitada

Notes to Financial StatementsJune 30, 2007, 2006 and 2005(in thousands of USD)

|1 | DESCRIPTION OF BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  | Minera Escondida Limitada
            (the ‘Company’ or‘Escondida’) is a mining company engaged in the
            exploration, extraction, processing, and marketing of mineral resources.
            The Company is currently exploiting the Escondida copper ore body
            located in the Second Region of the Republic of Chile, 170 kilometers
            southeast of the city of Antofagasta at an altitude of 3,100 meters
            above sea level. The Company produces copper concentrates and copper
            cathodes through an open-pit mining operation and cathode treatment
            plants at the mine site. The concentrate also includes gold and silver.
            The concentrate is transported by pipeline to the port facility in
            Coloso near Antofagasta where it is filtered and shipped to the customers.
            The copper cathodes are produced at an Oxide Plant, a heap leaching
            and SX/EW facility, located at the mine site. The copper cathodes
            are transported by rail to the port of Antofagasta for shipment to
      customers.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  | The Company, at the present operated
          by BHP Billiton, was formed by public deed on August 14, 1985 as a
      partnership. As of June 30, 2007 and 2006, the Owners are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Percentage | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | of Equity  | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |            | 
| | BHP Escondida Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 57.5       | 
| | Rio Tinto Escondida Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 30.0       | 
| | JECO Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 10.0       | 
| | International Finance Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2.5        | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |            | 
| | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 100.0      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |            | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |            | 
| | The company has completed several
      expansions. The Phase I expansion was completed in 1993, Phase II in 1994
      and Phase III in 1998. On December 1, 1998, Escondida commissioned its
      Oxide Leach Plant, a heap leaching operation and SX/EW plant. In January
      1999, the Phase III.5 expansion was completed. The Phase IV expansion was
      completed in October 2002. On October 1, 2002, Minera Escondida Limitada
      merged with its related company Sociedad Contractual Minera Escondida,
      which until that date, held the mining rights over the Escondida copper
    ore body.

(Continued)



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Minera Escondida Limitada

Notes to Financial StatementsJune 30, 2007, 2006 and 2005(in thousands of USD)

|2   | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    AND PRACTICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(a) | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The Company maintains accounting records in United States dollars,
the Companys functional currency, as authorized by the Companys Foreign Investment Contract with the Chilean government. Transactions in other currencies are recorded at actual rates of the transaction date. Year-end balances in Chilean
pesos and other currencies are translated at the applicable closing exchange rates.                                                                                                                                                                                                                                                                                                                                                                              
|   
|(b) | Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    | Cash equivalents of $126,069 and $12,077 at June 30, 2007 and 2006, respectively, consist of short term investments with an initial term of less than one month in financial instruments issued by Commercial
Banks and Central Bank of Chile Securities. For the purpose of the statement of cash flows, the Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(c) | Trade Accounts Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | The accounts receivable balances at June 30, 2007 and 2006 include provisional invoices issued for copper concentrate and copper cathode shipments. Such invoices are based on the Companys weights and assays,
which are subject to review and final agreement by the customers. Under the terms of the sales contracts, the final prices to be received will also depend on the prices fixed for copper by independent metal exchanges, including the London Metal
Exchange, during the future quotation periods applicable to each delivery. At June 30, 2007 and 2006, the sales under provisional invoicing arrangements have been valued based on forward price. Refining, treatment and shipping charges are netted
against operating revenues in accordance with industry practices. The Company has not recorded an allowance for doubtful accounts, as management considers all accounts and notes receivable are collectible.
|   
|(d) | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Minerals in process (including stockpile inventory), copper concentrate and copper cathodes are valued at the lower of cost or market value. Mining and milling costs and non cash costs are included in the value of the
inventories, as well as the allocated costs of central maintenance and engineering and the on-site general and administrative costs including all essential infrastructure support. Materials and supplies are valued at the lower of average cost and
estimated net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                                         

(Continued)



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006 and 2005
(in thousands of USD)

|(e)         | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | The Company accounts for derivatives
      and hedging activities in accordance with FASB Statement No. 133, Accounting
      for  Derivative Instruments and Certain Hedging Activities as
      amended, which requires that all derivate instruments be recorded on
      the balance sheet at their respective fair value. Derivatives, including
      those embedded in other contractual arrangements but separated for accounting
      purposes because they are not clearly and closely related to the host contract,
      are initially recognized at fair value on the date the contract is entered
      into and are subsequently remeasured at their fair value. The resulting
      gain or loss on remeasurement is recognized in the income statement. The
      measurement of fair value is based on quoted market prices. Where no price
      information is available from a quoted market source, alternative market
      mechanisms or recent comparable transactions, fair value is estimated based
      on the Companys views on relevant prices.
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | The Companys financial instrument
        policy is designed to achieve sales at the average annual LME price shifted
        forward by one month and three months, for cathodes and concentrates
        respectively, for all tonnes of copper shipped in a given calendar year.
        In the case where copper is sold with a different quotation period than
        our targeted standard price or shipments are not distributed evenly over
    the year, paper adjustments will be made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Financial instruments in revenue  see
        note 2(p). Financial instruments in treatment charges  see note
    23.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | All derivatives are marked to market
    at year end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(f)         | Property, Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Property, plant and equipment are stated
        at cost. Cost includes capitalized interest incurred during the construction
    and development period and during subsequent expansion periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Plant and equipment with a useful life
        of less than the life of the mine are depreciated on a straight-line
        basis over the respective useful lives, ranging from 3 to 11 years. The
        remaining items of plant and equipment are depreciated on a units-of-production
    basis over the life of the proven and probable copper reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Mine development is depreciated on
        a units-of-production basis over the life of the proven and probable
    copper reserves. Land is not subject to depreciation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Changes in estimates are accounted
        for over the estimated remaining economic life or the remaining commercial
    reserves of the mine as applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Total depreciation and amortization
        for the years ended June 30, 2007, 2006 and 2005 is included as a cost
    of the production of inventories.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | Expenditures for replacements and improvements
        are capitalized when the assets standard of performance is significantly
        enhanced or the expenditure represents a replacement of a component of
    an overall tangible fixed asset which has been separately depreciated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(g)         | Mining Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | At June 30, 2007 and 2006,
        the Company has recognized certain costs relating to mining property
    as property, plant and equipment. These include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|i)          | Costs incurred in delineating and
        developing the Escondida copper ore body and neighboring mineral areas
        of interest (in areas which have been subject to feasibility studies),
        together with the cost of drilling programs aimed at determining the
        extent of the mineral body, obtaining other technical data, and related
    direct expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|ii)         | Other expenditure incurred in the pre-operating
    stage of the project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(Continued)



A-85

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006 and 2005
(in thousands of USD)



|(h)         | Exploration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Exploration expenditures incurred in
        search of mineral deposits and the determination of the commercial viability
        of such deposits are charged against income as incurred until project
    feasibility is attained, from which time onward such costs are capitalized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | At June 30, 2007 and 2006 there were
    no capitalized exploration expenditures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(i)         | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | This corresponds to the fair value
        of the water rights at the date of acquisition. This asset is amortized
        on a units-of-production basis over the life of proven and probable copper
    reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(j)         | Other Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Other assets consist of medium-grade
        ore stockpiles, deferred borrowing expenses, spare parts and other minor
    assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | The medium-grade ore stockpiled for future
        use
is valued at the lower of average production cost or market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Borrowing expenses corresponding to
        the issuance of debt are capitalized and amortized based on the interest
    method over the period of the debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Spare parts are assets that will not
        be consumed within one year from balance sheet date, and are stated at
    cost and net of a provision for inventory obsolescence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(k)         | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Pursuant to its Foreign Investment
        Agreement with the Chilean government, the Company has opted to pay income
        taxes based on the generally applicable rate in effect, instead of the
        fixed rate set forth in such agreement. As a result, current income taxes
        are calculated in accordance with
existing Chilean tax legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Income taxes are accounted for under
        the asset and liability method. Deferred tax assets and liabilities are
        recognized for the future tax consequences attributable to differences
        between the financial statement carrying amounts of existing assets and
        liabilities and their respective tax bases and operating loss and tax
        credit carry forwards. Deferred tax assets and liabilities are measured
        using enacted tax rates expected to apply to taxable income in the years
        in which those temporary differences are expected to be recovered or
        settled. The effect on deferred tax assets and liabilities of a change
        in tax rates is recognized in income in the period that includes the
    enactment date.                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(l)         | Reclamation and Environmental Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | The Company provides for the costs
        of mine reclamation activities as required by various Chilean governmental
        agencies and Escondida owners regarding required minimum environmental
        business conduct. Certain reclamation costs are incurred and expensed
        as part of ongoing mining operations where no current or future benefit
        is discernible. For other reclamation costs the estimated future cost
        of decommissioning and restoration, discounted to its net present value,
        is provided and capitalized as part of the cost of each project. The
        capitalized cost is amortized over the life of the project and the increase
        in the net present value of the provision is treated as an operating
    expense.                                                                                          
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | Liabilities for loss contingencies,
      including environmental remediation costs not within the scope of FASB Statement
      No. 143, Accounting for Asset Retirement Obligations, arising from
      claims, assessments, litigation, fines, and penalties and other sources
      are recorded when it is probable that a liability has been incurred and
      the amount of the assessment and/or remediation can be reasonably estimated.
      Legal costs incurred in connection with loss contingencies are expensed
      as incurred. Recoveries of environmental remediation costs from third parties,
      which are probable of realization, are separately recorded as assets, and
      are not offset against the related environmental liability, in accordance
      with FASB Interpretation No. 39, Offsetting of Amounts Related to Certain
      Contracts.
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(Continued)



A-86

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006 and 2005 
(in thousands of USD)



|(m)         | Severance Indemnities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | The Company has an agreement with its
        employees to pay severance indemnities on termination of labor contracts.
        Provision has been made on the basis of one months remuneration
    per year of service, calculated on the latest months remunerations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(n)         | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | The preparation of the financial statements
        requires the management of the Company to make a number of estimates
        and assumptions relating to the reported amounts of assets and liabilities
        and the disclosure of contingent assets and liabilities at the date of
        the financial statements and the reported amounts of revenues and expenses
        during the period. Significant items subject to such estimation and assumptions
        include the carrying amount of property, plant and equipment, mining
        property, exploration and intangibles; valuation allowances for receivables,
        inventories and deferred income tax assets; environmental liabilities;
        and obligations related to employee benefits. Actual results could differ
    from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(o)         | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | In accordance with FASB Statement No.
      144 Accounting for the Impairment or Disposal of Long-Lived Assets,
      long-lived assets, such as property, plant, and equipment (including mining
      property, exploration), and purchased intangibles subject to amortization,
      are reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be recoverable. Recoverability
      of assets to be held and used is measured by a comparison of the carrying
      amount of an asset to estimated undiscounted future cash flows expected
      to be generated by the asset. If the carrying amount of an asset exceeds
      its estimated future cash flows, an impairment charge is recognized being
      the amount by which the carrying amount of the asset exceeds the fair value
      of the asset. Assets to be disposed of are separately presented in the balance
      sheet and reported at the lower of the carrying amount or fair value less
      costs to sell, and are no longer depreciated. The assets and liabilities
      of a disposal group classified as held for sale are presented separately
      in the appropriate asset and liability sections of the balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(p)         | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | Revenue is recognized when title to
        Copper Concentrate and Copper Cathode passes to the buyer when the ships
        depart from the loading port. The passing of title to the customer is
    based on the terms of the sales contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | Under our copper concentrate sales
        contracts with smelters, final prices are set on a specified future quotational
        period, typically three months after the month of arrival. For copper
        cathode sales contracts, final prices are typically one month after the
        month of arrival. Revenues are recorded under these contracts at the
        time title passes to the buyer based on the forward price for the expected
        settlement period. The contracts, in general, provide for a provisional
        payment based upon provisional assays and quoted metal prices. Final
        settlement is based on the average applicable price for a specified future
        period, and generally occurs from four to six months after shipment in
        copper concentrates and two months for copper cathodes. Final sales are
        settled using smelter weights, settlement assays (average of assays exchanged
        and/or umpire assay results) and are priced as specified in the smelter
        contract.
The Companys provisionally priced sales contain an embedded derivative
that is required to be separated from the host contract for accounting purposes.
The host contract is the receivable from the sale of concentrates measured at
the forward price at the time of sale. The embedded derivative does not qualify
for hedge accounting. The embedded derivative is recorded as a receivable on
the balance sheet and is adjusted to fair value through revenue and cost of sales
(for the smelting and refining charges of the sales) each period until the date
of final copper settlement. The form of the material being sold, after deduction
for smelting and refining is in an identical form to that sold on the London
Bullion Market. The form of the product is metal in flotation concentrate, which
is the final process for which the company is responsible.
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(q)         | Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | In March 2006, the EITF of the FASB
        reached a
consensus in Issue No. 06-3 How Taxes
Collected From Customers and  Remitted to Governmental Authorities
Should
be Presented in the Income Statement (That is, Gross versus Net Presentation)  (EITF
06-3). The disclosure required by the consensus will be applicable for annual
reporting periods beginning after December 15, 2006. This permits companies to
elect to present on either a gross or net basis based on their accounting policy.
This applies to sales and other taxes that are imposed on and concurred with
individual revenue producing transactions between a seller and a consensus would
not apply to tax systems that are based on gross receipts or total revenues.
The Company is currently assessing the
impact of EITF 06-3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(Continued)



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|(q) | Recently Issued Accounting Standards,
    continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In July 2006, the FASB issued FASB
        Interpretation No. 48 Accounting for Uncertainly in Income Taxes,an
        interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
        for uncertainty in income taxes recognized in an enterprises financial
        statements and prescribes a threshold of more-likely-than-not for recognition
        of tax benefits of uncertain tax positions taken or expected to be taken
        in a tax return. FIN 48 also provides related guidance on measurement,
        derecognition, classification, interest and penalties, and disclosure.
        The provisions of FIN48 will be effective for the Company on July 1,
        2007, with any cumulative effect of the change in accounting principle
        recorded as an adjustment to opening retained earnings. The Company is
        in the process of assessing the impact of adopting FIN 48 on its results
        of operations and financial
position.                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In September 2006, the SEC issued Staff
        Accounting Bulletin No. 108,Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements
        in Current Year Financial
Statements(SAB 108). SAB 108 provides
interpretive guidance on how the effects of prior-year uncorrected misstatements
should be considered when quantifying misstatements in the current year financial
statements. SAB 108 requires registrants to quantify misstatements using both
an income statement (‘rollover’) and balance sheet (‘iron curtain’) approach
and evaluate whether either approach results in a misstatement that, when all
relevant quantitative and qualitative factors are considered, is material. If
prior year errors that had been previously considered immaterial now are considered
material based on either approach, no restatement is required so long as management
properly applied its previous approach and all relevant facts and circumstances
were considered. If prior years are not restated, the cumulative effect adjustment
is recorded in opening accumulated earnings (deficit) as of the beginning of
the fiscal year of adoption. SAB 108 is effective for fiscal years ending on
or after November 15, 2006. The adoption of SAB 108 did not have an impact on
the Companys financial
statements.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In February 2006, the FASB issued Statement
        of Financial Accounting Standard No.155 Accounting for Certain Hybrid
        Financial Instruments (SFAS 155). SFAS 155 provides entities with
        relief from having to separately determine the fair value of an embedded
        derivative that would otherwise have to be bifurcated from its host contract
        in accordance with SFAS 133. SFAS 155 allows an entity to make an irrevocable
        election to measure such a hybrid financial instrument at fair value
        in its entirety, with changes in fair value recognized in earnings. Additionally,
        SFAS 155 requires that interests in securitized financial assets be evaluated
        to identify whether they are freestanding derivatives or hybrid financial
        instruments containing an embedded derivative that requires bifurcation
        (previously these were exempt from SFAS 133). SFAS 155 is effective for
        all financial instruments acquired, issued or subject to a remeasurement
        event occurring after the beginning of an entitys first fiscal
        year that begins after 15 September 2006. The Company is currently assessing
    the impact of adopting SFAS 155.                                                                                              

(Continued)

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|(q)         | Recently Issued Accounting Standards, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | In March 2006, the FASB issued SFAS No. 156, Accounting
for Servicing of Financial Assets  An Amendment of FASB
    Statement No. 140(SFAS
156). SFAS 156 requires that all separately recognized servicing assets and servicing
liabilities
    be initially measured at fair value, if practicable.
The statement permits, but does not require, the subsequent measurement
    of servicing assets and servicing liabilities
at fair value. SFAS 156 is effective as of the beginning of the first fiscal
year that
    begins after September 15, 2006, with earlier
adoption permitted. The Company does not believe the adoption of SFAS 156
    will have a significant effect on its financial statements.                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | In September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements(SFAS 157). SFAS
157 defines fair value,
    establishes a framework for measuring fair value
and expands disclosure of fair value measurements. SFAS 157 applies
    under other accounting pronouncements that require
or permit fair value measurements and accordingly, does not require
    any new fair value measurements. SFAS 157 is effective
for financial statements issued for fiscal years beginning after
    November 15, 2007. The Company is currently assessing
the impact of adopting SFAS 157 on its results of operations
    and financial position.                                                                                                                                                                                                                                                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(r)         | Deferred Stripping – Change in Accounting Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | Previously costs incurred through the removal
of overburden and other waste materials once saleable materials have begun
    to be extracted from a mine were referred to as
production stripping costs. Previously these production stripping costs were
    charged to the income statement as operating costs
when the ratio of waste material to ore extracted for an area of interest
    is expected to be constant throughout its estimated
life. When the current ratio of waste to ore was greater than the estimated
    life-of-mine ratio, a portion of the production
stripping costs was capitalized. In subsequent years, when the ratio of waste
to
    ore was less than the estimated life-of-mine ratio,
a portion of capitalized stripping costs was charged to the income
    statement as operating costs. The amount capitalized
or charged in a year was determined so that the stripping expense
    for the financial year reflects the estimated life-of-mine ratio.
|           
|(Continued)

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|(r) | Deferred Stripping–Change
            in Accounting
Policy, continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In March 2005, the Emerging Issues Task
        Force (EITF) of the FASB reached a consensus in Issue No. 04–6 Accounting
        for Stripping Costs Incurred During Production in the Mining
Industry (EITF 04–6) that stripping
costs incurred during the production phase of a mine are variable production
costs (effective July 1, 2006). As such, stripping costs incurred during the
production phase are treated differently to stripping costs incurred during the
development stage. The Company has adopted EITF 04–6
and retrospectively adjusted the 2006 and 2005 comparative financial years as
follow:
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                  | FY 2005       |  
|--------------------------------- | ------------- | -
|                                  |               |  
|                                  | As originally |  
|                                  | stated        |  
|                                  |               |  
|                                  |               |  
|Balance Sheet                     |               |  
|                                  |               |  
|Deferred stripping, net           | 492,533       |  
|Deferred income taxes non current | (151,175      | )
|Retained earnings  beginning     | (708,452      | )
|Retained earnings  ending        | (1,505,095    | )
|                                  |               |  
|Income Statement                  |               |  
|                                  |               |  
|Cost of products sold             | 970,391       |  
|Income taxes                      | 389,713       |  
|                                  |               |  
|                                  |               |  

|                                  | FY 2006       |  
|--------------------------------- | ------------- | -
|                                  |               |  
|                                  | As originally |  
|                                  | stated        |  
|                                  |               |  
|                                  |               |  
|Balance Sheet                     |               |  
|                                  |               |  
|Deferred stripping, net           | 441,111       |  
|Deferred income taxes non current | (188,110      | )
|Retained earnings  beginning     | (1,505,095    | )
|Retained earnings  ending        | (2,442,175    | )
|                                  |               |  
|Income Statement                  |               |  
|                                  |               |  
|Cost of products sold             | 1,231,376     |  
|Income taxes                      | 1,029,557     |  
|                                  |               |  
|                                  |               |  

|For the 2007 year all ongoing
    stripping costs have been recorded as production costs.
|-----------------------------------------------------------------------------------------
|                                                                                         
|3                                                                                        
|                                                                                         
|As of June 30, 2007 and 2006,
    cash and cash equivalents are summarized as follows:   
|                                                                                         

|                       |  | 2007    |  | 2006   | 
|---------------------- |  | ------- |  | ------ | 
|                       |  |         |  |        | 
|Cash and bank deposits |  | 1,230   |  | 323    | 
|Deposits               |  | 126,069 |  | 12,077 | 
|                       |  |         |  |        | 
|Total                  |  | 127,299 |  | 12,400 | 
|                       |  |         |  |        | 

(Continued)

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|4                                                                                  | TRADE ACCOUNTS RECEIVABLE
|---------------------------------------------------------------------------------- | -------------------------
|                                                                                  
|Trade accounts receivable at June 30,
    2007 and 2006, consist of the following:
|                                                                                  

|                 | 2007      |  | 2006      | 
|---------------- | --------- |  | --------- | 
|                 |           |  |           | 
|Domestic clients | 110,086   |  | 154,595   | 
|Foreign clients  | 1,618,945 |  | 1,295,423 | 
|                 |           |  |           | 
|Total            | 1,729,031 |  | 1,450,018 | 
|                 |           |  |           | 

|                                                 |                                                      
|------------------------------------------------ | -----------------------------------------------------
|5                                                | OTHER RECEIVABLES, INCLUDING EMPLOYEE
    RECEIVABLES
|                                                 |                                                      
|Other receivables are summarized
    as follows:

|                                             | 2007   |  | 2006  | 
|-------------------------------------------- | ------ |  | ----- | 
|                                             |        |  |       | 
|Accounts and notes receivable from employees | 15,904 |  | 3,011 | 
|Other accounts receivables                   | 1,376  |  | 4,114 | 
|                                             |        |  |       | 
|Total                                        | 17,280 |  | 7,125 | 
|                                             |        |  |       | 

|                                                        |                       
|------------------------------------------------------- | ----------------------
|6                                                       | PRODUCTION INVENTORIES
|                                                        |                       
|Production inventories are
      summarized as follows:
|                                                        |                       

|                                    | 2007    |  | 2006    | 
|----------------------------------- | ------- |  | ------- | 
|                                    |         |  |         | 
|Work in progress  Ore stockpiles   | 4,993   |  | 6,938   | 
|Minerals in process                 | 147,764 |  | 56,570  | 
|Finished Goods  Copper concentrate | 11,019  |  | 35,362  | 
|Finished Goods  Copper cathode     | 14,709  |  | 8,259   | 
|                                    |         |  |         | 
|Total                               | 178,485 |  | 107,129 | 
|                                    |         |  |         | 

|                                                      |                     
|----------------------------------------------------- | --------------------
|7                                                     | OTHER CURRENT ASSETS
|                                                      |                     
|Other current assets are summarized
      as follows:
|                                                      |                     

|                                     | 2007    |  | 2006    | 
|------------------------------------ | ------- |  | ------- | 
|                                     |         |  |         | 
|Prepayment and deferred expenses (a) | 77,900  |  | 54,696  | 
|Derivative asset                     | 79,752  |  | 50,298  | 
|Deposit                              | –       |  | 45,019  | 
|Tax for recovery                     | 29,796  |  | 2,626   | 
|Other assets                         | 4       |  | 119     | 
|                                     |         |  |         | 
|Total                                | 187,452 |  | 152,758 | 
|                                     |         |  |         | 

(Continued)



A-91

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005(in thousands of USD)

|7                                | OTHER CURRENT ASSETS, continued  
|-------------------------------- | ---------------------------------
|                                 |                                  
|(a)                              | Prepayment and deferred expenses.
|                                 |                                  
|Details of this account include:
|                                

|                                                   | 2007   |  | 2006   | 
|-------------------------------------------------- | ------ |  | ------ | 
|                                                   |        |  |        | 
|Prepayment for Power line                          | 10,000 |  | 9,834  | 
|Prepayment for Mineral Rights                      | 1,340  |  | 1,551  | 
|Deferred borrowing expenses                        | 645    |  | 1,881  | 
|Derivative asset (price participation in refining) | 62,257 |  | 41,430 | 
|Employee benefit pre-payment                       | 3,658  |  | –      | 
|                                                   |        |  |        | 
|Total                                              | 77,900 |  | 54,696 | 
|                                                   |        |  |        | 

|                                                                     |                                     
|-------------------------------------------------------------------- | ------------------------------------
|8                                                                    | PROPERTY, PLANT AND MINE DEVELOPMENT
|                                                                     |                                     
|Property, plant and mine development
      is summarized as follows:
|                                                                    

|                                          | 2007       |   | 2006       |  
|----------------------------------------- | ---------- | - | ---------- | -
|                                          |            |   |            |  
|Land                                      | 4,252      |   | 4,252      |  
|Mining development costs (pre-production) | 238,379    |   | 238,379    |  
|Machinery, vehicles and installations     | 5,090,456  |   | 4,030,912  |  
|Construction in progress                  | 491,746    |   | 1,070,663  |  
|                                          |            |   |            |  
|Sub total                                 | 5,824,833  |   | 5,344,206  |  
|Accumulated depreciation and amortization | (2,204,598 | ) | (1,965,525 | )
|                                          |            |   |            |  
|Total                                     | 3,620,235  |   | 3,378,681  |  
|                                          |            |   |            |  

Depreciation and amortization expense amounted to $239,073, $274,740 and $204,290 for the years ending June 30, 2007, 2006 and 2005, respectively, and is included as a cost of the production of inventories.

Interest capitalized for the years ending June 30, 2006 and 2005 was $39,359 and $12,328. No interest was capitalized for the year ending June 30, 2007.

The asset retirement obligation included in property, plant and mine development, net of accumulated amortization was $76,466 and $42,083 for the years ending June 30, 2007 and 2006, respectively.

|9                                            | INTANGIBLE ASSETS, NET
|-------------------------------------------- | ----------------------
|                                             |                       
|Intangible assets are summarized as follows:
|                                            

|                             | 2007    |   | 2006    |  
|---------------------------- | ------- | - | ------- | -
|                             |         |   |         |  
|Water rights – at cost       | 75,886  |   | 75,886  |  
|Accumulated amortization     | (22,515 | ) | (18,917 | )
|                             |         |   |         |  
|Total intangible assets, net | 53,371  |   | 56,969  |  
|                             |         |   |         |  

The above water rights were acquired from Minera Zaldívar in November 2000 and are related to operations of Phase IV of the mining project.

Aggregate amortization expense for amortizing intangible assets was $3,598, $5,584 and $4,750 for the years ended June 30, 2007, 2006 and 2005, respectively. For each of the next 5 years amortization
expense for intangibles is expected to be approximately $3,167 in 2008, $3,289 in 2009, $2,606 in 2010, $2,517 in 2011 and $2,448 in 2012.

(Continued)



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|10                                      | OTHER ASSETS (NON CURRENT)
|--------------------------------------- | --------------------------
|                                        |                           
|Other assets are summarized as follows:
|                                       

|                                | 2007    |  | 2006    | 
|------------------------------- | ------- |  | ------- | 
|                                |         |  |         | 
|Medium-grade ore stockpile (a)  | 89,188  |  | 86,419  | 
|Deferred borrowing expenses (b) | 175     |  | 832     | 
|Spare parts (c)                 | 53,063  |  | 33,734  | 
|Other assets (d)                | 24,154  |  | 13,720  | 
|                                |         |  |         | 
|Total                           | 166,580 |  | 134,705 | 
|                                |         |  |         | 
|                                |         |  |         | 

|(a)                                                                                                                                                                                                               | Medium-grade ore stockpile 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------
|                                                                                                                                                                                                                  |                            
|During mining operations the portion
        of ore mined below a specific copper grade is stockpiled in the medium-grade
        ore stockpile for future use. This ore is valued as described in note
    2(j).
|                                                                                                                                                                                                                  |                            
|(b)                                                                                                                                                                                                               | Deferred borrowing expenses
|                                                                                                                                                                                                                  |                            
|The amortization expense for the periods
        ending June 30, 2007, 2006 and 2005 amounts to $657, $1,721 and $2,975,
    respectively, calculated as described in note 2(j).                                 
|                                                                                                                                                                                                                  |                            
|(c)                                                                                                                                                                                                               | Spare parts                
|                                                                                                                                                                                                                  |                            
|Corresponds to spare parts that will
    not be consumed within one year from balance sheet date.                                                                                                                
|                                                                                                                                                                                                                 
|(d)                                                                                                                                                                                                               | Other assets               
|                                                                                                                                                                                                                  |                            

|                                                      | 2007   |  | 2006   | 
|----------------------------------------------------- | ------ |  | ------ | 
|                                                      |        |  |        | 
|Recoverable withholding taxes (*)                     | 6,180  |  | 4,938  | 
|Notes receivable  employee housing program and other | 17,974 |  | 8,782  | 
|                                                      |        |  |        | 
|Total other assets                                    | 24,154 |  | 13,720 | 
|                                                      |        |  |        | 

|            |                                                                                                                                                                                                                                                                                         
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*)         | The Chilean Internal Revenue Service
        allows for the recovery of withholding taxes relating to technical service
        contracts over the tax life of the related asset. The non-current portion
        of recoverable withholding
taxes has been included under other assets.
|            |                                                                                                                                                                                                                                                                                         
|(Continued)



A-93

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|11  | BALANCES AND TRANSACTIONS WITH RELATED
    COMPANIES          
|--- | --------------------------------------------------------------
|    |                                                               
|(a) | Balances with related companies are summarized
    as follows:
|    |                                                               
|i)  | Due from – current                                            

|                          |                        |        |  |        | 
|------------------------- | ---------------------- | ------ |  | ------ | 
|Company                   | Nature of relationship | 2007   |  | 2006   | 
|                          |                        |        |  |        | 
|BHP Escondida Inc.        | Parent Company         | –      |  | 281    | 
|BHP Billiton Marketing AG | Common ownership       | 25,775 |  | 28,040 | 
|Other                     | Various                | 132    |  | 223    | 
|                          |                        |        |  |        | 
|Total                     |                        | 25,907 |  | 28,544 | 
|                          |                        |        |  |        | 

|    |                 
|--- | ----------------
|ii) | Due to – current

|                                      |                        |        |  |        | 
|------------------------------------- | ---------------------- | ------ |  | ------ | 
|Company                               | Nature of relationship | 2007   |  | 2006   | 
|                                      |                        |        |  |        | 
|BHP Minerals International Inc.       | Common ownership       | 1,338  |  | 600    | 
|BHP Billiton Marketing AG             | Common ownership       | 31,706 |  | 11,523 | 
|BHP Chile Inc.                        | Common ownership       | 5,290  |  | 15,123 | 
|BHP International Finance Corporation | Common ownership       | 826    |  | 926    | 
|Other                                 | Various                | 1,135  |  | 1,346  | 
|                                      |                        |        |  |        | 
|Total                                 |                        | 40,295 |  | 29,518 | 
|                                      |                        |        |  |        | 

|    |                                                                   
|--- | ------------------------------------------------------------------
|(b) | Transactions with related companies are
    summarized as follows:

|                          |                        |                                      | Revenue/(expense) for the year ended |  
|------------------------- | ---------------------- | ------------------------------------ | ------------------------------------ | -
|                          |                        |                                      |                                      |  
|Company                   | Nature of relationship | Transaction                          | 2007                                 |  
|                          |                        |                                      |                                      |  
|BHP Billiton Marketing AG | Common ownership       | Sales agency & other commissions     | (27,621                              | )
|                          |                        | Reimbursement of expatriate salaries | (645                                 | )
|BHP Billiton Marketing AG | Common ownership       | Freight                              | (169,888                             | )
|BHP Billiton Marketing AG | Common ownership       | Sales                                | 623,908                              |  
|Minera Cerro Colorado     | Common ownership       | Sales                                | 40,933                               |  
|Minera Spence             | Common ownership       | Sales                                | 3,843                                |  
|BHP Chile Inc.            | Common ownership       | Financial service                    | (6,700                               | )
|                          |                        | Reimbursement of capital project     | (17,172                              | )

|                                                                                                                                                                                                                                                                                                                                                                                                          |                             
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------
|Payment conditions for all intercompany
        liabilities are 30 days from the date the transactions are received and
    accepted.                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                          |                             
|12                                                                                                                                                                                                                                                                                                                                                                                                        | INCOME TAXES                
|                                                                                                                                                                                                                                                                                                                                                                                                          |                             
|(a)                                                                                                                                                                                                                                                                                                                                                                                                       | Current income taxes payable
|                                                                                                                                                                                                                                                                                                                                                                                                          |                             
|Income tax expense attributable to income
        from continuing operations of $1,376,483, $1,027,534 and $385,101
        for the years ended June 30, 2007, 2006 and 2005, respectively, differed
        from the amounts computed by applying the Chilean income tax rate of
        18.92% (2006: 18.09%; 2005: 17%), to pretax income from continuing operations
    as a result of the following:

|                                                                            |           |   |           |   |         | 
|--------------------------------------------------------------------------- | --------- | - | --------- | - | ------- | 
|                                                                            | 2007      |   | 2006      |   | 2005    | 
|                                                                            |           |   |           |   |         | 
|Computed expected tax expense                                               | 1,396,142 |   | 1,007,262 |   | 381,835 | 
|Increase (reduction) in income taxes resulting from:                        |           |   |           |   |         | 
|Adjustment to deferred tax assets and liabilities from increase in tax rate | –         |   | 36,692    |   | –       | 
|Other, net                                                                  | (19,659   | ) | (16,420   | ) | 3,266   | 
|                                                                            |           |   |           |   |         | 
|Computed effective tax expense                                              | 1,376,483 |   | 1,027,534 |   | 385,101 | 
|                                                                            |           |   |           |   |         | 
|                                                                            |           |   |           |   |         | 
|(Continued)                                                                 |           |   |           |   |         | 



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|12                                                                                                                                                                                                                                                                                                                                                             | INCOME TAXES, continued       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------
|                                                                                                                                                                                                                                                                                                                                                               |                               
|On 1 January 2006 the Chilean
        tax rate for the Company increased from 17% to 18.92% (Calendar year
        2006 & 2007)
        and to 20.85% (from calendar year 2008 to 2018), following the introduction
        of a mining tax. The effect of this on current income tax from 1 January
    2006 is included in ‘Computed effective tax expense’.
|                                                                                                                                                                                                                                                                                                                                                               |                               
|(b)                                                                                                                                                                                                                                                                                                                                                            | Income tax charge for the year
|                                                                                                                                                                                                                                                                                                                                                               |                               
|The income tax charge for the year is
    summarized as follows:                                                                                                                                                                                                                                                                                              

|                               |           |  |           |  |         | 
|------------------------------ | --------- |  | --------- |  | ------- | 
|                               | 2007      |  | 2006      |  | 2005    | 
|                               |           |  |           |  |         | 
|Current income taxes provision | 1,280,379 |  | 944,464   |  | 356,438 | 
|Deferred income taxes          | 96,104    |  | 83,070    |  | 28,663  | 
|                               |           |  |           |  |         | 
|Total                          | 1,376,483 |  | 1,027,534 |  | 385,101 | 
|                               |           |  |           |  |         | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|All income tax expense is
    domestic tax. There is no foreign income tax expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|In assessing the realizability
        of deferred tax assets, management considers whether it is more likely
        than not that some portion or all of the deferred tax assets will not
        be realized. The ultimate realization of deferred tax assets is dependent
        upon the generation of future taxable income during the periods in which
        those temporary differences become deductible. Management considers the
        scheduled reversal of deferred tax liabilities, projected future taxable
        income, and tax planning strategies in making this assessment. In order
        to fully realize the deferred tax asset, the Company will need to generate
        future taxable income of US$396,817. Based upon the level of historical
        taxable income and projections for future taxable income over the periods
        in which the deferred tax assets are deductible, management believes
        it is more likely than not that the Company will realize the benefits
    of these deductible differences.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The amount of the deferred
        tax asset considered realizable, however, could be reduced in the near
        term if estimates of future taxable income during the carry forward period
    are reduced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Deferred income taxes are
    summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                               |         |   |           |   |         |   |           |  
|---------------------------------------------- | ------- | - | --------- | - | ------- | - | --------- | -
|                                               | 2007    |   | 2006      |  
|                                               |         |   |           |   |         |   |           |  
|                                               | Current |   | Long-term |   | Current |   | Long-term |  
|                                               |         |   |           |   |         |   |           |  
|Deferred tax assets:                           |         |   |           |   |         |   |           |  
|                                               |         |   |           |   |         |   |           |  
|Obsolescence reserve                           | –       |   | 2,601     |   | –       |   | 4,654     |  
|Price variance provision for provisional sales | –       |   | –         |   | 10,435  |   | –         |  
|Accrued employee vacation                      | 1,457   |   | –         |   | 1,393   |   | –         |  
|Accrued employee benefits                      | –       |   | 13,402    |   | –       |   | 11,314    |  
|Accrued reclamation                            | –       |   | 26,260    |   | –       |   | 17,656    |  
|Hedging non realized                           | 33,296  |   | –         |   | 6,833   |   | –         |  
|Other                                          | 32      |   | 2,140     |   | 31      |   | 2,961     |  
|                                               |         |   |           |   |         |   |           |  
|Gross deferred income tax assets               | 34,785  |   | 44,403    |   | 18,692  |   | 36,585    |  
|                                               |         |   |           |   |         |   |           |  
|                                               |         |   |           |   |         |   |           |  
|Deferred tax liability:                        |         |   |           |   |         |   |           |  
|                                               |         |   |           |   |         |   |           |  
|Property, plant and equipment, net             | –       |   | (281,057  | ) | –       |   | (136,144  | )
|Pre paid expenses                              | –       |   | –         |   | –       |   | (3,772    | )
|Price variance provision for provisional sales | (74,868 | ) | –         |   | (95,995 | ) | –         |  
|                                               |         |   |           |   |         |   |           |  
|Gross deferred income tax liabilities          | (74,868 | ) | (281,057  | ) | (95,995 | ) | (139,916  | )
|                                               |         |   |           |   |         |   |           |  
|Net deferred tax liability                     | (40,083 | ) | (236,654  | ) | (77,303 | ) | (103,331  | )
|                                               |         |   |           |   |         |   |           |  
|                                               |         |   |           |   |         |   |           |  
|(Continued)                                    |         |   |           |   |         |   |           |  



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|13                                                                  | ACCRUED LIABILITIES AND WITHHOLDINGS
|------------------------------------------------------------------- | ------------------------------------
|                                                                    |                                     
|Accrued liabilities and withholdings are
    summarized as follows:

|                                                               |         |  |        | 
|-------------------------------------------------------------- | ------- |  | ------ | 
|                                                               | 2007    |  | 2006   | 
|                                                               |         |  |        | 
|Accrued liabilities and withholdings for employee compensation | 31,885  |  | 36,888 | 
|Accrued project and vendor costs                               | 137,169 |  | 47,342 | 
|Other                                                          | 5,189   |  | 2,785  | 
|                                                               |         |  |        | 
|Total                                                          | 174,243 |  | 87,015 | 
|                                                               |         |  |        | 

|                                 |                                 
|-------------------------------- | --------------------------------
|14                               | ACCRUALS AND RECLAMATION RESERVE
|                                 |                                 
|Details of this account include:

|                                   |         |  |        | 
|---------------------------------- | ------- |  | ------ | 
|                                   | 2007    |  | 2006   | 
|                                   |         |  |        | 
|Restoration and Rehabilitation (a) | 125,970 |  | 86,892 | 
|Deferred customs duties and other  | 5,588   |  | 9,776  | 
|                                   |         |  |        | 
|Total                              | 131,558 |  | 96,668 | 
|                                   |         |  |        | 

|    |                                                                           
|--- | --------------------------------------------------------------------------
|(a) | Provision for restoration and rehabilitation
    movements are summarized:

|                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------- | - | ------ | -
|                                                                                                                                                                                                                                                                                                                                                                                                                   | 2007    |   | 2006   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |        |  
|Opening balance                                                                                                                                                                                                                                                                                                                                                                                                    | 86,892  |   | 61,654 |  
|Accretion                                                                                                                                                                                                                                                                                                                                                                                                          | 3,256   |   | 2,171  |  
|Increases to the provision                                                                                                                                                                                                                                                                                                                                                                                         | 36,307  |   | 24,161 |  
|Payments                                                                                                                                                                                                                                                                                                                                                                                                           | (485    | ) | (1,094 | )
|                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |        |  
|Closing balance                                                                                                                                                                                                                                                                                                                                                                                                    | 125,970 |   | 86,892 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |        |  
|                                                                                                                                                                                                                                                                                                                                                                                                                   |         |   |        |  
|The estimated undiscounted value
      of the restoration & rehabilitation provision is US$287,080 as
      at June 30, 2006 and US$359,279 for June 30, 2007. The discount rate
      applied to the cash flows is 3.72% and 3.5% respectively and it is not
    expected to have relevant payments in the next five years.                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                  
|The provision for restoration & rehabilitation
      includes the dismantling of all the mine site facilities including Los
      Colorados and Laguna Seca plants, the Cathode oxide plant, Cathode Sulphide
      Leach plant, a portion of the Coloso port facilities and the rehabilitation
      of the Salar de Punta Negra environment. Refer to note 8 for details of
    the asset retirement obligation.
|                                                                                                                                                                                                                                                                                                                                                                                                                  
|(Continued)                                                                                                                                                                                                                                                                                                                                                                                                       



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006 and 2005
(in thousands of
USD)

|15                                                                                 | SHORT TERM DEBT
|---------------------------------------------------------------------------------- | ---------------
|                                                                                   |                
|At the close of 2007 and 2006, the Company
    records short term debt as follows:
|                                                                                   |                

|Lender                   | Current rate |  | Payment date |  |  |  | 2007 |  | 2006    | 
|------------------------ | ------------ |  | ------------ |  |  |  | ---- |  | ------- | 
|                         |              |  |              |  |  |  |      |  |         | 
|Banco Santander Santiago | L+0.035%     |  | 31 July      |  |  |  | –    |  | 70,000  | 
|Banco Estado             | L+0.05%      |  | 21 July      |  |  |  | –    |  | 70,000  | 
|Banco BCI                | L+0.05%      |  | 13 July      |  |  |  | –    |  | 50,000  | 
|                         |              |  |              |  |  |  |      |  |         | 
|Total                    |              |  |              |  |  |  | –    |  | 190,000 | 
|                         |              |  |              |  |  |  |      |  |         | 

|                 | 
|---------------- | 
|L: LIBOR 30 days | 
|                 | 

|16                                                                                                                       | LONG TERM DEBT       
|------------------------------------------------------------------------------------------------------------------------ | ---------------------
|                                                                                                                         |                      
|The balances of long-term debt outstanding
    are summarized as follows:                                               
|                                                                                                                         |                      
|(a)                                                                                                                      | Senior unsecured debt
|                                                                                                                         |                      
|The balances of the senior unsecured debt
    outstanding (including the short-term position) are summarized as follows:

|                                                |              |  |  |  |         |   |         |  
|----------------------------------------------- | ------------ |  |  |  | ------- | - | ------- | -
|Lender                                          | Current rate |  |  |  | 2007    |   | 2006    |  
|                                                |              |  |  |  |         |   |         |  
|BNP Paribas (1998)                              | **L+0.25%    |  |  |  | 275,000 |   | 275,000 |  
|The Bank of Tokyo  Mitsubishi UFJ Ltd. (2001)  | **L+0.175%   |  |  |  | 62,500  |   | 87,500  |  
|Japan Bank for International Cooperation (2001) | **L+0.25%    |  |  |  | 227,500 |   | 262,500 |  
|Kreditanstalt für Wiederaufbau (2001)           | **L+0.275%   |  |  |  | 112,500 |   | 137,500 |  
|The Bank of Tokyo  Mitsubishi UFJ Ltd. (2005)  | **L+0.275%   |  |  |  | 90,000  |   | 45,000  |  
|Japan Bank for International Cooperation (2005) | **L+0.20%    |  |  |  | 210,000 |   | 105,000 |  
|                                                |              |  |  |  |         |   |         |  
|Sub total                                       |              |  |  |  | 977,500 |   | 912,500 |  
|                                                |              |  |  |  |         |   |         |  
|Less:                                           |              |  |  |  |         |   |         |  
|Short term portion                              |              |  |  |  | (85,000 | ) | (85,000 | )
|                                                |              |  |  |  |         |   |         |  
|Total                                           |              |  |  |  | 892,500 |   | 827,500 |  
|                                                |              |  |  |  |         |   |         |  

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(**) L: LIBOR 30 days                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|On June 12, 1998 the Company
        entered into an unsecured loan agreement for the amount of $275 million
    with BNP Paribas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|As at June 30, 2007 the interest
      rate is LIBOR + 0.25%. The loan is due for repayment in June 2009 (full
      amount).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|On September 14, 2001, the
      Company entered into a loan agreement for the amount of $500 million,
      of which $350 million is with Japan Bank for International Cooperation,
      and $150 million with a syndicate of banks, with The Bank of Tokyo-Mitsubishi
      Ltd. being the agent bank. At June 30, 2003, the total loan had been drawn
      down. The loan with Japan Bank for International Cooperation is payable
      in 20 semi-annual payments commencing March 1, 2004 and bears interest at
      LIBOR (180-day) plus 0.25%. The syndicate loan with The Bank of Tokyo-Mitsubishi
      Ltd. as lead bank is payable in 12 semi-annual payments commencing March
      1, 2004, and at commencement bore interest at LIBOR (180-days) + 0.90%.
      On March 2006 the interest rate was renegotiated and decreased to Libor
      (180 days) + 0.175%. The outstanding balance as of June 30, 2007 was $290
      million (June 30, 2006: $350 million). | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|16                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | LONG TERM DEBT, continued
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                          
|On January 31, 2005 the Company entered
        into an unsecured loan agreement for the amount of $300 million of
        which $210 million is with Japan Bank for International Cooperation
        and $90 million with a syndicate of banks, with The Bank of Tokyo-Mitsubishi
        UFJ Ltd being the agent bank. The loan with Japan Bank for International
        Cooperation bears interest at LIBOR (180 days) +0.20% and will mature
        after 12 years commencing January 31, 2010. The syndicate loan with The
        Bank of Tokyo-Mitsubishi Ltd as lead bank bears interest at LIBOR (180
        days) + 0.275% and will mature in 5 years. The balance outstanding as
    of June 30, 2007 was $300 million (June 30, 2006: $150 million).
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|On September 14, 2001, the
        Company entered into a loan agreement for the amount of $200 million
        with Kreditanstalt für Wiederaufbau. The loan is payable in 16 semi-annual
        payments commencing April 1, 2004. At commencement the loan bore interest
        at LIBOR (180 days) + 0.75%. On December 2005 the interest rate was
        renegotiated and decreased to a rate of LIBOR (180 days) + 0.275%. The
        maturity of the loan did not change. The balance outstanding at June
        30,
2007 was $112.5 million (June 30, 2006: $137.5 million).                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|(b)                                                                                                                      | At June 30, 2007, the Company maintains
      unused lines of credit with Banco de Chile, Banco Scotiabank, Banco Santander
      Santiago, Banco Bice, Banco del Estado and Banco BCI totaling $60 million.
      These lines of credit are not committed. 
|------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                         |                                                                                                                                                                                                                                                             
|The above loans in (a) and
      (b) are subject to certain covenants, the most restrictive of which require
      that:
|                                                                                                                         |                                                                                                                                                                                                                                                             
|i)                                                                                                                       | the total debt to Earnings Before Interest,
      Tax, Depreciation and Amortization (EBITDA) ratio be no greater than 2.75
      to 1.0 at June 30, 2001, 3.50 to 1.0 at June 30, 2002, 3.00 to 1.0 at June
      30, 2003 and 2.75 to 1.0 thereafter; and,
|                                                                                                                         |                                                                                                                                                                                                                                                             
|ii)                                                                                                                      | the net worth of the Company may not be
      less than US$900 million.                                                                                                                                                                                     
|                                                                                                                         |                                                                                                                                                                                                                                                             
|The senior unsecured debt ranks
      pari passu with any other senior unsecured debt.                                  
|                                                                                                                         |                                                                                                                                                                                                                                                             
|The Company was in compliance
      with all debt covenants as of June 30, 2007 and June 30, 2006.                      
|                                                                                                                         |                                                                                                                                                                                                                                                             
|(c)                                                                                                                      | Subordinated Owners’ debt                                                                                                                                                                                                                                   

|                                      |         |   |         |  
|------------------------------------- | ------- | - | ------- | -
|Lender                                | 2007    |   | 2006    |  
|                                      |         |   |         |  
|International Finance Corporation     | 9,050   |   | 10,250  |  
|Rio Tinto Finance PLC                 | 108,600 |   | 123,000 |  
|JEFCO Corporation                     | 36,200  |   | 41,000  |  
|BHP International Finance Corporation | 208,150 |   | 235,750 |  
|                                      |         |   |         |  
|Sub total                             | 362,000 |   | 410,000 |  
|                                      |         |   |         |  
|Less:                                 |         |   |         |  
|Short term portion                    | (48,000 | ) | (48,000 | )
|                                      |         |   |         |  
|Total long-term portion               | 314,000 |   | 362,000 |  
|                                      |         |   |         |  

|                                                                        |                                                                                                                                                                                                                                                   
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Drawdowns of subordinated Owners
      debt have been made as follows:
|                                                                        |                                                                                                                                                                                                                                                   
|•                                                                       | US$295 million during December 1998,
      payable in 30 semi-annual payments commencing on June 15, 1999. Interest
      accrues at LIBOR plus 4% and is payable semi-annually
      on June 15 and December 15.                                 
|•                                                                       | US$200 million during May and June
      2000, payable in 30 semi-annual payments commencing on December 15, 2000.
      Interest accrues at LIBOR plus 4% and is
      payable semi-annually on June 15 and December 15.                         
|•                                                                       | US$150 million on May 11, 2001, grace
      period of 5 years for principal payable in 20 semi-annual payments commencing
      on June 15, 2006. Interest accrues at LIBOR
      plus 4% and is payable semi-annually on June 15 and December 15.

|                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Under the terms of the subordinated
        loan agreement, the borrower can elect to capitalize interest due on
        each payment date to existing debt.
      Interest payable is shown as a current liability until such time as the
        election is made or until such interest is paid. No interest was capitalized
for the years ended June 30, 2007 and 2006.
|                                                                                                                                                                                                                                                                                                                                                                           
|The subordinated debt is unsecured.                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                           
|(Continued)                                                                                                                                                                                                                                                                                                                                                                



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006
and 2005
(in thousands of USD)

|16  | LONG TERM DEBT, continued                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                           
|(d) | Scheduled principal payments
      on long-term debt (including short-term portion) at June 30, 2007 are as
      follows:
|    |                                                                                                                           

|                                                  | Senior         |  | Subordinated |  |           | 
|------------------------------------------------- | -------------- |  | ------------ |  | --------- | 
|Principal payments during the year ending June
30 | Unsecured debt |  | owners debt |  | Total     | 
|                                                  |                |  |              |  |           | 
|2008                                              | 85,000         |  | 48,000       |  | 133,000   | 
|2009                                              | 360,000        |  | 48,000       |  | 408,000   | 
|2010                                              | 175,625        |  | 48,000       |  | 223,625   | 
|2011                                              | 86,250         |  | 48,000       |  | 134,250   | 
|2012                                              | 73,750         |  | 48,000       |  | 121,750   | 
|2013 and after                                    | 196,875        |  | 122,000      |  | 318,875   | 
|                                                  |                |  |              |  |           | 
|Total                                             | 977,500        |  | 362,000      |  | 1,339,500 | 
|                                                  |                |  |              |  |           | 

|   |                                                               
|-- | --------------------------------------------------------------
|17 | BONDS                                                         
|   |                                                               
|   | Bond obligations at June 30, 2007 and
    2006 are as follows:
|   |                                                               

|                                         | 2007     |   | 2006     |  
|---------------------------------------- | -------- | - | -------- | -
|                                         |          |   |          |  
|Total nominal value                      | 200,000  |   | 200,000  |  
|Discount at issue                        | (6,510   | ) | (6,510   | )
|                                         |          |   |          |  
|Net proceeds                             | 193,490  |   | 193,490  |  
|Accumulated amortization of discount     | 5,846    |   | 5,088    |  
|                                         |          |   |          |  
|Sub total                                | 199,336  |   | 198,578  |  
|                                         |          |   |          |  
|Less:                                    |          |   |          |  
|Principal repaid as of June 30           | (180,000 | ) | (140,000 | )
|Current portion of principal outstanding | (19,336  | ) | (40,000  | )
|                                         |          |   |          |  
|Total long-term portion                  | –        |   | 18,578   |  
|                                         |          |   |          |  

|                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|On October 22, 1999 the Company registered
        a Chilean bond issuance (No. 218) with the Chilean Superintendence
        of Stock Corporations and Insurance Companies (SVS). The issuance was
    made as follows:
|                                                                                                                                                                                                                        

|       |                 |  |            |  | Total nominal  |  | Outstanding   | 
|------ | --------------- |  | ---------- |  | -------------- |  | ------------- | 
|Series | Number of Bonds |  | Bond value |  | value at issue |  | nominal value | 
|       |                 |  |            |  |                |  |               | 
|A1     | 1,000           |  | 10         |  | 10,000         |  | 1,000         | 
|A2     | 400             |  | 100        |  | 40,000         |  | 4,000         | 
|A3     | 100             |  | 500        |  | 50,000         |  | 5,000         | 
|A4     | 100             |  | 1,000      |  | 100,000        |  | 10,000        | 
|       |                 |  |            |  |                |  |               | 
|       | 1,600           |  |            |  | 200,000        |  | 20,000        | 
|       |                 |  |            |  |                |  |               | 

|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                      
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Each series of bonds is being amortized over 5 years in 10 semi-annual
    installments commencing May 15, 2003. Interest accrues at 7.5% per year and
      payments are made semi-annually on May 15 and November 15. The Company
    had accrued interest of $184 and $552
    at June 30, 2007 and 2006, respectively. No guarantees have been given.
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                      
|The bonds are subject to certain restrictive
    financial covenants:                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                      
|i)                                                                                                                                                                                                                                                                                                                                                        | The ratio of debt to Earnings Before Interest,
        Tax, Depreciation and Amortization (“EBITDA”) for the last
    twelve months must not exceed 6, based on the Chilean GAAP Financial Statements
    at December 31 of each year that the bonds are outstanding.
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                      
|ii)                                                                                                                                                                                                                                                                                                                                                       | The Companys net worth must not
    be less than $800 million.                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                      
|The Company was in compliance with all bond covenants as of June 30,
    2007 and June 30, 2006.                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                      
|(Continued)                                                                                                                                                                                                                                                                                                                                              



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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006 and 2005
(in thousands of USD)

|18 | SUNDRY CREDITORS LONG-TERM
|-- | --------------------------

Sundry Creditors are summarized as follows:

|                                                          | 2007   |   | 2006   |  
|--------------------------------------------------------- | ------ | - | ------ | -
|                                                          |        |   |        |  
|Liability outstanding for water rights acquired           | 55,527 |   | 59,582 |  
|Less:                                                     |        |   |        |  
|Short-term portion (included in Sundry creditors-current) | (4,391 | ) | (4,055 | )
|                                                          |        |   |        |  
|Total                                                     | 51,136 |   | 55,527 |  
|                                                          |        |   |        |  

The water rights purchased from Compania Minera Zaldivar is payable in 15 annual installments of $9,000 commencing July 1, 2001. Interest is calculated using the imputed interest method using a discount rate of
8.3% .

|19 | INTEREST EXPENSE
|-- | ----------------

Interest expense is summarized as follows:

|                                     | 2007     |   | 2006    |   | 2005    |  
|------------------------------------ | -------- | - | ------- | - | ------- | -
|                                     |          |   |         |   |         |  
|Interest incurred                    | (113,792 | ) | (96,750 | ) | (80,878 | )
|Interest capitalized in fixed assets | –        |   | 39,359  |   | 12,328  |  
|                                     |          |   |         |   |         |  
|Total                                | (113,792 | ) | (57,391 | ) | (68,550 | )
|                                     |          |   |         |   |         |  

|   |        
|-- | -------
|20 | CAPITAL

| |                                                           |         | 
| | --------------------------------------------------------- | ------- | 
| | Capital has been contributed
    as follows:              |         | 
| |                                                           |         | 
| | Initial capital (*)                                       | 65,727  | 
| | Capitalization of retained earnings by public deed dated: |         | 
| | July 27, 1988                                             | 1,497   | 
| | October 7, 1988                                           | 22,877  | 
| | February 6, 1989                                          | 6,110   | 
| | April 7, 1989                                             | 6,013   | 
| | March 30, 2001                                            | 161,000 | 
| | December 21, 2001                                         | 196,700 | 
| | December 19, 2002                                         | 54,578  | 
| | December 30, 2003                                         | 16,700  | 
| | December 30, 2004                                         | 16,700  | 
| | December 30, 2005                                         | 50,000  | 
| |                                                           |         | 
| | Capital as of June 30, 2006                               | 597,902 | 
| |                                                           |         | 
| | Capitalization of retained earnings by public deed dated: |         | 
| | December 30, 2006                                         | 50,000  | 
| |                                                           |         | 
| | Capital as of June 30, 2007                               | 647,902 | 
| |                                                           |         | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | The Companys initial capital of $65,727 was contributed by the former partners Minera Utah de Chile Inc. and Getty Mining (Chile) Inc., and relates to property, plant and equipment, cash advances and
exploration costs.                                                                                                                                                                                                                                                                                 
|   
|    | According to the Foreign Investment Contract between the state of Chile and the Minera Escondida Owners, the financial debt / equity ratio must not be higher than 75% / 25% by the end of every calendar year. The
compliance by the Foreign Investors with the referred percentage is verified by the Executive Vice Presidency of the Foreign Investment Committee on December 31 of each year. To comply with this legal requirement, the company has capitalized the
retained earnings mentioned above.
|   
|    | (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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Minera Escondida Limitada

Notes to Financial Statements
June 30, 2007, 2006 and 2005
(in thousands of USD)

|21                                                                                                                                                                                                                                                                                                                                       | FAIR VALUE OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                         | The Companys financial instruments
      are composed of cash and cash equivalents, other receivables, recoverable
      taxes, accounts payable, other payables, due to and from related companies
      and accrued expenses (non derivatives). In managements opinion, the
      carrying amount approximate the fair value due to their short-term nature
      of these instruments. In addition, the long-term debt does not present a
      significant difference between its carrying amount and its fair value, based
      on the interest rate re-negotiation performed in 2006 and the current market
      rates.                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|22                                                                                                                                                                                                                                                                                                                                       | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(1)                                                                                                                                                                                                                                                                                                                                      | At June 30, 2007, the Company had entered
      into long-term contracts for the sale of approximately 6 million dry metric
      tonnes of concentrates in total, in predetermined annual amounts through
      the year 2015. Under the terms of the contracts, annual prices are based
      upon prevailing market prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2)                                                                                                                                                                                                                                                                                                                                      | Minera Escondida Limitada (MEL) entered
      into a Sales Agency Agreement for export tonnage with BHP Billiton Marketing
      A. G., a related party. This agreement, dated January 1, 2002, replaces
      the Sales Agency Agreement between MEL and BHP Billiton Minerals International
      Inc., originally signed in October 1985 between MEL and Utah International
      Inc., and amended in 1995. The sales commission is variable and can be up
      to 0.5% of monthly sale volumes. Shipping operations for export tonnage
      are covered by a Shipping Agency Agreement between Minera Escondida Limitada
      and BHP Billiton Marketing A.G. dated January 1, 2002, with a rate of US$68/wmt.
      Sales and shipping operations of Escondida within Chile are covered by a
      Domestic Marketing Services Agreement signed between Minera Escondida Limitada
      and BHP Chile Inc., dated January 1, 2002, with a rate of 0.125% of sales
      volumes.
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3)                                                                                                                                                                                                                                                                                                                                      | On October 2004, Minera Escondida Limitada
      was sued by Mr. Juan Cabezas who alleges that Escondida infringed his intellectual
      property rights and breached confidentiality in relation to the installation
      of certain acid fog collection devices at Escondidas Oxide plant in
      Chile. The devices are being installed in the Oxide plant by contractor
      SAME Limited. The amount in dispute is approximately US$27 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                         | In May 2007 the Company and Mr. Cabezas
      signed a settlement agreement by which the parties terminated this case.
      The Company paid a sum of US$ 0.6m.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(4)                                                                                                                                                                                                                                                                                                                                      | On March 2005, Minera Escondida Limitada
      (MEL) was sued by Thai Copper Industries Public Company Limited (TCI) who
      alleges that MEL has breached its obligation to sell quantities of copper
      concentrates to TCI on a yearly basis. The marketing contract was entered
      into on March 23, 1998 for a term of 5 years, commencing January 1, 1999.
      TCI was to take delivery of the copper concentrate at its smelter (which
      was not yet built) in Thailand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                         | The contract was amended on December
      17, 1998 to delay the commencement date to January 1, 2000 as TCIs
      smelter was not built and could not take any deliveries. The amendment provided
      that if TCI notified MEL that the completion of the smelter was to be later
      than January 1, 2001, MEL could elect to terminate the marketing contract.
      TCI notified MEL on February 5, 2003 that it expected production at its
      new smelter to commence in the 2nd quarter of 2004. MEL terminated the marketing
      contract by letter dated April 2, 2003. TCI alleges that MEL had no right
      to terminate the contract and seeks recovery of US$30 million in alleged
      damages.                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                         | On September 4, 2006 a settlement agreement
      was executed between Thai Copper and Minera Escondida, with no obligations
      for Escondida and TCI withdrawing the litigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|23                                                                                                                                                                                                                                                                                                                                       | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|The Company is exposed to
      movements in the prices of the products it produces which are generally
      sold as commodities on the world market. Relevant information on the Companys
      material cash-settled commodity contracts, which have been recognized at
      fair value in the income statement, is provided below:

|                                            |                         |  |                         | 
|------------------------------------------- | ----------------------- |  | ----------------------- | 
|Forwards                                    | Buy fixed/sell floating |  | Sell fixed/buy floating | 
|                                            |                         |  |                         | 
|Volume (000 tonnes)                        | 245                     |  | 247                     | 
|Average price of fixed contract (US$/tonne) | 7,081                   |  | 6,995                   | 
|Term to maturity (years)                    | 0-1                     |  | 0-1                     | 
|Notional amount of fixed contract (US$M)    | 1,790                   |  | 1,781                   | 

Price participation clauses are part of the TC/RC (treatment and refining charges) element of concentrate sales contracts. These price participation clauses include an embedded derivative, and as such have been marked
to fair value for the reporting period. The impact of this adjustment can be found in the income statement under ‘Unrealized fair value change  derivatives‘, while the balance sheet impact is recorded under ‘Financial Liabilities’.

(Continued)

A-101

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Back to Contents

Minera Escondida Limitada

Supplementary Information – Unaudited
June 30, 2007 and 2006
(in thousands of USD)

MINING OPERATIONS INFORMATION

BHP Billiton owns 57.5% of Minera Escondida. The other 42.5% is owned by the affiliates of Rio Tinto plc (30%); JECO, a subsidiary of Mitsubishi Corporation (10%) a consortium represented by Mitsubishi Corporation
(7%), Mitsubishi Materials Corporation (1%), Nippon Mining and Metals (2%); and the International Finance Corporation, (2.5%) .

Minera Escondida Limitada holds a mining concession from the Chilean state that remains valid indefinitely (subject to payment of annual fees).

The mine is accessible by public / private road.

Original construction of the operation was completed in 1990. The project has since undergone four phases of expansions at an additional cost of $2,125 million plus $451 million for the construction of an oxide
plant.

In October 2005, the Escondida Norte expansion was completed at a cost of $431 million.

In June 2006, the Escondida Sulphide Leach copper project achieved first production. The approved cost for the project was $907 million.

Escondida has two processing streams: two concentrator plants in which high quality copper concentrate is extracted from sulphide ore through a floatation extraction process; and a solvent extraction plant in which
leaching, solvent extraction and electrowinning are used to produce copper cathode.

Nominal production capacity is 3.2 Mtpa of copper concentrate and 150,000 tonnes per annum of copper cathode.

Escondida Sulphide Leach copper plant has the capacity to produce 180,000 tonnes per annum of copper cathode.

Separate transmission circuits provide power for the Escondida mine facilities. These transmission lines, which are connected to Chiles northern power grid, are company-owned and are sufficient to supply
Escondida post Phase IV. Electricity is purchased under contracts with local generating companies.

ORE RESERVES

The ore reserves tabulated are all held within existing, fully permitted mining tenements. The Companys minerals leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to
enable all reserves on the leased properties to be mined in accordance with current production schedules.

All of the ore reserve figures presented represent estimates at 30 June 2007. All tonnes and grade information presented have been rounded; hence small differences may be present in the totals. In addition, all reserve
tonnages and grades include dilution and are quoted on a dry basis, unless otherwise stated.

No third party audits have been carried out specifically for the purpose of this disclosure.

The reported reserves contained in this annual report do not exceed the quantities that, it is estimated, could be extracted economically if future prices were at similar levels to the average historical prices for
traded metals for the last three calendar years to 31 Dec 2006. Current operating costs have been matched to the average of historical or long term contract prices in accordance with Industry Guide 7.

(Continued)

A-102

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Back to Contents

Minera Escondida Limitada

Supplementary Information – Unaudited
June 30,
2007 and 2006
(in thousands of USD)

ORE RESERVES, continued

The three year historical average prices used for each commodity to estimate, or test for impairment of, the reserves of traded metals contained in this annual report are as follows:

|Commodity | Price US$ | 
|--------- | --------- | 
|          |           | 
|Copper    | 2.01/lb   | 
|          |           | 

|                      |                |  |                          |  |                            |  |                   |  |       |  |             | 
|--------------------- | -------------- |  | ------------------------ |  | -------------------------- |  | ----------------- |  | ----- |  | ----------- | 
|                      |                |  | Proven
      Ore Reserve |  | Probable Ore
      Reserve |  | Total Ore Reserve |  |       |  |             | 
|                      |                |  |                          |  |                            |  |                   |  |       |  |             | 
|                      |                |  |                          |  |                            |  |                   |  |       |  |             | 
|                      |                |  | Millions of              |  |                            |  | Millions of       |  |       |  | Millions of | 
|Commodity             |                |  | dry metric               |  |                            |  | dry metric        |  |       |  | dry metric  | 
|Deposit (1,2,3)       | Ore type       |  | tonnes                   |  | % TCu                      |  | tonnes            |  | % TCu |  | tonnes      | 
|                      |                |  |                          |  |                            |  |                   |  |       |  |             | 
|Copper:               |                |  |                          |  |                            |  |                   |  |       |  |             | 
|                      |                |  |                          |  |                            |  |                   |  |       |  |             | 
|Total Escondida (4,5) | Oxide          |  | 110                      |  | 0.81                       |  | 51                |  | 1.15  |  | 161         | 
|                      | Sulphide       |  | 659                      |  | 1.26                       |  | 1,083             |  | 1.08  |  | 1,743       | 
|                      | Sulphide leach |  | 667                      |  | 0.54                       |  | 1,728             |  | 0.55  |  | 2,395       | 
|                      |                |  |                          |  |                            |  |                   |  |       |  |             | 

|1) | % TCu  per cent total copper.                                  
|-- | ----------------------------------------------------------------
|  
|2) | Approximate drill hole spacing used to classify the reserves is:
|  

|Deposit   | Proven Reserve            |  | Probable Ore Reserve        | 
|--------- | ------------------------- |  | --------------------------- | 
|          |                           |  |                             | 
|Escondida | Sulphide: 55m x 55m       |  | Sulphide: 80m x 80m         | 
|          | Sulphide leach: 55m x 55m |  | Sulphide leach: 100m x 100m | 
|          | Oxide: 45m x 45m          |  | Oxide: 50m x 50m            | 
|          |                           |  |                             | 

|3) | Metallurgical recoveries for the operations
    are:
|-- | ----------------------------------------------------
|   |                                                     

|Deposit        | %Cu        | 
|-------------- | ---------- | 
|               |            | 
|Escondida      |            | 
|Sulphide       | 87% of TCu | 
|Sulphide Leach | 32% of TCu | 
|Oxide          | 68% of TCu | 
|               |            | 

|4) | Changes in the Escondida reserves for the year 2007 include an updated geological model using new data, updated cost and price estimates, full valuation of sulphide leach ore in ultimate pit limits, and variable
cut-off grade of sulphide mill ore. This year reserve report combined the two mines into a single reportable reserve. Economic and metallurgical studies are being conducted to evaluate optimal sulphide leach cut-off grades, which may lead to
revision in the reserve. The price used for Escondida was Cu = US$2.01/lb.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|5) | Escondida production rate and mine life estimate is based on the current life-of-mine plan which uses a future variable production rate from the Escondida pits. The current combined nominal production rate available to
the operation is 176 million tonnes per annum.                                                                                                                                                                                                                                                                       
|  

|Proven reserves in stockpiles at June 30, 2007 are: |                               |  |          | 
|--------------------------------------------------- | ----------------------------- |  | -------- | 
|Escondida Copper                                    | Millions of dry metric tonnes |  | % TCu    | 
|                                                    |                               |  |          | 
|Sulphide Ore                                        | 12.35                         |  | 1.21     | 
|Sulphide Leach                                      | 172.83                        |  | 0.68     | 
|Oxide Ore                                           | 105.53                        |  | 0.74     | 
|                                                    |                               |  |          | 
|These reserves will be used as follows:             |                               |  |          | 
|                                                    |                               |  |          | 
|Sulphide Ore                                        |                               |  | 8 Years  | 
|Sulphide Leach                                      |                               |  | 9 Years  | 
|Oxide Ore                                           |                               |  | 12 Years | 



A-103

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