**ALCAN INC. AUDIT COMMITTEE CHARTER**

**I.        Statementof Policy:**

The Audit Committee of the Board of Directors of Alcan Inc.**(the "Committee") shall provide assistance to the Board ofDirectors in fulfilling the Board's oversight responsibility with respect tothe Company.  Such assistance shall relate to the Company's financialstatements and the financial reporting process, the systems of internalaccounting and financial controls, the internal audit function, the annualindependent audit of the Company's financial statements, the selection of theindependent auditors (the ''Auditors'') and the other functions set out in thisCharter.  In so doing, it shall insist on maintaining free and opencommunication between the Committee, the Auditors, the internal auditors andManagement of the Company.  In discharging its oversight role, the Committee isempowered to investigate any matter brought to its attention with full accessto all books, records, facilities, and personnel of the Company and to retainassistance for this purpose.

**II.       Compositionand Organization of the Audit Committee:**

The Committee shall consist of at least three Directors,each of whom the Board of Directors has determined to be unrelated orindependent in respect of the Company as contemplated by the laws, regulationsand listing requirements to which the Company is subject and in accordance withthe *Guidelines on the Independence of the Directors of Alcan*. The Boardshall also determine each Committee Member's financial literacy, and whether heor she has accounting or related financial management expertise, as suchqualifications are interpreted by the Board of Directors in accordance with itsbusiness judgment and applicable regulations.

Members shall be appointed by the Board based on nominationsrecommended by the Company's Corporate Governance Committee or a sub-committeethereof, and shall serve for such term as the Board may determine.

The Committee shall designate one Member of the Committee toact as its Chairman.  The Secretary or an Assistant Secretary of the Companyshall act as secretary to the Committee.

**III.      Meetingsof the Audit Committee:**

The Committee shall meet regularly at least four times ayear, or more frequently if circumstances so dictate and shall meet quarterlyto review the Company's annual and quarterly releases of financial results.

At each regular meeting, the Committee shall meetseparately with senior Management, the Chief Internal Auditor and the Auditorsto discuss any matters that the Committee or any of these parties believeshould be discussed privately. The Committee may request any officer oremployee of the Company or the Auditors to attend a meeting of the Committee orto meet with any Members of the Committee.  In addition, the members of seniorManagement, the Chief Internal Auditor and the Auditors shall have access tothe Committee to bring forward matters requiring urgent attention.

The Committee shall meet *in camera*, as necessary.

 

 

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**IV.        Divisionof Responsibilities of the Audit Committee, the Auditors and Management:**

The primary responsibility of the Committee is to overseethe Company's financial reporting process on behalf of the Board and report theresults of its activities to the Board.  The Management of the Company isresponsible for the preparation, presentation and integrity of the Company'sfinancial statements and for the effectiveness of internal control overfinancial reporting. Management and the internal audit department areresponsible for maintaining appropriate accounting and financial reportingprinciples and policies as well as internal controls and procedures thatprovide for compliance with accounting standards and applicable laws andregulations. The Auditors are responsible for planning and carrying out auditsof the Company's annual financial statements in accordance with generallyaccepted auditing standards, reviewing the Company's quarterly financialstatements prior to the filing of each quarterly report, annually auditingmanagement's assessment of the effectiveness of internal control over financialreporting and other auditing procedures. 

The Committee shall have a clear understanding withManagement and the Auditors that the Auditors are accountable to the Board andthe Committee, as representatives of the Company's Shareholders.  The Committeeshall recommend the appointment of the Auditors to the Board for ultimateapproval by the Shareholders.  The Auditors' audit engagement letter shall besigned by the Chairman of the Committee on behalf of the Company, having been previouslyapproved by the Committee.

**V.        Dutiesand Powers of the Audit Committee:**

To carry out its responsibilities, the Committee shall havethe following duties and powers in respect of which it shall be entitled tofull support and cooperation from Management:

**1.        In respect of the Auditors:**

| (i)   | to recommend the retention or termination of theAuditors, having evaluated their performance;                                                                                                          |
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| (ii)  | to oversee the work of the Auditors (including theresolution of any disagreement between management and the Auditors regardingfinancial reporting) who shall report to the Committee;                  |
| (iii) | to approve all audit engagement fees and terms, aswell as all significant non‐audit fees;                                                                                                        |
| (iv)  | to require the Auditors to submit a formal writtenstatement describing their quality control procedures and any material issuesraised thereby;                                                         |
| (v)   | to consider any reports or communications (andManagement's responses thereto) submitted to the Committee by the Auditors asrequired by or referred to in applicable auditing standards;                |
| (vi)  | to require the Auditors to submit a report relatingto the Company's annual audited financial statements describing all criticalaccounting policies and practices as required by relevant regulations;  |
| (vii) | to discuss with the Auditors any relationships orservices that may impact the quality of audit services or the objectivity andindependence of the Auditors;                                                 |

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| (viii) | to discuss anysignificant matters arising from any audit and any errors, difficulties orserious differences of opinion encountered in the course of the audit andManagement's response thereto;                                                                                                                                                                 |
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| (ix)   | to review theannual Auditors' Report to Shareholders;                                                                                                                                                                                                                                                                                                           |
| (x)    | to review andpre-approve, or to adopt appropriate procedures to pre-approve, the Auditors'provision of audit and any non‐audit services to the Company;                                                                                                                                                                                                   |
| (xi)   | to discuss andreview the scope and plan of the annual audit;                                                                                                                                                                                                                                                                                                    |
| (xii)  | to review andevaluate the qualifications and performance of the relevant personnel of theAuditors;                                                                                                                                                                                                                                                              |
| (xiii) | to review theprocess for the rotation of the lead audit partner, the concurring partner andany other audit engagement team partner;                                                                                                                                                                                                                             |
| (xiv)  | to review andapprove any procedures on the hiring of employees or former employees of theAuditors, with a view to preserving Auditor independence;                                                                                                                                                                                                              |
| ( xv)  | to obtain fromthe Auditors assurance that the audit was conducted in a manner consistent withapplicable laws and regulations;                                                                                                                                                                                                                                   |
| (xvi)  | to discuss withthe Auditors the quality, not just acceptability, of the Company's accountingprinciples, including all critical accounting policies and practices used, anyalternative treatments of financial information that have been discussed withManagement, the implications of their use, as well as any other materialcommunications with Management.  |
| (xvii) | to remind theAuditors that they are accountable to the Board and the Committee, asrepresentatives of the Shareholders and that the Committee expects to beadvised on any areas that require its attention.                                                                                                                                                           |

**2.         In respect to the Internal Audit Function:**

| (i)   | to review andapprove the appointment of the Chief Internal Auditor;                                                                                                                                                                                                                                                                                |
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| (ii)  | to advise theChief Internal Auditor that he is expected to provide to the Committeesummaries of the significant issues and practices relating to accountingprinciples and policies, financial reporting and internal control overfinancial reporting prepared by the internal audit department for Managementand Management's responses thereto;   |
| (iii) | to receive areport on the activities of the internal audit function;                                                                                                                                                                                                                                                                               |
| (iv)  | to review theCompany's internal audit plan;                                                                                                                                                                                                                                                                                                        |
| (v)   | to review thedegree of independence of the internal audit function and the adequacy of staffingand compensation;                                                                                                                                                                                                                                   |
| (vi)  | to review senioremployee expenses and perquisites on an annual basis.                                                                                                                                                                                                                                                                                   |

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**3.         In respect of Disclosure and Internal Controls:**

| (i)    | to adviseManagement, the internal audit function and the Auditors that they are expectedto provide the Committee with a timely disclosure and analysis of transactionsand other events that would materially impact the Company's financialstatements;                                                                                                                               |
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| (ii)   | to discussguidelines and policies governing the process by which Management assesses andmanages the Company's exposure to risk (including insurance coverage), and todiscuss the Company's major financial risk exposures and the steps Managementhas taken to monitor and control such exposures;                                                                                   |
| (iii)  | on a regularbasis to review policies and practices of the Company, including those relatedto pension governance, funding and investments, metal and other commodityhedging activities, insurance and foreign exchange, and to receive updates asto current status;                                                                                                                   |
| (iv)   | to prepare anyreport required to be included in the Company's management proxy circular;                                                                                                                                                                                                                                                                                             |
| (v)    | to review allfinancial statements requiring Board approval and report thereon to the Board;                                                                                                                                                                                                                                                                                          |
| (vi)   | to review theCompany's annual report and annual regulatory filings and disclosures beforethey are filed with securities authorities;                                                                                                                                                                                                                                                 |
| (vii)  | to review theCompany's disclosure under Management's Discussion and Analysis of FinancialCondition and Results of Operation;                                                                                                                                                                                                                                                         |
| (viii) | to ensure thatthe Company's disclosure policy and practices meet applicable regulatoryrequirements and the needs of the Company;                                                                                                                                                                                                                                                     |
| (ix)   | to review thequarterly earnings press releases with unaudited consolidated financialstatements prepared by Management before their release to the public; includinga discussion of compliance with generally accepted accounting principles and otherdisclosure requirements as well as a discussion with the Auditors of theirreview of the quarterly financial statements;    |
| (x)    | to review andapprove the Company's quarterly report and quarterly regulatory filings anddisclosures before they are filed with securities authorities including theManagement's Discussion and Analysis of Financial Condition and Results ofOperation;                                                                                                                              |
| (xi)   | to review anyoff-balance sheet items;                                                                                                                                                                                                                                                                                                                                                |
| (xii)  | to discuss thekinds of financial information and earnings guidance provided, and the types ofpresentations made to analysts and rating agencies;                                                                                                                                                                                                                                     |
| (xiii) | to review theLegal Proceedings Report prepared by Management with a view to ensuring thatall potential material claims against the Company have been properly evaluated,accounted for and disclosed;                                                                                                                                                                                 |
| (xiv)  | to discuss withthe Company's Chief Legal Officer any significant legal, compliance orregulatory matters that may have a material effect on the financial statementsor the Company's business;                                                                                                                                                                                             |

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| (xv)    | to review theCompany's processes for monitoring compliance with the *Worldwide Code ofEmployee and Business Conduct* and the *Code of Ethics for SeniorFinancial Officers*;                                                                                                                                                                                                                                          |
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| (xvi)   | to review theadequacy of the Company's disaster recovery plan to ensure the ability toresume operations as rapidly and efficiently as possible in the event of adisaster;                                                                                                                                                                                                                                            |
| (xvii)  | to reviewsignificant tax exposures and tax planning initiatives with a view to ensuringfull compliance while minimizing tax costs;                                                                                                                                                                                                                                                                                   |
| (xviii) | to review theresults of the Company's joint ventures and investments;                                                                                                                                                                                                                                                                                                                                                |
| (xix)   | to receivereports on major accounting issues that have arisen and expected changes inaccounting standards and processes that might have an impact on the Company;                                                                                                                                                                                                                                                    |
| (xx)    | to reviewManagement's determination of goodwill impairment, if any, as required byaccounting standards;                                                                                                                                                                                                                                                                                                              |
| (xxi)   | to review anyuse of pro forma or non-generally accepted accounting principles information bythe Company in any documents other than the financial statements;                                                                                                                                                                                                                                                        |
| (xxii)  | to inquire ofthe Company's Chief Executive Officer and Chief Financial Officer as to theCompany's disclosure controls and procedures and as to the existence of anysignificant deficiencies or material weakness in the design or operation ofinternal control over financial reporting and any fraud that involves employees who have a significant role in the Company's internal control overfinancial reporting. |

**4.         In respect of Financial Matters and Securities:**

| (i)   | to review anyproposed material financial and capital transactions;                                                                    |
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| (ii)  | to review theimpact of the Company's financing plan on capital structure and credit rating;                                           |
| (iii) | to reviewproposals from the Company's Chief Financial Officer in respect of any issue ofsecurities previously approved by the Board;  |
| (iv)  | to review andrecommend to the Board the text of any registration or offering document thatmay be required to be issued;               |
| (v)   | to reviewManagement's recommendations regarding the Company's dividend policy and makerecommendations thereon to the Board.                |

**5.         In respect of Corporate Governance:**

| (i)  | to prepare anyreport or other disclosures, including any recommendation of the Committee,required by applicable laws and regulations to be included in the Company'sreports to Shareholders;  |
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| (ii) | to reviewperiodically the content and application of the *Code of Ethics for SeniorFinancial Officers* of the Company;                                                                             |

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| (viii) | to report itsactivities to the Board on a regular basis and to make such recommendationswith respect to the above and other matters as the Committee may deem necessaryor appropriate;                                                                                                                                       |
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| (ix)   | to prepare andreview with the Board an annual performance evaluation of the Committee and itsMembers, which evaluation must compare the performance of the Committee withthe requirements of this Charter; the performance evaluation by the Committeeshall be conducted in such manner as the Committee deems appropriate;  |
| (x)    | to review andrecommend to the Board the appointment of senior financial officers;                                                                                                                                                                                                                                            |
| (xi)   | to review theadequacy and competence of the Company's finance personnel;                                                                                                                                                                                                                                                     |
| (xii)  | to regularlyreview the independence, financial literacy and financial expertise of theCommittee Members;                                                                                                                                                                                                                     |
| (xiii) | to review thisCharter at least annually and recommend any changes to the Board.                                                                                                                                                                                                                                                   |

**VI.        Delegationto Subcommittee:**

The Committee may, in its discretion and as appropriate,delegate duties and responsibilities to a Member or to a subcommittee of theCommittee.

**VII.       Resourcesand Authority Function of the Committee:**

The Committee shall have the resources and authorityappropriate to discharge its duties and responsibilities, including theauthority to retain counsel, accountants or other experts, as it deemsappropriate, without seeking approval of the Board or Management.

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The function of the Committee is oversight. It is notthe duty or responsibility of the Committee or its Members (i) to plan orconduct audits, (ii) to determine that the Company's financial statements arecomplete and accurate and are in accordance with generally accepted accountingprinciples or (iii) to conduct other types of auditing or accounting reviews orsimilar procedures or investigations. The Committee, its Chairman and its financial expertMembers are Members of the Board, appointed to the Committee to provide broadoversight of the financial, risk and control related activities of the Company,and are specifically not accountable or responsible for the day to dayoperation or performance of such activities.  In particular, the Member orMembers identified as financial experts shall not be accountable for givingprofessional opinions on the internal or external audit of the Company'sfinancial information, but only for providing expertise in the Committee'soversight thereof.

Absent actual knowledge to the contrary (which shall bepromptly reported to the Board), each Member of the Committee shall be entitledto rely on (i) the integrity of those persons or organizations within andoutside the Company from which it receives information, (ii) the accuracy of thefinancial and other information provided to the Committee by such persons ororganizations and (iii) representations made by Management and the Auditors asto any non-audit services provided by the Auditors to the Company and itssubsidiaries.

 

 

 

 

 

 

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