##### 



SECURITIES
    AND EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
   [ Ö ]

Annual Report
    pursuant to Section 13 or 15(d)  of the Securities
    Exchange Act of 1934For
    the fiscal year ended31 December
    2006OR[    ]

Transition Report
    pursuant to Section 13 or 15(d)  of the Securities Exchange
    Act of 1934   Commission file
    number 1-3677
  Alcan
    Inc.
  Incorporated
    in:

I.R.S.
    Employer Identification No.:Canada

Not
    applicable1188
    Sherbrooke Street West,Montreal,
    Quebec, Canada H3A 3G2

Telephone:
    (514) 848-8000Securities
    registered pursuant to Section 12(b) of the Act:Title
    of Each Class

Name
    of Each Exchange on Which RegisteredCommon
    Shares, without nominal or par value

New
    York Stock ExchangeCommon
    Share Purchase Rights

New
    York Stock Exchange47/8% Notes
    due 2012

New
    York Stock Exchange   Securities
    registered pursuant to Section 12(g) of the Act:
    None
  Indicate by check
    mark if the Registrant is a well-known seasoned issuer, as
    defined in Rule 405 of the Securities Act.
 Yes Ö     No
  Indicate by check
    mark if the Registrant is not required to file reports pursuant
    to Section 13 or Section 15(d) of the Exchange
    Act.
 Yes      No Ö
  Indicate by check
    mark whether the Registrant: (1) has filed all reports
    required to be filed by Section 13 or 15(d) of the
    Securities Exchange Act of 1934 during the preceding
    12 months and (2) has been subject to such filing
    requirements for the past 90 days:
 Yes Ö     No
  Indicate by check
    mark if disclosure of delinquent filers pursuant to
    Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of Registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K.Ö
  Indicate by check
    mark whether the Registrant is a large accelerated filer, an
    accelerated filer, or a non-accelerated filer. See definition of
    accelerated filer and large accelerated
    filer in
    Rule 12b-2
    of the Exchange Act:
  Large
    accelerated
    filer  Ö

Accelerated
    filer

Non-accelerated
    filer   Indicate by check
    mark whether the Registrant is a shell company (as defined in
    Rule 12b-2
    of the Exchange Act).
 Yes      No Ö
  The
    aggregate market value of the voting stock held by
    non-affiliates:

USD
    17,606 million, as at 30 June 2006.Common
    Stock of Registrant outstanding:

367,434,803 Common
    Shares, as at 26 February 2007.Documents
    incorporated by reference:

Portions
    of the Proxy Circular for the Annual Meeting to be held on 26
    April 2007 are incorporated by reference in Part III of
    this
    Form 10-K.




---



##### 



INDEX TO
    ALCAN INC.
    2006 ANNUAL REPORT ON
    FORM 10-K
  PagePART IItem 1


Business

6Overview of
    Operating Segments

6History/Recent
    Developments

6Alcan Business
    Groups

9Bauxite
    and Alumina

9Primary
    Metal

12Engineered
    Products

19Packaging

23Information by
    Geographic Areas

26Research and
    Development

27Environment, Health
    and Safety/Alcan Integrated Management System

27Employees

28Patents, Licenses
    and Trademarks

28Competition and
    Government Regulations

29Item 1A


Risk
    Factors

29Item 1B


Unresolved Staff
    Comments

33Item 2


Properties

33Item 3


Legal
    Proceedings

33Environmental
    Matters

34Item 4


Submission of
    Matters to a Vote of Security Holders

37PART IIItem 5


Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities

37Item 6


Selected Financial
    Data

39Item 7


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations

40 Overview

41 Market
    Review

41 Results
    of Operations

44 Liquidity
    and Capital Resources

53 Operating
    Segment Review

59 Bauxite
    and Alumina

60 Primary
    Metal

62 Engineered
    Products

65 Packaging

69 Risks
    and Uncertainties

73 Critical
    Accounting Policies and Estimates

74Item 7A


Quantitative and
    Qualitative Disclosures about Market Risk

76




---



##### 



PageItem 8


Financial
    Statements and Supplementary Data

81 Managements
    Report on Internal Control over Financial Reporting

81 Report
    of Independent Registered Public Accounting Firm

83 Consolidated
    Statement of Income

85 Consolidated
    Balance Sheet

86 Consolidated
    Statement of Cash Flows

88 Consolidated
    Statement of Shareholders Equity

89 Notes
    to Consolidated Financial Statements

92 Supplementary
    Data

165 Quarterly
    Financial Data (unaudited)

165 Eleven
    Year Summary

168 Selected
    Alcan France SAS Unaudited Consolidated Financial
    Information

170Item 9


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure

171Item 9A


Controls and
    Procedures

171Item 9B


Other
    Information

171PART IIIItem 10


Directors and
    Executive Officers of the Registrant

171Item 11


Executive
    Compensation

173Item 12


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters

174Item 13


Certain
    Relationships and Related Transactions

176Item 14


Principal
    Accountant Fees and Services

176PART IVItem 15


Exhibits and
    Financial Statement Schedules

176Signatures

180




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##### 



Alcan Company Registrant Issuer
  Business Group
  Board Board of
    Directors
  Director
  Dollars $
  Executive Officers
  Financial Statements
  Joint Venture
  LME
  Managements Discussion and Analysis
  MW MWh kWh
  Novelis Canada Business Corporations Act
  Novelis Spin-off
  Proxy Circular
  Pechiney
  Related Company
  Share Common Share
  Shareholder Common
    Shareholder
  Subsidiary
  tonne kt Mt kt/y Mt/y
  US GAAP
 4




---



##### 



Form 10-K Form 10-K
  Form 10-K Form 10-K
  Special
    Note Regarding Forward-Looking Statements
  Certain statements made or incorporated by reference in this
    report are forward-looking statements within the meaning of
    securities legislation, in particular the United States
    Private Securities Litigation Reform Act of 1995. Terms
    such as believes, expects,
    may, will, could,
    should, anticipates,
    estimates, intends and plans
    and the negatives of and variations on terms such as these
    signify forward-looking statements. All statements that address
    the Companys expectations or projections about the future
    including statements about the Companys growth, cost
    reduction goals, expenditures and financial results are
    forward-looking statements. Because these forward-looking
    statements include risks and uncertainties, readers are
    cautioned that actual results may differ materially from the
    results expressed in or implied by the statements.
  For a listing of certain factors that could, among others,
    cause actual results or outcomes to differ materially from the
    results expressed or implied by forward-looking statements,
    please refer to Item 1A of this
    Form 10-K.
  Additional information concerning factors that could cause
    actual results to differ materially from those in
    forward-looking statements include, but are not necessarily
    limited to, those discussed under the heading Risks and
    Uncertainties in Managements Discussion and Analysis
    in Item 7 of this
    Form 10-K.
  Alcan undertakes no obligation to release publicly the
    results of any future revisions it may make to forward-looking
    statements to reflect events or circumstances after the date of
    this report or to reflect the occurrence of unanticipated
    events, nor does Alcan undertake any obligation to update on an
    interim basis the risk factors that could cause actual results
    to differ materially from those in forward-looking
    statements.
  1-800-SEC-0330 Securities Exchange Act of
    1934 Worldwide Code of Employee and
    Business Conduct
 5




---



##### 



PART I  ITEM 1
    BUSINESS      A.
    OVERVIEW
    OF OPERATING SEGMENTS    Bauxite and Alumina
  Primary Metal
  Engineered Products
  Packaging
  B.
    HISTORY /
    RECENT DEVELOPMENTS   6




---



##### 



1.
    Alcans
    Recent Developments                          ®
         7




---



##### 



8




---



##### 



start-up
  C.
    ALCAN
    BUSINESS GROUPS    1.
    Bauxite
    and Alumina    1.1
    Products
    and Services / Business Units  Bauxite: sub-tropical
  Smelter-Grade
    Alumina:
  Specialty Alumina:
  Services:
       9




---



##### 



1.2
    Alumina
    Plants    Smelter-Grade
    Alumina Refineries
  % ofOwnership


Annual Capacity


2006 ProductionLocations

by Alcan


(in kt)


(in kt)Australia

Gladstone, Queensland (QAL)


41.4



1,640
*


1,601
*Gove, Northern Territory


100



2,000



1,615Brazil

São Luis (Alumar)


10



145
*


144
*Canada

Jonquière, Quebec


100



1,300



1,305France

Gardanne


100



200



191Total Smelter-Grade
    Alumina






5,285



4,856     *
    
    Represents Alcans share.  Specialty
    Alumina Plants
  % ofOwnership


Annual Capacity


2006 ProductionLocations

by Alcan


(in kt)


(in kt)Canada

Brockville, Ontario


100



20



16Jonquière, Quebec*


100



80
**


169France

Gardanne


100



435



445Beyrède


100



28



25La Bâthie


100



31



27Germany

Teutschenthal


100



28



24Total Specialty
    Alumina






622



706     *
    
    Decision taken in 2006 to shut down
    part of production capacity.**
    
    Capacity is at 31 December
    2006.  1.3
    Source
    Materials  1.3.1
    Bauxite
    Mines / Deposits   10




---



##### 



Bauxite
    Mines / Deposits
  % ofOwnership


Annual Capacity


2006 ProductionLocations

by Alcan


(in kt)


(in kt)Australia

Gove, Northern Territory


100



6,000



4,767Ely, Queensland


100



0
**


0
**Brazil

Porto Trombetas (MRN)


12.5



2,100
*


2,130
*Ghana

Awaso


80



1,000
*


793
*Guinea

Conakry (CBG)


22.9



6,200
*


6,205
*India

Orissa (UTKAL)


45



N/A
***


0
***Total Bauxite






15,300



13,895     *
    
    Represents Alcans Share.**
    
    Operations commenced in January
    2007.***
    
    Bauxite extraction not yet in
    operation.  
    
    Approximately 6.2 Mt of the
    bauxite produced at Conakry are reserved for Alcans needs.    1.3.2
    Chemicals
    and Other Materials    1.3.3  Services
    1.4
    Recent
    Developments  Australia:
  start-up
  Brazil:
 11




---



##### 



Canada:
  Guinea: country-wide
  Ghana:
  Madagascar:
  2.
    Primary
    Metal    2.1
    Products
    and Services / Business Units  Power Operations:
  Smelter Operations:
    Trading:
 12




---



##### 



Technology Sales, Equipment Sales and
    Engineering Services:
  
    Technology Sales:  Aluval, which is located in
    Voreppe (France), provides advanced smelter technology in terms
    of productivity (production capacity and energy consumption),
    such as AP18-22 and the AP3X families of smelter technologies,
    and the newly-announced AP50 technology, to third parties. This
    sector is supported by a strong research and development
    program. The services include the sale of licenses of primary
    aluminum smelting technology, engineering and
    start-up
    support, and technical assistance;
    Equipment Sales:  Électricité
    Charpente Levage (ECL) is a major supplier of cranes and potroom
    equipment for the aluminum industry. In addition, it provides
    cranes for baking furnaces and rodding shop equipment. ECL
    operations are located in France, Canada, South Africa,
    Australia, Bahrain, the Netherlands, Mozambique, China and
    India; and
    Engineering Services:  Alcan Alesa Engineering
    (Alesa) provides services and custom-made engineering solutions
    on a global basis to Subsidiaries as well as third parties.
    Alesa subsidiaries maintain engineering offices in Switzerland
    and Canada. The main areas of activity include raw materials
    technologies, materials handling technologies and process
    automation.  Other Production
    facilities:
      2.2
    Production
    Facilities and Sales Centres  Smelter Operations: and/or
 13




---



##### 



Primary
    Metal Smelter Locations
  % ofOwnership


Annual Capacity


2006 ProductionLocations

by Alcan


(in kt)


(in kt)Australia

Tomago, New South Wales


51.5



268
(1)


268
(1)Cameroon

Edea
    (Alucam)(2)


46.7



47
(1)


42
(1)Canada

Alma, Quebec


100



415



410Sept-Iles, Quebec (Alouette)


40



229
(1)


228
(1)Beauharnois, Quebec


100



52



52Bécancour, Quebec


25



101
(1)


101
(1)Kitimat, British Columbia


100



277



238Grande-Baie, Quebec


100



207



206Laterrière, Quebec


100



228



227Shawinigan, Quebec


100



99



98Arvida, Quebec


100



166



165China

Qingtongxia


50



76
(1)


77
(1)France

Dunkerque


100



259



259Lannemezan(3)


100



50



47Saint-Jean-de-Maurienne


100



135



134Iceland

Reykjavik (ISAL)


100



179



168Netherlands

Vlissingen(4)


85



181
(1)


179
(5)Norway

Husnes (SORAL)


50



82
(1)


82
(1)Oman

Sohar


20



N/A
(6)


0
(6)Switzerland

Steg(7)


100



N/A
(7)


12United Kingdom

Lynemouth


100



178



173Lochaber


100



43



43United States

Sebree, Kentucky


100



196



194Total Smelting
    Operations






3,468



3,403     (1)
    
    Represents Alcans share.(2)
    
    Alcans direct ownership in Edea is 46.7%; however, the
    Company obtains 70 to 80% of the production of the plant as the
    major industrial shareholder.(3)
    
    In the process of being closed.(4)
    
    Strategic review underway  See
    sub-heading
    2.4 Recent Developments hereunder.(5)
    
    Represents 100% of the Vlissingen smelters production.(6)
    
    Smelter not yet in operation; Alcans 20% proportionate
    share of the smelters expected capacity of 350 kt/y would
    be 70 kt/y.(7)
    
    Closed during the course of 2006. 14




---



##### 



Technology Sales, Equipment Sales Centres (ECL)
    and Engineering Services:
  Technology
    and Equipment Sales Centres and Engineering Services
  Country

Location

BusinessAustralia

Eagle Farm, Queensland

ECLBahrain

Bahrain

ECLCanada

Quebec City, Quebec
    Montreal, Quebec

ECL
    Engineering ServicesChina

Shanghai

ECLFrance

Ronchin
    Voreppe

ECL
    Technology SalesIndia

Bhubaneshwar

ECLMozambique

Matola

ECLNetherlands

Ritthem

ECLSouth Africa

Richards Bay

ECLSwitzerland

Zurich

Engineering Services   2.2.3
    Other Production Facilities:  Other
    Production Facilities
  % ofOwnershipLocations

Output/Type of Facility

by AlcanCanada

Dubuc, Quebec

Engineered cast products


100Strathcona, Alberta

Calcined coke


61Arvida, Quebec

Calcined coke and cathode blocks


100Vaudreuil, Quebec

Fluoride plant


100France

Compiègne*

Recycling


100Carbone Savoie

Cathodes


100Netherlands

Rotterdam

Anode facility


58.5Norway

Vigelands

High purity metal refinery


50Sweden

Helsingborg

Fluoride plant


50     *
    
    In the process of being closed.  Other Aluminum
    Sources:
  2.3
    Source
    Materials    Electrical Power:
 15




---



##### 



short-term
 16




---



##### 



Power
    Generation
 % ofOwnership


Installed CapacityLocations

by Alcan


(MW)Canada

Quebec Power Stations


100



2,687Isle-MaligneChute-à-CaronShipshawChute
    du DiableChute
    à la SavaneChute-des-PassesKemano, British Columbia


100



896China

Daba power plant (coal-fired)


21.8



261
*Norway

Vigelands


100



26United Kingdom

Lynemouth (coal-fired)


100



420Highlands Power Stations


100



80LochaberKinlochlevenTotal Power
    Generation








4,370    *
    
    Represents Alcans share,
    through its Joint Venture interest.  Anodes: on-site
    Cathodes:
  Chemicals and Other
    Materials:
  2.4  Recent
    Developments
  Canada:
 17




---



##### 



France:
    Iceland:
  Netherlands:
  South Africa:
 18




---



##### 



3.
    Engineered
    Products  3.1
    Products
    / Business Units      Aerospace, Transportation & Industry
    (ATI):
  Composites: weight-to-rigidity
  Cable:
  Extruded Products:
  Engineered and Automotive Solutions
    (EAS):
  Alcan Service Centres:
 19




---



##### 



Alcan International Network
    (AIN):
  Specialty Sheet:
        3.2
    Production
    and Services Facilities    Engineered
    Products Locations
  Locations

Products / Business UnitsAustria

Hallein

Service CentresSt. Johann im Pongau

Service CentresVienna

Alcan International Network;
    Service CentresBelgium

Brussels

Alcan International Network;
    Service CentresGent

Alcan International NetworkBrazil

Camaçari

CompositesSão Paulo

Alcan International NetworkCanada

Concord, Ontario

CableLapointe, Quebec

CableSaguenay, Quebec

Engineered and Automotive SolutionsShawinigan, Quebec

CableChina

Beijing

Alcan International NetworkHong Kong

Alcan International NetworkShanghai

Alcan International Network;
    CompositesTaipei

Alcan International NetworkCzech Republic

Dečin

Extruded ProductsPrague

Alcan International NetworkStrojmetal

Engineered and Automotive
    Solutions (Partnership)Ecuador

Guayaquil

CompositesQuevedo

CompositesSanto Domingo de los Rios

CompositesManta

CompositesPlantations Raw Materials

Composites 20




---



##### 



Locations

Products / Business UnitsEngineered Products Locations
    (Contd)Egypt

Cairo

Alcan International NetworkFrance

Carquefou

Aerospace, Transportation &
    IndustryChassieu

Service CentresHam

Extruded ProductsIssoire

Aerospace, Transportation &
    IndustryMontreuil-Juigne

Aerospace, Transportation &
    IndustryNantes

Service CentresNeuf-Brisach

Specialty SheetNuits-Saint-Georges

Extruded ProductsOzoir-la-Ferrière

Service CentresParis

Alcan International NetworkSabart

Aerospace, Transportation &
    IndustrySaint-Florentin

Extruded ProductsSatma/Goncelin

OtherUssel

Aerospace, Transportation &
    IndustryGermany

Bad Salzungen

Service CentresBurg

Extruded ProductsCrailsheim

Extruded ProductsDahenfeld

Engineered and Automotive SolutionsDüsseldorf

Alcan International Network;
    Service CentresFellbach

Service CentresFrankfurt

Service CentresGera

Service CentresGottmadingen

Engineered and Automotive SolutionsHamburg

Service CentresHannover

Service CentresHebsack

Service CentresHohenacker

Service CentresImmendingen

Service CentresLandau

Extruded ProductsKöln

Service CentresMannheim

Service CentresMunich

Service CentresNürnberg

Service CentresOsnabrück

CompositesSingen*

Composites; Extruded Products;
    Specialty Sheet;
      Engineered and Automotive SolutionsGreece

Athens

Alcan International NetworkHungary

Budapest

Alcan International Network;
    Service CentresItaly

Bologna

Service CentresFlorence

Service CentresMilan

Alcan International NetworkPadova

Service CentresTreviglio

Service CentresJapan

Tokyo

Alcan International NetworkMexico

Mexico City

Alcan International NetworkMonterrey

Alcan International NetworkNetherlands

Amsterdam

Alcan International NetworkBreda

Service CentresPortugal

Lisbon

Alcan International NetworkRomania

Bucharest

Alcan International NetworkBihor

Service Centres 21




---



##### 



Locations

Products / Business UnitsEngineered Products Locations
    (Contd)Russia

Moscow

Alcan International NetworkSingapore

Singapore

Alcan International NetworkSlovakia

Levice**

Extruded ProductsSlovenia

Koper

Engineered and Automotive Solutions(Joint Venture)Ljubljana

Service CentresSouth Africa

Johannesburg (Sandton)

Alcan International NetworkSouth Korea

Seoul

Alcan International NetworkSpain

Barcelona

Alcan International Network;
    Service CentresMadrid

Alcan International Network;
    Service CentresSwitzerland

Altenrhein

Engineered and Automotive SolutionsDagmersellen

Service CentresNiederglatt

Service CentresSierre***

Extruded Products; Aerospace,
    Transportation &
      IndustrySins

CompositesSweden

Goteborg

Alcan International NetworkThailand

Bangkok

Alcan International NetworkUnited Arab Emirates

Dubai

Alcan International NetworkUnited Kingdom

Chelmsford

CompositesSlough-Berkshire

Alcan International NetworkWorkington****

Aerospace, Transportation &
    IndustryUnited States

Benton, Kentucky

CompositesChatsworth, California

CableGlasgow, Kentucky

CompositesMt. Juliet, Tennessee

CompositesNorthvale, New Jersey

CompositesNovi, Michigan

Engineered and Automotive SolutionsRavenswood, West Virginia

Aerospace, Transportation &
    Industry; Alcan
      Rolled Products  RavenswoodRoseburg, Oregon

CableSedalia, Missouri

CableSt. Louis, Missouri

CompositesStamford, Connecticut

Alcan International NetworkStatesville, North Carolina

CompositesVernon, California****

Aerospace, Transportation &
    IndustryWilliamsport, Pennsylvania

Cable     *
    
    Shared site with the Packaging Business Group.**
    
    Facility not yet in operation.***
    
    Shared site with Novelis.****
    
    Facility to be closed.  3.3
    Source
    Materials    22




---



##### 



4.
    Packaging  4.1
    Products
    / Business Sectors      Food Packaging Europe, Americas and
    Asia:
    Global Pharmaceutical and Medical
    Packaging:
  Global Beauty and Personal Care
    Packaging: make-up,
   Global Tobacco
    Packaging:
      4.2  Production
    Facilities
     23




---



##### 



Packaging
    Plants
  Locations

Packaging SectorArgentina

Chivilcoy

Food AmericasAustralia

Adelaide, South Australia

Food EuropeBelgium

Grace-Hollogne (Veramic)

Pharmaceutical and MedicalBrazil

Diadema, São Paulo

Pharmaceutical and MedicalMaua, São Paulo

Food AmericasMogi das Cruzes, São Paulo

Beauty and Personal CareSão Paulo, São Paulo

Beauty and Personal CareSuape, Pernambuco

Beauty and Personal CareCanada

Baie dUrfe, Quebec

Pharmaceutical and MedicalBrampton, Ontario

Beauty and Personal CareLachine, Quebec

TobaccoSaint-Cesaire, Quebec

Food EuropeWeston, Ontario

Food AmericasWoodbridge, Ontario

Pharmaceutical and MedicalChile

Santiago de Chile

Food EuropeChina

Beijing

Food AsiaChengdu

Food AsiaFoshan

Beauty and Personal CareHuizhou

Food Asia; Pharmaceutical and
    MedicalJiangyin

Food Asia; Pharmaceutical and
    MedicalSuzhou

Beauty and Personal CareZhongshan

Beauty and Personal CareCzech Republic

Skrivany

Food EuropeFrance

Albertville

Beauty and Personal CareArras

Food EuropeAumale

Pharmaceutical and MedicalAuthon-du-Perche (2 plants)

Pharmaceutical and MedicalBernaville

Beauty and Personal CareChalles

Beauty and Personal CareChalon-sur-Saone

Food EuropeDax

Food EuropeDijon

Food EuropeFroges

Food EuropeLucenay-les-Aix

Pharmaceutical and MedicalMareuil-sur-Ay

Food EuropeMontreuil-Bellay

Pharmaceutical and MedicalMoreuil

Food EuropePlouhinec

Beauty and Personal CareSainte-Menehoud (2 plants)

Beauty and Personal CareSaint-Maur

Pharmaceutical and MedicalSaint-Seurin-sur-lIsle

Food EuropeSarrebourg

Food EuropeSélestat

Food Europe; Pharmaceutical and
    MedicalUchaux

Food AmericasVandieres

Beauty and Personal CareVienne-le-Chateau

Beauty and Personal CareGermany

Neumunster

TobaccoSchesslitz

Beauty and Personal CareSingen

Food Europe; Pharmaceutical and
    MedicalTeningen

Food EuropeIndonesia

Demak

Beauty and Personal CareTangerang

Food Asia 24




---



##### 



Locations

Packaging SectorPackaging Plants
    (Contd)Ireland

Dublin

Food EuropeItaly

Arenzano

Food EuropeLainate

Food EuropeLugo di Vicenza

Food Europe; Pharmaceutical and
    MedicalTortona

Beauty and Personal CareVerderio Superiore

Beauty and Personal CareKazakhstan

Almatinskaya Oblast

TobaccoMalaysia

Rawang

TobaccoMexico

Matamoros, Tamaulipas

Beauty and Personal CareMexico City

Beauty and Personal CareMonterrey, Nuevo Leon

Food AmericasReynosa, Tamaulipas

Beauty and Personal CareTlaquepaque, Jalisco

Food AmericasZacapu, Michoacan de Ocampo

Food AmericasMorocco

Mohammedia

Food EuropeNetherlands

Brabant (Bergen Op Zoom)

TobaccoZutphen

Food EuropeNew Zealand

Wellington

Food AsiaPhilippines

Cainta

TobaccoPoland

Lodz

Beauty and Personal CareZlotow

Food EuropePortugal

Carvalhos

Food EuropePuerto Rico

Cayey

Pharmaceutical and MedicalRussia

Moscow*

Food EuropeSt. Petersburg*

TobaccoSpain

Alzira

Food Europe; Pharmaceutical and
    MedicalBarcelona

Beauty and Personal CareSwitzerland

Kreuzlingen

Food Europe; Pharmaceutical and
    MedicalRorschach

Food EuropeThailand

Bangplee

Food AsiaPhetchaburi

Food AsiaSriracha

Food AsiaTurkey

Istanbul

Food EuropeIzmir

TobaccoUnited Kingdom

Bristol

TobaccoCramlington

Pharmaceutical and MedicalMidsommer Norton**

Food EuropeWorkington (Cumbria)

Food Europe 25




---



##### 



Locations

Packaging SectorPackaging Plants
    (Contd)United States

Akron, Ohio

Food AmericasAmerican Canyon, California

Food EuropeAsheville, North Carolina

Pharmaceutical and MedicalAtlanta, Georgia

TobaccoBatavia, Illinois

Food AmericasBellwood, Illinois

Food AmericasBethlehem, Pennsylvania

Pharmaceutical and MedicalBoscobel, Wisconsin (2 plants)

Food AmericasChase City, Virginia

Pharmaceutical and MedicalCommerce, California

Pharmaceutical and MedicalDes Moines, Iowa

Food AmericasDes Plaines, Illinois

Pharmaceutical and MedicalEdgewood, New York

Food AmericasJoplin, Missouri

Food AmericasLincoln Park, New Jersey**

Beauty and Personal CareMarshall, North Carolina

Pharmaceutical and MedicalMenasha, Wisconsin

Food AmericasMillville, New Jersey (4 plants)

Pharmaceutical and MedicalMilwaukee, Wisconsin

Pharmaceutical and MedicalMinneapolis, Minnesota

Food AmericasMorristown, Tennessee

Beauty and Personal CareNeenah, Wisconsin

Food AmericasNewark, California

Food AmericasNew Hyde Park, New York

Food AmericasReidsville Industrial Park,

TobaccoNorth CarolinaRichmond, Virginia

TobaccoRussellville, Arkansas

Food AmericasShelbyville, Kentucky

Food Americas; Pharmaceutical and
    MedicalShelbyville, Tennessee

Beauty and Personal CareSt. Louis Park, Minnesota***

Food AmericasSyracuse, Nebraska

Pharmaceutical and MedicalTulsa, Oklahoma

Food AmericasWashington, New Jersey

Beauty and Personal CareWestport, Indiana

Pharmaceutical and MedicalYoungsville, North Carolina

Pharmaceutical and Medical     *
    
    Greenfield facility.**
    
    To be closed.***
    
    Counted as part of the Minneapolis facility.   4.3
    Source
    Materials    D.
    INFORMATION
    BY GEOGRAPHIC AREAS   26




---



##### 



E.
    RESEARCH
    AND DEVELOPMENT                  F.
    ENVIRONMENT,
    HEALTH AND SAFETY/ALCAN INTEGRATED MANAGEMENT SYSTEM      EHS FIRST ,
 27




---



##### 



EHS FIRST
  EHS FIRST EHS FIRST
  EHS FIRST
  G.
    EMPLOYEES          H.
    PATENTS,
    LICENSES AND TRADEMARKS       28




---



##### 



I.
    COMPETITION
    AND GOVERNMENT REGULATIONS  first-tier
   ITEM 1A  RISK
    FACTORS    Alcan is
    exposed to volatility in the aluminum industry and in aluminum
    end-use markets, which may adversely affect its financial
    results because such volatility may significantly reduce
    revenues without resulting in corresponding cost
    savings.
    Fluctuations
    in currency exchange rates may negatively affect Alcans
    financial results and cost structure.
     29




---



##### 



Alcans
    operations are energy-intensive and, as a result, its
    profitability may be adversely affected by rising energy costs
    or by energy supply interruptions.
    
    the unavailability of hydroelectric power due to droughts;
    significant increases in the costs of supplied electricity or
    other energy;
    interruptions in energy supply due to equipment failure or other
    causes; or
    the inability to extend contracts for the supply of energy on
    economical terms upon expiration.    Alcans
    profitability could be adversely affected by increases in the
    costs of and disruptions in the availability of raw
    materials.
      Alcan
    participates in highly competitive markets.
    Alcan is
    subject to risks caused by changes in interest rates.
    Alcan
    could be required to make large contributions to its defined
    benefit pension plans as a result of adverse changes in interest
    rates and the equity markets.
     30




---



##### 



Alcan has
    a unionized workforce, and union disputes and other employee
    relations issues could harm its financial results.
    Alcans
    operations are affected by conditions and events beyond its
    control in countries where Alcan has operations or sells
    products.
    Alcan is
    exposed to market and credit risks from its derivatives
    portfolio and trading activities.
    Alcan may
    be exposed to significant legal proceedings or
    investigations.
    Alcan is
    subject to a broad range of environmental laws and regulations
    in the jurisdictions in which it operates, and Alcan may be
    exposed to substantial environmental costs and
    liabilities.
    Alcan may
    be subject to liability related to the use of hazardous
    substances in production.
   31




---



##### 



Alcan is,
    and may be in the future, subject to suits regarding product
    liability, commercial disputes and claims by individuals,
    corporations and governmental entities related to its past and
    current activities and the activities of companies that Alcan
    has acquired and may acquire in the future.
    Alcan may
    not be able to successfully implement productivity and
    cost-reduction initiatives.
    Alcan has
    made significant capital expenditure commitments to expand and
    modernize production capacity.
    Alcan is
    subject to risks related to the Novelis Spin-off.
        Alcan
    could be adversely affected by changes in the business or
    financial condition of significant customers.
   32




---



##### 



The
    markets for Alcans products are highly competitive and the
    willingness of customers to accept substitutions for
    Alcans products is high.
    Future
    acquisitions or divestitures may adversely affect Alcans
    financial condition.
      Alcan may
    not be able to successfully develop and implement new technology
    required to achieve continued profitability.
    Unexpected
    events may increase Alcans cost of doing business or
    disrupt Alcans operations.
     ITEM 1B  UNRESOLVED
    STAFF COMMENTS   ITEM 2  PROPERTIES  sub-headings 1.2
 ITEM 3  LEGAL
    PROCEEDINGS   33




---



##### 



A.
    ENVIRONMENTAL
    MATTERS  1.
    Cases  Omega Chemical Site.
  Millville, New Jersey Plant.
  Shulton, Mays Landing Landfill.
  Williams Landfill.
  Clifton, New Jersey Facility. clean-up on-site
  LM Trentesaux Site. clean-up
  Algoods Ontario Remediation.
 34




---



##### 



Howmet Sites.
  Dover, New Jersey Site.
  Combe Fill South Landfill.
  Holden Mine Site.
  Blackbird Mine. clean-up clean-up.
 35




---



##### 



Tungsten Mine Site.
  Pohatcong Valley Site. on-site
  High Point Sanitary Landfill.
  Spill at Port Installations.
  Guelph, Ontario.
  Muzin River.
  Centralia.
 36




---



##### 



2.
    Reviews
    and Remedial Actions   ITEM 4  SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5
    MARKET
    FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES            Income Tax Act gross-up
  37




---



##### 



Dividend ($)

New York Stock Exchange* ($)


Toronto Stock Exchange** (CAN$)High


Low


Close


Avg. Daily Volume


High


Low


Close


Avg. Daily Volume2006 QuarterFirst

0.150


51.55



40.64



45.73



1,567,674



59.25



47.05



53.43



1,534,425Second

0.150


59.20



41.55



46.94



2,900,325



64.99



46.05



52.29



1,804,657Third

0.200


48.50



37.48



39.87



975,374



54.95



41.78



44.55



1,335,986Fourth

0.200


51.31



38.32



48.74



1,220,320



58.95



43.25



56.78



1,264,882Year

0.700 High


Low


Close


Avg. Daily Volume


High


Low


Close


Avg. Daily Volume2005 QuarterFirst

0.150


47.50



35.75



37.92



1,269,532



58.27



43.35



46.00



1,268,361Second

0.150


39.13



28.75



30.00



1,207,673



47.89



36.56



36.78



1,468,538Third

0.150


36.78



30.21



31.37



1,231,066



44.18



35.38



36.85



1,492,671Fourth

0.150


41.92



29.49



40.95



1,233,368



48.60



34.86



47.76



1,678,781Year

0.600     *
    
    As reported by the New York Stock
    Exchange  Consolidated Trading.**
    
    As reported by the Toronto Stock
    Exchange.  Performance
    Graph
    Purchases
    of Equity Securities
    Rule 10b-18 Securities Exchange Act of 1934
    Total Number of


Maximum Number ofShares Purchased as


Shares that May YetTotal Number of


Average Price Paid


Part of Publicly


Be Purchased Under2006 Period

Shares Purchased


per Share


Announced Program


the Program1 Oct.  31 Oct.


0







0



18,800,0001 Nov.  30 Nov.


9,781,200



47.42



9,781,200



9,018,8001 Dec.  31 Dec.


50,000



47.92



50,000



8,968,800Total


9,831,200



47.42



9,831,200



  38




---



##### 



Sales of
    Unregistered Securities
  Securities Act
    of 1933
  NumberDates

of Shares23 October 2006


2,5968 November 2006


6829 November 2006


72320 November 2006


1,6381 December 2006


40512 December 2006


4,82818 December 2006


1,980    ITEM 6  SELECTED
    FINANCIAL DATA  SELECTED
    HISTORICAL FINANCIAL DATA
   Years Ended December 312006


2005


2004


2003


2002US GAAPSales and operating revenues


23,641



20,320



24,948



13,850



12,483Income (Loss) from continuing
    operations


1,786



155



243



262



421Income (Loss) from discontinued
    operations


4



(26
)


15



(159
)


(21
)Cumulative effect of accounting
    changes


(4
)










(39
)


(748
)Net income (Loss)


1,786



129



258



64



(348
)Earnings (Loss) per
    share:Basic:Income (Loss) from continuing
    operations


4.75



0.40



0.64



0.79



1.29Income (Loss) from discontinued
    operations


0.01



(0.07
)


0.05



(0.49
)


(0.07
)Cumulative effect of accounting
    changes


(0.01
)










(0.12
)


(2.32
)Net income (Loss) per share


4.75



0.33



0.69



0.18



(1.10
)Diluted:Income (Loss) from continuing
    operations


4.74



0.40



0.64



0.79



1.29Income (Loss) from discontinued
    operations


0.01



(0.07
)


0.05



(0.49
)


(0.07
)Cumulative effect of accounting
    changes


(0.01
)










(0.12
)


(2.32
)Net income (Loss) per share


4.74



0.33



0.69



0.18



(1.10
)Cash dividends per share


0.70



0.60



0.60



0.60



0.60Total assets


28,939



26,638



33,341



31,948



17,761Long-term debt (including current
    portion)


5,512



6,067



6,914



7,778



3,369    39




---



##### 



Spin-off. pro-forma Spin-off Spin-off Form 10-K.
    Stock-Based
  after-tax
  after-tax
  Form 10-K.
  Form 10-K.
  ITEM 7
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS INTRODUCTION    Form 10-K.
    Accounting
    Estimates and Assumptions
   40




---



##### 



OVERVIEW  $3-billion
      3-month
 MARKET
    REVIEW  World
    Primary Aluminum Balance
  Supply
    and Demand
      Defined as the world
    excluding the Commonwealth of Independent States (CIS), Eastern
    Europe and China.
 41




---



##### 



World
    Primary Aluminum Supply and Demand
  
  Balance
    and Prices
  3-months intra-day
  Total
    Aluminum Inventories and Ingot Prices
  
    * International Aluminium
    Institute
  Outlook
   42




---



##### 



Total
    Aluminum Consumption
    1999-2000.
  year-over-year
  Total
    Global Consumption by End-Use Market
  2006


2005


2004Containers and
    Packaging


15%



16%



16%Building and
    Construction


20%



20%



18%Electrical


10%



10%



8%Transportation


27%



27%



31%Consumer Durables


7%



7%



6%Machinery and
    Equipment


8%



8%



8%Other


13%



12%



13%Total


100%



100%



100%   Total
    Global Consumption by Geographic Market
  2006


2005


2004North America


23%



24%



25%Western Europe


21%



22%



22%Asia (excl. China)


20%



21%



21%Latin America


5%



5%



5%Africa and Oceania


2%



2%



2%Western World


71%



74%



75%China


25%



22%



21%Eastern Europe


2%



2%



2%CIS


2%



2%



2%Total


100%



100%



100%  43




---



##### 



Alcans
    Revenues by Geographic Market*
  2006


2005


2004North America


37%



36%



35%Europe


45%



47%



45%Asia/Pacific/Africa


17%



16%



16%South America


1%



1%



4%Total


100%



100%



100%     * Point of destination
 RESULTS
    OF OPERATIONS  Presentation
    of Financial Information
  Novelis
    Spin-Off
    Earnings
    Summary
  Income
    from Continuing Operations
  
    *
    Other Specified Items (OSIs)
    include, for example: restructuring and synergy charges; asset
    impairment charges; gains and losses on non-routine sales of
    assets, businesses or investments; unusual gains and losses from
    legal claims and environmental matters; gains and losses on the
    redemption of debt; income tax reassessments related to prior
    years and the effects of changes in income tax rates; and other
    items that, in Alcans view, do not typify normal operating
    activities. 44




---



##### 



Net
    Income
  For the Year Ended2006


2005


2004(In millions of US$)Included in income from continuing
    operations are:Foreign currency balance sheet
    translation


(12
)


(86
)


(153
)Other Specified Items:Synergy costs






(57
)


(44
)Restructuring charges


(115
)


(162
)


(41
)Asset impairments


(51
)


(314
)


(66
)Goodwill impairment






(122
)


(154
)Gains (losses) from non-routine
    sales of assets, businesses and investments, net


(23
)


36



54Tax adjustments


79



(37
)


13Novelis costs






(21
)


(31
)Legal and environmental provisions










(7
)Pechiney financing-related losses










(2
)Purchase accounting and related
    adjustments










(122
)Other


12



7



(4
)Total Other Specified Items


(98
)


(670
)


(404
)Income from continuing
    operations


1,786



155



243Income (Loss) from discontinued
    operations


4



(26
)


15Cumulative effect of accounting
    change


(4
)






Net Income


1,786



129



258   2006
    vs. 2005
       45




---



##### 



2005
    vs. 2004
  year-over-year
         46




---



##### 



Sales and
    Operating Revenues
  Revenues
    and Aluminum Volumes
  
    *
    Includes ingot shipments (primary,
    secondary and scrap) and, in respect of 2004, rolled products
    shipments.  Sales
    Price Realizations
  
  2006
    vs. 2005
    2005
    vs. 2004
   47




---



##### 



Revenues
    by Market
  2006


2005


2004Packaging


27%



30%



37%Aluminum Ingot


33%



30%



17%Beverage Cans


3%



3%



10%Building and
    Construction


3%



3%



6%Electrical


3%



3%



3%Transportation


7%



8%



8%Other


24%



23%



19%Total


100%



100%



100%   Costs and
    Expenses
      Costs
    and Expenses
  For the Year Ended% of





% of





% of2006


Sales


2005


Sales


2004


Sales(In millions of US$, except where indicated)Cost of sales and operating
    expenses


17,990



76.1



16,135



79.4



20,270



81.2Depreciation and amortization


1,043



4.4



1,080



5.3



1,337



5.4Selling, administrative and
    general expenses


1,475



6.2



1,402



6.9



1,615



6.5Research and development expenses


220



0.9



227



1.1



239



1.0Interest


284



1.2



350



1.7



346



1.4Restructuring charges 
    net


179



0.8



685



3.4



87



0.3Other expenses
    (income)  net


77



0.3



(4
)






321



1.3  48




---



##### 



Total
    Aluminum Volume and Purchases
  
    *
    Includes ingot shipments (primary,
    secondary and scrap) and, in respect of 2004, rolled products
    shipments.  2006
    vs. 2005
          2005
    vs. 2004
       49




---



##### 



Interest
  Interest
  
  2006
    vs. 2005
      2005
    vs. 2004
      Restructuring
    Charges  Net
  2006
   50




---



##### 



2005
    2004
    Other
    Expenses (Income)  Net
  2006
  marking-to-market
  2005
  marking-to-market
  2004
  marking-to-market
  Income
    Taxes
  2006
   51




---



##### 



2005
    2004
    Goodwill
  2006
    vs. 2005
    2005
    vs. 2004
   52




---



##### 



LIQUIDITY
    AND CAPITAL RESOURCES  Operating
    Activities
  Cash
    Flow from Operating Activities and Free Cash Flow from
    Continuing Operations
  
  Free
    Cash Flow from Continuing Operations  Reconciliation
    with Cash Flow from Operating
    Activities*
  For the Year Ended2006


2005


2004(In millions of US$)Cash flow from operating
    activities in continuing operations


3,040



1,535



1,739DividendsAlcan shareholders (including
    preference)


(267
)


(224
)


(223
)Minority interests


(2
)


(2
)


(13
)Capital expenditures in continuing
    operations


(2,081
)


(1,742
)


(1,269
)Free Cash Flow from Continuing
    Operations


690



(433
)


234     * Certain prior period amounts have been reclassified to conform
    with the current period presentation.
  2006
    vs. 2005
     53




---



##### 



2005
    vs. 2004
        Financing
    Activities
  Total
    Borrowings and Equity
  
    *
    
    Includes borrowings of operations
    held for sale**
    
    Includes minority interests and
    preference shares***
    
    Definition on page 55  2006
    vs. 2005
   54




---



##### 



$3-billion, $2-billion, $1-billion, 364-day
    2005
    vs. 2004
        18-month $500-million,
  Liquidity
    Debt
    as a Percentage of Capital
   55




---



##### 



Debt
    as a Percentage of Invested Capital
  As at 31 December2006


2005


2004(In millions of US$)DebtShort-term borrowings


467



348



2,486Debt maturing within one year


36



802



569Debt not maturing within one year


5,476



5,265



6,345Debt of operations held for sale










5Total debt


5,979



6,415



9,405EquityMinority interests


71



67



236Shareholders equityRedeemable non-retractable
    preference shares


160



160



160Common shareholders equity


10,934



9,484



10,566Total equity (including
    minority interests)


11,165



9,711



10,962Invested capital


17,144



16,126



20,367Debt as a Percentage of
    Invested Capital (%)


35



40



46   Investment
    Activities
  2006
    vs. 2005
    2005
    vs. 2004
   56




---



##### 



Capital
    Expenditures and Depreciation in Continuing
    Operations
  
  Capital
    Expenditures
  2006
    vs. 2005
  start-up
  equity-accounted
  2005
    vs. 2004
    Acquisitions
    and Divestments of Businesses and Investments
    Acquisitions/Investments
   57




---



##### 



720-kt/y
    150-kt/y
  Divestments
          Novelis
    Spin-Off
     58




---



##### 



Contractual
    Obligations
    Contractual
    Obligations
  Payments Due by Period2012 andAs at 31 December 2006

Total


2007


2008-2009


2010-2011


Thereafter(In million of US$)Long-term
    debt(1)


5,512



36



537



1,270



3,669Interest
    payments(1)


3,768



306



586



522



2,354Capital lease
    obligations(2)


29



6



6



2



15Operating
    leases(2)


442



74



125



86



157Purchase
    obligations(2)


6,252



1,272



1,050



976



2,954Unfunded pension
    plans(3)


2,455



64



137



138



2,116Other post-employment
    benefits(3)


2,777



65



144



158



2,410Funded pension
    plans(3)(4)


(4)



289



590



608



(4)Guarantees(2)


279



16



191



1



71Total






2,128



3,366



3,761
     (1)
    
    Interest payments are calculated
    using the interest rate in effect, including the impact of
    interest rate swap agreements on $600 million of fixed rate
    long-term debt and the outstanding debt balance as at
    31 December 2006. All commercial paper borrowings and
    interest payments thereon have been included in 2011 when the
    long-term credit facility matures. Refer to
    note 22  Debt Not Maturing Within One Year to
    the Financial Statements.(2)
    
    Refer to note 27 
    Commitments and Contingencies to the Financial Statements.(3)
    
    Refer to note 31 
    Post-Retirement Benefits to the Financial Statements.(4)
    
    Pension funding generally includes
    the contribution required to finance the annual service cost,
    except where the plan is largely overfunded, and amortization of
    unfunded liabilities over periods of 15 years, with larger
    payments made over the initial period where required by pension
    legislation. Contributions depend on actual returns on pension
    assets and on deviations from other economic and demographic
    actuarial assumptions. Based on managements long-term
    expected return on assets, annual contributions for years after
    2011 are projected to be in the same range as in prior years and
    to grow in relation with payroll. OPERATING
    SEGMENT REVIEW   59




---



##### 



Bauxite
    and Alumina
  Business Description:
  Business Group Target: low-cost
  Recent Business Developments:
 60




---



##### 



year-end. 2.1 Mt/y.
  ramp-up
  country-wide pre-tax
  Financial
    Results
  For the Year Ended


% Increase (Decrease)2006


2005


2004*


2006


2005Third-party sales and operating
    revenues (US$M)


1,844



1,478



1,487



25



(1
)Intersegment sales and operating
    revenues (US$M)


2,001



1,515



1,575



32



(4
)Third-party shipments (kt)


3,602



3,463



3,838



4



(10
)Intersegment shipments (kt)


6,054



5,879



4,967



3



18Hydrate production (kt)


5,477



5,665



5,630



(3
)


1BGP (US$M)


609



435



460



40



(5
)     * Data has been restated to
    exclude entities transferred to Novelis.
  2006
    vs. 2005
  Revenues: 3-month
 61




---



##### 



Production:
  BGP:
    2005
    vs. 2004
  Revenues: 3-month
  Production:
  BGP:
  Primary
    Metal
  Business description: value-added
 62




---



##### 



third-party
  Business Group Target:
  Recent Business Developments: 44-kt/y
  50-kt/y
  280-kt/y
      third-party
       63




---



##### 



720-kt/y 25-year
    $1.8-billion
    five-year
  $1.7-billion, 350-kt/y
  Financial
    Results
  For the Year Ended


% Increase (Decrease)2006


2005


2004*


2006


2005Third-party sales and operating
    revenues (US$M)


8,661



6,877



4,586



26



50Intersegment sales and operating
    revenues (US$M)


2,486



1,898



3,741



31



(49
)Aluminum production (kt)


3,406



3,420



3,273







4Third-party shipments (kt)


4,333



4,339



6,296







(31
)BGP (US$M)


2,962



1,751



1,462



69



20Average realized price (US$/t)


2,618



2,036



1,876



29



9
     * Data has been restated to exclude
    entities transferred to Novelis
  2006
    vs. 2005
  Revenues:
  Production:
 64




---



##### 



BGP:
  2005
    vs. 2004
  Revenues: year-over-year
  Production: value-added
  BGP:
  Engineered
    Products
  Business description: value-added
 65




---



##### 



Business Group Target: after-tax
  year-over-year
  Financial
    Results
  For the Year Ended


% Increase (Decrease)2006


2005


2004*


2006


2005Third-party sales and operating
    revenues (US$M)


7,146



6,015



5,525



19



9Intersegment sales and operating
    revenues (US$M)


194



202



725



(4
)


NMBGP (US$M)


567



403



379



41



6BGP margin(%)**


7.7



6.4



6.1



20



5BGP margin from operations(%)***


8.0



7.5



6.1



7



23     *
    
    Data has been restated to exclude
    entities transferred to Novelis**
    
    BGP as a percentage of total
    third-party and intercompany sales and operating revenues***
    
    BGP margin excluding OSIs and
    foreign currency balance sheet translationNM
    
    Not meaningful  2006
    vs. 2005
  Revenues: year-over-year
  BGP:
 66




---



##### 



2005
    vs. 2004
  Revenues:
  BGP:
  Engineered
    Products Group  Revenues by Business
    Unit
  2006


2005Aerospace
    Transportation & Industry (ATI)*


22%



23%Composites


10%



10%Cable


11%



10%Extruded Products


13%



12%Engineered and Automotive
    Solutions (EAS)


4%



3%Alcan Service Centres
    (ASC)


7%



7%Alcan International Network
    (AIN)


11%



14%Specialty Sheet


21%



19%Ventures


1%



2%Total


100%



100%       Engineered
    Products Business Units
  Aerospace, Transportation and Industry (ATI) year-over-year
 67




---



##### 



Composites weight-to-rigidity year-over-year
  Cable tm
  Extruded Products
  Engineered and Automotive
    Solutions (EAS)
  Alcan Service Centres (ASC)
 68




---



##### 



Alcan International Network (AIN)
  Specialty Sheet
  Business exits
  Ventures
  
    General distribution (France)
    Air freight containers (Germany)
    Automotive castings (Germany)
    Roll-bond (France)
    High-purity smelting & rolling (France)
    Mass transport systems (Switzerland)
    Cast plate (US)  Packaging
  Business description:
 69




---



##### 



Business Group Target:
  Recent Business Developments:
    Financial
    Results
  For the Year Ended


% Increase (Decrease)2006


2005


2004


2006


2005Third-party sales and operating
    revenues (US$M)


5,960



6,004



6,024



(1
)


Intersegment sales and operating
    revenues (US$M)


4



5



69



NM



NMBGP (US$M)


550



595



653



(8
)


(9
)BGP margin (%)*


9.2



9.9



10.7



(7
)


(7
)BGP margin from
    operations (%)**


10.0



10.4



10.9



(4
)


(5
)     *
    
    BGP as a percentage of total
    third-party and intercompany sales and operating revenues**
    
    BGP margin excluding OSIs and
    foreign currency balance sheet translationNM
    
    Not meaningful  2006
    vs. 2005
  Revenues: year-on-year
  BGP:
   70




---



##### 



year-on-year
  year-on-year
    2005
    vs. 2004
  Revenues:
  BGP: year-end.
      Packaging
    Revenues by Market
  2006


2005


2004Food


64%



63%



61%Pharmaceutical


16%



16%



13%Beauty


12%



14%



18%Tobacco


8%



7%



8%Total


100%



100%



100%   Packaging
    Revenues by Region
  2006


2005


2004Europe


53%



49%



57%North America


34%



38%



37%South America


8%



6%



2%Asia/Pacific/Africa


5%



7%



4%Total


100%



100%



100%  71




---



##### 



Packaging
    Business Sectors
    The Food Packaging Europe
  Food Packaging Americas
  Food Packaging Asia value-added
  Global Pharmaceutical and Medicals state-of-the-art
  Global Beauty and Personal Care value-added low-cost non-strategic
  Global Tobacco Packaging state-of-the-art
 72




---



##### 



RISKS AND
    UNCERTAINTIES    Risk
    Management
      Sensitivities
    Increase in


In millions


US$ perRate / Price


of US $


Common ShareEconomic impact of changes in
    period-average exchange ratesCanadian dollar

+ US$
0.10


$
(150
)

$
(0.42
)European currencies

+ US$
0.10


$
(50
)

$
(0.14
)Australian dollar

+ US$
0.10


$
(70
)

$
(0.19
)Balance sheet translation impact
    of changes in period-endexchange ratesCanadian dollar

+ US$
0.10


$
(230
)

$
(0.63
)Australian dollar

+ US$
0.10


$
(25
)

$
(0.07
)Economic impact of changes in
    period-average LME prices*Aluminum

+ US$
100/t


$
190


$
0.51     *
    
    Realized prices generally lag LME
    price changes by one month. Changes in local and regional premia
    may also impact aluminum price realizations. Sensitivities are
    updated as required to reflect changes in the Companys
    commercial arrangements and portfolio of operations. Not
    included are sensitivities to energy and raw-material prices,
    which may have significant impacts.  Foreign
    Currency Exchange
   73




---



##### 



Aluminum
    Prices
    Critical
    Accounting Policies and Estimates
    Post-Retirement
    Benefits
  post-retirements
 74




---



##### 



15-year
  Environmental
    Liabilities
    Property,
    Plant and Equipment
    Goodwill
   75




---



##### 



Income
    Taxes
    Business
    Combinations
    ITEM 7A
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rates
   76




---



##### 



Currency Legend:BRL

Brazilian RealCAD

Canadian DollarCHF

Swiss FrancCZK

Czech KorunaDKK

Denmark KronerEUR

EurosGBP

UK PoundISK

Iceland KronurJPY

Japanese YenMXN

Mexican PesoPLN

Polish ZlotyUSD

US Dollar   Currency
    Derivatives
    2009 to 2012


Total Nominal2007


2008


and Thereafter


Amount


Fair Value(In US$ millions, except average contract rates)FORWARD CONTRACTSTo buy USD against the foreign
    currencyCHF

Nominal amount


7







1
*


8



Average contract rate


1.221







1.166
*CAD

Nominal amount


2











2



Average contract rate


1.156







JPY

Nominal amount


11











11



Average contract rate


113.4







MXN

Nominal amount


9



1







10



Average contract rate


10.90



11.29



DKK

Nominal amount


1











1



Average contract rate


5.788







ISK

Nominal amount


1











1



Average contract rate


69.52







NZD

Nominal amount


2











2



Average contract rate


1.538







      2012 and2009


2010


2011


Thereafter*

To buy USD against the foreign
    currencyCHF

Nominal amount


1











Average contract rate


1.166











  77




---



##### 



2009 to 2012


Total Nominal2007


2008


and Thereafter


Amount


Fair Value(In US$ millions, except average contract rates)FORWARD CONTRACTS
    (Contd)To sell USD against the foreign
    currencyGBP

Nominal amount


2











2



Average contract rate


0.511







BRL

Nominal amount


46











46



8Average contract rate


2.669







CHF

Nominal amount


20











20



Average contract rate


1.214







ISK

Nominal amount


4











4



Average contract rate


69.32







CAD

Nominal amount


4











4



Average contract rate


1.155







To buy EUR against the foreign
    currencyUSD

Nominal amount


63











63



4Average contract rate


1.248







GBP

Nominal amount


7











7



Average contract rate


0.678







JPY

Nominal amount


12











12



1Average contract rate


148.5







CAD

Nominal amount


2











2



Average contract rate


1.525







PLN

Nominal amount


4











4



Average contract rate


3.958







To sell EUR against the foreign
    currencyUSD

Nominal amount


276



13



5
*


294



(5
)Average contract rate


1.308



1.113



1.358
*GBP

Nominal amount


3











3



Average contract rate


0.674







CHF

Nominal amount


22



4







26



(1
)Average contract rate


1.561



1.506



CZK

Nominal amount


12











12



Average contract rate


28.24







To buy GBP against the foreign
    currencyJPY

Nominal amount


2











2



Average contract rate


206.7







To sell GBP against the foreign
    currencyCHF

Nominal amount


11











11



Average contract rate


2.381







      2012 and2009


2010


2011


ThereafterTo sell EUR against the foreign
    currency*

USD

Nominal amount


1



1



1



2Average contract rate


1.333



1.349



1.360



1.381  78




---



##### 



2008 to 2011


Total Nominal2006


2007


and Thereafter


Amount


Fair Value(In US$ millions, except average contract rates)FORWARD CONTRACTSTo buy USD against the foreign
    currencyCHF

Nominal amount


26











26



1Average contract rate


1.233







GBP

Nominal amount


8











8



Average contract rate


0.576







JPY

Nominal amount


7











7



Average contract rate


111.8







NZD

Nominal amount


3











3



Average contract rate


1.464







To sell USD against the foreign
    currencyAUD

Nominal amount


172











172



(4
)Average contract rate


1.336







GBP

Nominal amount


32











32



(1
)Average contract rate


0.572







BRL

Nominal amount


23



42







65



2Average contract rate


2.507



2.669



ISK

Nominal amount


7











7



Average contract rate


63.86







CHF

Nominal amount


10











10



Average contract rate


1.316







Other

Nominal amount


3











3



To buy EUR against the foreign
    currencyUSD

Nominal amount


657



20







677



7Average contract rate


1.187



1.201



GBP

Nominal amount


34



1







35



Average contract rate


0.692



0.694



JPY

Nominal amount


6











6



Average contract rate


137.8







CAD

Nominal amount


4



2







6



(1
)Average contract rate


1.490



1.525



Other

Nominal amount


3











3



 79




---



##### 



2008 to 2011


Total Nominal2006


2007


and Thereafter


Amount


Fair ValueFORWARD CONTRACTS
    (Contd)To sell EUR against the foreign
    currencyUSD

Nominal amount


607



24



15
*


646



2Average contract rate


1.207



1.223



1.179
*CHF

Nominal amount


44



5



4
**


53



(1
)Average contract rate


1.524



1.522



1.506
**GBP

Nominal amount


8











8



Average contract rate


0.679







Other

Nominal amount


3











3



To buy CHF against the foreign
    currencyGBP

Nominal amount


6











6



Average contract rate


0.442







JPY

Nominal amount


3











3



Average contract rate


88.59







Other

Nominal amount


1











1



To sell CHF against the foreign
    currencyCZK

Nominal amount


3











3



Average contract rate


18.62







OPTIONSTo sell EUR against the foreign
    currencyUSD

Nominal amount


119



20







139



Average contract rate


1.328



1.320



     2011 and2008


2009


2010


ThereafterTo sell EUR against the foreign
    currency*

USD

Nominal amount


11



1



1



2Average contract rate


1.113



1.333



1.349



1.374**

CHF

Nominal amount


4











Average contract rate


1.506











     Derivative
    Commodity Contracts
   80




---



##### 



ITEM 8  FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA
  Responsibility
    for the Annual Report
             President and Chief Executive Officer
     Executive Vice-President and Chief Financial Officer
    Managements
    Report on Internal Control over Financial Reporting
  Rule 15a-15(d)
 81




---



##### 



Internal Control  Integrated Framework
    OECD
    Guidelines
  Worldwide
    Code of Employee and Business Conduct
 82




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    Internal
    Control  Integrated Framework
      Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework
   83




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
    FIRM  (Continued)
      PricewaterhouseCoopers
    LLP
 Chartered Accountants
    84




---



##### 



CONSOLIDATED
    STATEMENT OF INCOME
  Year Ended December 312006


2005


2004(In millions of US$, exceptper share amounts)Sales and operating
    revenues


23,641



20,320



24,948Costs and expensesCost of sales and operating
    expenses, excluding depreciation and amortization noted below


17,990



16,135



20,270Depreciation and amortization(NOTE 7)


1,043



1,080



1,337Selling, administrative and
    general expenses


1,475



1,402



1,615Research and development expenses


220



227



239Interest


284



350



346Restructuring charges 
    net(NOTE 8)


179



685



87Goodwill impairment(NOTE 7)






122



154Other expenses
    (income)  net(NOTE 14)


77



(4
)


32121,268



19,997



24,369Income from continuing operations
    before income taxes and other items


2,373



323



579Income taxes(NOTE 9)


665



257



375Income from continuing operations
    before other items


1,708



66



204Equity income(NOTE 10)


85



88



54Minority interests


(7
)


1



(15
)Income from continuing operations


1,786



155



243Income (Loss) from discontinued
    operations(NOTE 4)


4



(26
)


15Income before cumulative effect of
    accounting change


1,790



129



258Cumulative effect of accounting
    change, net of income taxes of $2
    (nil in 2005 and 2004)(NOTE 3)


(4
)






Net income


1,786



129



258Dividends on preference shares


11



7



6Net income attributable to
    Common Shareholders


1,775



122



252Earnings (Loss) per Share(NOTE 5)BasicIncome from continuing operations


4.75



0.40



0.64Income (Loss) from discontinued
    operations


0.01



(0.07
)


0.05Cumulative effect of accounting
    change


(0.01
)






Net income per Common
    Share  basic


4.75



0.33



0.69DilutedIncome from continuing operations


4.74



0.40



0.64Income (Loss) from discontinued
    operations


0.01



(0.07
)


0.05Cumulative effect of accounting
    change


(0.01
)






Net income per Common
    Share  diluted


4.74



0.33



0.69Dividends per Common
    Share


0.70



0.60



0.60    85




---



##### 



CONSOLIDATED
    BALANCE SHEET
  As at December 312006


2005


2004(In millions of US$, exceptwhere indicated)ASSETSCurrent assetsCash and time deposits


229



181



184Trade receivables (net of
    allowances of $58 in 2006, $56 in 2005 and $99 in 2004)(NOTES 12 and 13)


2,910



2,308



3,247Other receivables


1,195



946



936Deferred income taxes(NOTE 9)


152



150



214Inventories(NOTE 15)


3,186



2,734



4,040Current assets held for sale(NOTE 4)


5



119



791Total current assets


7,677



6,438



9,412Deferred charges and other assets(NOTE 16)


1,087



1,052



1,130Investments(NOTE 17)


1,509



1,511



1,747Deferred income taxes(NOTE 9)


989



863



870Property, plant and equipment(NOTE 18)Cost (excluding construction work
    in progress)


18,698



16,990



21,595Construction work in progress


2,294



1,604



1,177Accumulated depreciation


(8,592
)


(7,561
)


(9,478
)12,400



11,033



13,294Intangible assets, net of
    accumulated amortization of $346 in 2006, $233 in 2005 and $172
    in 2004(NOTE 7)


676



1,013



1,230Goodwill(NOTE 7)


4,599



4,713



5,496Long-term assets held for sale(NOTE 4)


2



15



162Total assets


28,939



26,638



33,341    86




---



##### 



CONSOLIDATED
    BALANCE SHEET  (Continued)
  As at December 312006


2005


2004(In millions of US$, exceptwhere indicated)LIABILITIES AND SHAREHOLDERS
    EQUITYCurrent liabilitiesPayables and accrued liabilities


5,430



4,608



5,843Short-term borrowings


467



348



2,486Debt maturing within one year(NOTE 22)


36



802



569Deferred income taxes(NOTE 9)


46



25



23Current liabilities of operations
    held for sale(NOTE 4)






62



335Total current
    liabilities


5,979



5,845



9,256Debt not maturing within one year(NOTES 22 and 29)


5,476



5,265



6,345Deferred credits and other
    liabilities(NOTE 21)


1,787



1,608



1,521Post-retirement benefits(NOTE 31)


3,381



3,037



3,465Deferred income taxes(NOTE 9)


1,151



1,172



1,543Long-term liabilities of
    operations held for sale(NOTE 4)










249Minority interests


71



67



236Shareholders
    equityRedeemable non-retractable
    preference shares, issuable in series; unlimited number of
    shares authorized(NOTE 23):Series C: stated value $106,
    number of shares authorized 5,700,000; outstanding 5,699,900 in
    2006; 5,699,900 in 2005 and 5,700,000 in 2004


106



106



106Series E: stated value $54,
    number of shares authorized 3,000,000; outstanding 2,999,000 in
    2006; 2,999,000 in 2005 and 3,000,000 in 2004


54



54



54Common Shareholders equityCommon Shares, unlimited number of
    shares authorized, 
    outstanding (in thousands) 366,728 in 2006; 371,921 in 2005 and
    369,930 in 2004(NOTE 24)


6,235



6,181



6,670Additional paid-in capital(NOTE 25)


672



683



112Retained earnings(NOTE 26)


4,281



3,048



3,362Common Shares held by a Subsidiary(NOTE 24)


(31
)


(31
)


(35
)Accumulated other comprehensive
    income (loss)


(223
)


(397
)


45710,934



9,484



10,56611,094



9,644



10,726Commitments and contingencies(NOTE 27)Total liabilities and
    shareholders equity


28,939



26,638



33,341       Director
    Director
   87




---



##### 



CONSOLIDATED
    STATEMENT OF CASH FLOWS
  Year Ended December 312006


2005


2004(In millions of US$)OPERATING ACTIVITIESNet income


1,786



129



258Cumulative effect of accounting
    change


4







Loss (Income) from discontinued
    operations


(4
)


26



(15
)Income from continuing operations


1,786



155



243Adjustments to determine cash from
    operating activities:Depreciation and amortization


1,043



1,080



1,337Deferred income taxes


367



123



45Equity income, net of dividends


15



(33
)


(16
)Asset impairment charges


84



428



100Goodwill impairment






122



154Stock option expense


40



19



11Gain on disposals of businesses and
    investments  net


(6
)


(32
)


(47
)Change in operating working capitalChange in receivables


(443
)


(331
)


(437
)Change in inventories


(263
)


(6
)


24Change in payables and accrued
    liabilities


138



(51
)


214Change in deferred charges, other
    assets, deferred credits and other liabilities, and
    post-retirement benefits  net


377



81



36Other  net


(98
)


(20
)


75Cash from operating activities in
    continuing operations


3,040



1,535



1,739Cash from operating activities in
    discontinued operations


9



27



113Cash from operating
    activities


3,049



1,562



1,852FINANCING ACTIVITIESProceeds from issuance of new
    debt  net of issuance costs


479



1,272



1,768Debt repayments


(1,096
)


(1,695
)


(1,615
)Short-term borrowings 
    net


77



(2,056
)


(540
)Common Shares issued


162



62



96Common Shares purchased for
    cancellation


(466
)






Dividends Alcan shareholders
    (including preference)


(267
)


(224
)


(223
) Minority interests


(2
)


(2
)


(13
)Other


2



(4
)


(11
)Cash used for financing activities
    in continuing operations


(1,111
)


(2,647
)


(538
)Cash used for financing activities
    in discontinued operations






(55
)


(38
)Cash used for financing
    activities


(1,111
)


(2,702
)


(576
)INVESTMENT ACTIVITIESPurchase of property, plant and
    equipment


(2,081
)


(1,742
)


(1,269
)Business acquisitions and purchase
    of investments, net of cash and time deposits acquired(NOTE 19)


(201
)


(112
)


(466
)Net proceeds from disposal of
    businesses, investments and other assets


307



266



35Settlement of amounts due from
    Novelis(NOTE 6)






2,535



Other


66







(8
)Cash from (used for) investment
    activities in continuing operations


(1,909
)


947



(1,708
)Cash from (used for) investment
    activities in discontinued operations


5



60



(22
)Cash from (used for) investment
    activities


(1,904
)


1,007



(1,730
)Effect of exchange rate changes on
    cash and time deposits


14



(26
)


16Increase (Decrease) in cash and
    time deposits


48



(159
)


(438
)Cash and time deposits 
    beginning of year


181



340



778Cash and time deposits 
    end of year in continuing operations


229



181



184Cash and time deposits 
    end of year in current assets held for sale(NOTE 4)










156Cash and time deposits 
    end of year


229



181



340    88




---



##### 



CONSOLIDATED
    STATEMENT OF SHAREHOLDERS EQUITY
  Year Ended December 31Preference











Common


AccumulatedShares 





Additional





Shares Held


Other


TotalComprehen-


Series C


Common


Paid-In


Retained


by a


Comprehensive


Shareholderssive Income


and E


Shares


Capital


Earnings


Subsidiary


Income (Loss)


Equity(In millions of US$)Balance at end of 2003






160



6,461



128



3,331



(56
)


253



10,277Net income  2004


258















258











258Other comprehensive income:Net change in deferred translation
    adjustments


454Net change in excess of market
    value over book value of
    available-for-sale
    securities


2Reclassification to net income


Net change in minimum pension
    liability  net of taxes of $82


(200
)Net change in unreleased gains andlosses on derivatives 
    net of taxes of $24:Net change from periodic
    revaluations


(65
)Net amount reclassified to income


13























204



204Comprehensive income


462Dividends:Preference


















(6
)










(6
)Common


















(221
)










(221
)Stock option expense














11















11Exercise of stock options










27



(27
)














Common Shares held by a Subsidiary






















21







21Common Shares issued for cash:Executive Share option plan










60



















60Share purchase plan










24



















24Liquidity Agreement










12



















12Common Shares issued under the
    dividend reinvestment plan










4



















4Common Shares issued in exchange
    for tendered Pechiney securities










82



















82Balance at end of 2004






160



6,670



112



3,362



(35
)


457a



10,726    89




---



##### 



CONSOLIDATED
    STATEMENT OF SHAREHOLDERS EQUITY 
    (Continued)
  Year Ended December 31Preference











Common


AccumulatedShares 





Additional





Shares Held


Other


TotalComprehen-


Series C


Common


Paid-In


Retained


by a


Comprehensive


Shareholderssive Income


and E


Shares


Capital


Earnings


Subsidiary


Income (Loss)


Equity(In millions of US$)Spin-off of Novelis(NOTE 6)










(576
)


572



(214
)


4



(71
)


(285
)Net income  2005


129















129











129Other comprehensive income:Net change in deferred translation
    adjustments


(695
)Net change in excess of market
    value over book value of
    available-for-sale
    securities


(4
)Reclassification to net income


Net change in minimum pension
    liability  net of taxes of $21


67Net change in unreleased gains and
    losses on derivatives  net of taxes of $78:Net change from periodic
    revaluations


(196
)Net amount reclassified to income


45Comprehensive income


(654
)






















(783
)


(783
)Dividends:Preference


















(7
)










(7
)Common


















(222
)










(222
)Stock option expense














19















19Exercise of stock options










20



(20
)














Common Shares issued for cash:Executive Share option plan










46



















46Share purchase plan










12



















12Liquidity Agreement










4



















4Common Shares issued under the
    dividend reinvestment plan










5



















5Balance at end of 2005






160



6,181



683



3,048



(31
)


(397
)b


9,644    90




---



##### 



CONSOLIDATED
    STATEMENT OF SHAREHOLDERS EQUITY 
    (Continued)
   Year Ended December 31Preference











Common


AccumulatedShares 





Additional





Shares Held


Other


TotalComprehen-


Series C


Common


Paid-In


Retained


by a


Comprehensive


Shareholderssive Income


and E


Shares


Capital


Earnings


Subsidiary


Income (Loss)


Equity(In millions of US$)Novelis Spin-off(NOTE 24)


















21







7



28Net income  2006


1,786















1,786











1,786Other comprehensive income:Net change in deferred translation
    adjustments


746Net change in excess of market
    value over book value of
    available-for-sale
    securities


1Reclassification to net income


Net change in minimum pension
    liability  net of taxes of $16


51Net change in unreleased gains and
    losses on derivatives  net of taxes of $1:Net change from periodic
    revaluations


(195
)Net amount reclassified to income


198Comprehensive income


2,587























801



801Unfunded status of pension and
    other postretirement plans(NOTE 31)


























(634
)


(634
)Dividends:Preference


















(11
)










(11
)Common


















(261
)










(261
)Stock option expense














40















40Exercise of stock options










51



(51
)














Common Shares issued for cash:Executive Share option plan










104



















104Share purchase plan










25



















25Liquidity Agreement










33



















33Common Shares issued under the
    dividend reinvestment plan










5



















5Common Shares purchased for
    cancellation(NOTE 24)










(164
)






(302
)










(466
)Balance at end of 2006






160



6,235



672



4,281



(31
)


(223
)c


11,094     a.
    
    Comprised of deferred translation adjustments of $1,063,
    unrealized gain on
    available-for-sale
    securities of $8, minimum pension liability of ($550) (net of
    tax of $238) and unreleased loss on derivatives of ($64) (net of
    tax of $30).b.
    
    Comprised of deferred translation adjustments of $264,
    unrealized gain on
    available-for-sale
    securities of $4, minimum pension liability of ($450) (net of
    tax of $202) and unreleased loss on derivatives of ($215) (net
    of tax of $109).c.
    
    Comprised of deferred translation adjustments of $1,017,
    unrealized gain on
    available-for-sale
    securities of $5, unfunded status of pensions and other
    postretirement plans of ($1,033) (net of tax of $467) and
    unreleased loss on derivatives of ($212) (net of tax of $110).   91




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of US$, except where indicated)
  1.  NATURE
    OF OPERATIONS
      Spin-off
    of Rolled Products Businesses  Basis of
    Presentation
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES
  Use of
    Estimates
    Business
    Combinations
    Principles
    of Consolidation and Other Investments
   92




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
  available-for-sale.
    Foreign
    Currency
            Revenue
    Recognition
   93




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
   No. 00-21,
    Shipping
    and Handling Costs
    Commodity
    Contracts and Options
         94




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
   Interest
    Rate Swaps
      Inventories
    Capitalization
    of Interest Costs
    Sale
    of Receivables
    Property,
    Plant and Equipment
    Impairment
    or Disposal of Long-Lived Assets
   95




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
   Goodwill
    Intangible
    Assets
    Legal
    Claims
    Asset
    Retirement Obligations
      Environmental
    Costs and Liabilities
   96




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
   Pensions
    and Post-Retirement Benefits
    Stock
    Options and Other Stock-Based Compensation
    Income
    Taxes
       97




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
      Cash
    and Time Deposits
    Allowance
    For Doubtful Accounts
    Guarantees
    Recently
    Issued Accounting Standards
  FIN 48 
    Accounting for Uncertainty in Income Taxes
      SFAS No. 157 
    Fair Value Measurements
    SFAS No. 159 
    The Fair Value Option for Financial Assets and Financial
    Liabilities
   98




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    2.  SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)
    SFAS No. 156 
    Accounting for Servicing of Financial Assets
    3.  ACCOUNTING
    CHANGES
  SFAS No. 158 
    Employers Accounting for Defined Benefit Pension and Other
    Postretirement Plans
    SFAS No. 123(R) 
    Share-Based Payment
     99




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    3.  ACCOUNTING
    CHANGES  (Continued)
   SFAS No. 151 
    Inventory Costs
    SAB 108 
    Guidance for Quantifying Financial Statement
    Misstatements
    SFAS No. 154 
    Accounting Changes and Error Corrections
    FIN 47 
    Conditional Asset Retirement Obligations
  conditional asset
    retirement obligation
 100




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    3.  ACCOUNTING
    CHANGES  (Continued)
   SFAS No. 153 
    Exchanges of Nonmonetary Assets
    EITF
    03-13 
    Discontinued Operations
  03-13,
  4.
    DISCONTINUED
    OPERATIONS AND ASSETS HELD FOR SALE  Bauxite
    and Alumina and Primary Metal
      Primary
    Metal
    Engineered
    Products
     101




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    4.  DISCONTINUED
    OPERATIONS AND ASSETS HELD FOR
    SALE  (Continued)
    Packaging
    Other
          Year Ended December 312006


2005


2004Sales


55



339



1,419Income (Loss) from operations


(2
)


5



26Gain (Loss) on
    disposal  net


(2
)


(2
)


27Asset impairment charges






(24
)


(5
)Pre-tax income (loss)


(4
)


(21
)


48Income taxes recovered (expense)


8



(5
)


(33
)Income (Loss) from discontinued
    operations


4



(26
)


15  102




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    4.  DISCONTINUED
    OPERATIONS AND ASSETS HELD FOR
    SALE  (Continued)
    2006


2005


2004Current assets held for sale:Cash and time deposits










156Trade receivables


1



30



308Other receivables


4



51



40Deferred income taxes






2



2Inventories






36



2855



119



791Long-term assets held for sale:Deferred charges and other assets






13



21Deferred income taxes










6Property, plant and equipment, net


2



2



85Intangible assets, net










50Goodwill










2



15



162Current liabilities of operations
    held for sale:Payables and accrued liabilities






62



330Short-term borrowings










5



62



335Long-term liabilities of
    operations held for sale:Deferred credits and other
    liabilities










101Deferred income taxes










7Minority interests










141







249   103




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  5.
    EARNINGS
    PER SHARE  BASIC AND DILUTED    2006


2005


2004Numerator:Income from continuing operations


1,786



155



243Less: dividends on preference
    shares


(11
)


(7
)


(6
)Income from continuing operations
    attributable to Common Shareholders


1,775



148



237Denominator (number of Common
    Shares in millions):Weighted average of outstanding
    Shares


374



370



368Effect of dilutive stock options


1



1



2Adjusted weighted average of
    outstanding Shares


375



371



370Earnings per Common
    Share  basic (in US$)


4.75



0.40



0.64Earnings per Common
    Share  diluted (in US$)


4.74



0.40



0.64       6.
    SPIN-OFF
    OF ROLLED PRODUCTS BUSINESSES    Agreements
    between Alcan and Novelis
     104




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    6.  SPIN-OFF
    OF ROLLED PRODUCTS
    BUSINESSES  (Continued)
     Carrying amount of spun-off
    businesses:(1)Current assets


2,924Non-current assets


2,739Current liabilities


(3,117
)Non-current liabilities


(2,258
)Accumulated other comprehensive
    income


(64
)Total


224Derivatives(2)


(31
)Total amount recorded in retained
    earnings


193     (1)
    
    The agreements giving effect to the Novelis Spin-off provided
    for the resolution of outstanding matters and various
    post-transaction
    adjustments, most of which were carried out by the parties in
    2006. See note 31  Post-Retirement Benefits for
    the treatment of the pension assets and liabilities transferred
    to Novelis.(2)
    
    Alcan is the counterparty to certain derivative contracts with
    Novelis; prior to the spin-off, these derivatives were
    eliminated in the consolidated Financial Statements. Subsequent
    to the spin-off, the derivatives are presented in the balance
    sheet at their fair value. The amount of ($31) represents the
    mark-to-market
    adjustment to the derivatives for the period from 1 to
    5 January 2005. As described in note 1  Nature
    of Operations  Spin-off of Rolled Products
    Businesses  Basis of Presentation, all income earned
    and cash flows generated by Novelis entities during the period
    from 1 January 2005 to the spin-off date of 6 January
    2005 were attributed to Novelis due to immateriality. In
    addition, the transactions between Alcan and Novelis during this
    period were also immaterial, with the exception of a net
    derivative gain as described above.       105




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    6.  SPIN-OFF
    OF ROLLED PRODUCTS
    BUSINESSES  (Continued)
    Unaudited
    Pro Forma Condensed Consolidated Balance Sheet
  As at 31 December 2004Removal of


Pro Forma




AlcanAlcan


Novelis


Adjustments




Pro FormaASSETSCurrent
    assetsCash and time deposits


184



(31
)








153Receivables, net


4,183



(1,761
)


1,637


(c)


3,810(312
)

(g)58


(j)5


(k)Deferred income taxes


214













214Inventories


4,040



(1,226
)


143


(a)


2,957Current assets held for sale


791













791Total current assets


9,412



(3,018
)


1,531





7,925Deferred charges, other assets,
    investments and long-term receivables from related parties


2,877



(297
)


2,599


(c)


2,658(2,597
)

(g)76


(k)Deferred income taxes


870













870Property, plant and equipment, net


13,294



(2,348
)








10,946Intangible assets, net


1,230



(35
)








1,195Goodwill


5,496



(256
)








5,240Long-term assets held for sale


162













162Total assets


33,341



(5,954
)


1,609





28,996LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilitiesPayables and accrued liabilities


5,843



(1,260
)


1,247


(c)


5,162(426
)

(g)(242
)

(j)Short-term borrowings


2,486



(541
)


392


(c)


614(1,723
)

(h)Debt maturing within one year


569



(1
)








568Deferred income taxes


23













23Current liabilities of operations
    held for sale


335













335Total current
    liabilities


9,256



(1,802
)


(752
)




6,702 106




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  As at 31 December 2004Removal of


Pro Forma




AlcanAlcan


Novelis


Adjustments




Pro Forma6.  SPIN-OFF OF
    ROLLED PRODUCTS
    BUSINESSES  (Continued)Debt not maturing within one year


6,345



(2,736
)


2,597


(c)


5,746(10
)

(g)(750
)

(h)300


(j)Deferred credits and other
    liabilities, and post- retirement benefits


4,986



(472
)


17


(k)


4,531Deferred income taxes


1,543



(249
)


49


(a)


1,343Long-term liabilities of
    operations held for sale


249













249Minority interests


236



(140
)








96Shareholders
    equityRedeemable non-retractable
    preference shares


160













160Common Shareholders equityCommon Shares


6,670













6,670Additional paid-in capital


112













112Retained earnings


3,362



(467
)


94


(a)


3,053(2,473
)

(g)2,473


(h)64


(k)Common Shares held by a Subsidiary


(35
)












(35
)Accumulated other comprehensive
    income


457



(88
)








369Total liabilities and
    shareholders equity


33,341



(5,954
)


1,609





28,996  107




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    6.  SPIN-OFF
    OF ROLLED PRODUCTS
    BUSINESSES  (Continued)
  Unaudited
    Pro Forma Condensed Consolidated Statement of
    Income
  For the Year Ended 31 December 2004Removal of


Pro Forma




AlcanAlcan


Novelis


Adjustments




Pro FormaSales and operating
    revenues


24,948



(7,755
)


2,409


(b)


19,602Costs and expensesCost of sales and operating
    expenses


20,270



(6,856
)


(67
)

(a)


15,7562,409


(b)Depreciation and amortization


1,337



(246
)








1,091Selling, administrative and
    general expenses


1,615



(268
)


30


(f)


1,377Research and development expenses


239



(58
)


38


(e)


219Interest


346



(74
)


37


(d)


289(25
)

(h)5


(j)Goodwill impairment


154













154Other expenses
    (income)  net and restructuring charges 
    net


408



(28
)


(26
)

(d)


311(38
)

(e)4


(f)(2
)

(k)(7
)

(j)24,369



(7,530
)


2,358





19,197Income from continuing operations
    before income taxes and other items


579



(225
)


51





405Income taxes


375



(166
)


17


(l)


226Income from continuing operations
    before other items


204



(59
)


34





179Equity income


54



(6
)








48Minority interests


(15
)


10









(5
)Income from continuing operations


243



(55
)


34





222Income from discontinued operations


15













15Net income


258



(55
)


34





237Dividends on preference shares


6













6Net income attributable to
    Common Shareholders


252



(55
)


34





231 108




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  For the Year Ended 31 December 2004Removal of


Pro Forma




AlcanAlcan


Novelis


Adjustments




Pro Forma6.  SPIN-OFF OF
    ROLLED PRODUCTS
    BUSINESSES  (Continued)Earnings per ShareIncome from continuing operations
    per Common Share- basic and diluted (in US$)


0.64



(0.15
)


0.09





0.58Net income per Common
    Share  basic and diluted (in US$)


0.69



(0.15
)


0.09





0.63Average number of Shares used in
    calculating earnings per Share  basic (in millions)
















368Average number of Shares used in
    calculating earnings per Share  diluted (in millions)
















370     (a)
    
    Adjustments to reflect the release of deferred profits held in
    inventory and the related tax effects. These adjustments arise
    due to the change in relationship between Alcan and Novelis
    subsequent to the spin-off. Prior to the spin-off, all profits
    on sales of inventory between Alcan and Novelis were deferred on
    the balance sheet until the inventory was sold to a third party.
    Subsequent to the spin-off, Alcan and Novelis are not considered
    affiliated and any sales between Alcan and Novelis are
    considered third party.(b)
    
    Adjustments to reflect the sales and cost of sales between Alcan
    and Novelis. These adjustments arise due to the change in
    relationship between Alcan and Novelis subsequent to the
    spin-off. Prior to the spin-off, all sales and cost of sales
    between Alcan and Novelis were eliminated upon consolidation in
    Alcans Financial Statements. Subsequent to the spin-off,
    all sales and cost of sales between Alcan and Novelis are
    considered third party and are not eliminated.(c)
    
    Adjustments to reflect the receivables, payables, and debt
    between Alcan and Novelis. These adjustments arise due to the
    change in relationship between Alcan and Novelis subsequent to
    the spin-off. Prior to the spin-off, all receivables and
    payables between Alcan and Novelis were eliminated upon
    consolidation in Alcans Financial Statements. Subsequent
    to the spin-off, receivables and payables between Alcan and
    Novelis are considered third party and are not eliminated.(d)
    
    Adjustments to reflect the interest expense and income on loans
    payable and receivable between Alcan and Novelis. These
    adjustments arise due to the change in relationship between
    Alcan and Novelis subsequent to the spin-off. Prior to the
    spin-off, all interest expense and income on loans payable and
    receivable between Alcan and Novelis were eliminated upon
    consolidation in Alcans Financial Statements. Subsequent
    to the spin-off, interest expense and income are adjusted to
    reflect the settlement of the intercompany loans receivable and
    payable between Alcan and Novelis.(e)
    
    Adjustments to reflect the research and development and other
    services rendered between Alcan and Novelis. These adjustments
    arise due to the change in relationship between Alcan and
    Novelis subsequent to the spin-off. Prior to the spin-off, all
    revenues and expenses related to these services rendered were
    eliminated upon consolidation in Alcans Financial
    Statements. Subsequent to the spin-off, these revenues and
    expenses are considered third party and are not eliminated. 109




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    6.  SPIN-OFF
    OF ROLLED PRODUCTS
    BUSINESSES  (Continued)
   (f)
    
    Adjustments to record the general corporate expenses allocated
    to Novelis. As these expenses will continue to be incurred by
    Alcan subsequent to the spin-off, they are included in
    Alcans pro forma condensed consolidated statements of
    income.(g)
    
    Represents the settlement of intercompany loans receivable and
    payable between Alcan and Novelis.(h)
    
    Represents the proceeds from Novelis of $2,473, which have been
    used to reduce Alcans commercial paper and bank loans
    included in Short-term borrowings and in Debt not maturing
    within one year. As a result of this reduction in debt, interest
    expense has been reduced by $25 in Alcans pro forma
    condensed consolidated income statement for the year ended
    31 December 2004.(i)
    
    In October 2003, Alcan entered into a derivative financial
    instrument that was designated as a hedge of Alcans net
    investment in certain foreign Subsidiary companies. With the
    Novelis Spin-off the amount of the net investment in those
    foreign subsidiaries is less than the notional amount of the
    derivative instrument, until 15 December 2003 when Alcan
    acquired Pechiney. The change in fair value of the derivative
    instrument for 2003 amounted to a $32 loss and is reported in
    Accumulated other comprehensive income. No adjustment has been
    made in this pro forma financial information related to this
    transaction, as it would not have a recurring impact on
    Alcans consolidated results of operations.(j)
    
    Under an agreement effective 18 December 2001, on an
    ongoing basis, the Company sold to a third party an undivided
    interest in certain trade receivables, with limited recourse,
    for maximum cash proceeds of $300 with the maximum credit
    exposure to the Company held in reserve by the third party. The
    Company acted as a service agent and administers the collection
    of the receivables sold. As at 31 December 2004, the
    Company sold trade receivables of $345, of which $242 were
    allocated to Novelis, with $45 held in reserve by the third
    party. Subsequent to the spin-off, this program was discontinued.(k)
    
    Adjustment to reflect a lease to Novelis of the Sierre North
    Building and the machinery and equipment located in the Sierre
    North Building (including the hot and cold mills) for a term of
    15 years, renewable at Novelis option for an
    additional five-year period, at an annual base rent of $5.(l)
    
    Represents the tax effect of pro forma adjustments at the
    statutory rate of 34%.  7.  GOODWILL
    AND INTANGIBLE ASSETS
  Goodwill
    Balance

















Balanceas at








Foreign








as at1 January








Exchange





Impairment


31 December2006


Divestments


Additions


Adjustments


Adjustments


Losses


2006Bauxite and Alumina


1,076















(49
)






1,027Primary Metal


1,374







40



53



(83
)






1,384Engineered Products


354







3



29



(21
)






365Packaging


2,574



(109
)


1



146



(156
)






2,4565,378



(109
)


44



228



(309
)






5,232Goodwill included in equity-
    accounted entities


665







(1
)


16



(47
)






633
*Goodwill excluding amount included
    in equity-accounted entities


4,713



(109
)


45



212



(262
)






4,599     *
    Includes goodwill of $314 for Bauxite and Alumina and $319 for
    Primary Metal. 110




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    7.  GOODWILL
    AND INTANGIBLE ASSETS  (Continued)
     Balance

















Balanceas at








Foreign








as at1 January








Exchange





Impairment


31 December2005


Divestments


Additions


Adjustments


Adjustments


Losses


2005Bauxite and Alumina


1,117











(1
)


(40
)






1,076Primary Metal


1,509







2



(72
)


(65
)






1,374Engineered Products


409







3



(40
)


(18
)






354Packaging


3,044



(44
)


18



(196
)


(126
)


(122
)


2,574Entities transferred to Novelis


254



(254
)


















6,333



(298
)


23



(309
)


(249
)


(122
)


5,378Goodwill included in equity-
    accounted entities


837







2



(22
)


(152
)






665
*Goodwill excluding amount included
    in equity-accounted entities


5,496



(298
)


21



(287
)


(97
)


(122
)


4,713     *
    Includes goodwill of $347 for Bauxite and Alumina and $318 for
    Primary Metal.    Balance

















Balanceas at








Foreign








as at1 January








Exchange





Impairment


31 December2004


Divestments


Additions


Adjustments


Adjustments*


Losses


2004Bauxite and Alumina


558















559







1,117Primary Metal


534







4



24



947







1,509Engineered Products


184











10



369



(154
)


409Packaging


1,276







4



64



1,700







3,044Pechiney


2,283















(2,283
)






Entities transferred to Novelis


24











2



228







254Goodwill excluding amount included
    in Long-term assets held for sale


4,859







8



100



1,520



(154
)


6,333Goodwill included in equity-
    accounted entities


173







4



19



641







837
**Goodwill excluding amount included
    in equity-accounted entities and Long-term assets held for sale


4,686







4



81



879



(154
)


5,496Goodwill included in Long-term
    assets held for sale


22



(19
)






(1
)


(2
)






4,708



(19
)


4



80



877



(154
)


5,496     *
    
    In 2004, adjustments are principally changes to the tentative
    purchase price allocation related to the Pechiney acquisition.**
    
    Includes goodwill of $489 for Bauxite and Alumina, $347 for
    Primary Metal, and $1 for Packaging. 111




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    7.  GOODWILL
    AND INTANGIBLE ASSETS  (Continued)
          112




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    7.  GOODWILL
    AND INTANGIBLE ASSETS  (Continued)
   Intangible
    Assets with Finite Lives
  Gross Carrying


AccumulatedAmount


Amortization


Net Book Value31 December 2006Trademarks


183



73



110Patented and non-patented
    technology


472



149



323Purchase contracts


313



118



195Customer contracts


45



6



39Other


9







91,022



346



67631 December 2005Trademarks


170



54



116Patented and non-patented
    technology


421



108



313Purchase contracts


291



67



224Customer contracts


35



4



31Prior service costs included in
    pensions(NOTE 31)


329







3291,246



233



1,01331 December 2004Trademarks


218



53



165Patented and non-patented
    technology


537



89



448Purchase contracts


355



21



334Customer contracts


39



9



30Prior service costs included in
    pensions(NOTE 31)


253







2531,402



172



1,230     8.
    RESTRUCTURING
    PROGRAMS  2006
    Restructuring Activities
       113




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    8.  RESTRUCTURING
    PROGRAMS  (Continued)
               2005
    Restructuring Activities
     114




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    8.  RESTRUCTURING
    PROGRAMS  (Continued)
              2004
    Restructuring Activities
    Pechiney
   115




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    8.  RESTRUCTURING
    PROGRAMS  (Continued)
    Other
    2004 restructuring activities
            2001
    Restructuring Program
     116




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    8.  RESTRUCTURING
    PROGRAMS  (Continued)
      As at 31 December 2006AssetSeverance


ImpairmentCosts


Charges*


Other


TotalProvision balance as at
    31 December 2003


80







40



1202004:Charges recorded in the statement
    of income


44



30



13



87Charges recorded in the allocation
    of the Pechiney purchase price


175







18



193Cash payments


(99
)






(33
)


(132
)Non-cash items






(30
)


8



(22
)Provision balance as at
    31 December 2004


200







46



2462005:Provisions transferred to Novelis


(31
)






(14
)


(45
)Charges recorded in the statement
    of income


204



400



81



685Cash payments  net


(118
)






(40
)


(158
)Non-cash items


(12
)


(400
)


(16
)


(428
)Provision balance as at
    31 December 2005


243







57



3002006:Charges recorded in the
    statement of income


101



44



34



179Cash payments 
    net


(160
)






(39
)


(199
)Non-cash items


15



(44
)


9



(20
)Provision balance as at
    31 December 2006


199







61



260     *
    
    Fair value of assets was determined using discounted future cash
    flows. 117




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    8.  RESTRUCTURING
    PROGRAMS  (Continued)
     Charges
    (recoveries) recorded in the statement of income
  Year Ended 31 December 2006AssetSeverance


ImpairmentCosts


Charges


Other


TotalBauxite and Alumina


2



11



2



15Primary Metal


37



23



6



66Engineered Products


15







3



18Packaging


41



10



21



72Other


6







2



8Total


101



44



34



179   Year Ended 31 December 2005AssetSeverance


ImpairmentCosts


Charges


Other


TotalBauxite and Alumina


6



1



2



9Primary Metal


51



61



14



126Engineered Products


53



7



3



63Packaging


94



331



60



485Other










2



2Total


204



400



81



685   Year Ended 31 December 2004AssetSeverance


ImpairmentCosts


Charges


Other


TotalBauxite and Alumina










(3
)


(3
)Primary Metal


4



5



5



14Engineered Products


7



6



4



17Packaging


23



11



5



39Entities transferred to Novelis


8



8







16Other


2







2



4Total


44



30



13



87    118




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    8.  RESTRUCTURING
    PROGRAMS  (Continued)
   Charges
    forming part of the allocation of the Pechiney purchase price in
    2004
  Year Ended 31 December 2004SeveranceCosts


Other


TotalPrimary Metal


50



2



52Engineered Products


12



6



18Packaging


42



5



47Entities transferred to Novelis


17



2



19Other


54



3



57Total


175



18



193    9.
    INCOME
    TAXES  2006


2005


2004Income (Loss) from continuing
    operations before income taxes and other itemsCanada


387



198



(144
)Other countries


1,986



125



7232,373



323



579Current income taxesCanada


(48
)


(29
)


9Other countries


346



163



321298



134



330Deferred income taxesCanada


94



133



89Other countries


273



(10
)


(44
)367



123



45Income tax provision


665



257



375    119




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    9.  INCOME
    TAXES  (Continued)
     2006


2005


2004Income taxes at the composite
    statutory rate


772



104



185Differences attributable to:Effect of a change in tax laws or
    enacted tax rates


(57
)


42



(32
)Exchange translation items


(3
)


69



89Exchange revaluation of deferred
    income taxes


(8
)


19



44Unrecorded tax
    benefits  net


19



65



85Investment and other allowances


(45
)


(25
)


(22
)Goodwill impairment






39



50Withholding taxes


13



8



34Reduced rate, tax exempt income
    and non-deductible expenses


19



(13
)


(25
)Foreign tax rate differences


(30
)


(31
)


(40
)Prior years tax adjustments


(25
)


(26
)


(23
)Other  net


10



6



30Income tax provision


665



257



375     2006


2005


2004LiabilitiesProperty, plant, equipment and
    intangibles


1,381



1,376



1,765Inventory


16



25



75Other  net


216



140



1131,613



1,541



1,953AssetsTax benefit carryovers


1,259



1,468



1,505Accounting provisions not
    currently deductible for tax


1,651



1,348



1,4962,910



2,816



3,001Valuation allowance


1,353



1,459



1,5301,557



1,357



1,471Net deferred income tax
    liability


56



184



482Amounts recognized in the
    consolidated balance sheet consist of:Deferred income tax
    asset  current


(152
)


(150
)


(214
)Deferred income tax
    asset  non-current


(989
)


(863
)


(870
)Deferred income tax
    liability  current


46



25



23Deferred income tax
    liability  non-current


1,151



1,172



1,543Net deferred income tax
    liability


56



184



482  120




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    9.  INCOME
    TAXES  (Continued)
      10.  INVESTMENT
    IN UNCONSOLIDATED AFFILIATES
          Summary
    of Combined Financial Position
  2006


2005


2004Current assets


1,093



951



1,091Non-current assets


3,575



3,112



3,628Total assets


4,668



4,063



4,719Current liabilities


955



870



1,122Non-current liabilities


1,311



813



1,052Total liabilities


2,266



1,683



2,174Net assets


2,402



2,380



2,545Alcans equity in net
    assets


1,472



1,470



1,690  121




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    10.  INVESTMENT
    IN UNCONSOLIDATED
    AFFILIATES  (Continued)
  Summary
    of Combined Operations
  2006


2005


2004Revenues


2,592



2,308



1,954Costs and expenses


2,131



1,829



1,648Income taxes


168



172



114Net income


293



307



192Alcans share of net
    income as reported in equity income


85



88



54   11.  RELATED
    PARTY TRANSACTIONS
    2006


2005


2004Year ended December 31:Sales and operating revenues


315



158



95Cost of sales and operating
    expenses


708



613



528Other expenses
    (income)  net


(2
)


(5
)


(1
)As at December 31:Trade receivables


82



39



198Other receivables


55







Deferred charges and other assets


72



61



56Payables and accrued liabilities


104



87



136Short-term borrowings


56



79



34   12.  ALLOWANCE
    FOR DOUBTFUL ACCOUNTS
    AdditionsBalance at


Transfers


Charged to














Foreign


BalanceBeginning


to


Costs &














Exchange


at End ofYear

of Year


Novelis


Expenses


Acquisitions


Recoveries


Write-Offs


Divestments


Adjustments


Year2006


56







19



1



(15
)


(4
)


(2
)


3



582005


99



(33
)


17







(6
)


(15
)


(1
)


(5
)


562004


92







27







(7
)


(17
)






4



99   13.  SALES
    OF RECEIVABLES
   122




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    13.  SALES
    OF RECEIVABLES  (Continued)
      14.  OTHER
    EXPENSES (INCOME)  NET
    2006


2005


2004Asset impairment charges not
    included in restructuring programs


40



28



70Gain on disposal of businesses and
    investments  net(NOTE 19)


(6
)


(32
)


(35
)Provisions for (Recoveries of)
    legal claims(NOTE 27)


(52
)


20



8Environmental provisions


34



6



20Interest revenue


(40
)


(73
)


Pechiney integration






3



38Exchange losses
    (gains)  net


31



(56
)


61Derivatives losses  net


27



115



36Other


43



(15
)


12377



(4
)


321              123




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    14.  OTHER
    EXPENSES (INCOME)  NET (Continued)
     15.  INVENTORIES
  2006


2005


2004Aluminum operating
    segmentsAluminum


1,060



912



1,881Raw materials


835



704



733Other supplies


495



365



5762,390



1,981



3,190Packaging operating
    segmentRaw materials and other supplies


311



297



347Work in progress


155



133



147Finished goods


330



323



356796



753



8503,186



2,734



4,040    16.  DEFERRED
    CHARGES AND OTHER ASSETS
    2006


2005


2004Prepaid pension costs(NOTE 31)


42



176



197Available-for-sale
    securities


77



76



52Prepaid mining expenses


45



47



49Debt financing costs


46



52



43Reserve for receivables sold(NOTE 13)


74



42



10Amount receivable on currency swap
    of debt










62Long-term notes and other
    receivables


720



594



585Other


83



65



1321,087



1,052



1,130    17.  INVESTMENTS
    2006


2005


2004Companies accounted for under the
    equity method(NOTE 10)


1,472



1,470



1,690Investments accounted for under
    the cost method


37



41



571,509



1,511



1,747   124




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  18.  PROPERTY,
    PLANT AND EQUIPMENT
  2006


2005


2004Cost (excluding Construction
    work in progress)Land and property rights


579



550



686Buildings


3,303



3,011



3,909Machinery and equipment


14,816



13,429



17,00018,698



16,990



21,595     19.  SALES
    AND ACQUISITIONS OF BUSINESSES AND INVESTMENTS
  2006
  Acquisitions
  France
   2006Trade receivables


16Inventories


28Property, plant and equipment


73Intangible
    assets(1)


35Goodwill(2)


41193Payables and accrued liabilities


21Short-term borrowings


6Deferred income taxes 
    current


2Deferred credits and other
    liabilities


1Post-retirement benefits


5Deferred income taxes 
    long-term


27Fair value of net assets
    acquired at date of acquisition (net of cash acquired of
    $2)


131     (1)
    
    The intangible assets are amortized over a period of
    15 years.(2)
    
    See note 7  Goodwill and Intangible Assets. The
    goodwill is not deductible for tax purposes. 125




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    19.  SALES
    AND ACQUISITIONS OF BUSINESSES AND
    INVESTMENTS  (Continued)
     United
    States
   Asia and
    Other Pacific
   All
    Other
     Other
    Europe
   Sales
    France
           United
    States
    126




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    19.  SALES
    AND ACQUISITIONS OF BUSINESSES AND
    INVESTMENTS  (Continued)
   Asia and
    Other Pacific
   Other
    Europe
   Investments
    2005
  Acquisitions
    Canada
   United
    States
   Asia and
    Other Pacific
       France,
    United Kingdom, Germany, Other Europe
    127




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    19.  SALES
    AND ACQUISITIONS OF BUSINESSES AND
    INVESTMENTS  (Continued)
   Sales
  France,
    United Kingdom, Germany, Other Europe
                   2004
  Asia and
    Other Pacific
 150-kilotonne
  250-kt
 128




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    19.  SALES
    AND ACQUISITIONS OF BUSINESSES AND
    INVESTMENTS  (Continued)
   Other
    Europe
   All
    Other
 350-kt .
  20.  ASSET
    RETIREMENT OBLIGATIONS
      2006


2005


2004Balance  beginning
    of year


659



624



563Acquisition of Pechiney










8Liabilities incurred


53



82



20Liabilities settled


(21
)


(15
)


(36
)Accretion expense


35



27



26Foreign exchange adjustments


18



(5
)


40Revisions in estimated cash flows


39



(54
)


3Balance  end of
    year


783



659



624    129




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
   21.  DEFERRED
    CREDITS AND OTHER LIABILITIES
    2006


2005


2004Asset retirement obligations
    (long-term
    portion)


718



610



582Environmental liabilities


175



183



237Restructuring liabilities


90



76



13Claims


110



130



155Fair value of derivatives


343



321



235Other


351



288



2991,787



1,608



1,521    22.  DEBT
    NOT MATURING WITHIN ONE YEAR
  2006


2005


2004Alcan Inc.Commercial paper  CAN
    $(CAN$605 million)(A)


519



428



703Commercial paper 
    US$(A)


299



238



1165.5% Euro note






710



8136.25% Debentures, due 2008


200



200



2006.45% Debentures, due 2011


400



400



4004.875% Global notes, due
    2012(B)


500



500



5004.50% Global notes, due 2013


500



500



5005.20% Global notes, due 2014


500



500



5005.00% Global notes, due
    2015(B)


506



500



7.25% Debentures, due 2028


100



100



1007.25% Debentures, due 2031


400



400



4006.125% Global notes, due 2033


750



750



7505.75% Global notes, due 2035


300



300



Bank loans










29Bank
    loan(D)










500Other debt, due 2017 and 2033
    (CAN$14 million)


13



12



11Alcan France S.A.S. (formerly
    Pechiney S.A.)Bank loan, due 2008
    (138 million)(C)


183



163



187Bank loan, due 2008
    (45 million)(C)(E)


59



53



613.45% Bank loan






48



54Commercial paper 
    Euro(A)










1605.10% Debentures










3132.15% Equity link bonds










83Bank loans, due 2007/2010
    (11 million)(F)


15



13



Other debt, due 2007/2013
    (7 million)(C)


10



17



15Aluminium Pechiney
    SPVBank loan, due
    2007/2013(C)


75



88



89Aluminium DunkerqueCredit facility, due 2016
    (33 million)


43



30



63Bank loan










27 130




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  2006


2005


200422.  DEBT NOT
    MATURING WITHIN ONE YEAR  (Continued)Alcan Finance Jersey
    LimitedEuro Medium Term Note Program
    (EMTN)EMTN, due 2008
    (13 million)(C)(G)


17



15



18EMTN, due 2008
    (8 million)(C)(G)


11



10



11Alcan CorporationCommercial paper 
    US$(A)


20







Teckpack AsiaBank loans, due
    2007/2010(C)


17



22



26Alcan Holdings FranceBank
    loans(F)










18Alcan Taihan Aluminium
    Limited(H)4.55% Bank loan










704.80% Bank loan










394.55% Bank loan










24Other bank loans










2ALA (Nevada) Inc.Bank loan










60OtherBank loans, due
    2007/2015(C)


19



30



28Other debt, due
    2007/2033(C)


56



40



445,512



6,067



6,914Debt maturing within one year
    included in current liabilities


(36
)


(802
)


(569
)5,476



5,265



6,345     (A)
    Effective 16 June 2006, the Company replaced its $3,000
    multi-currency, five-year, committed global credit facility that
    was in place since April 2004, with a new two-tranche
    multi-currency, committed global credit facility with a
    syndicate of international banks. This new facility is comprised
    of a $2,000
    5-year
    tranche, maturing in June 2011, and a $1,000
    364-day
    tranche which may be extended by two years at the Companys
    option. This facility is available for general corporate
    purposes and is primarily used to support the commercial paper
    programs.       131




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    22.  DEBT
    NOT MATURING WITHIN ONE
    YEAR  (Continued)
        (B)
    In 2006, the Company entered into interest rate derivatives to
    swap interest payments on $600 of its long-term debt from fixed
    to floating ($500 relating to the 5.00% Global notes due in 2015
    and $100 to the 4.875% Global notes due in 2012). The fair
    market value of these derivatives is $5 as at 31 December
    2006. These derivatives have been designated as fair value
    hedges of the underlying fixed rate debt and both the debt and
    the derivatives are recorded at fair value in the Financial
    Statements.(C)
    Interest rates fluctuate principally with the lenders
    prime commercial rate, the commercial bank bill rate, or are
    tied to LIBOR/EURIBOR/SIBOR rates.  (D)
    In August 2004, Alcan Aluminium Corporation redeemed the
    Floating Rate Notes (FRNs) that were due in December 2005. Alcan
    Inc. refinanced the FRNs with a bank loan due in 2006 that was
    repaid during the first quarter of 2005.  (E)
    On 14 November 2005, Alcan France S.A.S. exercised an
    option to convert the interest rate on this loan from fixed
    (4.80%) to floating.  (F)
    In 2005, the debt of Alcan Holdings France was transferred to
    Alcan France S.A.S.  (G)
    The EMTNs of principal amounts of  13 million and
     8 million were swapped for £9 million and
    £5 million, respectively.(H)
    In December 2004, Alcan Taihan Aluminium Limited (ATA) entered
    into a $70 floating rate long-term loan, which was subsequently
    swapped for a 4.55% fixed rate KRW 73 billion loan. In
    2004, ATA also entered into two new long-term floating rate
    loans of KRW 40 billion and KRW 25 billion that were
    swapped for fixed rates of 4.80% and 4.45%, respectively. These
    loans replaced the KRW 30 billion and KRW 20 billion
    floating rate loans, that were outstanding in 2003 and that
    matured in 2004, of which $25 was swapped to fixed interest
    rates. In 2004, interest on the KRW 2 billion loans ranged
    from 3.00% to 5.50% and the Company had swapped interest rates
    to 2007 on $63 of its floating rate debt to fixed. ATA is an
    entity included in the Novelis Spin-off. Accordingly, these
    borrowings, and associated interest rate derivatives, were
    transferred to Novelis upon completion of the spin-off on
    6 January 2005.    23.  PREFERENCE
    SHARES
  Authorized
   132




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    23.  PREFERENCE
    SHARES  (Continued)
  Authorized
    and Outstanding
          24.  COMMON
    SHARES
    Number


Stated Value2006


2005


2004


2006


2005


2004(In thousands)Outstanding 
    beginning of year


371,921



369,930



365,181



6,181



6,670



6,461Net impact of Novelis Spin-off


















(576
)


Issued for cash:Executive share option plan(NOTE 25)


3,007



1,354



1,760



104



46



60Liquidity Agreement(NOTE 25)


934



118



276



33



4



12Share purchase plan


581



382



540



25



12



24Issued under dividend reinvestment
    plan


116



137



91



5



5



4Issued in exchange for tendered
    Pechiney shares*










2,082











82Transfer of additional paid-in
    capital upon exercise of stock options














51



20



27Purchased for cancellation


(9,831
)










(164
)






Outstanding  end of
    year


366,728



371,921



369,930



6,235



6,181



6,670     *
    
    As at 31 December 2006, 872 of these Shares (2005 and 2004:
    872 Shares) with a stated value of $31 (2005: $31; 2004: $35)
    are held by a Subsidiary as a result of the Pechiney
    acquisition. In 2004, 692 Shares with a stated value of $27 were
    issued to a Subsidiary and subsequently sold by the Subsidiary
    on the open market in January 2004.  Shareholder
    Rights Plan
   133




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    24.  COMMON
    SHARES  (Continued)
        Share
    Repurchase Program
      25.  STOCK
    OPTIONS AND OTHER STOCK-BASED COMPENSATION
  Alcan
    Executive Share Option Plan
   134




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
        Number of Shares Under Options


Weighted Average Exercise Price2006


2005


2004


2006


2005


2004(In thousands)


(Can$)Outstanding 
    beginning of year


11,295



10,410



9,566



43.40



50.96



47.49Net impact of Novelis Spin-off






(100
)










N/A



Granted


167



2,866



2,679



49.59



38.26



58.13Exercised(NOTE 24)


(3,007
)


(1,354
)


(1,760
)


39.30



39.84



43.25Forfeited/expired


(315
)


(527
)


(75
)


44.59



45.11



45.95Outstanding  end of
    year


8,140



11,295



10,410



44.99



43.40



50.96Exercisable  end of
    year


3,329



3,411



4,285



40.89



40.59



45.98   Shares
    under Options Outstanding at 31 December 2006
  Weighted AverageRange of Exercise


Weighted Average


RemainingNumber of Shares Under Options


Price


Exercise Price


Contractual Life(In thousands)


(Can$)


(Can$)


(Years)488



30.43-35.00



33.83



4.792,250



35.01-40.00



38.35



8.16877



40.01-45.00



40.91



3.591,383



45.01-50.00



46.64



6.693,142



50.01-56.34



51.90



6.398,140



30.43-56.34



44.99



6.53   Shares
    under Options Exercisable and Fully Vested at 31 December
    2006
  Weighted AverageRange of Exercise


Weighted Average


RemainingNumber of Shares Under Options


Price


Exercise Price


Contractual Life(In thousands)


(Can$)


(Can$)


(Years)488



30.43-35.00



33.83



4.791,379



35.01-40.00



38.42



7.84598



40.01-45.00



40.97



3.25462



45.01-50.00



46.35



5.71402



50.01-56.34



51.57



3.933,329



30.43-56.34



40.89



5.80  135




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
                2006*


2005**


2004**Dividend yield(%)


1.66



1.76



1.71Expected volatility(%)


31.78



27.97



25.16Risk-free interest rate(%)


4.89



4.05



3.88Expected life (years)


N/A



6



6Original term of awards (years)


10



N/A



N/A     *
    
    Monte Carlo simulation model**
    
    Black-Scholes valuation model  7-year
    Derived
    Service Period
   136




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
        Pechiney
    Stock Option Plans
    Autorité des
    marchés financiers
    Weighted AverageNumber of Shares Under Pechiney Options


Exercise Price2006


2005


2004


2006


2005


2004(In thousands)


()Outstanding 
    beginning of year


3,670



3,327



3,889



31.63



35.92



34.71Impact of Novelis
    Spin-off(1)






461











N/A



Exercised(NOTE 24)


(936
)


(118
)


(276
)


29.22



27.44



27.03Exercised for Pechiney
    shares(2)










(152
)










24.11Forfeited/expired


(36
)






(134
)


29.94







32.43Outstanding and
    exercisable  end of year


2,698



3,670



3,327



32.48



31.63



35.92     (1)
    
    As a result of the Novelis Spin-off, the Pechiney options were
    converted in the same manner as described under the Alcan
    Executive Share Option Plan.(2)
    
    Pechiney options were exercised for 108 Pechiney shares
    (equivalent to 152 Alcan Common Shares under Pechiney options)
    during the period of the withdrawal offer, open from
    23 January to 5 February 2004. On 6 February
    2004, these Pechiney shares were purchased by Alcan for $7. No
    Alcan Common Shares were issued as a result of the exercising of
    these options during this period. 137




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
  Shares
    under Pechiney Options Outstanding and Exercisable at
    31 December 2006
  Range of


Weighted Average


Weighted AverageExercise


Exercise Price


RemainingNumber of Shares Under Options


Price





Contractual Life(In thousands)


()


()


(Years)349



16.73-19.92



19.79



6.0944



23.50-23.92



23.67



1.73902



29.07-31.36



29.95



3.551,403



37.53-37.67



37.54



5.182,698



16.73-37.67



32.48



4.70           Other
    Stock-Based Compensation Plans
  Stock
    Price Appreciation Unit Plan
         138




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
      Dividend yield(%)


1.5Expected volatility(%)


32.8Risk-free interest rate(%)


4.64   7-year
    Weighted AverageNumber of SPAUs


Exercise Price2006


2005


2004


2006


2005


2004(In thousands)


(Can$)Outstanding 
    beginning of year


1,019



924



720



42.09



50.23



46.41Net impact of Novelis Spin-off






(111
)










N/A



Granted






222



275







38.57



58.15Exercised


(299
)


(6
)


(59
)


39.44



34.42



40.17Forfeited/expired


(19
)


(10
)


(12
)


48.86



47.74



52.58Outstanding  end of
    year


701



1,019



924



43.04



42.09



50.23Exercisable   end of
    year


340



359



320



39.98



39.77



45.10   SPAUs
    Outstanding at 31 December 2006
  Weighted AverageRange of


Weighted Average


RemainingNumber of SPAUs


Exercise Price


Exercise Price


Contractual Life(In thousands)


(Can$)


(Can$)


(Years)82



34.04-35.00



34.04



3.91157



35.01-40.00



38.26



8.70132



40.01-45.00



40.86



4.15176



45.01-50.00



46.16



5.35154



50.01-50.99



50.99



7.68701



34.04-50.99



43.04



6.22  139




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
  SPAUs
    Exercisable at 31 December 2006
  Weighted AverageRange of


Weighted Average


RemainingNumber of SPAUs


Exercise Price


Exercise Price


Contractual Life(In thousands)


(Can$)


(Can$)


(Years)82



34.04-35.00



34.04



3.9187



35.01-40.00



38.26



8.6881



40.01-45.00



40.86



3.7988



45.01-50.00



46.16



3.972



50.01-50.99



50.99



4.58340



34.04-50.99



39.98



5.11           Total
    Shareholder Return Performance Plan
       140




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
          Alcan expected volatility(%)


31.01Alcan expected correlation with
    market


0.47Risk-free interest rate(%)


4.72Expected market volatility
    (S&P 500)(%)


10.46   3-year
    2004 and 2005 Grants

Volatility


Correlation with MarketPeer company average


26.89
%


0.44Peer company high


118.18
%


0.68Peer company low


12.56
%


0.10   2006 Grant

Volatility


Correlation with MarketPeer company average


25.62
%


0.54Peer company high


52.19
%


0.68Peer company low


16.87
%


0.33      141




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
    Restricted
    Share Unit Plan
              Executive
    Deferred Share Unit Plan
   142




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
          Non-Executive
    Directors Deferred Share Unit Plan
        Other
    Restricted Share Units
   143




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    25.  STOCK
    OPTIONS AND OTHER STOCK-BASED
    COMPENSATION  (Continued)
        Retirement
    Eligible Employees
    Total
    Stock-Based Compensation Cost
    26.  RETAINED
    EARNINGS
    27.  COMMITMENTS
    AND CONTINGENCIES
   144




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    27.  COMMITMENTS
    AND CONTINGENCIES  (Continued)
      10-day
     145




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    27.  COMMITMENTS
    AND CONTINGENCIES  (Continued)
              
    liabilities of the Company other than those of an entity forming
    part of Novelis or otherwise assumed by Novelis pursuant to its
    separation agreement with Novelis;
    any liability of the Company or its Subsidiaries, other than
    Novelis, retained by Alcan under the separation agreement; and
    any breach by the Company of its separation agreement with
    Novelis or any of its ancillary agreements with Novelis.     146




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  28.  CURRENCY
    GAINS AND LOSSES
    2006


2005


2004Currency gains (losses)
    recorded in Income from continuing operationsRealized and unrealized gains
    (losses) on currency derivatives


24



(47
)


(66
)Realized deferred translation
    adjustments*


(2
)


10



Gains (Losses) on translation of
    monetary assets and liabilities


(31
)


56



(62
)(9
)


19



(128
)Deferred translation
    adjustments**  beginning of year


264



1,063



609Effect of exchange rate changes


759



(847
)


616Gains realized*


(13
)


(18
)


(32
)Deferred translation adjustments
    reclassified due to the Novelis Spin-off


7



(105
)


Gains (Losses) on forward exchange
    contracts, net of tax, or translation of debt designated as an
    equity hedge of foreign subsidiaries






167



(123
)Gains (Losses) on translation of a
    convertible loan to a Subsidiary forming part of the net
    investment






4



(7
)Deferred translation
    adjustments  end of year


1,017



264



1,063     *
    
    The gain of $13 realized in 2006 includes ($2) related
    principally to the sale of the Cebal Aerosol business, and $15
    recorded in Income (Loss) from discontinued operations related
    to the sale of certain non-strategic assets in the Engineered
    Products group.The gain of $18 realized in 2005 includes $10 recorded in Income
    from continuing operations, relating principally to the sale of
    Alcan Packaging Sutton Ltd., Alcan Print Finishers Ltd., and the
    Italian Laffon plant, and $8 recorded in Income (Loss) from
    discontinued operations.The gain of $32 realized in 2004 relates to the sale of the
    Boxal Group and Suner Cartons and is recorded in Income (Loss)
    from discontinued operations.**
    
    Deferred translation adjustments are included in Accumulated
    other comprehensive income (loss).  29.  FINANCIAL
    INSTRUMENTS AND COMMODITY CONTRACTS
   147




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    29.  FINANCIAL
    INSTRUMENTS AND COMMODITY
    CONTRACTS  (Continued)
  Derivatives 
    Currency
  Outstanding at December 31



2006


2005


2004Assets (Liabilities)



Fair


Fair


FairFinancial Instrument

Hedge

Value


Value


ValueForward exchange contracts

Future firm net operating cash
    flows


(1
)


10



(62
)Forward exchange contracts

To swap intercompany foreign
    currency denominated loans to US$,  and CHF






(6
)


(5
)Forward exchange contracts

To hedge  net investments in
    foreign
    operations(1)










(167
)Forward exchange contracts

Anticipated
    transactions(2)


8



(2
)


5Forward exchange contracts

To swap CAN$ commercial paper
    borrowings to US$


(11
)


3



31Currency options

Future US$ sales against 
    and £










15Cross currency interest swap and
    forward exchange contracts

To swap US$ third-party borrowings
    to KRW










(8
)Cross currency interest swap

To swap  21 million medium
    term notes to £14 million






1



2Embedded derivatives




1



1



     (1)
    
    An exchange gain (loss) of nil was recorded in Deferred
    translation adjustments (2005: $167; 2004: ($123)).(2)
    
    In 2006, mainly anticipated transactions denominated in
    Brazilian real for the expansion of the Alumar alumina refinery
    in Brazil. In 2005, mainly anticipated transactions denominated
    in Australian dollars for the expansion of the Gove alumina
    refinery in Australia and Brazilian real for the Alumar
    expansion project. In 2004, mainly anticipated transactions
    denominated in Australian dollars for the Gove expansion project.  Derivatives 
    Interest Rate
    2006


2005


2004Outstanding at December 31

Fair


Fair


FairAssets (Liabilities)

Value


Value


ValueFinancial InstrumentRate swap  floating to
    fixed in LIBOR floating to
    EURIBOR fixed






1



Rate swap  fixed to
    floating(1) in USD Fixed to USD
    LIBOR


5







Rate swap  floating to
    fixed in KRW floating to KRW
    fixed










(1
)     (1)
    
    These derivatives, which are designated as fair value hedges,
    convert the interest rate from fixed to floating on $500 of debt
    through 2015 and on $100 of debt through 2012.  Derivatives
    and Commodity Contracts  Aluminum
   148




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    29.  FINANCIAL
    INSTRUMENTS AND COMMODITY
    CONTRACTS  (Continued)
      Outstanding at December 31Assets (Liabilities)

2006


2005


2004Financial InstrumentForward contracts principally
    forward sales contracts and physical trading
    contracts(1)Maturing principally in years


2007



2006 to 2007



2005 to 2006Fair value


(287
)


(236
)


(104
)Forward fixed price sales
    agreementsMaturing principally in years


2007



2006



Fair value


(56
)


(80
)


Call options purchasedMaturing principally in years


2007



2006



2005Fair value


28



29



36Call options soldMaturing principally in years


2007



2006



2005Fair value


(28
)


(29
)


(10
)Embedded derivativesMaturing principally in years










2005Fair value










(10
)     (1)
    
    There was a loss of $33 due to hedge ineffectiveness in 2006
    (2005: $18 and 2004: nil) on forward contracts, for which the
    Company applies cash flow hedge accounting under
    SFAS No. 133. As at 31 December 2006, the Company
    estimates that it will reclassify into earnings in 2007 pre-tax
    derivative losses of $302 from Accumulated other comprehensive
    income (loss) and the remaining balance will be reclassified
    into earnings during the period ending January 2010.  Derivatives 
    Electricity
    2006


2005


2004Financial InstrumentFixed price contractsMaturing at various times in years


N/A



N/A



2016Fair value


N/A



N/A



18   Counterparty
    risk
   149




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    29.  FINANCIAL
    INSTRUMENTS AND COMMODITY
    CONTRACTS  (Continued)
    Financial
    Instruments  Fair Value
        30.  SUPPLEMENTARY
    INFORMATION
  2006


2005


2004Income statementInterest on long-term debt


329



339



316Capitalized interest


(73
)


(29
)


(11
)Balance sheetPayables and accrued liabilities
    include the following:Trade payables


2,163



1,855



2,816Other accrued liabilities


1,700



1,520



1,805Derivatives


740



508



263Income and other taxes


119



116



343Accrued employment costs


708



609



616     2006


2005


2004Statement of cash
    flowsInterest paid continuing operations


386



376



413 discontinued operations






7



3Income taxes paid continuing operations


292



74



546 discontinued operations










6   150




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  31.  POST-RETIREMENT
    BENEFITS
    Funded
    Pension Plans
        Allocation in Aggregate at 31 DecemberCategory of Asset

Target Allocation


2006


2005


2004Equity


40% to 65%



58
%


55
%


54
%Debt securities


30% to 55%



32
%


34
%


35
%Real estate






6
%


5
%


6
%     Expected benefit payments from
    Funded Pension Plans are:2007


5492008


5562009


5712010


5842011


6002012  2016


3,240  151




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    31.  POST-RETIREMENT
    BENEFITS  (Continued)
    2006


2005


2004Change in projected benefit
    obligationProjected benefit obligation at
    January 1


10,331



10,117



8,729Current service cost


187



155



157Interest cost


509



496



488Members contributions


62



48



44Benefits paid


(557
)


(480
)


(459
)Amendments


3



65



8Acquisitions/curtailments/divestitures 
    net


7



(5
)


78Novelis Spin-off


(225
)


(407
)


Actuarial losses


7



823



744Currency (gains) losses


526



(481
)


328Projected benefit obligation at
    December 31


10,850



10,331



10,117   2006


2005


2004Change in fair value of plan
    assetsAssets as January 1


8,726



8,468



7,537Actual return on assets


893



1,192



848Members contribution


62



48



44Benefits paid


(557
)


(480
)


(459
)Company contribution


273



212



188Acquisitions/curtailments/divestitures 
    net


4



(5
)


29Novelis Spin-off


(194
)


(290
)


Currency gains (losses)


444



(419
)


281Assets at December 31


9,651



8,726



8,468     2006


2005


2004Deferred charges and other assets


42



N/A



N/APayables and accrued liabilities






N/A



N/APostretirement benefits


(1,241
)


N/A



N/ATotal funded status


(1,199
)


(1,605
)


(1,649
)      152




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    31.  POST-RETIREMENT
    BENEFITS  (Continued)
    2006


2005


2004Current service cost


187



155



157Interest cost


509



496



488Expected return on assets


(609
)


(548
)


(520
)AmortizationActuarial losses


106



90



69Prior service cost


72



63



70Curtailment/settlement (gains)
    losses


2



4



(18
)Net periodic benefit
    cost


267



260



246   Unfunded
    Retirement Benefits and Other Post-Retirement
    Benefits
        Unfunded Retirement Benefits


Other Benefits2006


2005


2004


2006


2005


2004Change in projected benefit
    obligationProjected benefit obligation at
    January 1


1,058



1,267



1,100



1,074



1,048



940Current service cost


18



18



24



16



14



13Interest cost


47



48



61



59



53



56Benefits paid


(81
)


(70
)


(94
)


(56
)


(60
)


(65
)Amendments














(4
)


33



(3
)Acquisitions/curtailments/divestitures 
    net


16



3



(15
)






5



64Novelis Spin-off


(9
)


(143
)










(115
)


Actuarial (gains) losses


(26
)


80



79



40



96



42Currency (gains) losses


116



(145
)


112



1







1Projected benefit obligation at
    December 31


1,139



1,058



1,267



1,130



1,074



1,048    153




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    31.  POST-RETIREMENT
    BENEFITS  (Continued)
    Unfunded Retirement Benefits


Other Benefits2006


2005


2004


2006


2005


2004Payables and accrued liabilities


64



N/A



N/A



65



N/A



N/APostretirement benefits


1,075



N/A



N/A



1,065



N/A



N/AProjected benefit
    obligation


1,139



1,058



1,267



1,130



1,074



1,048     Unfunded Retirement Benefits


Other Benefits2006


2005


2004


2006


2005


2004Current service cost


18



18



24



16



14



13Interest cost


47



48



61



59



53



56AmortizationActuarial (gains) losses


(2
)


(2
)


(3
)


12



5



(1
)Prior service cost










2



3







Curtailment/settlement (gains)
    losses


4



6



5



(1
)


9



Net periodic benefit
    cost


67



70



89



89



81



68   UnfundedRetirement


OtherExpected benefit payments are:

Benefits


Benefits2007


64



652008


68



702009


69



742010


67



772011


71



812012-2016


392



457   Information
    on Other Comprehensive Income
    2006

Before


Adjustments


AfterAssetsDeferred charges and other assets


1,365



(278
)(A)


1,087Investments


1,529



(20
)(B)


1,509Deferred income taxes 
    long-term


713



276
(C)


989Intangible assets  net


775



(99
)(D)


676Total Assets


29,060



(121
)


28,939LiabilitiesPayables and accrued liabilities


5,339



91
(E)


5,430Postretirement benefits


2,959



422
(F)


3,381Accumulated other comprehensive
    income (loss)


411



(634
)


(223
)Total liabilities and
    shareholders equity


29,060



(121
)


28,939  154




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    31.  POST-RETIREMENT
    BENEFITS  (Continued)
      (A)
    
    Reduction in prepaid pension assets to reflect the funded status
    of the Funded Pension Plans.(B)
    
    Recognition of the funded status of post-retirement benefit
    plans for companies accounted for under the equity method.(C)
    
    Tax impact of adopting SFAS No. 158.(D)
    
    Elimination of the prior service costs relating to the minimum
    pension liability.(E)
    
    Classification of the amount by which the expected benefit
    payments in the following year exceed the plan assets as a
    current liability.(F)
    
    Recognition of the funded status of post-retirement benefit
    plans.    Pension Plans


Other Benefits2006


2006Net actuarial loss


834



165Prior service cost


477



241,311



189     Pension Plans


Other BenefitsAssumptions

2006


2005


2004


2006


2005


2004Weighted average assumptions
    used to determine projected benefit obligation at December
    31Discount rate


4.9
%


4.9
%


5.3
%


5.6
%


5.6
%


5.8
%Average compensation growth


3.4
%


3.4
%


3.4
%


3.6
%


3.7
%


3.7
%Weighted average assumptions
    used to determine net periodic benefit costDiscount rate


4.9
%


5.3
%


5.6
%


5.6
%


5.8
%


6.2
%Average compensation growth


3.4
%


3.4
%


3.3
%


3.7
%


3.7
%


3.7
%Expected return on plan assets


6.9
%


7.0
%


7.0
%


8.3
%


8.3
%


8.5
%   long-term
 155




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    31.  POST-RETIREMENT
    BENEFITS  (Continued)
    Other Benefits1% Increase


1% DecreaseSensitivity AnalysisEffect on current service and
    interest costs


7



(6
)Effect on projected benefit
    obligation


80



(74
)   Defined
    Contribution Plans
    Spin-off
    of Rolled Products Businesses
             156




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  32.  INFORMATION
    BY GEOGRAPHIC AREAS
  Location

2006


2005


2004Sales and operating
    revenues  third parties (by destination)

Canada


1,690



1,438



1,117United States


6,898



5,944



7,620Brazil


255



221



527France


2,436



2,244



2,260United Kingdom


1,787



1,641



2,099Germany


2,316



1,989



2,267Switzerland


383



300



235Other Europe


3,560



3,220



4,306Australia


890



420



429Asia and Other Pacific


2,439



2,126



3,294All Other


987



777



794Total


23,641



20,320



24,948Sales and operating
    revenues  intercompany (by origin)

Canada


2,220



1,557



3,394United States


258



224



945Brazil


13



7



76France


959



870



2,504United Kingdom


16



66



578Germany


435



274



546Switzerland


1,539



1,289



1,250Other Europe


1,761



1,046



1,046Australia


651



508



926Asia and Other Pacific


54



25



56All Other


278



225



414Sub-total


8,184



6,091



11,735Consolidation eliminations


(8,184
)


(6,091
)


(11,735
)Total










  157




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    32.  INFORMATION
    BY GEOGRAPHIC AREAS  (Continued)
    Location

2006


2005


2004Sales and operating
    revenues  third parties
    (by origin)

Canada


3,231



3,007



1,504United States


5,767



4,748



7,648Brazil


203



176



587France


4,899



3,993



4,468United Kingdom


1,252



1,152



1,025Germany


1,763



1,620



3,203Switzerland


2,043



2,176



1,831Other Europe


1,866



1,376



1,754Australia


1,021



731



384Asia and Other Pacific


1,031



855



2,085All Other


565



486



459Total


23,641



20,320



24,948Income (Loss) from continuing
    operations

Canada


371



(197
)


(43
)United States


267



53



129Brazil


17



6



62France


414



(39
)


(209
)United Kingdom


88



(14
)


(33
)Germany


(8
)


(5
)


21Switzerland


95



(3
)


70Other Europe


196



86



46Australia


294



229



227Asia and Other Pacific


39



(8
)


11All Other


55



41



21Consolidation eliminations


(42
)


6



(59
)Total


1,786



155



243          158




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    32.  INFORMATION
    BY GEOGRAPHIC AREAS  (Continued)
    Location

2006


2005


2004Property, plant and equipment,
    Intangible assets and Goodwill at December 31**

Canada


4,228



4,691



4,735United States


2,034



2,198



2,796Brazil


117



101



648France


2,652



2,240



3,047United Kingdom


643



593



983Germany


809



782



1,229Switzerland


715



744



839Other Europe


1,605



1,531



2,093Australia


4,225



3,263



2,402Asia and Other Pacific


330



309



979All Other


317



307



269Total


17,675



16,759



20,020Cash paid for capital
    expenditures, business acquisitions and purchase of
    investments

Canada


232



237



377United States


222



154



230Brazil


29



11



36France


299



215



355United Kingdom


41



35



65Germany


56



88



106Switzerland


32



40



51Other Europe


105



110



159Australia


1,173



879



190Asia and Other Pacific


50



58



116All Other


43



27



50Total


2,282



1,854



1,735 159




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  Location

2006


2005


200432.  INFORMATION BY
    GEOGRAPHIC AREAS  (Continued)Average number of employees
    (in thousands  unaudited)

Canada


11



11



11United States


10



8



14Brazil


1



1



4France


15



15



17United Kingdom


2



3



4Germany


5



5



8Switzerland


2



3



3Other Europe


6



5



8Australia


1



2



2Asia and Other Pacific


7



6



8All Other


5



4



3Total


65



63



82     **
    In 2005, Property, plant and equipment, Intangible assets and
    Goodwill reflect goodwill impairment charges of $4 in Canada,
    $39 in the United States, $29 in France, $1 in the United
    Kingdom, $15 in Germany, $16 in Other Europe, $6 in Asia and
    Other Pacific and $12 in All Other.In 2004, Property, plant and equipment, Intangible assets and
    Goodwill reflect goodwill impairment charges of $36 in the
    United States, $116 in France and $2 in the United Kingdom.  33.  INFORMATION
    BY OPERATING SEGMENTS
   160




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    33.  INFORMATION
    BY OPERATING SEGMENTS  (Continued)
          Bauxite
    and Alumina
    Primary
    Metal
    Engineered
    Products
    Packaging
    Intersegment
    and other
    161




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    33.  INFORMATION
    BY OPERATING SEGMENTS  (Continued)
  Intersegment


Third PartiesSales and Operating Revenues

2006


2005


2004


2006


2005


2004Bauxite and Alumina


2,001



1,515



1,575



1,844



1,478



1,487Primary Metal


2,486



1,898



3,741



8,661



6,877



4,586Engineered Products


194



202



725



7,146



6,015



5,525Packaging


4



5



69



5,960



6,004



6,024Entities transferred to Novelis










535











7,321Adjustments for equity-accounted
    Joint Ventures and certain investments














(15
)


(101
)


(40
)Other


(4,685
)


(3,620
)


(6,645
)


45



47



45











23,641



20,320



24,948   Business Group Profit (BGP)

2006


2005


2004Bauxite and Alumina


609



435



460Primary Metal


2,962



1,751



1,462Engineered Products


567



403



379Packaging


550



595



653Entities transferred to Novelis










654Adjustments for equity-accounted
    Joint Ventures and certain investments


(263
)


(270
)


(242
)Adjustments for
    mark-to-market
    of derivatives


(45
)


(41
)


(29
)Depreciation and amortization


(1,043
)


(1,080
)


(1,337
)Goodwill impairment






(122
)


(154
)Intersegment, corporate offices
    and other


(680
)


(998
)


(921
)Equity income


85



88



54Interest


(284
)


(350
)


(346
)Income taxes


(665
)


(257
)


(375
)Minority interests


(7
)


1



(15
)Income from continuing
    operations


1,786



155



243         162




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
    33.  INFORMATION
    BY OPERATING SEGMENTS  (Continued)
  Total Assets at December 31

2006


2005


2004Bauxite and Alumina


5,865



4,638



3,496Primary Metal


12,026



10,889



10,342Engineered Products


4,727



4,106



4,601Packaging


6,868



6,847



8,242Entities transferred to Novelis










5,434Adjustments for equity-accounted
    Joint Ventures and certain investments


(558
)


(505
)


(313
)Other


4



529



586Assets held for sale:Bauxite and Alumina










63Primary Metal






118



823Engineered Products






9



63Packaging


7



7



4Total assets held for sale


7



134



95328,939



26,638



33,341   Depreciation and Amortization


Cash Paid For Capital Expenditures, Business Acquisitions and
    Investments2006


2005


2004


2006


2005


2004Bauxite and Alumina


154



154



136



1,262



949



181Primary Metal


520



505



488



582



363



621Engineered Products


188



189



201



215



160



212Packaging


256



314



342



383



435



434Entities transferred to Novelis










267











207Adjustments for equity-accounted
    Joint Ventures and certain investments


(96
)


(101
)


(118
)


(186
)


(83
)


(35
)Other


21



19



21



26



30



1151,043



1,080



1,337



2,282



1,854



1,735   Risk
    Concentration
      2006


2005Bauxite and Alumina


73



46Primary Metal


2,510



1,918Engineered Products


40



79Packaging


8



19Total


2,631



2,062   163




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (in millions of US$, except where indicated)
  34.  PRIOR
    YEAR AMOUNTS
   164




---



##### 



SUPPLEMENTARY
    DATA
  QUARTERLY
    FINANCIAL DATA (unaudited)
  First


Second


Third


Fourth


Year(In millions of US$, except per share data)2006Revenues


5,550



6,103



5,769



6,219



23,641Cost of sales and operating
    expenses


4,128



4,646



4,454



4,762



17,990Depreciation and amortization


251



258



273



261



1,043Income taxes


269



195



146



55



665Other items


448



550



436



723



2,157Income from continuing
    operations(1)


454



454



460



418



1,786Income (Loss) from discontinued
    operations


3



1



(4
)


4



4Income before cumulative effect of
    accounting change


457



455



456



422



1,790Cumulative effect of accounting
    change


(4
)














(4
)Net income


453



455



456



422



1,786Dividends on preference shares


2



3



3



3



11Net income attributable to Common
    Shareholders


451



452



453



419



1,775Net income per Common
    Share  basicIncome from continuing operations


1.21



1.21



1.21



1.12



4.75Income (Loss) from discontinued
    operations


0.01







(0.01
)


0.01



0.01Cumulative effect of accounting
    change


(0.01
)














(0.01
)Net income per Common
    Share 
    basic(2)


1.21



1.21



1.20



1.13



4.75Net income per Common
    Share  dilutedIncome from continuing operations


1.20



1.20



1.21



1.12



4.74Income (Loss) from discontinued
    operations


0.01







(0.01
)


0.01



0.01Cumulative effect of accounting
    change


(0.01
)














(0.01
)Net income per Common
    Share 
    diluted(2)


1.20



1.20



1.20



1.13



4.742005Revenues


5,178



5,206



4,887



5,049



20,320Cost of sales and operating
    expenses


4,090



4,130



3,921



3,994



16,135Depreciation and amortization


272



268



266



274



1,080Income taxes


98



70



101



(12
)


257Other items


510



530



527



1,126



2,693Income (Loss) from continuing
    operations(1)


208



208



72



(333
)


155Income (Loss) from discontinued
    operations


10



(17
)


9



(28
)


(26
)Net income (Loss)


218



191



81



(361
)


129Dividends on preference shares


2



1



2



2



7Net income (Loss) attributable to
    Common Shareholders


216



190



79



(363
)


122Net income (Loss) per Common
    Share  basic and dilutedIncome (Loss) from continuing
    operations


0.56



0.56



0.19



(0.91
)


0.40Income (Loss) from discontinued
    operations


0.02



(0.04
)


0.02



(0.07
)


(0.07
)Net income (Loss) per Common
    Share  basic and
    diluted(2)


0.58



0.52



0.21



(0.98
)


0.33 165




---



##### 



SUPPLEMENTARY DATA  (Continued)
   First


Second


Third


Fourth


Year(In millions of US$, except per share data)QUARTERLY FINANCIAL DATA
    (unaudited)  (Continued)2004Revenues


6,020



6,208



6,184



6,536



24,948Cost of sales and operating
    expenses


4,972



4,918



4,997



5,383



20,270Depreciation and amortization


336



324



322



355



1,337Income taxes


41



125



134



75



375Other items


537



556



560



1,070



2,723Income (Loss) from continuing
    operations(1)


134



285



171



(347
)


243Income (Loss) from discontinued
    operations


(28
)


46



(4
)


1



15Net income (Loss)


106



331



167



(346
)


258Dividends on preference shares


2



1



1



2



6Net income (Loss) attributable to
    Common Shareholders


104



330



166



(348
)


252Net income (Loss) per Common
    Share  basicIncome (Loss) from continuing
    operations


0.36



0.77



0.46



(0.95
)


0.64Income (Loss) from discontinued
    operations


(0.07
)


0.12



(0.01
)


0.01



0.05Net income (Loss) per Common
    Share 
    basic(2)


0.29



0.89



0.45



(0.94
)


0.69Net income (Loss) per Common
    Share  dilutedIncome (Loss) from continuing
    operations


0.35



0.77



0.46



(0.95
)


0.64Income (Loss) from discontinued
    operations


(0.07
)


0.12



(0.01
)


0.01



0.05Net income (Loss) per Common
    Share 
    diluted(2)


0.28



0.89



0.45



(0.94
)


0.69     (1)
    
    The first quarter of 2006 included losses of $29 on business and
    asset disposals, charges of $18 mainly related to restructuring
    of the packaging business, as well as asset impairment charges
    of $6 mainly related to the sale of the bottles business,
    partially offset by a gain of $41 arising on the sale of
    bankruptcy claims against Enron. The second quarter of 2006
    included charges of $66 related to restructuring initiatives
    across all Business Groups largely offset by a favourable tax
    adjustment of $63 mainly related to a deferred tax benefit
    arising from a reduction in the Canadian federal tax rates
    enacted in June 2006. The third quarter of 2006 included
    restructuring charges of $17 mainly related to the Packaging and
    Primary Metal groups and asset impairment charges of $7 offset
    by a net gain of $7 on sales of businesses and a favourable tax
    adjustment resulting from an assessment of $16 in Canada. The
    fourth quarter of 2006 included charges of $36 associated with
    restructuring initiatives across most Business Groups, asset
    impairment charges of $14 principally in relation to the Gove
    alumina refinery in Australia, asset retirement obligation
    adjustments relating to closed sites of $11 and a net loss on
    business divestments of $8.   166




---



##### 



SUPPLEMENTARY DATA  (Continued)
     QUARTERLY
    FINANCIAL DATA
    (unaudited)  (Continued)
    (2)
    
    Net income per Common Share calculations are based on the
    average number of Common Shares outstanding in each period. See
    note 5  Earnings Per Share  Basic and
    Diluted. 167




---



##### 



SUPPLEMENTARY
    FINANCIAL AND OPERATING DATA
  ELEVEN-YEAR
    SUMMARY
  2006


2005


2004


2003


2002


2001


2000


1999*


1998*


1997*


1996*US


US


US


US


US


US


US


Canadian


Canadian


Canadian


CanadianGAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAPCONSOLIDATED INCOME STATEMENT
    ITEMS(in millions of US$)Sales and operating revenues


23,641



20,320



24,948



13,850



12,483



12,545



9,237



7,324



7,789



7,777



7,614Cost of sales and operating expenses


17,990



16,135



20,270



11,171



10,032



10,108



7,342



5,695



6,076



6,005



5,919Depreciation and amortization


1,043



1,080



1,337



862



772



809



496



477



462



436



431Selling, administrative and general
    expenses


1,475



1,402



1,615



758



580



567



426



388



448



444



422Research and development expenses


220



227



239



190



115



134



80



67



70



72



71Interest


284



350



346



212



198



242



67



76



92



101



125Goodwill impairment






122



154



28



























Restructuring charges and Other
    expenses (income)  net


256



681



408



131



119



818



32



(40
)


(12
)


(34
)


13Income taxes


665



257



375



258



287



(15
)


232



211



210



248



212Equity income (loss)


85



88



54



38



44



44



35



(1
)


(48
)


(33
)


(10
)Minority interests


(7
)


1



(15
)


(16
)


(3
)


14



1



(14
)


4



(4
)


(1
)Income (Loss) from continuing
    operations before amortization of goodwill and extraordinary item


1,786



155



243



262



421



(60
)


598



435



399



468



410Amortization of goodwill


























16















Income (Loss) from continuing
    operations before extraordinary item


1,786



155



243



262



421



(60
)


582



435



399



468



410Extraordinary gain






































17



Income (Loss) from continuing
    operations


1,786



155



243



262



421



(60
)


582



435



399



485



410Income (Loss) from discontinued
    operations


4



(26
)


15



(159
)


(21
)


(6
)


















Income (Loss) before cumulative
    effect of accounting change


1,790



129



258



103



400



(66
)


582



435



399



485



410Cumulative effect of accounting
    change, net of income tax


(4
)










(39
)


(748
)


(12
)


















Net income (Loss)


1,786



129



258



64



(348
)


(78
)


582



435



399



485



410Net income (Loss) attributable to
    Common Shareholders


1,775



122



252



57



(353
)


(86
)


572



426



389



475



394CONSOLIDATED BALANCE SHEET
    ITEMS(in millions of US$)Operating working capital***


1,861



1,380



2,380



2,458



1,445



1,237



2,354



1,307



1,682



1,483



1,461Capital assets and
    goodwill  net***


17,675



16,759



20,020



20,006



12,023



12,054



12,118



6,434



5,897



5,458



5,470Total assets


28,939



26,638



33,341



31,948



17,761



17,551



17,846



9,839



9,901



9,374



9,228Total debt***


5,979



6,415



9,400



9,542



3,747



3,990



4,572



1,489



1,789



1,515



1,516Deferred income taxes 
    net***


56



184



482



836



821



751



1,144



781



747



969



996Minority interests***


71



67



236



403



150



132



244



207



110



43



73Preference shares


160



160



160



160



160



160



160



160



160



203



203Common Shareholders equity


10,934



9,484



10,566



10,117



8,132



8,410



8,580



5,358



5,359



4,871



4,661PER COMMON SHARE(in US$)Net income (Loss) before
    amortization of goodwill and extraordinary Item  basic


4.75



0.33



0.69



0.18



(1.10
)


(0.27
)


2.37



1.95



1.71



2.02



1.74Net income (Loss) before
    extraordinary item  basic


4.75



0.33



0.69



0.18



(1.10
)


(0.27
)


2.37



1.95



1.71



2.02



1.74Net income (Loss)  basic


4.75



0.33



0.69



0.18



(1.10
)


(0.27
)


2.31



1.95



1.71



2.09



1.74Dividends paid


0.70



0.60



0.60



0.60



0.60



0.60



0.60



0.60



0.60



0.60



0.60Common Shareholders equity


29.81



25.50



28.56



27.70



25.30



26.21



26.99



24.47



23.71



21.43



20.57Market price  NYSE close
    (unaudited)


48.74



40.95



49.04



46.95



29.52



35.93



34.19



41.38



27.06



27.63



33.63 168




---



##### 



SUPPLEMENTARY FINANCIAL AND OPERATING DATA 
    (Continued)
   2006


2005


2004


2003


2002


2001


2000


1999*


1998*


1997*


1996*US


US


US


US


US


US


US


Canadian


Canadian


Canadian


CanadianGAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAP


GAAPELEVEN-YEAR
    SUMMARY  (Continued)OPERATING DATA(in thousands of tonnes
    except for LME price) (unaudited)Consolidated aluminum
    shipments****Ingot products (includes primary
    and secondary ingot, trading and scrap)


3,018



3,070



2,012



1,387



1,429



1,419



974



859



829



858



810Entities transferred to Novelis










2,815



2,559



























Rolled products


















2,058



1,937



1,855



1,609



1,603







Aluminum used in engineered
    products and packaging


1,315



1,269



1,469



562



546



536



352



302



220







Total fabricated products


1,315



1,269



4,284



3,121



2,604



2,473



2,207



1,911



1,823



1,694



1,539Conversion of customer-owned metal


















391



344



328



315



289



276



258Total aluminum volume


4,333



4,339



6,296



4,508



4,424



4,236



3,509



3,085



2,941



2,828



2,607Consolidated primary aluminum
    production


3,406



3,420



3,382



2,354



2,238



2,042



1,562



1,518



1,481



1,429



1,407Consolidated aluminum purchases


967



843



2,172



1,843



1,855



1,865



1,679



1,297



1,227



1,254



1,003Consolidated aluminum inventories
    (end of year)


229



341



831



513



534



528



576



477



469



451



408Primary aluminum
    capacityConsolidated subsidiaries and Joint
    Ventures


3,468



3,483



3,435



4,076



2,365



2,252



1,899



1,583



1,706



1,558



1,561Total consolidated subsidiaries,
    Joint Ventures and related companies


3,468



3,483



3,435



4,076



2,365



2,252



1,899



1,583



1,706



1,695



1,698Average three-month LME price (US$
    per tonne)


2,594



1,900



1,721



1,428



1,365



1,454



1,567



1,388



1,379



1,620



1,536OTHER STATISTICSCash from operating activities from
    continuing operations (in millions of US$)


3,040



1,535



1,739



1,801



1,519



1,614



1,059



1,182



739



719



981Cash from (used for) financing
    activities from continuing operations (in millions of US$)


(1,111
)


(2,647
)


(538
)


3,453



(673
)


(538
)


781



(629
)


(95
)


(46
)


(700
)Cash from (used for) investment
    activities from continuing operations (in millions of US$)


(1,909
)


947



(1,708
)


(4,594
)


(860
)


(1,182
)


(2,074
)


(838
)


(656
)


(587
)


178Cash used for capital expenditures
    (in millions of US$)


2,081



1,742



1,269



838



627



1,017



1,482



1,169



805



641



482Cash used for business acquisitions
    (in millions of US$)


201



112



466



3,819



346



404



244



129



72







Debt as a percentage of invested
    capital (%) (unaudited)


35



40



46



47



31



31



34



21



24



23



23Average number of employees (in
    thousands) (unaudited)


65



63



82



47



47



48



35



38



36



33



34Common Shareholders 
    registered (in thousands at end of year) (unaudited)


17



17



18



18



18



18



19



20



20



21



22Common Shares outstanding (in
    millions at end of year)


367



372



370



365



321



321



318



218



226



227



227Registered in Canada (%)
    (unaudited)**


82



82



82



82



80



79



76



61



60



61



61Registered in the United States (%)
    (unaudited)


18



18



18



18



20



21



24



39



39



39



39Registered in other countries (%)
    (unaudited)


































1







Return on average Common
    Shareholders equity (%) (unaudited)


17



1



2



1



(4
)


(1
)


8



8



7



10



9     *
    
    Amounts during this period were prepared under Canadian
    generally accepted accounting principles, which may not be
    comparable to those prepared under US GAAP.**
    
    Shares held by former algroup and Pechiney shareholders are
    registered in Canada.***
    
    Excludes assets and liabilities of operations held for sale.****
    
    Consolidated aluminum shipments were reclassified for 2004 and
    2003 to reflect the Novelis Spin-off. 169




---



##### 



SUPPLEMENTARY FINANCIAL AND OPERATING DATA 
    (Continued)
   SELECTED
    ALCAN FRANCE S.A.S. UNAUDITED CONSOLIDATED FINANCIAL
    INFORMATION
    Alcan
    France S.A.S.  Selected consolidated financial
    information
  31 December 2006


31 December 2005


31 December 2004(Unaudited)


(Unaudited)


(Unaudited)(In millions of US$,except where indicated)Sales and operating revenues


8,222



7,127



7,236Net income (Loss)


547



(256
)


(341
)Total long-term assets


7,607



6,835



7,681Shareholders equity


6,657



5,467



5,012Average number of employees
    (in thousands)


26



26



31    170




---



##### 



ITEM
    9
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A
    CONTROLS
    AND PROCEDURES  Evaluation
    of disclosure controls and procedures
  Rules 13a-15(e) Securities Exchange Act of
    1934
  Managements
    report on internal control over financial reporting
  Rule 15a-15(d) Securities Exchange Act of 1934
  Internal Control  Integrated Framework
  Form 10-K.
  Managements
    report on Financial Statements
    ITEM 9B
    OTHER
    INFORMATION   PART III  Information in this part is based on information contained in
    the Companys Proxy Circular dated 26 February 2007,
    except as otherwise provided.
 ITEM 10  DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT  A.
    IDENTIFICATION
    OF DIRECTORS  Worldwide Code of Employee and Business Conduct Code of Ethics for
 171




---



##### 



Name

Age


Director since

CommitteesRoland Berger


69


2002

CGC, HRC, EHSCL. Denis Desautels


63


2003

CGC, AC (C)Richard B. Evans


59


2005

None  OfficerL. Yves Fortier


71


2002

CGC (C), EHSCJeffrey E. Garten


60


2007

CGC, ACJean-Paul Jacamon


59


2004

CGC, HRC, ACYves Mansion


56


2004

CGC, AC, EHSCChristine Morin-Postel


60


2003

CGC, HRC, NC (C)Heather Munroe-Blum


56


Nominated in 2007

H. Onno Ruding


67


2004

CGC, EHSCGerhard Schulmeyer


68


1996

CGC, HRC (C)Paul M. Tellier


67


1998

CGC, AC, EHSC (C), NCMilton K. Wong


68


2003

CGC, AC, EHSC   Committee
    Memberships
            B.
    IDENTIFICATION
    OF EXECUTIVE OFFICERS      Position

Professional ExperienceName

Title

Age

Held Since

(last 5 years) and Current Outside Corporate DirectorshipsRichard B. Evans

President and CEO

59

March 2006

 Executive Vice President, Chief Operating Officer (2005 to March 2006)
 Executive Vice President, Multiple Business Groups (1997 to 2005)
 Director, Bowater Incorporated and International Aluminium Institute 172




---



##### 



Position

Professional ExperienceName

Title

Age

Held Since

(last 5 years) and Current Outside Corporate DirectorshipsMichael Hanley

Executive Vice President
    and Chief Financial
    Officer

41

October 2005

 Executive Vice President, Office of the President (2005)
 President and CEO, Alcan Bauxite and Alumina (2002 to 2005)
 Vice President, Investor Relations (2000 to 2002)David L. McAusland

Executive Vice President,
    Corporate Development
    and Chief Legal Officer

53

February 2005

 Senior Vice President, Mergers and Acquisitions, and Chief Legal Officer (2000 to 2005)
 Director, Cogeco Inc., Cogeco Cable Inc. and Cascades Inc.Daniel Gagnier

Senior Vice President, 
    Corporate and External
    Affairs

60

January 1995

 No changeJean-ChristopheDeslarzes

Senior Vice President,

43

March 2006

 Vice President, Human
    Resources and Environment, HealthHuman Resources





and Safety, Alcan
    Packaging (2003 to March 2006),Alcan Packaging (2003
    to March 2006), Alcan Rolled
      Products Europe (2002 to 2003) and Alcan
      Aluminum Fabrication (2001 to 2002)Gaston Ouellet

Senior Vice President

64

October 2000

 President, Pechiney (2005 to present)
 Senior Vice President, Human Resources (2000 to 2006)Jacynthe Côté

Senior Vice President, 
    Alcan and President and
    CEO, Alcan Bauxite
    and Alumina

48

June 2005

 Vice President, Human Resources, Environment, Health and Safety, Alcan Primary Metal (2003 to June 2005)
 Vice President, Business Planning and Development, Alcan Primary Metal (2000 to 2003)Michel Jacques

Senior Vice President, 
    Alcan and President and
    CEO, Alcan Primary
    Metal

55

October 2006

 President and CEO, Alcan Engineered Products (2003 to October 2006)
 Vice President, Strategic Management Support (2002 to 2003)
 Director, Corporate Development (2000 to 2002)Christel Bories

Senior Vice President,
    Alcan and President
    and CEO, Alcan 
    Engineered Products

42

October 2006

 President and CEO, Alcan Packaging (2003 to October 2006)
 Senior Executive Vice President, Packaging Sector, Pechiney (1999 to 2003)Ilene Gordon

Senior Vice President, 
    Alcan and President and 
    CEO, Alcan Packaging

53

December 2006

 President, Alcan Food Packaging Americas (2004 to December 2006)
 President, Pechiney Plastic Packaging, Inc. (1999 to 2004)Rhodri J. Harries

Vice President Finance
    and Treasurer

43

January 2007

 Vice President and Treasurer (2004 to January 2007)
 Assistant treasurer, General Motors Corporation (2001 to 2004)Cesidio Ricci

Vice President
    and Controller

42

December 2005

 Vice President, Business Finance Director, Alcan Engineered Products (2003 to December 2005)
 Financial Director, Alcan Engineered Products and Composites (2002 to 2003)
 Financial Director, Bauxite, Alumina and Specialty Chemicals (1999 to 2002)Pierre D. Chenard

Vice President and
    General Counsel,
    Operations

46

July 2005

 Deputy Chief Legal
    Officer (2001 to July 2005)Roy Millington

Corporate Secretary

47

July 2001

 No change   ITEM 11
    EXECUTIVE
    COMPENSATION    Human
    Resources Committee Interlocks And Insider
    Participation
   173




---



##### 



ITEM 12
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Securities
    Authorized For Issuance Under Equity Compensation
    Plans
    Share
    Ownership Of Certain Beneficial Owners
    Amount and Nature of


% of OutstandingName and Address of Beneficial Owner

Beneficial Ownership


Common Shares OwnedCapital Group International,
    Inc.11 100 Santa Monica Boulevard
    Los Angeles, California 90025


27,018,110
(1)


7.2     (1)
    
    Capital Group International, Inc. (CGII) is the parent holding
    company of a group of investment management companies. It
    reported that it had sole power to vote 23,254,850 Shares, sole
    power to dispose of 27,018,110 Shares and shared power to
    vote or dispose of none of the Shares in a filing with the SEC
    on Form 13G/A on 12 February 2007. Capital Guardian
    Trust Company, an affiliate of CGII, also reported that it
    is the beneficial owner of 18,511,810 or 4.9% of the outstanding
    Common Shares which are included in the above-mentioned
    27,018,100 Shares.  Share
    Ownership of Directors and Executive Officers
   174




---



##### 



Current





Stock Price


Number of


Number ofBeneficial


Shares Subject


Appreciation


Deferred


RestrictedName

Holdings


to
    Options(1)


Units(2)


Share Units


Share
    Units(3)


TotalRoland Berger (D)


5,000



N/A



N/A



11,357
(4)






16,357L. Denis Desautels (D)


1,212



N/A



N/A



8,400
(4)






9,612L. Yves Fortier (D)


1,000



N/A



N/A



35,932
(4)






36,932Jeffrey E. Garten (D)






N/A



N/A











0Jean-Paul Jacamon (D)


136



N/A



N/A



6,012
(4)






6,148Yves Mansion (D)






N/A



N/A



12,316
(4)






12,316Gwyn Morgan (D)


15,000



N/A



N/A



3,766
(4)






18,766Christine Morin-Postel (D)






N/A



N/A



13,712
(4)






13,712H. Onno Ruding (D)


112



N/A



N/A



4,666
(4)






4,778Guy Saint-Pierre (D)


18,837



N/A



N/A



13,937
(4)






32,774Gerhard Schulmeyer (D)


2,542



N/A



N/A



13,276
(4)






15,818Paul M. Tellier (D)


1,980



N/A



N/A



23,387
(4)






25,367Milton K. Wong (D)


40,000



N/A



N/A



14,966
(4)






54,966Richard B. Evans (D, O)


30,702



640,046



57,020



41,449
(5)


72,738



841,955Michael Hanley (O)


1,790



91,872



N/A







29,458



123,120Michel Jacques (O)






25,203



130,282



2,274
(6)


27,052



189,373Christel Bories (O)






133,606



N/A







26,956



160,562David McAusland (O)






201,354



N/A



10,043
(6)


19,824



231,221All Directors and Executive
    Officers as a group (27 individuals)


126,007



1,520,501



219,358



231,906



249,797



2,347,569        (1)
    
    Represents Shares that may be acquired through the exercise of
    C, D, and F options as described in the Proxy Circular on
    pages 29 and 30.(2)
    
    Indicates number of units awarded under the Alcan Stock Price
    Appreciation Unit Plan. The Plan is described on page 32 of
    the Proxy Circular. The units are payable in cash.(3)
    
    Indicates number of units awarded under the Restricted Share
    Unit Plan. The Plan is described on page 23 of the Proxy
    Circular. The units are payable in cash except for the French
    RSU Plan, as described in the Proxy Circular on page 24.(4)
    
    Indicates number of deferred share units awarded under the
    Director Deferred Share Unit Plan. The Plan is described on
    page 37 of the Proxy Circular. The units are payable in
    cash.(5)
    
    Mr. Evans holds 37,749 deferred shares units under the
    Executive Deferred Share Unit Plan, and 3,700 units under the
    Medium-Term Incentive Plan, which has been discontinued. The
    Executive Deferred Share Unit Plan is described on page 24
    of the Proxy Circular. The units are payable in cash.(6)
    
    Indicates number of deferred share units under the Executive
    Deferred Share Unit Plan. The Plan is described on page 24
    of the Proxy Circular. The units are payable in cash. 175




---



##### 



ITEM 13
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Indebtedness
    of Directors and Executive Officers
      Director
    Independence
    ITEM 14
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  ITEM 15
    EXHIBITS
    AND FINANCIAL STATEMENT SCHEDULES  A.  1.  FINANCIAL
    STATEMENTS
    
    Independent Auditors Report
    Consolidated Statement of Income
    Consolidated Balance Sheet
    Consolidated Statement of Cash Flows
    Consolidated Statement of Shareholders Equity
    Notes to Financial Statements
    Quarterly Financial Data (unaudited)
    Eleven-Year Summary  2.
    FINANCIAL
    STATEMENTS SCHEDULES    3.
    EXHIBITS  No. 1-3555. No. 1-3677.
    3.1
    Restated Articles of Incorporation dated 6 January 2005.
    (Incorporated by reference to exhibit 3.1 to the Companys
    Current Report on Form 8-K filed on 7 January 2005.)3.2
    By-law No. 1A. (Restated). (Incorporated by reference to exhibit
    3.1 to the Annual Report on Form 10-K of the Company for
    2003.) 176




---



##### 



(4)
    Instruments defining the rights of security holders:  4.1.1
    Indenture, dated as of 15 May 1983 between Alcan Inc. and
    Bankers Trust Company, as Trustee. (Incorporated by reference to
    exhibit 4.1 to the Companys Registration Statement on Form
    S-3 (No. 33-29761) filed with the Commission on 7 July
    1989.)4.1.2
    First Supplemental Indenture dated as of 1 January 1986 to the
    Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers
    Trust Company, as Trustee. (Incorporated by reference to exhibit
    4.2 to the Companys Registration Statement on Form S-3
    (No. 33-29761) filed with the Commission on 7 July 1989.)4.1.3
    Second Supplemental Indenture dated as of 30 June 1989 to the
    Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers
    Trust Company, as Trustee. (Incorporated by reference to exhibit
    4.3 to the Companys Registration Statement on Form S-3
    (No. 33-29761) filed with the Commission on 7 July 1989.)4.1.4
    Third Supplemental Indenture dated as of 19 June 1989 to the
    Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers
    Trust Company, as Trustee. (Incorporated by reference to exhibit
    (4)(a) to the Companys Current Report on Form 8-K dated 26
    July 1989 filed with the Commission on 26 July 1989 (Commission
    File Number 1-3677).)4.1.5
    Fourth Supplemental Indenture dated as of 17 July 1990 to the
    Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers
    Trust Company, as Trustee. (Incorporated by reference to exhibit
    4.5 to the Companys Registration Statement on Form S-3
    (No. 333-35977) filed with the Commission on 20 July 1990.)4.1.6
    Fifth Supplemental Indenture dated as of 1 January 1995 to the
    Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers
    Trust Company, as Trustee. (Incorporated by reference to exhibit
    4.6 to the Companys Registration Statement on Form S-3
    (No. 333-76535) filed with the Commission on 19 April 1999.)4.1.7
    Sixth Supplemental Indenture dated as of 8 April 2002 to the
    Indenture dated as of 15 May 1983 between Alcan Inc. and Bankers
    Trust Company, as Trustee. (Incorporated by reference to exhibit
    4.7 to the Companys Registration Statement on Form S-3
    (No. 333-85998) filed with the Commission on 11 April 2002.)4.1.8
    Form of Seventh Supplemental Indenture to the Indenture dated 15
    May 1983 between Alcan Inc. and Bankers Trust Company, as
    Trustee. (Incorporated by reference to exhibit 4.8 to the
    Companys Registration Statement on Form S-3 (No.
    333-105999) filed with the Commission on 10 June 2003.)4.1.9
    Form of Eighth Supplemental Indenture to the Indenture dated 15
    May 1983 between Alcan Inc. and Bankers Trust Company, as
    Trustee. (Incorporated by reference to exhibit 4.9 to the
    Companys Registration Statement on Form S-3 (No.
    333-110739) filed with the Commission on 25 November 2003.)4.1.10
    Specimen Form of Debt Security. (Incorporated by reference to
    exhibit 4.1 to Form 8-A filed with the Commission on 10
    September 2002.)4.2
    Form of certificate for the Registrants Common Shares.
    (Incorporated by reference to exhibit 4.2 to the Annual Report
    on Form 10-K of the Company for 1989.)4.3
    Shareholder Rights Agreement as re-confirmed and amended on 28
    April 2005 between Alcan Inc. and CIBC Mellon Trust Company as
    Rights Agent, which Agreement includes the form of Rights
    Certificates. (Incorporated by reference to exhibit 99 to
    the Companys Current Report on Form 8-K filed on 29 April
    2005.) 177




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10.1
    Employment Agreement dated 14 March 2006 with Richard B.
    Evans. (Incorporated by reference to exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed on 16 March 2006.)10.2
    Employment Agreement dated 10 March 2005 with Michael
    Hanley. (Incorporated by reference to exhibit 10.3 to the
    Annual Report on
    Form 10-K
    of the Company for 2005.)10.3
    Employment Agreement dated 21 December 2006 with Michel
    Jacques. (Incorporated by reference to exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed on 22 December 2006.)10.4
    Employment Agreement dated 14 January 2002 with David
    McAusland. (Filed herewith.)10.5
    Change of Control Agreement dated 1 May 2005 with Richard
    B. Evans. (Incorporated by reference to exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed on 29 July 2005.)10.6
    Change of Control Agreement dated 1 May 2005 with Michael
    Hanley. (Incorporated by reference to exhibit 10.8 to the
    Annual Report on
    Form 10-K
    of the Company for 2005.)10.7
    Change of Control Agreement dated 1 May 2005 with Michel
    Jacques. (Incorporated by reference to exhibit 10.10 to the
    Annual Report on
    Form 10-K
    of the Company for 2005.)10.8
    Change of Control Agreement dated 1 May 2005 with Christel
    Bories. (Filed herewith.)10.9
    Change of Control Agreement dated 1 May 2005 with David
    McAusland. (Filed herewith.)10.10
    Alcan Executive Share Option Plan, dated 30 April 1990, as
    amended. (Incorporated by reference to exhibit 10.11 to the
    Annual Report on
    Form 10-K
    of the Company for 2005.)  10.11
    Alcan Executive Performance Award Plan, dated 1 January
    2007, as amended and restated. (Filed herewith.).  10.12
    Alcan Flexible Perquisites Program (Canada). (Incorporated by
    reference to exhibit 10.6 to the Annual Report on
    Form 10-K
    of the Company for 1995.)10.13
    Alcan Corporation Flexible Perquisites Program (US), dated
    1 January 2003. (Incorporated by reference to
    exhibit 10.6 to the Annual Report on
    Form 10-K
    of the Company for 2003.)10.14
    Alcan Corporation Executive Company Vehicle Program (US), dated
    7 November 2000. (Incorporated by reference to
    exhibit 10.7 to the Annual Report on
    Form 10-K
    of the Company for 2003.)10.15
    Alcan Pension Plan for Officers, dated 1 January 2006,
    amended and restated. (Filed herewith.)10.16
    B.C./Alcan Inc. 1997 Agreement. (Incorporated by reference to
    exhibit 10.12 to the Quarterly Report on
    Form 10-Q
    of the Company for the quarter ended 30 June 1997.)10.17
    Alcan Inc. Stock Price Appreciation Unit Plan, dated
    27 September 2001, as amended. (Incorporated by reference
    to exhibit 10.18 to the Annual Report on
    Form 10-K
    of the Company for 2005.)10.18
    Alcan Inc. Deferred Share Unit Plan for Non-Executive Directors,
    dated 1 April 2001, as amended. (Incorporated by reference
    to exhibit 10.19 to the Annual Report on
    Form 10-K
    of the Company for 2005.)10.19
    Total Shareholder Return Performance Plan, dated 1 January
    2002, as amended. (Incorporated by reference to
    exhibit 10.2 to the Quarterly Report on
    Form 10-Q
    of the Company for the quarter ended 30 September 2006.) 178




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##### 



10.20
    Separation Agreement dated 31 December 2004 between Alcan
    Inc. and Novelis Inc. (Incorporated by reference to
    exhibit 10.16 to the Annual Report on
    Form 10-K
    of the Company for 2004.)10.21
    Alcan Executive Deferred Share Unit Plan, dated 1 January
    2003, as amended. (Incorporated by reference to
    exhibit 10.3 to the Quarterly Report on
    Form 10-Q
    of the Company for the quarter ended 30 September 2006.)10.22
    Alcan Restricted Share Unit Plan, dated 20 September 2006,
    as amended. (Filed herewith.)10.23
    Alcan Supplemental Short Term Incentive Plan, dated
    11 February 2006. (Filed herewith.)10.24
    Pechiney Supplemental Pension Plan, dated 8 August 2003, as
    amended and restated. (Filed herewith.)  (14.1)
    Worldwide Code of Employee and Business Conduct.(Incorporated by reference to exhibit 14.1 to the
    Annual Report on
    Form 10-K
    of the Company for 2003.)(14.2)
    Code of Ethics for Senior Financial Officers.(Incorporated by reference to exhibit 14.2 to the
    Annual Report on
    Form 10-K
    of the Company for 2003.)(21)
    The list of Subsidiaries and Related Companies of the Company.
    (Filed herewith.)(23)
    Consent of Registered Public Accounting Firm.(24)
    Powers of Attorney. (Filed herewith.)  (24.1)
    Power of Attorney of R. Berger(24.2)
    Power of Attorney of L. D. Desautels(24.3)
    Power of Attorney of L. Y. Fortier(24.4)
    Power of Attorney of J. E. Garten(24.5)
    Power of Attorney of Y. Mansion(24.6)
    Power of Attorney of C. Morin-Postel(24.7)
    Power of Attorney of H. O. Ruding(24.8)
    Power of Attorney of G. Saint-Pierre(24.9)
    Power of Attorney of G. Schulmeyer(24.10)
    Power of Attorney of P. M. Tellier  (31.1)
    Section 302 Certification signed by Richard B. Evans on
    1 March 2007. (Filed herewith.)(31.2)
    Section 302 Certification signed by Michael Hanley on
    1 March 2007. (Filed herewith.)(32.1)
    Section 906 Certification signed by Richard B. Evans on
    1 March 2007. (Filed herewith.)(32.2)
    Section 906 Certification signed by Michael Hanley on
    1 March 2007. (Filed herewith.)(99.1)
    Proxy Circular. (Filed herewith.)(99.2)
    Board Charter. (Filed herewith.)    Regulation S-K.
 179




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##### 



SIGNATURES  Securities Exchange Act of 1934
  ALCAN INC.
  By:
    *  Chairman of the Board
    Securities Exchange Act
    of 1934
  /s/  Richard
    B. EvansRichard
    B. Evans, Director, President and Chief Executive
    Officer
    (Principal Executive Officer)*Roland
    Berger, Director*L.
    Denis Desautels, Director*L.
    Yves Fortier, Chairman of the Board*Jeffrey
    E. Garten, DirectorJean-Paul
    Jacamon, Director*Yves
    Mansion, DirectorGwyn
    Morgan, Director*Christine
    Morin-Postel, Director*H.
    Onno Ruding, Director 180




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##### 



*Guy
    Saint-Pierre, Director*Gerhard
    Schulmeyer, Director*Paul
    M. Tellier, DirectorMilton
    K. Wong, Director/s/  Michael
    HanleyMichael
    Hanley, Executive Vice President and Chief Financial
    Officer
    (Principal Financial Officer)/s/  Cesidio
    RicciCesidio
    Ricci, Vice President and Controller (Principal Accounting
    Officer)* By: Roy Millington as Attorney-in-fact  181