<PAGE>   1
Exhibit 13


                                  [ALCAN LOGO]



                                  IMAGINATION
                               MATERIALIZED . . .











                        Alcan Inc., 2000 Annual Report
<PAGE>   2
                                  [ALCAN LOGO]




                                  IMAGINATION
                               MATERIALIZED . . .


             Innovative Aluminum and Packaging Solutions Worldwide





                        Alcan Inc., 2000 Annual Report
<PAGE>   3
PROFILE
Alcan Inc., a Canadian corporation, is a $13-billion organization and the parent
company of an international group operating in the aluminum and packaging
sectors. Alcan's unique strengths lie in its expansive network of operations
with 53,000 dedicated employees, a global customer base, innovative products and
advanced technologies. With a strong commitment to the highest standards in all
aspects of its operations, the Company is a valued corporate partner to its
stakeholders.

ALCAN IS:

(bullet) A strongly competitive producer of primary metal through its
         unique combination of power generation capabilities, raw materials
         management and low-cost smelting capacity;

(bullet) A global force in aluminum fabrication, with low-cost rolling
         operations, leadership in can stock and a wide array of value-added
         engineered products;

(bullet) The largest converter of flexible packaging in Europe and one of the
         world's leading suppliers of packaging materials for the fast moving
         consumer goods, pharmaceutical and cosmetics industries;

(bullet) An innovative solutions provider through the development of strategic
         customer partnerships such as in the automotive/transportation sector.

Alcan Inc. is a multicultural, multilingual organization with a presence in some
40 countries. Alcan's shares are traded internationally and are listed on the
New York, Toronto, London, Frankfurt and Swiss stock exchanges. The word ALCAN
and the Alcan symbol are registered trademarks in more than 100 countries.

                                   HIGHLIGHTS
                                  OF THE YEAR

Highlights of the Year                            1
Message to Shareholders                           2
The Alcan Group's Businesses at a Glance          6
Imagination Materialized                          8
Corporate Citizenship                            18
Management's Discussion and Analysis             22
Financial Section                                45
Corporate Governance                             77
Directors and Officers                           78
Shareholder Information                          79
Glossary                                         80
Company Information                              81

                              ALCAN'S NAME CHANGE

ON MARCH 1, 2001, ALCAN ALUMINIUM LIMITED CHANGED ITS NAME TO ALCAN INC. THE NEW
NAME WAS SELECTED BY THE BOARD OF DIRECTORS PURSUANT TO THE AUTHORITY CONFERRED
BY THE SHAREHOLDERS' RESOLUTION, WHICH WAS ADOPTED ON NOVEMBER 22, 1999.

THE INFORMATION PRESENTED THROUGHOUT THIS REPORT INCLUDES DATA OF ALUSUISSE
GROUP LTD (ALGROUP) ONLY SINCE THE COMPLETION OF THE MERGER IN OCTOBER 2000.
<PAGE>   4
1 > Highlights of the Year

<TABLE>
<CAPTION>
                                                                2000                1999            1998
                                                                ------             -----           -----
<S>                                                             <C>                <C>             <C>
Financial Data
(in millions of US$, except where indicated)
  Sales and operating revenues                                   9,148             7,324           7,789
  Net income                                                       618               460             399
  Economic Value Added (EVA(R))(1)
    Excluding purchase accounting adjustments(2)                   153              (111)           (285)
    Including purchase accounting adjustments(2)                    19               N/A             N/A
  Return (%) on average common shareholders' equity                 10                 9               7
  Total assets (at year-end)                                    18,407             9,849           9,901
  Capital investments                                            1,735             1,298             877
  Ratio of borrowings to equity (at year-end)                    33:67             21:79           24:76
  Per common share (in us$)
    Net income                                                    2.45              2.06            1.71
    Dividends                                                     0.60              0.60            0.60
    Price on NYSE (at year-end)                                  34.19             41.38           27.06
                                                                ------             -----           -----
Operating Data
(in thousands of tonnes)
  Ingot products shipments(3)                                      974               859             829
  Rolled products shipments(4), (5)                              2,183             1,924           1,892
  Aluminum used in engineered products and packaging               352               302             220
  Primary aluminum production                                    1,562             1,518           1,481
                                                                ------             -----           -----
Average LME Three-Month Price
(in US$/tonne)                                                   1,567             1,388           1,379
                                                                ------             -----           -----
</TABLE>

1  EVA is a registered trademark of Stern Stewart & Co.

2  Goodwill and asset revaluation related to the algroup merger, as well as
   depreciation and amortization.

3  Includes primary and secondary ingot and scrap, as well as shipments from
   metal trading activities.

4  Includes conversion of customer-owned metal.

5  Includes foil products for 1998 only; foil operations have been reclassified
   to the packaging segment for 1999 and 2000.

Net Income and Average
LME Three-Month Price                  Rolled Products Shipments(dagger)

[GRAPHIC]                              [GRAPHIC]

[] Net Income                          [] Rolled products shipments
(Before extraordinary item)            [] Rolled products shipments adjusted
                                          for acquisitions and divestments

With higher metal prices,              Rolled products shipments have
continued progress under the           increased by more than 40%
Full Business Potential program        over the last five years.
and the inclusion of algroup for
the fourth quarter, net income         (dagger) includes conversion of
in 2000 was 34% higher than in                  customer-owned metal and
the previous year.                              includes foil products for
                                                1996, 1997 and 1998; foil
                                                operations have been
                                                reclassified to the packaging
                                                segment for 1999 and 2000.
<PAGE>   5

2

MESSAGE TO SHAREHOLDERS

[PICTURE]

John R. Evans,
Chairman of the Board

OUR STRATEGIC PRIORITIES

> Manage a smooth transition to the new Alcan.

> Surpass our targets for earnings improvement programs and merger synergies.

> Position Alcan as the global partner of choice in both aluminum and packaging,
  perceived as NO. 1 in the eyes of customers.

> Maintain profitable growth momentum and achieve our governing objective to
  maximize shareholder value.
<PAGE>   6
3 > Message to Shareholders

The year 2000 ended on a high note with our successful conclusion of the
Alcan-algroup merger. By combining the complementary strengths of these two
outstanding organizations, the new Alcan has emerged as a dynamic global leader
in both aluminum and packaging with annual revenues of approximately $13 billion
-- plus exceptional upside potential in terms of future growth and value
creation.

ENHANCED COMPETITIVE POSITION -- NEW GROWTH PLATFORM

With 53,000
employees in some 40 countries, Alcan benefits from enhanced competitive
positions in key sectors such as:

(bullet)  Primary metal -- maintaining a low-cost position in primary aluminum;

(bullet)  Aluminum fabrication -- with low-cost, high-quality rolling
          operations, plus leadership in can stock globally and value-added
          products in Europe;

(bullet)  Automotive -- where we now enjoy industry
          leadership in both Europe and North America as a provider of aluminum
          solutions to major automakers such as Audi/Volkswagen, Ford and
          General Motors;

(bullet)  Packaging -- a significant new growth platform for
          Alcan, underpinned by established leadership in food flexible,
          pharmaceutical, cosmetics/personal care and other specialty areas.

In short, the new Alcan is a cutting-edge organization with a remarkable
combination of talented people, innovative products and advanced technologies.
It is uniquely equipped to devise creative solutions to meet customers' needs --
a capability we like to think of as Imagination Materialized.

INCREASED EARNINGS

Continued progress in Alcan's Full Business Potential (FBP) earnings improvement
program, increased fabricated products volumes and higher average metal prices
contributed to a significant increase in earnings for 2000. The Company
generated consolidated net income of $618 million, an increase of 34% from 1999.
Those results incorporate the operations of the former algroup for the fourth
quarter of 2000, and include non-cash, merger-related charges of $60 million.

SYNERGIES GREATER THAN ANTICIPATED

The merger integration process got off to a
running start and is progressing very well. Management now expects total
synergies of some $200 million, 33% higher than originally anticipated.
Furthermore, integration costs will be considerably lower, $100 million versus
an earlier estimate of $150 million.

[PICTURE]

Travis Engen,
Alcan's new President and CEO

Effective March 12, 2001, Travis Engen is appointed Alcan's
new President and Chief Executive Officer (CEO). Prior to assuming this post,
Mr. Engen was chairman and chief executive of ITT Industries, Inc. He has been a
member of Alcan's Board of Directors since 1996. Expressing the unanimous
support of the Board for the appointment, Dr. John Evans, Chairman, said Mr.
Engen is "a proven international business leader with a solid record of
achievement, a wealth of manufacturing know-how and a reputation for nurturing
successful customer relationships." He noted that Mr. Engen already had gained a
strong appreciation of Alcan's global business from his service as a member of
the Board. "Sometimes, you are fortunate to find the optimal candidate close to
home."

<PAGE>   7
4 > Message to Shareholders

CUSTOMER-FOCUSED BUSINESS GROUPS

Alcan's customer-focused business groups -- Primary Metal;
Aluminum Fabrication, Americas and Asia; Aluminum Fabrication, Europe; and
Packaging -- are responsible for value creation within their respective markets.
They provide the business leadership for growth and assume the operating
oversight to deliver profitably and meet customer, shareholder and employee
expectations.

CONTINUED PROGRESS ON PROFIT IMPROVEMENT

The continued progress of
profit improvement programs is impressive throughout Alcan and former algroup
operations. Alcan's FBP program has achieved $580 million over the four years
since its inception, including $150 million during 2000. Alcan also showed
substantial improvement in terms of Economic Value Added (EVA(R)) for the year
under review, generating Positive EVA of $153 million (excluding the
merger-related revaluation of assets and goodwill) compared with a Negative $111
million in 1999.

An even more aggressive earnings improvement program, which now
includes the former algroup operations, has been adopted for 2001 and 2002, with
targets based on EBITDA (earnings before interest, taxes, depreciation and
amortization), another key measure of financial performance.

50th ANNIVERSARY ON NYSE

The year 2000 also marked the 50th anniversary of Alcan's listing on the New
York Stock Exchange (NYSE), on June 1, 1950. Key customers as well as senior
Alcan executives and customer-relationship managers were in New York to
celebrate the anniversary -- and to hear an announcement confirming that the
Alcan-algroup merger would proceed.

Information regarding other significant milestones and achievements of 2000 --
including the successful start-up of the new smelter at Alma, Quebec, the
acquisition of Aluminium of Korea Limited and the ramp-up of operations at our
Pindamonhangaba rolling mill in Brazil -- can be found in this document, in the
messages of the four business group presidents.

ACKNOWLEDGEMENTS

On January 10, 2001, the Board of Directors accepted with regret the resignation
of Jacques Bougie, who had served as President and Chief Executive Officer (CEO)
for seven years. On February 26, 2001, the Board announced the appointment of
Travis Engen, formerly chairman and chief executive of ITT Industries, Inc., as
Alcan's new President and CEO, effective March 12, 2001. During the transition
period, we were able to forge ahead with the merger-integration process and the
implementation of other strategic initiatives, thanks to the efforts of a very
strong senior management team overseen by interim President and CEO W. R. C.
Blundell.

Once again, in the year 2000, it was the drive and commitment of people that
made possible our accomplishments. On behalf of the Board, I'd like to thank
employees throughout the organization for their contributions to the success of
their respective business units and functions, and for helping bring about a
smooth, speedy integration. If we are to achieve our goals and realize our full
potential, we must strive to be the best at everything we decide to do by being
value- and customer-driven, results-oriented, proactive, innovative and
open-minded. People clearly remain the single most important asset of Alcan.
<PAGE>   8
5 > Message to Shareholders

I would also like to acknowledge the guidance and support received from other
members of the Board of Directors during what can rightly be termed a historic
year for Alcan. Special thanks are due to the directors who have retired from
the Board: Warren Chippindale, Eleanor R. Clitheroe, Allan E. Gotlieb, Sir
George Russell and, of course, Jacques Bougie, each of whom has made a valuable
contribution. We welcome four new directors who joined our Board following
completion of the Alcan-algroup merger: W. R. C. Blundell, who is the retired
chairman of Manulife Financial and earlier served as chairman and CEO of GE
Canada; Martin Ebner, chairman of the board of directors of BZ Group Holding
Limited and chairman of the board of directors of Lonza Group Ltd.; Rupert
Gasser, executive vice president of Nestle S.A. and a director of various
companies within the Nestle group; and Willi Kerth, a director of Alusuisse
Swiss Aluminium Ltd.

OUTLOOK

The Alcan-algroup merger represents an exciting new chapter in our corporate
history -- another major step in the pursuit of our governing objective, which
is to maximize shareholder value.

To properly reflect the increasingly diverse nature of its activities --
particularly in the packaging sphere -- the Company's name has been changed from
Alcan Aluminium Limited to Alcan Inc., as of March 1, 2001.

Although weaker economic conditions, particularly in the United States, reduced
near-term demand for aluminum last year, the Company should continue to benefit
from strategic actions taken previously and those currently in progress as 2001
unfolds. Indeed, going forward, Alcan expects to realize significant benefits
from its aggressive profit-improvement initiatives as well as the positive
impact of merger synergies. The Board is strongly supportive of the Company's
strategic direction and has full confidence in the ability of the management
team to successfully implement that strategy, in order to achieve continued
profitable growth and enhanced shareholder value.

[SIGNATURE]
JOHN R. EVANS
Chairman of the Board
March 1, 2001

JACQUES BOUGIE:
LASTING CONTRIBUTIONS

In accepting the resignation of Jacques Bougie, effective January 10, 2001, the
Board of Directors expressed its appreciation for the distinguished leadership
and lasting contributions Mr. Bougie made to Alcan during a career that spanned
more than 20 years -- including 10 years as President during seven of which he
also served as CEO.

"From the pivotal repositioning of Alcan's assets to the drive to realize the
full potential of our operations and the evolution of the Company into a global
leader in both aluminum and packaging, Mr. Bougie certainly made his mark," the
Board noted. "He leaves Alcan at a new level of performance with enhanced
opportunities for the future. We wish him and his family well."


<PAGE>   9

                                                                               6

                                                                       THE ALCAN
                                                                         GROUP'S
                                                                   BUSINESSES AT
                                                                        A GLANCE

Alcan has a very clear strategic focus, aimed at profitable growth, as evidenced
by certain key accomplishments during 2000.

Alcan's Total
Aluminum Volume+

GRAPH

In thousands of tonnes

Alcan's EBITDA
from Operations

GRAPH

In millions of US$

Alcan's Economic
Value Added++

GRAPH

In millions of US$

+  Total aluminum volume includes ingot and rolled products shipments,
   conversion of customer-owned metal as well as aluminum used in engineered
   products and packaging.

++ EVA excluding algroup purchase accounting adjustments.
<PAGE>   10
A GLOBAL PRESENCE

[MAP]
<PAGE>   11
7 > The Alcan Group's Businesses at a Glance

 > NET INCOME was up 34%.

 > THE MERGER with algroup was successfully completed and post-merger
   integration is proceeding very well with expected SYNERGIES INCREASED
   by 33%, from $150 million to $200 million.

 > ECONOMIC VALUE ADDED (EVA), excluding purchase accounting adjustments,
   was $153 million, a $264-MILLION IMPROVEMENT over 1999.

 > Alcan has achieved $580 MILLION towards its five-year, $1-billion FULL
   BUSINESS POTENTIAL (FBP) program. The balance has been incorporated into
   a more aggressive EBITDA earnings improvement program for 2001 and 2002.

 > Operations at the new 400-kt annual capacity SMELTER IN ALMA, QUEBEC,
   were successfully started up. When in full operation later this year,
   this state-of-the-art smelter will be ONE OF THE LOWEST COST smelters in
   the world.

 > The integration of the newly acquired ALUMINIUM OF KOREA LIMITED with the
   operations of Alcan Taihan Aluminum Limited is well underway and positions
   Alcan as the LOWEST COST PRODUCER of can sheet in Asia.

 > Following the completion of the expansion of the Pindamonhangaba rolling mill
   in BRAZIL, Alcan reached A NEW RECORD IN RECYCLING of used beverage cans
   with 29% OF ALL CANS RECYCLED in Brazil.

 > At 1.6 MT, PRIMARY METAL PRODUCTION reached its best year ever, with record
   third-party sales in North America and a major improvement in on-time
   delivery.

 > CONTINUOUS IMPROVEMENT in our management systems was A PRIME FOCUS in 2000.
   This approach led to better ENVIRONMENTAL CONTROL PRACTICES and further
   positive changes in workplace HEALTH AND SAFETY.

 > Alcan and some 20 other leading metals and mining companies joined together
   to launch an E-COMMERCE MARKETPLACE, now known as QUADREM. This initiative
   will be key to REFINING ALCAN'S GLOBAL PROCUREMENT strategies and to
   maximizing our FBP.

 > ROLLED PRODUCTS SHIPMENTS WORLDWIDE, at 2.2 MT, increased over 1999, with
   major improvements in sheet shipments in Europe.

 > FABRICATED PRODUCTS SHIPMENTS, including tolling, for Americas and Asia
   increased 11% over 1999 levels to a RECORD 1.6 MT.

 > ALCAN'S PACKAGING OPERATION is now one of the world's largest in its category
   with over $3 BILLION in ANNUAL SALES.

 > Alcan is a WORLD LEADER IN AUTOMOTIVE ALUMINUM -- the fastest growing market
   for aluminum -- with leadership positions in North America and Europe.
<PAGE>   12
<TABLE>
<S>                                                     <C>                                         <C>
Primary Aluminum Production                              Operating Segment's EBITDA                  Economic Value Added(1)
[GRAPH]                                                  [GRAPH]                                     [GRAPH]
in thousands of tonnes                                   In millions of US$                          In millions of US$


Operations                                               2000 Highlights                             Primary
-------------------------------------------------------------------------------------------------    Metal
(bullet) 15 SMELTERS in 7 countries with over            (bullet) 1.6 Mt of ingot produced.
         2.2 Mt of ultimate rated capacity,              (bullet) 1.0 Mt of ingot purchased.
         including the Alma, Quebec, smelter.            (bullet) $1.3 billion (758 kt) in primary
                                                         ingot third-party sales.

(bullet) 8 ALUMINA PLANTS in 5 countries with            (bullet) 3.9 Mt of alumina hydrate produced.
         5.3* Mt of annual capacity, including           (bullet) $403 million in alumina and chemicals
         specialty chemicals.                            third-party sales.

(bullet) 9 BAUXITE MINES/DEPOSITS in 6 countries         (bullet) 9.4 Mt used.
         with 422* Mt of proved ore reserves.            (bullet) $100 million in bauxite third-party
                                                         sales.

         In addition to the sales of bauxite, alumina and specialty chemicals
         indicated above, Alcan's non-aluminum products account for $99 million
         in sales.

*   AS AT JANUARY 2001, REFLECTS 100% OWNERSHIP OF GOVE ASSETS IN AUSTRALIA.

Operations                                               2000 Highlights
-----------------------------------------------------------------------------------------------------
(bullet) 33 FOOD FLEXIBLE and FOIL PLANTS.               (bullet) $922 million in sales.             Packaging

(bullet) 43 PHARMACEUTICAL, COSMETICS and                (bullet) $210 million in sales.
         PERSONAL CARE PLANTS.

(bullet) 9 SPECIALTY PACKAGING PLANTS.                   (bullet) $84 million in sales.

(bullet) TOTAL:                                          (bullet) $1.2 billion in sales.
Over 85 plants in 14 countries.

Third-Party Revenues(2)                                  Operating Segment's EBITDA(2)               Economic Value(3) Added(1), (2)
[GRAPH]                                                  [GRAPH]                                     [GRAPH]
In millions of US$                                       In millions of US$                          In millions of US$

(1)   Eva excluding algroup purchase accounting adjustments.
(2)   Excludes foil products for 1998 only; foil operations have been reclassified
      to the packaging segment from the fabricated products segments for 1999 and
      2000.

Rolled Products Shipments(3)                             Operating Segment's(3) EBITDA               Economic Value Added(1)
[GRAPH]                                                  [GRAPH]                                     [GRAPH]
In thousands of tonnes                                   In millions of US$                          In millions of US$

Aluminum                                                 Operations                                  2000 Highlights
Fabrication,                                             --------------------------------------------------------------------------
Americas                                                 (bullet) 17 ROLLED (sheet and light gauge)  (bullet) $3.4 billion
and Asia                                                 PRODUCTS PLANTS.                            (1,487 kt) in sales, including

                                                         (bullet) 11 ENGINEERED PRODUCTS PLANTS*.    conversion of
                                                                                                     customer-owned metal.

                                                         (bullet) TOTAL:                             (bullet) $0.5 billion (161 kt)
                                                         28 plants in 7 countries.                   in sales.

                                                                                                     (bullet) 1.6 Mt of aluminum
                                                                                                     fabrication in Alcan
                                                                                                     facilities, including
                                                                                                     conversion of
                                                                                                     customer-owned metal.
                                                                                                     (bullet) $3.9 billion in
                                                                                                     sales, including conversion of
                                                                                                     customer-owned metal.

*   INCLUDES CABLE, EXTRUSIONS AND ENGINEERED CAST PRODUCTS.

Aluminum                                                 Operations                                  2000 Highlights
Fabrication,                                             ---------------------------------------------------------------------------
Europe                                                   (bullet) 11 ROLLED (sheet and surface       (bullet) $1.7 billion (696 kt)
                                                         finished) PRODUCTS PLANTS.                  in sales, including conversion
                                                                                                     of customer-owned metal.

                                                         (bullet) 26 ENGINEERED PRODUCTS PLANTS**.   (bullet) $0.2 billion (16 kt)
                                                                                                     in sales.

                                                         (bullet) TOTAL:                             (bullet) 712 kt of aluminum
                                                         37 plants in 11 countries.                  fabrication in Alcan
                                                                                                     facilities, including
                                                                                                     conversion of
                                                                                                     customer-owned metal.

                                                                                                     (bullet) $1.9 billion in
                                                                                                     sales, including conversion
                                                                                                     of customer-owned metal.
 ** Includes extrusions, auto systems and components, sales and service centres
    and mass transportation systems throughout Europe as well as composites
    worldwide (including china and the U.S.).

Rolled Products Shipments(3)                             Operating Segment's EBITDA                  Economic Value(3) Added(1)
[GRAPH]                                                  [GRAPH]                                     [GRAPH]
In thousands of tonnes                                   In millions of US$                          In millions of US$

(3)   Includes foil products for 1998 only; foil operations have been reclassified
      to the packaging segment for 1999 and 2000.
</TABLE>
<PAGE>   13

                                                                               8

IMAGINATION
  MATERIALIZED

PICTURE

                                                          The butterfly model on
                                                            this page and on the
                                                            cover of this report
                                                                was created with
                                                              aluminum, plastic,
                                                                  paperboard and
                                                                glass materials.

Alcan -- providing global
aluminum and packaging solutions
that turn today's ideas into
tomorrow's innovations.

Every good idea needs a partner to see it through. The new Alcan is a
cutting-edge organization with a remarkable combination of talented people,
innovative products, advanced technologies and a decidedly customer-focused
culture. So whatever the challenge -- be it contributing to the design of a more
fuel-efficient and environmentally friendly automobile, engineering a
sophisticated new component or coming up with a clever new packaging concept for
pharmaceutical or food products -- look no further. Alcan -- providing global
aluminum and packaging solutions that turn today's ideas into tomorrow's
innovations!
<PAGE>   14
9 > Imagination Materialized

 > PRIMARY METAL

   Focuses Alcan's global bauxite, alumina, power-generation and smelting assets
   on the production of primary, value-added aluminum in the form of sheet
   ingot, extrusion billet, wire bar and foundry ingot for other Alcan plants or
   sold to third-party customers serving the transportation, building and
   construction, consumer goods and machinery markets.

 > ALUMINUM FABRICATION, AMERICAS AND ASIA

   Provides high-quality sheet and light gauge rolled products as well as rod,
   cable, wire, extrusions and engineered cast products to customer-partners
   that range from the building and construction, and durable goods industries
   to major automakers and global manufacturers of beverage cans.

 > ALCAN PACKAGING

   Is one of the world's largest specialty packaging groups and ranks among the
   leaders in supplying most consumer packaging markets; food, pharmaceutical,
   cosmetics/personal care, and tobacco. It offers a variety of packaging
   solutions based on plastics, paperboard, aluminum, glass and other materials.

 > ALUMINUM FABRICATION, EUROPE

   Serves a number of European markets with advanced and value-added engineered
   products, including extrusions and composites, automotive systems and
   components, platforms for rapid-transit and high-speed rail vehicles as well
   as rolled products such as lithographic sheet and industrial plate.

<PAGE>   15
                                                                              10

PRIMARY
METAL

                                                                         PICTURE

                                                                 Emery P.Leblanc
                                                        President, Primary Metal

"Alcan's Primary Metal group performed exceptionally well in 2000, achieving
financial and operating results that exceeded expectations by a considerable
margin, with EBITDA of $994 million compared to $557 million in 1999. Results
for the latest year include an additional $75 million in earnings improvements
(excluding restarts) realized as part of the Full Business Potential program.
Noteworthy, too, is the fact that the final quarter of 2000 marked our sixth
consecutive EVA-positive quarter.

It was also a year of historic milestones, highlighted by the safe start-up of
our new Alma, Quebec, smelter in October; permanent closure of the 57-year-old
smelter at nearby Isle-Maligne, Quebec; and, of course, integration of the
global primary metal operations of Alcan and algroup, which began during the
fourth quarter.

The majority of our facilities, including 11 of 15 smelters as well as three
alumina refineries, posted production records for 2000, and third-party metal
sales in North America reached an all-time high -- attesting to Primary Metal's
status as a supplier of choice. I am pleased to report that we were also able to
maintain our solid performance in employee health and safety and make further
progress in terms of addressing environmental issues. These are top priority
areas that figure prominently in any evaluation of the group's performance.

Looking ahead to 2001, strategic priorities include: aggressively pursuing the
merger synergies; accelerating the ramp-up of Alma; capitalizing on
opportunities to reduce procurement costs through the new Quadrem e-commerce
marketplace; further enhancing our safety record; setting new standards of
environmental performance; and achieving the group's ambitious targets for
profit improvement. Our efforts in that regard were bolstered by the
acquisition, subsequent to year-end, of the remaining 30% of the Gove alumina
refinery and related bauxite mine in Australia.

Our aim is to continue growing Alcan's Primary Metal business and creating value
for customers and shareholders."
<PAGE>   16
11 > Primary Metal

COMPLETED ALMA PROJECT EXPECTED TO DELIVER $250 MILLION IN EBITDA IMPROVEMENT

The Primary Metal group is striving to achieve an accelerated start-up of its
new Alma, Quebec, smelter complex in order to begin realizing the substantial
benefits that will accrue from this strategic investment.

The state-of-the-art aluminum smelter, originally planned with an annual
production capacity of 375,000 tonnes, will now be able to produce 400,000
tonnes, further enhancing Alcan's competitiveness by delivering quality primary
metal at operating costs among the lowest in the world. Once fully up and
running, it is expected to generate EBITDA of approximately $250 million per
year at a metal price of $1,500 per tonne. The complex also includes a casting
centre that will produce value-added ingot products for high-growth market
segments such as automotive.

A milestone in the realization of the project
occurred on October 21, 2000, when the first of the new facility's 432 reduction
cells was energized, marking the initial start of potroom operations. Work on
the commissioning of the remaining cells, along with equipment and operations in
other parts of the plant, was in full swing by year-end.

[PICTURE]

When in full production, Alcan's Alma, Quebec, smelter will also produce foundry
T ingots for the automotive industry.

Launching production at a massive complex like Alma -- with its kilometre-long
central potline --requires meticulous planning and careful coordination. At the
peak of activity during the autumn of 2000, more than 3,000 production employees
and construction workers were busy on site. However, thanks to the extraordinary
efforts of everyone involved, the start-up has so far proceeded swiftly and
safely.

As well as being one of the most cost-efficient smelters in the world, Alma was
designed to establish a new standard of excellence in terms of the level of
environmental protection it affords employees and the surrounding community.
This reflects Alcan's conviction that responsible corporate citizenship is
crucial to our overall success.

GOVE ACQUISITION YIELDS IMMEDIATE PAYOFF PLUS
PROMISE OF FUTURE GAINS

The Gove alumina refinery and related bauxite mine in Australia represent a
significant competitive advantage -- for now and for the future. In January
2001, Alcan acquired outright ownership of the world-scale Australian complex,
which has a current annual capacity of 1.8 million tonnes of low-cost alumina.
This has enabled the Primary Metal group to immediately realize a further
reduction in its average alumina costs, while gaining access to 100% of Gove's
substantial, low-cost expansion potential.
<PAGE>   17
                                       12

ALUMINUM FABRICATION,
AMERICAS AND ASIA

PICTURE

Brian W. Sturgell
President, Aluminum Fabrication,
Americas and Asia

"Underscoring Alcan's international growth strategy, the Aluminum Fabrication,
Americas and Asia group developed new capacity and capabilities during 2000,
helping solidify our leadership in the global rolling market. We significantly
enhanced our presence in the rapidly growing markets of South America and Asia,
while improving our competitive position in North America through a focus on
manufacturing excellence and value-creating supply alliances with customers.

The group shipped a record 1.6 million tonnes in 2000, an increase of 11% over
1999 -- in markets where total consumption increased only 3.5%. Key to this
success was a 52% increase in sales at our recently expanded and improved
Pindamonhangaba (Pinda), Brazil, rolling complex. In addition, our Korean
operations acquired the facilities of Aluminium of Korea Limited (Koralu),
providing Alcan with new advanced-technology, globally competitive, rolling
operations to capitalize on the growing Asian market.

We also made further inroads in the automotive sector, where aluminum in general
-- and Alcan in particular -- continue to strengthen their market position.

The group's profitable growth is the result of our strategic investments and of
our focus on differentiating ourselves from competitors by adding value to
customers' operations and providing superior quality-and-service solutions.
Critical to our continued success are creativity and human resources -- the
7,500 highly-motivated men and women of the Aluminum Fabrication, Americas and
Asia group who have demonstrated the outstanding abilities required to sustain
our positive momentum.

In 2001, we expect our business group will continue to grow profitably as we
aggressively pursue manufacturing excellence and superior service solutions."
<PAGE>   18
13 > Aluminum Fabrication, Americas and Asia


RECYCLING: A BIG PART OF
ROLLED PRODUCTS BUSINESS

Recyclability is one of aluminum's greatest attributes. So it makes sense that
recycling plays an important role in the activities of Aluminum Fabrication,
Americas and Asia. Our North American recycling operations handled a record 23.8
billion used beverage cans (UBCs) during 2000 -- representing nearly four out of
every 10 aluminum beverage cans recycled in the United States. Elsewhere, the
group's state-of-the art recycling plant in Brazil handles approximately 50% of
all UBCs recovered in that country. Needless to say, Alcan's conversion of all
those used cans into new, high-quality rolled products conveys significant
environmental, energy and economic benefits.

Can sheet continues to be the largest global market in the rolled products
category. And as a result of strategically targeted modernization and
capacity-related investments in Brazil and Korea, we have extended our global
leadership position in this crucial segment.


INDUSTRIAL PRODUCTS --
THE SUPPLIER OF CHOICE

Alcan also has emerged as the supplier of choice in the industrial products
category. Over the past decade, the group's sales in this segment have increased
at a compounded annual rate of 24.2% -- four times faster than the industry.
A recent customer survey conducted by the National Association of Aluminum
Distributors ranked Alcan first in seven of 10 customer-satisfaction categories
and No. 1 overall, reinforcing Alcan's continued commitment to be the supplier
of choice in these markets.


PLUGGED IN TO ELECTRIC
UTILITY CUSTOMERS

Strong customer alliances have generated increased value for Alcan products and
service among customers in the electrical cable market. We have expanded our
position with electric utility customers through several long-term supply
contracts. Also, demonstrating its active commitment to the environment, the
North American cable unit became the first business unit in the group to obtain
ISO-14001 registration at all its seven plants.

AUTOMOTIVE

The Alcan-algroup merger brought together two of the world's most successful and
innovative suppliers of lightweight automotive solutions. A new strategic unit
called Alcan Global Automotive Solutions, with offices in Detroit and Zurich,
works in close collaboration with our fabrication groups and major automakers to
accelerate the development of lighter and more fuel-efficient aluminum-intensive
vehicles.

Results of Alcan's automotive developments in North America were highly visible
in 2000, with the introduction of General Motors' new GMC Yukon and Chevrolet
Suburban sport utility vehicles, which boast the first aluminum rear liftgates
built in North America, and the unveiling of the Precept and Prodigy concept
cars from GM and Ford, respectively. Alcan's Alumineering(SM) know-how figured
prominently in both concept cars, which were developed under the Partnership for
a New Generation of Vehicles (PNGV), a U.S. government-industry program, to
demonstrate that producing safe, environmentally friendly automobiles, capable
of delivering up to three times the gas mileage of today's typical family sedan,
is an achievable goal.

These successful partnerships with leading Detroit automakers enable us to
differentiate ourselves by underscoring the fact that Alcan is not only a
supplier of metal, but rather a provider of solutions -- solutions aligned with
the value goals of our automotive customers as well as those of society.
<PAGE>   19
                                       14

ALUMINUM FABRICATION,
EUROPE

PICTURE

Richard B. Evans
President, Aluminum Fabrication,
Europe

"By quickly putting an experienced transition team in place, Aluminum
Fabrication, Europe was able to move promptly following completion of the merger
last October to identify -- and begin capitalizing on -- synergies stemming from
the merger. It is within our extensive European fabricating operations, where
the greatest opportunities exist for system optimization and profit improvement.

Despite the intensive integration activities and inherent disruptions placed on
our management teams, many of our European business units improved their
performance during the integration. The rolled products sector, led by our Norf
facility in Germany, set overall and numerous individual shipment records.

Throughout the Aluminum Fabrication, Europe group, continued progress was made
on improving business fundamentals, including such areas as reliability,
capacity utilization and delivery performance. We also continued to enhance our
position in the key automotive market by the significant contribution of former
algroup automotive technical expertise and market presence.

Looking ahead to 2001, our group's strategic priorities include:

> Accelerating and maximizing the synergies resulting from the Alcan-algroup
  combination;

> Enhancing our product mix by drawing on the greater capabilities of the new
  combined assets and technologies;

> Continuing our programs to achieve manufacturing excellence by transferring
  best practices and technology both within our group and with Alcan's other
  three business groups;

> Aggressively pursuing both internal and external growth opportunities.

Demand for aluminum in Europe is expected to remain strong during the first half
of 2001, and our group is looking forward to seizing the opportunities for
further growth."
<PAGE>   20
15 > Aluminum Fabrication, Europe

TECHNICAL PROWESS PAYS OFF

Exceptional technical capabilities in both aluminum and advanced composite
materials -- along with a penchant for innovation -- have enabled the group's
engineered products teams to carve leading positions in a number of growing
markets including mass transportation, building facades and display
applications.

Alcan engineered products that incorporate the group's specialized know-how in
areas such as joining technology and light-weight modular design are being
utilized as key components in an array of 21st-century passenger rail and
urban-transit systems, including high-speed tilting trains, rapid-transit
systems, trams, city buses and commuter-rail vehicles serving urban areas
throughout Europe and abroad.

Composite materials, including structural composites, extruded sheets,
engineering foam and sandwich-bonded panels, represent another of the group's
strengths, addressing constantly evolving customer needs in market segments as
diverse as automotive, mass transportation, architectural products and retail
and trade-show displays. Our Airex Composites unit captured the 2000 SPE
(Society of Plastics Engineers) Award for the most innovative plastic part -- a
rear spoiler for a new Porsche.

INDUSTRY LEADER IN PROVIDING CUSTOMER SOLUTIONS

Alcan in Europe is increasingly providing solutions to customers utilizing our
technology and manufacturing capability in the rolled products sector. In higher
value markets such as industrial plate, precision lithographic sheet, automotive
body sheet, and beverage and food can sheet, Alcan has been increasing sales.

In these exacting market segments, where product tolerances expressed in
microns (one one-thousandth of a millimetre) are the norm, the group's superior
technological know-how and focus on achieving consistent high quality add up to
a competitive edge.

In the plate sector, a strong marketing effort combined with Alcan's
technological edge and highly differentiated product and service led to a 16%
gain in year-over-year sales of value-added industrial plate, mainly to the
machinery and moulding markets. The outlook for 2001 remains buoyant, thanks to
strong demand and a continuing trend to substitute aluminum for steel in these
markets.

PARTNERING WITH AUTOMOTIVE LEADERS

Alcan engineers are providing extensive support to auto industry leaders Audi,
DaimlerChrysler, BMW and the European operations of Ford and General Motors. For
example, we partnered with Audi on the development of the Audi A2
aluminum-intensive automobile, which was launched in the European market during
2000. Initial customer response has been positive. In 2001, the A2 is expected
to establish its position as the largest volume aluminum-intensive vehicle in
the world.

Based on our successful earlier collaboration on the luxury Audi A8, the German
automaker chose algroup as its development and production partner for the new,
larger-volume A2 model. Thanks to its high-tech aluminum space frame, body
panels and shock-absorbing bumpers and side-impact beams, the A2 boasts a total
vehicle weight of only 895 kilograms. That is about 250 kilograms less than
would have been the case had the car been built using steel.

To meet increasing demand from the automotive industry, Aluminum Fabrication,
Europe has expanded its auto-body sheet-finishing capacity and invested in new
engineered products production facilities at Dahenfeld, Gottmadingen and
Markt-Schwaben, in Germany.
<PAGE>   21
                                                                              16

ALCAN PACKAGING

[PICTURE]

Henk Van de Meent
President, Alcan Packaging

"Alcan Packaging brought together the two packaging divisions of the former
algroup -- which account for approximately 75% of revenues -- along with the
packaging and European foil rolling operations of Alcan.

With more than 85 plants on four continents, we already rank as one of the
world's largest specialty packaging groups and are well positioned for growth by
virtue of our status as:

 > The leading supplier of packaging for pharmaceuticals;
 > A leader in flexible packaging for food products;
 > Strong market positions in tobacco packaging and other key specialty
   segments.

Alcan is determined to remain at the forefront of these markets by staying
focused on low-cost, highly efficient manufacturing systems, superior customer
service and innovative packaging solutions. Strategically, the group is also
committed to growing with its multinational customers around the globe.

The various business units that comprise Alcan Packaging generally performed
well during 2000, despite sometimes difficult circumstances. Volumes grew
satisfactorily, although profits were impacted by cost increases for materials
and, in Europe, by adverse exchange rates. Strategic priorities for 2001 include
reorganizing the manufacturing systems at our European foil-rolling and
conversion operations to achieve greater efficiencies and shorter lead times. We
also intend to capitalize on growth opportunities created by the enhanced
product ranges, broader distribution systems and new customer relationships
resulting from the merger.

Our successes -- past,  present and future -- ultimately hinge on the efforts of
our empowered  people, a team I am privileged  to lead as we enter what I'm
confident  will be an exciting and rewarding new chapter in the evolution of the
group."
<PAGE>   22
17 > Alcan Packaging

THE ONE-STOP SHOP FOR PHARMACEUTICAL PACKAGING SOLUTIONS

The pharmaceutical and cosmetics sector of Alcan Packaging combines a multi-line
product offering with a global account-management process that enables us to
effectively channel innovative packaging solutions to leading drug companies
worldwide.

The following case study -- involving a widely prescribed product from a major
international pharmaceutical company -- illustrates how clients can capitalize
on our customer-focused strategy, which offers one-stop access to a range of
specialized products and services from Alcan Packaging facilities around the
globe.

Packaging such a product is truly a global team effort:

(bullet) Lawson Mardon at Singen, in Germany, rolls the aluminum foil (from
         ingots produced by Alcan's Primary Metal group), which is then shipped
         to our Pharma Centre at the Shelbyville facility in Kentucky, U.S.A.;

(bullet) Pharma Centre in Shelbyville converts the basic rolled foil into
         blister foil and forwards it on to our Margo business unit in Montreal,
         Canada;

(bullet) Margo then utilizes its combined contract packaging and specialty
         carton capabilities to deliver the drug in its consumer-ready package
         -- including blisters, sealed cards and displays -- to the customer.
         Margo's design centre also developed the graphic and structural design
         of the package used for this product in the Canadian market.

(bullet) Just to round out the picture, it should be noted that our Wheaton
         unit, situated in Cayey, Puerto Rico, also produces plastic bottles for
         the same product.

From Concept to Market(sm), Alcan Packaging delivers innovative packaging
solutions to pharmaceutical companies around the globe!

INNOVATIVE STICK-PACK HELPS NESTLE WIN NEW MARKET SHARE

Alcan Packaging's innovative "stick-pack" food flexible has helped Nestle perk
up its share of the instant-coffee market in France.

Working in close collaboration with the customer, our Packaging group drew on
its broad expertise to devise a solution precisely suited to Nestle's
requirements. Stick-pack incorporates three different materials -- polyester,
aluminum foil and polyethylene -- and several applied technologies -- including
reverse-gravure printing and extrusion laminating in a package that is not only
eye-catching and convenient but also addresses practical necessities such as
barrier protection, to keep the product fresh, and production-line efficiency.
Stick-pack's patented "easy-opening" feature, produced right on the press line,
makes for easy opening and pouring and also served to make the product a hit
with consumers.

The sort of ingenuity reflected in stick-pack has enabled Alcan Packaging to
build a strong customer relationship with Nestle, providing it with winning
packaging solutions for markets worldwide.
<PAGE>   23
                                       18

  CORPORATE
CITIZENSHIP

Alcan research identified aquatic plants that can be used to treat runoff water
due to their ability to absorb aluminum without any harm to the plant or the
ecosystem.

STRATEGY

Alcan ensures ethical conduct wherever it operates and its facilities work to
meet or exceed environment and health and safety regulations. The Company's
corporate citizenship strategies contribute to the long-term health of the
organization, the well being of the communities where it operates and society in
general. Alcan's success will not only be measured through traditional tracking
systems, but also by its efforts to preserve and restore natural resources as
well as by the impact of its actions and products in contributing to a more
sustainable planet in the future.

-- a key element to increased shareholder value and long-term sustainable
growth.


At Alcan, corporate citizenship means going beyond sponsoring local
events or charitable causes. It is about linking social responsibility with the
business objectives of the organization. It is how the Company demonstrates its
commitment towards employees, communities and all stakeholders who may be
influenced by our policies and practices on the environment, health and safety,
and community responsibility. Corporate citizenship is about how Alcan perceives
and acts upon its responsibilities -- it is an essential component of our
long-term sustainability as a global corporation.

As more companies embrace corporate citizenship, it becomes increasingly
valuable to benchmark performance. Alcan earned a place in the Dow Jones
Sustainability Group Index. This Index tracks the performance of
sustainability-driven organizations worldwide and found Alcan to be among the
top 10% of companies within its market sector in terms of economic,
environmental and social policies, practices and performance.

<PAGE>   24
19 > Corporate Citizenship

ENVIRONMENT

Increasingly, major companies are specifying environmental management systems as
a standard supplier requirement -- making Alcan's corporate citizenship approach
an even more relevant strategic business decision. In 2000, Alcan further
demonstrated its global commitment to be an environmental leader by initiating a
long-term greenhouse gas management program in all businesses. Known as TARGET,
this program's objective is to institutionalize ongoing greenhouse gas
reductions.

Alcan is involved with other leading companies, industry associations,
governments, and special interest groups in a number of environmental efforts
that respond to climate change issues. For example, in Canada, Alcan joined
major multinational companies in the Champions in Action initiative of the
Voluntary Challenge and Registry and, internationally, Alcan participates in the
Partnership for Climate Action. Climate change is an international issue, and
Alcan will continue to take a leadership role in working with others to develop
pragmatic and cost-effective solutions.

In the United States, the Environmental Protection Agency singled out Alcan's
Sebree smelter in Kentucky as the 2000 recipient of the Climate Protection
Award. Sebree made significant reductions in global warming gases such as
decreasing its rate of PFC (perfluorocarbon) emissions by more than 60% between
1990-1999. Elsewhere in the Company, particularly in Canada and Brazil, improved
processes have also resulted in reductions of PFCs.

                Alcan will continue to work with its partners to
         improve its products and maximize product life cycle benefits.

In the last year, the Company continued its progress towards environmental
management excellence in power operations, smelters and fabricated products and
packaging plants by doubling the number of facilities that have earned the
ISO-14001 environmental management system certification of the International
Organization for Standardization. In addition, Alcan will continue to work with
its partners -- customers, suppliers, employees, governments and communities --
to improve its products and maximize product life cycle benefits.

Alcan strives for environmental leadership within its industry sectors -- a goal
that includes being accountable and transparent in the reporting of
environmental issues and progress. Several of Alcan's subsidiaries and
facilities have published documents on their environmental performance and
challenges. Exemplifying this commitment is the release of a "three pillar"
report by Alcan's operations in British Columbia (B.C.), Canada. The
publication, Committed to Continual Improvement, outlines performance in three
key areas of sustainability: environmental stewardship, economic contribution
and social responsibility.

This review has already had a positive impact through increased employee and
stakeholder awareness of issues affecting B.C. operations. A global corporate
citizenship report is being planned for 2002 covering all Alcan operations.
<PAGE>   25
                                                      20 > Corporate Citizenship

HEALTH AND SAFETY

Alcan's health and safety values are reflected in its facilities and are viewed
by many investors and stakeholders as criteria to assess the long-term health of
the organization.

Despite strong employee efforts that resulted in health and safety milestones at
numerous Alcan facilities around the globe, the Company suffered two employee
fatalities and one contractor fatality in 2000. This reality reinforced Alcan's
resolve to ensure that appropriate management systems and safeguards are in
place and to strengthen our efforts to minimize at-risk behaviours through the
implementation of Behaviour Based Safety (BBS) processes. The employee-driven
BBS approach or other similar programs are now in place at many Alcan
installations in North and South America and Europe, and even more facilities
will benefit as these initiatives continue to be implemented.

Other health and safety initiatives in 2000 include the creation of an
Environment, Health and Safety Council and the development of special procedures
for third-party contractors in Canada and Brazil. In Canada, a cooperative
effort between the University of Sherbrooke and the Occupational and
Environmental Health Service of the Primary Metal group resulted in unique
software that analyzes the impact of plant equipment design and installation as
it relates to employee exposure to noise. In the Alcan Packaging group, a
focused approach to health and safety has resulted in substantial improvements
in areas such as fire protection, machine guards and risk reduction. In addition
to a continued commitment to standards certified by the International
Organization for Standardization, several Alcan food packaging plants also
received hygiene certification in 2000.

                                    [PICTURE]

A full review of safety issues for mobile equipment and overhead cranes resulted
in extensive safety management systems being implemented throughout the
organization.


Increased networking is one vehicle being used to encourage excellence. For
example, the bauxite and alumina health and safety experts met in Jamaica to
share best practices and identify opportunities for improvement.

Alcan believes that people make the difference between an ordinary company and
an extraordinary one. Published in 2000, the Company's shared values reinforce
its corporate Code of Conduct and are intended to stimulate all employees to
seek their full potential.

INTEGRITY

Integrity requires the adherence to a code of sound moral and ethical conduct
that governs all aspects of our activities.

ACCOUNTABILITY

Accountability means honouring our commitments and accepting responsibility for
our actions and behaviour. At Alcan, we believe in aligning decision-making
power with responsibilities -- at all levels of the organization -- and for
employees to exercise greater control over their activities and, at the same
time, be accountable for the results.

TRUST AND TRANSPARENCY

The success of our organization depends, to a considerable extent, on being able
to trust the information we receive and the people who provide it. Transparency
is vitally important as well, which means we promote an atmosphere of open
communication and the constant exchange of timely, credible information.

TEAMWORK

A cooperative effort by all Alcan employees is crucial to achieve our common
goals. We regard interaction with other group and team members as a vital part
of everyone's job. Through effective team-work, the organization is able to
leverage the energies and abilities of various groups to achieve results that
wouldn't otherwise be possible.
<PAGE>   26
21 > Corporate Citizenship

COMMUNITY

From community consultation and investment to volunteer programs, Alcan is
viewed as a valued partner. Developing these ties helps to maintain a positive
relationship with key stakeholders. It is an indication of what communities can
expect when new Alcan projects are proposed. In the educational sector, the
Company's support includes local grants and scholarships, mentorship programs,
medical education conferences and cooperative research undertakings. For
example, in Jamaica, where Alcan has earned an enviable reputation for its
agricultural contributions, the Company's cooperative efforts with local
universities include the funding of a chair in sustainable development at the
University of the West Indies. In terms of environmental education at the
primary school level, the Micro-Business program in Brazil, launched and
sponsored by Alcan over four years ago, has expanded to include 25,000 children
and more than 600 teachers in three cities.

Alcan employees were extremely proud to watch six beneficiaries of the
Jamaica-based employee community and sports program participate at the summer
Olympics where three of the athletes received medals for their performance. And,
Alcan-sponsored wheelchair athlete Chantal Petitclerc captured two gold and two
silver medals against top international competitors at the Paralympics, which
followed the Olympic Games in Australia.

In Canada, consultation with community and union leaders resulted in the smooth
closure of Alcan's Kemano company village where technology now allows the
power-house to be managed by rotating work crews. Alcan was commended by
government authorities for its cooperative approach and for making the village
site available for extensive fire and rescue training exercises.

From dragon boat festivals to special relief for the less fortunate, the
generosity of Alcan employees is difficult to surpass. In the U.K., as part of
Operation Christmas Child, employees in Uxbridge prepared special Christmas
surprise boxes for children in Eastern Bloc countries. Families in need of
housing in the U.S. benefited from Alcan's participation in the Aluminum Cans
Build Habitat For Humanity Homes program, jointly sponsored by the Aluminum
Association and Habitat for Humanity International. In Brazil, Alcan continues
its support of the World Wildlife Fund in areas such as educator training,
participates in Project Smile that has provided some 2,600 needy children with
free dental care, and has also played an active role in the restoration of two
historic buildings in Ouro Preto, a UNESCO world heritage site.

Alcan's involvement with its neighbours is no better demonstrated than in the
U.K. where the closure of the kinlochleven smelter is being turned into new
community opportunities in tourism and small business.

After almost a century of operation, Alcan closed its Kinlochleven smelter in
Scotland, but not without first ensuring that the community was in a strong
position to survive. Since the decision some five years ago to close the world's
oldest and smallest smelter, Alcan has worked with employees and community
leaders to explore future opportunities. A $14.7-million ((Sterling pound)
10-million) community redevelopment plan is well underway and Alcan has invested
an equivalent amount into upgrading the neighbouring kinlochleven power station.
The facility will be open to public visits along with a Heritage and Visitor
Centre created to commemorate the region's contribution to aluminum smelting.

Alcan is now furthering its commitment by proposing a woodland regeneration
program on 3,000 hectares of Company-owned land. The aim is to maintain and
enhance the existing native woodlands and encourage development of new wildlife
areas.
<PAGE>   27
22

MANAGEMENTS'S
DISCUSSION
AND ANALYSIS


As a result mainly of improved metal prices and continued progress under the FBP
program, the Company's net income increased by 34% and its EVA was up $264
million+ in 2000.

+ Excluding purchasing accounting adjustments
  related to the merger with algroup.

World Market Review              22
Merger with algroup              25
Results of Operations            25
Operating Segment Review         29
Geographic Review                38
Liquidity and Capital Resources  41
Environmental Matters            42
Risks and Uncertainties          42


Western World Primary Aluminum
Supply and Demand

(GRAPH)

[] Production plus imports from C.I.S.
[] Shipments (seasonally adjusted)

Demand growth was up 3.5% from the previous year.
Supply increased by less than 1% in 2000, due to
power-related cutbacks in the U.S. Pacific Northwest
and higher net Chinese imports.

Total Aluminum Inventories
and Ingot Prices

(GRAPH)

[] Total inventories                              LME []
   (IAI*, LME and                   three-month price
   COMEX**)

 * international Aluminium Institute
** Inventories held by the New York Mercantile Exchange

Total inventories were down by 435 kt from the end of 1999.
Prices trended down in 2000, after peaking at $1,756/t in January.
The average price of $1,567/t was 13% higher than in 1999.
<PAGE>   28
23 > Management's Discussion and Analysis

WORLD MARKET REVIEW

PRIMARY ALUMINUM

Western World* total consumption grew by 3.5% in 2000, a level slightly higher
than earlier forecasts suggested. Demand surpassed expectations in all regions
except for North America and Latin America. North American demand was strong in
the first half, with growth of 5%, but slowed significantly during the second
half of 2000 as confidence dipped amid fears of a recession.

Overall, North American demand rose by 1.1% during the year, a significant
decline compared to the 6.8% growth rate in 1999. This was contrasted sharply by
a 6.8% growth rate in Asia, driven mainly by Japan and other export-oriented
countries. Europe experienced growth in demand of 3.7%, bolstered by consumer
confidence and exports. Latin American growth measured 5.1%, somewhat lower than
earlier forecast levels, but nonetheless very healthy.

Western World consumption totalled 28.5 million tonnes (Mt) in 2000, 20.2 Mt of
which was primary metal, and the balance, recycled metal. Since 1982, demand for
aluminum has grown at a compound annual growth rate of approximately 4%.

Western World primary aluminum production grew 2.3 % in 2000, to 17.3 Mt. During
the year, Alcan and other producers announced combined restarts of 310 thousand
tonnes (kt) to meet anticipated demand. However, power constraints in the U.S.
Pacific Northwest have resulted in production capacity of about 770 kt per year
(kt/y) being idled by the end of 2000, representing approximately 47% of the
region's capacity. Most of the idle capacity in that region, which increased to
about 1 Mt by February 2001, will likely be restarted only when energy prices
for aluminum producers drop significantly from current levels.

Aluminum inventories decreased by 13% in 2000 to 3.5 Mt.

Imports from the former Eastern Bloc decreased by approximately 9.4% to 2.4 Mt
in 2000, due to Chinese net imports increasing to 0.7 Mt, more than double the
total of 1999.

In 2000, growth in consumption translated into a 3.5% growth in demand for
primary aluminum, whereas supply increased by only 0.7%, resulting in a
reduction of inventories estimated at 450 kt.

During the year, inventories with aluminum producers, the London Metal Exchange
(LME) and COMEX decreased to approximately 3.5 Mt, or the equivalent of about
nine weeks of consumption. For 2001, current expectations are that demand will
match supply for the year as a whole, although inventory levels may fluctuate
during the year.

Ingot prices (LME three-month) were at $1,638 per tonne (/t) at the beginning of
2000, reaching a high of $1,756/t in mid-January, dropping to a low of $1,427/t
in mid-April, and closing the year at $1,568/t. The average LME price of
$1,567/t was 12.9% higher than the 1999 average of $1,388/t, which had been
virtually unchanged from 1998.

WESTERN WORLD CONSUMPTION VS. ALCAN SALES

Alcan's total shipments grew to 3.5 Mt in 2000, an increase of 13.7% over the
previous year, with ingot shipments rising 13.4% and rolled products shipments
increasing by 15.3%.

Demand from the transportation sector increased by 2.7% to 8.4 Mt, a lower rate
of growth than in previous years. Nonetheless, it remains the largest, and most
promising market for aluminum. The year 2000 was a record year in terms of light
vehicle sales in the U.S., as was 1999

*Defined as the world excluding the Commonwealth of Independent States (C.I.S.),
 Eastern  Europe and China.
<PAGE>   29
                                                                              24

Composite materials, such as engineering foam and sandwich-bonded panels, are
used for facades and claddings in the building and construction market.

2000 Western World Aluminum
Consumption by End-Use Market

[GRAPH]

[] Containers and packaging

[] Building and construction

[] Electrical Transportation

[] Other

[GRAPH]

Alcan's 2000 Fabricated and
Non-Aluminum Sales by Market

compared to the prior year. However, the market has begun to contract,
reflecting increases in energy prices and interest rates, as well as a slowing
economy. Automotive demand for aluminum in Japan was also strong for most of the
year, but dropped in the last quarter. Alcan's revenues from the transportation
market increased by 20%. This market accounted for 8% of its revenues.

Demand from the building and construction sector grew by 2.5%, to 5.2 Mt. The
sector started out in 2000 on a strong note in the U.S., but dropped later in
the year due to higher mortgage rates and fears of an economic slowdown. Growth
in this market was healthy in Europe, but flat in Japan, and negative in Asia as
a whole. Alcan's revenues from building and construction increased by 4%,
accounting for 12% of Company revenues.

Consumption from the containers and packaging market was stable, at 4.9 Mt. Can
stock demand was stable in 2000, as growth in Asia and Latin America was offset
by downgauging and substitution in North America. Other packaging, principally
foil, declined slightly as the decrease in the U.S. was offset by gains in most
other regions. Alcan's aluminum revenues from the containers and packaging
market increased by 35%, accounting for 50% of revenues.
<PAGE>   30
25 > Management's Discussion and Analysis

The electrical market grew a very
healthy 6% to 2.6 Mt, with above average growth in North America and Asia.
Alcan's revenues from the electrical market increased by 18%, accounting for 9%
of revenues.

Demand from other markets increased to 7.3 Mt in 2000. This includes demand from
the machinery and equipment market, which was up 7.6% to 2.7 Mt, as well as
demand from the consumer durables market, which increased by 3.3% to 1.8 Mt.
Alcan's revenues from these other markets increased by 32%, accounting for 21%
of the Company's revenues.

MERGER WITH ALGROUP

Alcan completed its merger with Alusuisse Group Ltd ("algroup") in October 2000.
The merger was recorded under the purchase method of accounting, in a
transaction which valued algroup at $5.6 billion. This included the issue by the
Company of 115.4 million shares having a market value of $3.5 billion, and
algroup's debt of $2.1 billion.

Results from the operations of algroup have been included with
the financial results of Alcan for the fourth quarter of 2000.

RESULTS OF OPERATIONS

Alcan reported consolidated net income for 2000 of $618 million compared to $460
million in 1999 and $399 million in 1998.

The increase in 2000 net income was attributable in large part to the higher
average metal prices compared to 1999, to further improvements made under the
Company's Full Business Potential (FBP) earnings improvement program, and to the
inclusion of algroup's results in the fourth quarter. These favourable factors
were offset in part by higher energy costs and the unfavourable effect arising
from the time lag in fully passing on higher metal prices to customers. The lag
varies from about one month for ingot products to over six months for certain
can sheet customers.

[PICTURE]

With 33 plants in 11 countries, the food flexible and foil sector customizes
packaging to meet the needs of a vast array of food product manufacturers.



In 1999, operating results were higher than in the previous year due mainly to
higher fabricated product sales volumes and to lower operating costs, offset in
part by the unfavourable effect of the time lag in fully passing on higher metal
prices to customers.

Average metal prices in 2000 were approximately 13% higher than in 1999 and
1998. In 2000, the average LME three-month price was $1,567/t compared to
$1,388/t in 1999 and $1,379/t in 1998. The average metal price during the second
half of 1999 was $1,503/t, compared to $1,322/t for the same period in 1998.

The results for 2000 included non-cash merger related charges of $60 million
after tax. This was comprised of depreciation and amortization of asset
revaluation ($19 million), amortization of goodwill ($16 million), and a
one-time inventory adjustment of $25 million.

Also included in the results for 2000 were special items totalling a net loss of
$35 million after tax. These included rationalization charges of $30 million,
related principally to the closure of operations in the U.K. (Rogerstone Foil)
and Canada (Kemano, B.C.).

In addition, there were favourable tax adjustments of $75 million during the
year. These included favourable prior year income tax adjustments of $37 million
in
<PAGE>   31
                                                                              26

Foundry ingot and extrusion billet are strategic to Alcan's success as a leading
partner-supplier to various markets in North America, such as control arms
(shown above) or heat exchangers for the automotive market.

2000 Economic Value Added (EVA)+

EVA        LME three-month price

+ Excluding purchase accounting adjustments.

Compared to 1999, and excluding purchase accounting adjustments, EVA improved by
$264 million in 2000.

Canada, as well as a $20-million reduction of deferred income tax liabilities in
Canada and Germany due to a reduction in tax rates. Moreover, the revaluation of
deferred taxes due to exchange rate changes resulted in a non-cash gain of
$18 million.

For 1999, the results included a net non-operating gain of $62 million,
after tax. These included gains on business disposals of $90 million. In
addition, there was a favourable tax adjustment of $31 million in Canada, offset
by rationalization costs of $33 million. Furthermore, the revaluation of
deferred taxes due to exchange rate changes resulted in a non-cash charge of
$26 million.

For 1998, there were a number of offsetting special items totalling a
net after-tax loss of $10 million.

Economic Value Added (EVA) was $19 million in 2000, including the purchase
accounting adjustments related to the algroup merger*. Excluding these purchase
accounting adjustments, to allow for a more meaningful comparison with prior
years, EVA was $153 million positive in 2000. This compares to a negative $111
million in 1999 and a negative $285 million in 1998. The improvement in 2000
over 1999 was due in large part to higher metal prices and to continued progress
in achieving the Company's FBP program. The improvement in 1999 over 1998 was
largely due to changes in cost of capital and economic tax rates.

*Goodwill and asset revaluation, as well as depreciation and
amortization.
<PAGE>   32
27 > MANAGEMENT'S DISCUSSION AND ANALYSIS


Under the FBP program, Alcan's objective was to improve pre-tax profitability
by $1 billion over the five-year period of 1997 to 2001, at benchmark LME
prices of $1,380/t. The $1-billion target included a contribution of
$150 million from the new 400 kt smelter in Alma, Quebec. Start-up of the Alma
smelter commenced successfully in October 2000, and its profit contribution to
the FBP target is virtually assured. The smelter is expected to be fully
operational by September 30, 2001.

Of the remaining $850 million, the Company had achieved $430 million during
the first three years of the program, from 1997 to 1999. In 2000, a further
$150 million of profit improvement was achieved to raise the total profit
improvement to $580 million.

Following the merger with algroup, the Company has set a new profit improvement
goal. This objective includes the former algroup businesses and sets aggressive
targets for all operations. In 2000, total earnings from operations before
interest, taxes, depreciation and amortization (EBITDA) for the Company,
including algroup for the full year on a pro-forma basis, were approximately
$2 billion. The Company has given itself the goal of improving this base of
$2 billion by $1 billion, or 50%, over the two-year period of 2001 and 2002.
This new target, based upon a benchmark LME price of $1,500/t (compared to an
average price of $1,567/t in 2000) includes the remaining $270 million from the
prior FBP program, the positive impact from the Alma smelter, the EBITDA to be
generated by the recently acquired Korean rolling mills, the EBITDA improvement
of the former algroup businesses, as well as the impact of the merger related
synergies.

Revenues
<TABLE>
<CAPTION>
                                       2000      1999      1998
                                      -----     -----     -----
<S>                                   <C>       <C>       <C>
Sales and operating revenues
(millions of US$)                     9,148     7,324     7,789
Total aluminum
volume(1) (kt)                        3,509     3,085     2,941
Average sales price
realizations (US$/t)
Ingot products                        1,667     1,511     1,558
Rolled products(2)                    2,455     2,209     2,603
</TABLE>

(1)  Includes shipments of ingot and rolled products, conversion of
     customer-owned metal as well as aluminum used in engineered products and
     packaging.

(2)  Includes foil products for 1998 only; foil operations have been
     reclassified to the packaging segment for 1999 and 2000.

Sales and operating revenues, at $9,148 million, were 25% higher than the level
of 1999, and 17% higher than 1998. Compared to both 1999 and 1998, the increase
in 2000 was attributable mainly to higher average metal prices and to the
inclusion of the former algroup results for the fourth quarter, which added
226 kt to total aluminum volume, and $1.2 billion to revenues.

Other income, which comprises interest income and other non-operating gains, was
$96 million in 2000 compared to $179 million in 1999 and $231 million in 1998.
The decrease in 2000 was due mainly to the lower asset disposal gains. In 1999
and 1998, these gains totalled $110 million and $156 million before taxes,
respectively.


COSTS AND EXPENSES

Cost of sales and operating expenses increased by 25% in 2000, in line with the
increase in sales and operating revenues. The increase was attributable mainly
to the inclusion of algroup in the fourth quarter results, to higher average
prices of purchased metal, to the increased volume of ingot purchases for the
year, to higher energy costs, and to increased start-up and pre-operating
expenses related to the Alma smelter and the restarts at the Lynemouth, U.K.,
and Sebree, Kentucky, smelters. However, as a percentage of sales and operating
revenues, cost of sales and operating expenses remained stable at approximately
78%, compared to 1999 and 1998, reflecting in part the continued progress under
the Company's FBP program.

<TABLE>
<CAPTION>
(kt)                            2000      1999      1998
                               -----     -----     -----
<S>                            <C>       <C>       <C>
Purchases of aluminum
  Ingot products               1,033       714       648
  Scrap                          572       538       535
  Fabricated products             65        45        44
                               -----     -----     -----
                               1,670     1,297     1,227
                               =====     =====     =====
</TABLE>

Purchases of primary ingot increased in 2000 to support the higher level of
fabricated product sales volumes, and also as a result of the metal trading
activity of algroup, which was included for the fourth quarter of the year.
<PAGE>   33

28 > Management's Discussion and Analysis

Oil prices increased by about 45% in 2000, compared to 1999, and natural gas
prices increased by approximately 70% during the year. The Company did not bear
the full impact of the higher oil prices due to forward purchases at lower
prices. These increases had a negative impact on cost of sales, offset only
slightly by a 7% reduction in caustic soda prices. During 1999, the impact of
somewhat higher energy prices, compared to 1998, was negligible.

Depreciation and amortization expense was $545 million compared to $477 million
in the previous year and $462 million in 1998. The increase reflected
depreciation on the algroup assets, the two rolling mills in South Korea
acquired in late 1999 and early 2000, and the major expansion of the
Pindamonhangaba (Pinda) rolling mill in Brazil, which was completed in late
1999.

Selling, administrative and general expenses, at $405 million, increased 8% from
the 1999 level of $375 million, which represented a 16% decline from the 1998
level. The increase in 2000 was due mainly to the algroup merger, and expressed
as a percentage of sales, these expenses fell to 4.4% representing a 14%
improvement over 1999 and a 23% improvement compared to 1998.

Research and development expenses were $81 million for 2000 compared to $67
million and $70 million in 1999 and 1998 respectively. Alcan's research and
development activities are closely aligned with the needs of its core
businesses, principally raw materials, smelting, fabrication, and packaging. The
Company continues to maintain a strong effort in developing sheet applications
and technology for the automotive industry and is working closely with a number
of automotive companies in this regard.

[PICTURE]

Alcan is the only aluminum can sheet producer with operations in North and South
America, Asia and Europe and its can recycling operations in both the U.S. and
Brazil established new records in 2000.


Other expenses were $139 million compared to $127 million in 1999 and $219
million in 1998. In 2000, this included rationalization costs of $45 million as
well as a non-recurring environmental provision of $14 million. The 1999 figure
included rationalization costs of $55 million, and included in 1998 was an asset
write-off of $143 million related to the Aughinish alumina refinery in Ireland,
which was sold in early 1999.

Interest Costs

<TABLE>
<CAPTION>
(millions of US$)                       2000    1999    1998
                                        ----    ----    ----
<S>                                     <C>     <C>     <C>
Interest expense                          78      76      92
Interest capitalized                      81      41      15
Total interest costs                     159     117     107
Effective average interest rate (%)      7.1     6.9     6.7
                                        ----    ----    ----
</TABLE>

Total interest costs rose $42 million due to debt incurred to finance capital
expenditures and share repurchases, and to the inclusion of algroup's debt as a
result of the merger. In 2000, $81 million of interest was capitalized, compared
to $41 million in 1999, relating mainly to the construction of the new smelter
in Alma, Quebec. In 1998, $15 million of interest was capitalized, relating
mainly to the Pinda, Brazil, and Alma projects.

The Company expects capitalized interest of about $25 million related to the
Alma project during 2001. The pre-tax interest expense coverage ratio was 6.0
times in 2000, compared to 5.5 times in 1999 and 6.3 times in 1998.

<PAGE>   34
29

INCOME TAXES

Income taxes of $254 million for 2000 represented an effective rate of 29%,
compared to 31% in 1999 and 32% in 1998. This compares to a composite statutory
rate of 40.2% in Canada. In 2000, the difference in the rates was due primarily
to investment and other allowances, prior years' tax adjustments and the impact
of reduced tax rates on accumulated deferred income taxes. In 1999 and 1998, the
difference in the rates was due primarily to prior years' tax adjustments,
reduced rate or tax exempt items and investment and other allowances. In
addition, a non-cash gain of $18 million was recorded on the currency
revaluation of deferred tax balances due to the weaker Canadian dollar during
the year. In 1999, a loss of $26 million for currency revaluation was recorded,
while a gain of $31 million was recorded in 1998.

OPERATING SEGMENT REVIEW

The following information is reported by major operating segment, viewing each
segment on a stand-alone basis. Transactions between segments are conducted on
an arm's-length basis and reflect market prices. Thus, earnings from primary
metal operations include profit on metal produced by the Company, whether sold
to third parties or used in the Company's fabricating and packaging operations.
Earnings from the fabricated products and packaging operations represent only
the fabricating profit from rolled products, engineered products and packaging
products.

Optimization of materials, joining technology, prototype construction,
light-weight modular design are all key to Alcan's know-how in design and
manufacturing solutions for the mass transportation market.

Costs and Expenses

[GRAPH]

[] Cost of sales and operating expenses

[] Research and development expenses

[] Depreciation and amortization

[] Interest

[] Selling, administrative and general expenses

[] Other expenses

Despite increased prices for purchased metal and energy, and higher start-up and
pre-operating expenses, cost of sales and operating expenses remained stable at
78% of sales and operating revenues.
<PAGE>   35
                                                                              30

With 100% ownership of the Gove, Australia, alumina refinery and related bauxite
mine, Alcan will further reduce its average alumina cost and has access to
low-cost expansion potential.

The Primary Metal segment's EBITDA increased to $994 million in 2000, an
improvement of 78% compared to 1999. Higher metal prices, FBP progress and the
inclusion of algroup's operations contributed to this improvement.

Following the merger with algroup in 2000, the operations were reorganized to
create four operating segments. In addition to EVA, a key financial performance
measure for the operating segments is EBITDA. Additional operating segment
information is presented in note 22 to the financial statements. Comparative
information has been restated to conform to the new organizational structure.

Primary Metal

<TABLE>
<CAPTION>
(millions of US$)                 2000     1999     1998
                                  ----    -----    -----
<S>                               <C>     <C>      <C>
Sales and operating revenues
  Third parties                   2,123   1,689    1,813
  Intersegment                    1,667   1,317    1,405
EBITDA                              994     557      629
                                  -----   -----    -----
</TABLE>

The Primary Metal segment includes the Company's bauxite and alumina operations,
as well as its primary aluminum facilities.

EBITDA from this segment increased 78% from the 1999 level reflecting higher
realized prices for alumina and aluminum, the positive impact from continued
progress under the FBP program, and the inclusion of algroup's operations in the
fourth quarter of 2000. In 1999, primary metal segment EBITDA declined compared
to 1998 reflecting lower realized prices, as well as higher rationalization,
pre-operating and closure costs.

Bauxite and Alumina

<TABLE>
<CAPTION>
(millions of US$)                  2000     1999     1998
                                  -----    -----    -----
<S>                               <C>      <C>      <C>
Sales and operating revenues
  Third parties                     470      413      509
  Intersegment                      536      479      516
EBITDA                              265      118      192
                                  -----    -----    -----
Alumina shipments
    - third parties (kt)            975    1,153    1,641
Production (kt)
  Alumina hydrate                 3,941    3,991    5,013
                                  -----    -----    -----
</TABLE>
<PAGE>   36
 31 > Management's Discussion and Analysis

Bauxite and alumina EBITDA increased 125% in 2000 compared to the previous year,
reflecting higher realized prices for alumina and bauxite as well as the
addition of algroup's Gove, Australia, bauxite and alumina operation for the
fourth quarter.

Average realized prices for alumina, which are highly correlated to metal
prices, increased in 2000 as metal prices on the LME were 13% higher in 2000
compared to 1999. During 2000, spot prices for alumina also rose following an
explosion that took place in July 1999 at a competitor's alumina refinery in the
U.S. This refinery is expected to resume production in 2001 which, in
conjunction with decreased alumina requirements resulting from the idling of
significant smelting capacity in the U.S. Pacific Northwest, is expected to
lower alumina spot prices in 2001.

The 1998 results included those of the Aughinish alumina refinery in Ireland,
which was sold early in 1999.

BAUXITE

In 1999, Alcan adopted the Australasian Code for Reporting of Mineral Resources
and Ore Reserves, an internationally accepted reporting standard. On that basis,
and including 100% of the Gove assets in Australia, Alcan's current proven ore
reserves are estimated to be 422 Mt and measured mineral resources are estimated
to be 454 Mt, representing increases of 66% and 118%, respectively, compared to
1999. The Company has more than sufficient bauxite to meet its needs for the
next 30 years based on current production capabilities.

In January 2000, the Ely bauxite reserves in Australia began supplying the
Company's 21.4% interest in the Queensland Alumina Limited (QAL) refinery.
Significant savings on bauxite costs were realized during the year, and will
continue in the future.

The equity partners in the Mineracao Rio do Norte S.A. (MRN) bauxite mine in
Brazil, in which Alcan owns a 12.5% interest, have approved an expansion that
would result in total production increasing by about 50%, from 11 Mt to 16.3
million tonnes per year (Mt/y), by 2003.

ALUMINA

Alumina hydrate production reached 3.9 Mt in 2000, a 1% decrease over 1999.
Adjusting for divestitures and the algroup merger, production in 2000 was stable
compared to 1999, which had been a record year, following an increase of 8% over
1998. In 2000, new records for hydrate production were achieved in Jamaica, the
QAL refinery in Australia and the Alumar facility in Brazil.

Despite the increase in oil and natural gas prices, production costs increased
by only 3% in 2000 compared to 1999. Partly offsetting the higher energy costs
were reductions achieved under the ongoing FBP program during 2000.

In January 2001, the Company acquired the remaining 30% of the Gove alumina
refinery and related bauxite mine at a cost of $362 million, subject to certain
post-closing adjustments which could require the payment of additional amounts
of up to $30 million. The refinery has a total annual capacity of 1.8 Mt of
low-cost alumina. This investment will enable the Company to further reduce its
average alumina cost, while giving it access to all of Gove's significant
low-cost expansion potential.

In February 2001, the Company announced its intention to sell its 93% interest
in the Alcan Jamaica Company, which operates bauxite and alumina facilities
having a capacity of 1.2 Mt/y of alumina.

The Company continues to own a 35% interest in the proposed 1.2 Mt Utkal alumina
project in Orissa, India.

The $105-million modernization program for the Company's alumina refinery in
Jonquiere, Quebec, is progressing on schedule and within budget. The start-up
has begun in certain areas and will help reduce alumina costs in 2001, with
completion scheduled in 2002-03. The project is expected to result in higher
productivity, improved process efficiencies and better environmental, health and
safety working conditions.
<PAGE>   37
                                       32 > Management's Discussion and Analysis
CHEMICALS

Operating results in 2000 were better than in 1999, although the European
operations continued to suffer losses, caused mainly by depressed selling
prices, unfavourable exchange rates and lower shipment volumes. A major
restructuring of the European operations is underway and is expected to result
in improved performance in 2001. This follows a significant reduction in
workforce already implemented in the latter part of 1999.

Primary Aluminum

<TABLE>
<CAPTION>
(millions of US$)                         2000      1999      1998
                                         -----    ------    ------
<S>                                      <C>      <C>       <C>
Sales and operating revenues

  Third parties                          1,653     1,276     1,304
  Intersegment                           1,674     1,312     1,394
EBITDA                                     729       439       437
                                         -----     -----     -----
Shipments(1) (KT)
  Third parties                            758       649       635
  Intersegment                             932       892       904
Production of primary aluminum (KT)      1,562     1,518     1,481
                                         -----     -----     -----
</TABLE>

(1) Shipments of primary aluminum, including those resulting from metal trading
    activities. data was restated for 1999 and 1998.

Primary aluminum EBITDA increased by 66% in 2000, reaching a level of $729
million compared to $439 mil- lion in 1999 and $437 million in 1998. The main
factors contributing to the increase were the improved ingot product
realizations on third- party sales, which were 10% higher compared to 1999, the
benefits arising from the FBP program and the addition of the former algroup's
primary aluminum business. In 1999, EBITDA was similar to 1998, as the positive
impact from reduced operating costs in 1999 was offset by higher start-up,
pre-operating and rationalization costs, and by lower prices on third-party
sales of primary ingot.

Primary aluminum production increased 2.9% in 2000 to 1,562 kt. Eleven of the
Company's 15 smelters achieved record production in 2000. The positive
contribution to production as it relates to the algroup merger and the restarts
of idle capacity at the Sebree, U.S., and Lynemouth, U.K., smelters, more than
offset the lost production in 2000 caused by the permanent closures of the
Isle-Maligne, Quebec, and Kinlochleven, U.K., smelters. Production from the new
smelter in Alma, Quebec, which commenced operations in October 2000, was
negligible during the year.

[PICTURE]

Sheet ingot is lifted from the casting area of the Laterriere, Quebec, smelter.
Together with Alcan's 14 other smelters worldwide, primary metal production
levels were the best ever in 2000.

Construction of the new smelter and casting center in Alma is approximately 90%
completed and facilities are gradually being transferred to operations. The
smelter should reach full capacity of 400 kt/y by September 30, 2001, with
production of about 270 kt in 2001. The smelter also has low-cost expansion
capability of 133 kt/y.

Alcan's average cost of production of primary aluminum (mainly in the form of
sheet ingot, extrusion billet and foundry ingot), including alumina at market
prices, was $1,337/t in 2000 compared to $1,275/t in 1999 and $1,327/t in 1998.
Higher alumina prices had an unfavourable impact on costs, as did higher energy
prices, more than offsetting the savings generated by the cost reductions
related to the FBP program. This total metal production cost included special
charges of $94/t in 2000 compared to $73/t in 1999 and $46/t in 1998. The
increase in special charges in 2000 was attributable mainly to Alma
pre-operating expenses and start-up expenses for the Sebree and Lynemouth
smelters ($67/t in 2000). Excluding special charges, the average cost of
production of primary aluminum increased by only 3.4% in 2000 compared to the
previous year, despite higher alumina and purchased energy prices.

Almost all smelter production is in value-added form, such as sheet ingot,
extrusion billet and foundry ingot, which costs more to produce than the remelt
ingot sold on the LME. Despite the effect of the weakening U.S. economy during
the last few months of 2000, Alcan achieved record sales for value-added ingots.

<PAGE>   38
33

The Company installed a state-of-the-art research extrusion press at its
Kingston, Ontario, facility in 2000, which will increase its knowledge and
customer service capabilities as it relates to the metallurgical and extrusion
processes. An extrusion scrap recycling facility in Sebree, Kentucky, became
operational in 2000, and an expansion of Sebree's billet capacity was approved
during the year, with expected completion in 2001. This investment will increase
billet capacity by 65 kt/y. The average realized price on third-party sales of
primary ingot was $1,747/t compared to $1,569/t in 1999 and $1,618/t in 1998.

Fabricated Products --
Americas and Asia

<TABLE>
<CAPTION>

(millions of US$)                  2000     1999    1998(1)
                                   -----   -----   --------
 <S>                               <C>      <C>      <C>
Sales and operating revenues
   Third parties                   3,929    3,402     3,478
   Intersegment                       82       80       N/A
EBITDA                               296      349       299
                                   -----    -----     -----
Total aluminum
    volume(2) (kt)                 1,648    1,481     1,395
                                   =====    =====     =====

</TABLE>

(1)  Includes foil products for 1998 only; foil operations have been
     reclassified to the packaging segment for 1999 and 2000. Intersegment data
     not available for 1998.

(2)  Includes shipments of rolled products, conversion of customer-owned metal
     and aluminum used in engineered products.

The markets served by this business segment include containers and packaging,
building and construction, industrial products, electrical, as well as
automotive and other transportation sectors.

In 2000, EBITDA was $296 million compared to $349 million in 1999 and $299
million in 1998. The decline in 2000 was attributable

[PICTURE]

Following a successful start-up last fall, Alcan's newest, state-of-the-art
400-kt capacity smelter at Alma, Quebec, will be one of the lowest cost smelters
in the world when in full operation in September 2001.

Despite the effect of the weakening U.S. economy during the last few months of
2000, Alcan achieved record sales for value-added ingots.
<PAGE>   39
                                                                              34

[PICTURE]

Alcan's recent investments as well as modernization and capacity expansions
continue to solidify its global leadership position in rolled products.

Total Aluminum Volume1 and Purchases

[GRAPH]

[] Total aluminum volume

[] Total purchases

Increased aluminum shipments surpassed the increase in primary production,
leading to higher metal purchases.

1 Includes ingot and rolled products shipments, conversion of customer-owned
  metal as well as aluminum used in engineered products and packaging.

mainly to a squeeze in profit margins in North America and Asia, offset in part
by an improvement in South America. In 1999, EBITDA was higher than in 1998, due
mainly to the higher sales volume of rolled products and to cost reductions.

Highlights for 2000 included a 46% increase in shipment volumes in South America
following the successful expansion and modernization of the Company's rolling
mill located in Pinda, Brazil. In addition, through its 68%-owned subsidiary,
Alcan Taihan Aluminum Limited (ATA), the Company acquired an equity interest of
95% in Aluminium of Korea Limited (Koralu) in May 2000 and has integrated its
operations into ATA.

During 2000, Alcan's total aluminum volume from this segment increased 11%
compared to 1999, as a result of the strategic focus on South American and Asian
markets, which complements the segment's overall growth strategy given the
maturity of North American markets.

Rolled Products

<TABLE>
<CAPTION>
                                  2000      1999      1998(1)
                                  -----     ------    -------
<S>                               <C>       <C>        <C>
Shipments (kt)                    1,269     1,096      1,035
Conversion of customer-owned
  metal (kt)                        218       218        196
Total aluminum volume (kt)        1,487     1,314      1,231
                                  -----     ------     -----
EBITDA (millions of US$)            261       307        265

Average price realizations(2)
  (US$/T)                         2,401     2,239      2,418
                                  =====     =====      =====
</TABLE>

(1)  Includes foil products for 1998 only; foil operations have been
     reclassified to the packaging segment for 1999 and 2000.

(2)  Excluding conversion of customer-owned metal.
<PAGE>   40
35 > Management's Discussion and Analysis

EBITDA from rolled products was $261 million in 2000, compared to $307 million
in 1999 and $265 million in 1998. Although shipments and price realizations were
higher in 2000, this was not sufficient to offset higher energy prices, the
unfavourable impact due to the time lag in fully passing higher aluminum prices
to customers, as well as losses from the South Korean operations.

Alcan continues to consolidate its position of leadership in rolled products
markets in North and South America following capacity expansions and
modernization in recent years and, through its acquisitions in South Korea, has
established a platform for growth in Asian markets.

Alcan's recent investments in modernization and capacity expansions continue to
solidify its global leadership position in rolled products. Alcan is the only
can sheet producer with operations in North America, South America, Asia and
Europe.

In 2000, Alcan's North American rolled products business matched its previous
year's record shipment level amid declining market conditions and increased
competitiveness across all product lines, reflecting continued market share
growth.

A project to upgrade rolling operations in Kingston, Ontario, was completed in
2000. This has improved the Company's ability to service the growing automotive
market and expanded its industrial products capacity.

Despite a 3.5% decline in U.S. can sheet shipments by the industry in 2000
compared to 1999, the Company's shipments of can sheet increased by 1%, allowing
it to gain market share owing to its focus on quality, service and its global
leadership position.

[PICTURE]

The Lincoln LS, Motor Trend magazine's "2000 Car of the Year" makes extensive
use of aluminum (450 lb/204 kg), including Alcan body sheet for the hood, front
fenders and trunk lid -- accounting for 40% of the metal body surface.

Alcan's automotive sheet sales rose by approximately 75% in 2000 compared to
1999, despite a decline in vehicle production during the second half of the
year. Although shipment volume levels to this market remain a minor portion of
the Company's overall shipments, this growth performance exceeded that of the
overall market in this key strategic market to Alcan.

In January 2000, Alcan and Ford signed a significant multi-year aluminum supply
agreement. During the year, both Ford and GM introduced demonstration aluminum
intensive vehicles. The Ford Prodigy and GM Precept models use a wide range of
aluminum applications including body structures and skin panels for significant
weight and fuel savings.

In South America, Alcan achieved record sales levels in Brazil. Shipments of
rolled products from South American operations grew by 46% in 2000 compared to
1999, as the Company's expanded and modernized rolling mill in Pinda, Brazil,
enjoyed its first full year of production. The Company now expects this facility
to reach full capacity by the end of 2001, two years ahead of schedule. Alcan is
currently the only manufacturing company in South America capable of producing
can sheet, and is therefore well positioned to benefit from the anticipated
rapid growth in this region of the world.

<PAGE>   41
36

[PICTURE]

Alcan's Koralu rolling complex at Ulsan (shown above), together with the mill at
Yeongju, South Korea, provide a new platform for earnings growth in low-cost,
technically advanced semi-fabricated products in Asia.

Alcan's aluminum can recycling operations in the United States
increased throughput to establish a new record of 23.8 billion
used beverage cans.

In Asia, shipments of rolled products more than doubled in 2000 to reach 239 kt
compared to 117 kt in 1999. This increase was due primarily to the first full
year of production at the Yeongju, South Korea, rolling mill acquired in
September 1999. In addition, through its 68%-owned ATA subsidiary, Alcan
acquired Koralu in May 2000, adding a second world-class rolling mill in South
Korea. The Koralu acquisition further enhances Alcan's overall cost position in
Asia and doubles the Company's annual production capacity in South Korea to 600
kt to meet the development of its chosen markets. The repositioning of Alcan in
Asia included the sale of Indian Aluminium Company, Limited (Indal) during the
year.

RECYCLING ACTIVITIES

Alcan's aluminum can recycling operations in the United States increased
throughput to establish a new record of 23.8 billion used beverage cans (UBCs),
a 10% increase over last year. This represented an estimated 40% of aluminum
beverage cans recycled in the U.S. in 2000. At the Berea, Kentucky, facility,
already the largest UBC recycling facility in the world, production increased by
13% as a result of improved manufacturing efficiencies.
<PAGE>   42
37 > Management's Discussion and Analysis

Alcan continues to expand the capacity of its
state-of-the-art recycling plant at Pinda, in Brazil, to keep pace with the
tremendous growth in demand for beverage cans in that region. Currently, Alcan
recycles and processes 29% of all the aluminum cans collected in Brazil, and
along with metal received from a third-party recycler, casts 50% of the UBCs
collected in Brazil.

Engineered Products

<TABLE>
<CAPTION>
(millions of US$)         2000    1999    1998
                          ----    ----    ----
<S>                       <C>     <C>     <C>

Sales and operating
  revenues                 538     494     644
EBITDA                      35      42      34
                          ----    ----    ----
Aluminum used
  in engineered
  products (KT)            161     167     164
                          ====    ====    ====
</TABLE>

Engineered products are comprised mainly of Alcan's North American cable
business, where EBITDA declined in 2000 compared to 1999, mainly as a result of
the weakening North American construction and housing activities in the second
half of the year, exacerbated by an already competitive market place. As a
result, shipments of cable products in 2000 decreased by about 2% following a
number of years of sustained growth.

Sales of bare transmission and distribution cables for high voltage power supply
were strong throughout the year. With demand for energy growing, the outlook for
overhead transmission lines continues to be positive for 2001.

Fabricated Products -- Europe

<TABLE>
<CAPTION>
(millions of US$)         2000    1999    1998(1)
                         ------  ------   ------
<S>                       <C>     <C>     <C>

Sales and operating
  revenues
Third parties            1,854   1,524     2,485
Intersegment               289     268       N/A
EBITDA                     164     144       157
Total aluminum
  volume(2) (KT)           712     620       717
                         =====   =====     =====
</TABLE>

(1)  Includes foil products for 1998 only; foil operations have been
     reclassified to the packaging segment for 1999 and 2000. intersegment data
     not available for 1998.

(2)  Includes shipments of rolled products, conversion of customer-owned
     metal and aluminum used by engineered products.

With a significant presence in rolled products and engineered products, the
markets served by this segment include containers and packaging, building and
construction, industrial products, machinery and equipment, automotive and mass
transportation, displays and facades. The increase in EBITDA in 2000 compared to
1999 and 1998 resulted mainly from the inclusion of algroup's operations in the
fourth quarter. Following the merger, Alcan now has a significant engineered
products business in Europe. The merger also consolidates the company's
leadership position in rolled products in that region. Results for 1998 included
foil operations, which have been reclassified to the packaging segment for 1999
and 2000.

Rolled Products

<TABLE>
<CAPTION>
                               2000    1999    1998(1)
                              -----   -----    -----
<S>                            <C>     <C>     <C>

Shipments (KT)                  586     513      568
Conversion of
  customer-owned
  metal (KT)                    110      97       93
Total aluminum
  volume (KT)                   696     610      661
                              -----   -----    -----
EBITDA (MILLIONS OF US$)        144     142      114
Average price
  realizations(2)
 (US$/T)                      2,571   2,145    2,942
                              =====   =====    =====

</TABLE>

(1)  Includes foil products for 1998 only; foil operations have been
     reclassified to the packaging segment for 1999 and 2000.

(2)  Excluding conversion of customer-owned metal.

EBITDA was relatively flat in 2000 compared to 1999, as the increase in shipment
volumes and price realizations was offset mainly by the strength of the pound
sterling against other European currencies, which had an unfavourable impact on
profits from U.K. based fabrica- tion operations. In 1999, EBITDA was higher
than in the prior year due mainly to the absence of rationalization charges that
were recorded in 1998.

The European rolled product market grew in 2000, increasing by 3.8% over 1999.
This mirrored the growth in overall aluminum consumption in Europe, which
increased 3.7% in 2000, after having grown 3.2% in 1999.

Despite a very competitive environ- ment, the European aluminum beverage can
market grew in 2000, increasing its share from steel in the U.K. to 70% and
showed strong growth in Eastern Europe. Alcan's total sales volume in Europe
reached an all-time record in the beverage can market. Compared to 1999,
can-body stock shipments increased by 8%, and shipments of can-end and can-tab
were up by 34%.
<PAGE>   43
 38 > Management's Discussion and Analysis

The litho sheet market grew strongly
during 2000, with Alcan's increase at more than twice the market growth. The
Company achieved record litho sales in 2000, exceeding the 1999 level by 10%.

ENGINEERED PRODUCTS

<TABLE>
<CAPTION>
(Millions of US$)     2000    1999   1998
                      ----    ----   ----
<S>                   <C>     <C>    <C>
Sales and operating
 revenues              188      58    653
EBITDA                  20       2     43
Aluminum used
 in engineered
 products (KT)          16      10     56
                      ----    ----   ----
</TABLE>

The EBITDA generated by engineered products in Europe for 2000 relates only to
algroup's operations in the fourth quarter. The year 1999 included engineered
products operations in France and Germany, which were sold during the year.

Following the merger with algroup, Alcan now has a significant presence in
engineered products in Europe. Alcan's main markets include:

- automotive  systems and components,  using extrusions and plastic components,

- large  extrusions,   composite  panels  and  structures  for lightweight mass
  transportation systems,

- composites for displays, facades and transport
  applications,

- large profile extrusions for building, transportation,
  machinery and equipment, and industrial markets.

PACKAGING

<TABLE>
<CAPTION>
(millions of US$)      2000    1999   1998(1)
                       ----    ----   -------
<S>                    <C>     <C>     <C>
Sales and operating
 revenues             1,216     681     N/A
                      -----     ---     ---
EBITDA                   73      43     N/A
Aluminum used
 in packaging (KT)      175     125     N/A
                      -----     ---     ---
</TABLE>

(1) Excludes foil products for 1998 only; foil operations have been reclassified
     to the packaging segment from the fabricated product segments for 1999 and
     2000.

The former algroup had significant operations in the specialty packaging
industry. Alcan expects annual revenue to be approximately $3 billion from this
segment, compared to $681 million in 1999. The year 2000 included the fourth
quarter results of algroup.

Alcan's packaging revenues1 can be broken down as follows:

<TABLE>
<S>                    <C>
BY MARKET                 %
Food                    47
Pharmaceutical          17
Tobacco                 12
Cosmetics                7
Other                   17
                       ----
                       100%
                       ====

BY TYPE OF INPUT          %
Plastic and paper       42
Aluminum                38
Paperboard               9
Glass                    9
Steel                    2
                       ----
                       100%
                       ====

BY REGION                 %
Europe                  64
North America           32
South America            3
Asia                     1
                       ----
                       100%
                       ====
</TABLE>
(1) Based on 1999 data.



GEOGRAPHIC REVIEW
<TABLE>
(millions of US$)     2000   1999   1998
                      ----   ----   ----
<S>                   <C>    <C>    <C>
Canada                 295    111    133
United States          155    178    144
Brazil                  34      5     13
Germany                 43     30      7
United Kingdom          10     18      2
Switzerland              1      3     --
Other Europe            17     13    (98)(1)
Australia               59     36     25
Asia                   (22)    46    922
Other                   26     20     81
                       ---    ---    ---
Net income             618    460    399
                       ===    ===    ===
</TABLE>

(1) Includes a write-down of $120 million after-tax related to the sale of the
    Aughinish alumina refinery in Ireland.

(2) Includes a gain of $140 million after-tax related to the sale of a portion
    of the Company's investment in Nippon Light Metal Company, Ltd.

In Canada, the increase in net income compared to 1999 and 1998 resulted mainly
from higher aluminum prices and favourable tax adjustments. In addition,
rationalization charges were lower than in 1999.

In the United States, net income was lower than in 1999 due mainly to higher
energy costs, the time lag in passing metal prices to customers, lower shipments
in certain rolled products markets as a result of the slowing U.S. economy, a
non-recurring environmental provision, and a less favourable sales product mix.
Partly offsetting these factors were increased earnings from the U.S. smelting
operation due to higher metal prices, and the restart of idled capacity at the
Sebree, Kentucky, smelter. Net income for 1999 was higher than in 1998 due
mainly to increased sales volumes and lower operating costs.
<PAGE>   44
39

In Brazil, the improvement in net income for 2000 was attributable mainly to
higher shipment volumes of rolled products and lower unit production costs
following the first full year of production from the expanded Pinda rolling
mill. Compared to 1998, operating results in 1999 were affected by the impact of
the economic crisis early in the year as well as depreciation and startup costs
for the Pinda expansion.

In Germany, the increase in net income for 2000 was caused mainly by a reduction
in Germany's deferred income tax liability of $12 million due to a reduction in
tax rates in that country. Excluding special items, 1999 net income was similar
to the 1998 level. In 1999, the special item was a $25-million net gain on sale
of a business. In 1998, the special item comprised of a net rationalization
charge of $3 million.

In the U.K., the decline in net income in 2000 was due mainly to net
rationalization charges of $18 million associated with the closure of the foil
operations at Rogerstone and the strength of the pound sterling against other
European currencies, offset in part by higher average metal prices on ingot
sales and the restart of idled capacity at the Lynemouth smelter. Excluding
special items, 1999 net income from the U.K. was in line with the prior year. In
1999, special items were a net $12-million gain, comprised of a $16-million gain
on sale of property offset in part by rationalization costs of $4 million. In
1998, special items were net rationalization costs of $6 million.

[PICTURE]

Alcan's pharmaceutical sector, the world's No. 1 packaging supplier, combines a
multi-line product, offering a global account management process and effectively
channels innovative packaging solutions to leading pharmaceutical companies
worldwide.

2000 Aluminum Shipments by Region

[GRAPH]

[] Western World consumption
[] Alcan Group shipments

Alcan is well positioned to serve key markets in all regions.
<PAGE>   45
                                                                              40
CASH FLOWS

[graph]

[] Sales of assets and investments
[] Cash from operating activities
[] Dividends paid
[] Capital investments

Capital investments during the year included $850 million for the Alma, Quebec,
smelter, and $200 million to acquire Koralu, in South Korea.


TOTAL BORROWINGS AND EQUITY (at-year-end)

[graph]

[] Total borrowings
[] Equity (includes minority interests and preference shares)
[] Ratio of total borrowings to equity

The Company maintains a healthy balance sheet, with a
debt:equity ratio of 33:67 at the end of 2000.


In Australia, net income for 2000 was higher than in 1999 and 1998, due mainly
to higher alumina prices and to the addition of the Gove bauxite and alumina
operations in the fourth quarter of 2000 and to the benefits arising from the
bauxite mining and exchange agreement with Comalco for the development of the
Company's Ely bauxite reserves to supply its interest in the QAL refinery.

In Asia, the decline in 2000 net income resulted primarily from the absence of a
$37-million net business disposal gain recorded in 1999 for the sale of shares
in Nippon Light Metal Company, Ltd (NLM), and from losses incurred by the rolled
products operations in South Korea, acquired in late 1999 and early 2000. The
1998 net income related primarily to a gain arising from the sale of a large
portion of Alcan's stake in NLM.

Activities in other areas include bauxite and alumina operations in Jamaica,
bauxite mining operations in Guinea and Ghana, smelting operations in Iceland,
packaging operations in Turkey and Puerto Rico, and trading, shipping and
insurance activities in Bermuda. Alcan also sells products in other parts of the
world such as the Middle East and Africa.
<PAGE>   46
41 > MANAGEMENT'S DISCUSSION AND ANALYSIS

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES

Cash generation, calculated by taking the net income for the year and adding
back depreciation, amortization and deferred income taxes, was $1,231 million
compared to $1,047 million in 1999 and $890 million in 1998. The improvement
mainly reflected increased metal prices and the inclusion of algroup's results
in the fourth quarter of 2000.

Net operating working capital increased by $223 million in 2000 compared to a
decline of $239 million in 1999 and an increase of $106 million in 1998. The
increase in 2000 was due mainly to a refinancing of trade payables by short-term
borrowings in South Korea, as well as a decrease in payables related to the Alma
smelter in Quebec.

INVESTMENT ACTIVITIES

Capital investment in the year was $1.7 billion, an increase from the previous
two years, which were $1.3 billion and $877 million respectively. Capital
investments in 2000 included about $850 million related to the Alma smelter
project in Quebec, $200 million for the acquisition of Koralu, and the capital
expenditures for the former algroup operations in the fourth quarter of 2000. On
an ongoing basis, approximately $750 million is required annually to maintain
the integrity and competitiveness of the Company's assets.

In October 2000, the Company made a pre-acquisition loan of $532 million to
algroup in order to finance a special payment to algroup shareholders as part of
the share exchange offer.

In 2001, capital expenditures are projected to total $1.1 billion, including
about $300 million for the completion of the Alma smelter. In addition, as
mentioned previously, the Company has acquired the remaining 30% of the Gove
alumina refinery and related bauxite mine at a cost of $362 million, subject to
certain post-closing adjustments which could require the payment of additional
amounts of up to $30 million. The Company expects to realize about $400 million
from asset disposals during 2001.

Disposal of assets in 2000 was mainly comprised of the sale of shares in Indal
and of a small panel business in Thailand.

FINANCING ACTIVITIES

Reflecting the inclusion of algroup's debt, increased capital expenditures and
funds required to repurchase shares, total borrowings increased to $4.6 billion
at the end of 2000 compared to $1.5 billion at the end of 1999. The
debt-to-equity ratio was 33:67 at the end of 2000 compared to 21:79 at the end
of 1999.

In October 2000, the Company issued 115.4 million common shares in exchange for
99.4% of algroup's shares.

During 2000, the Company purchased for cancellation 16.6 million of its common
shares, at a total cost of $530 million, under a normal course issuer bid
program which was initiated in June 2000. At the end of 2000, outstanding shares
totalled 317.9 million compared to 218.3 million at the end of 1999.

In January 2000, $100 million 9.5% debentures were redeemed at a price of
104.64%. In April 2000, $150 million 5.875% debentures matured and were repaid.
In July 2000, the remaining $18 million of the 9.625% sinking fund debentures
were purchased at par. In January 2001, the CHF150 million 6.75% debentures were
redeemed at par. Commercial paper outstanding increased from $30 million at the
beginning of 2000 to $1,475 million at the end of the year.

Cash reserves totalled $261 million at the end of 2000 compared to $315 million
at the end of 1999. Alcan has increased committed credit facilities to $2.75
billion through the establishment of a new $1.75-billion multi-currency credit
facility, in addition to a previously existing $1-billion credit facility. As at
December 31, 2000, $250 million had been drawn and $1.5 billion used as
"back-up" for commercial paper in issue under
<PAGE>   47
                                       42 > Management's Discussion and Analysis

these facilities. In addition to the balance available under these facilities,
the Company's investment grade rating continues to provide Alcan with access to
global capital markets through the issuance of commercial paper, debt and equity
instruments.

The quarterly common share dividend remained at 15 cents per common share in
2000. Total dividends paid (common and preferred) to shareholders were $155
million in 2000 compared to $140 million in 1999.

The Company expects that cash generation from operations, combined with the
above resources, will be more than sufficient to meet the cash requirements of
operations, planned capital expenditures and dividends. In addition, the Company
considers that its ability to access capital markets should provide any
additional liquidity which may be required to meet unforeseen events.

ENVIRONMENTAL MATTERS

Underlying Alcan's environmental commitments are a number of factors. These
include a clear approach to environmental management systems, continual
improvement of environmental control systems, dedicated environmental
professionals, and ongoing employee involvement.

Alcan is also committed to making the most of the inherent environmental value
of aluminum and other materials in every stage of our products' life cycles.

In most of the countries where Alcan operates production facilities,
environmental control regulations have been established or are in the process of
being established. Alcan believes that its existing and planned anti-pollution
measures will enable it to satisfy statutory and regulatory demands without
material effect on its competitive position.

Alcan's capital expenditures to protect the environment and improve working
conditions at the smelters and other locations were $133 million in 2000.
Similar expenditures for 2001 and 2002 are projected to be $110 million and $130
million, respectively. In addition, expenditures charged against income for
environmental protection were $91 million in 2000 and are expected to be $115
million in 2001 and $110 million in 2002.

RISKS AND UNCERTAINTIES

RISK MANAGEMENT

As a multinational company, which is to a large degree engaged in a
commodity-related business, Alcan's financial performance is heavily influenced
by fluctuations in metal prices and exchange rates. In order to reduce the
associated risks, the Company uses a variety of financial instruments and
commodity contracts. All risk management activities are governed by clearly
defined policies and management controls. Transactions in financial instruments
for which there is no underlying exposure are prohibited.

The decision whether and when to commence a hedge, along with the duration of
the hedge, can vary from period to period depending on market conditions and the
relative costs of various hedging instruments. The duration of a hedge is always
linked to the timing of the underlying transaction, with the connection between
the two being constantly monitored to ensure effectiveness.

FOREIGN CURRENCY EXCHANGE

Exchange rate movements, particularly between the Canadian dollar and the U.S.
dollar, have an impact on Alcan's results. For example, on an annual basis, each
US$0.01 permanent change in the value of the Canadian dollar has an after-tax
impact of approximately $11 million
<PAGE>   48
43

on the Company's long-term profitability. Alcan benefits from a weakening in
the Canadian dollar, but, conversely, is disadvantaged if it strengthens.

In 1999, the Company revised its currency risk management strategy for its
ongoing Canadian dollar operating cost exposure. The Company used to hedge a
portion of such ongoing Canadian dollar requirements for future periods up to a
maximum of three years. This deferred the impact of changes in exchange rate,
without adding value over the longer term. The Company no longer hedges these
exposures, thus eliminating the cost of hedging instruments and program
administration. This change in approach does not affect the Company's hedging of
its Canadian dollar capital commitments for the construction of the new smelter
at Alma, Quebec.

Following the algroup merger, exchange movements between the Euro and U.S.
dollar have a greater impact on the Company's results. It is estimated, based on
the current European earnings base, that each US$0.01 permanent change in the
value of the Euro has an annual after-tax translation impact of approximately $3
million on profitability. Alcan benefits from a strengthening of the Euro, but,
conversely, is disadvantaged if it weakens.

For further details, refer to note 17 of the financial statements.

[PICTURE]

>    From the luxury Audi A8 (shown above in production) to the fuel-efficient
     A2, total vehicle weight is reduced thanks to a light-weight, high-strength
     aluminum structure and body panels.

On an annual basis, each $100/t change in the price of aluminum has an after-tax
impact of $130 million on the Company's profitability.
<PAGE>   49
                                       44 > Management's Discussion and Analysis

The Company's deferred income tax liability in Canada is translated into U.S.
dollars at current rates, and the resultant exchange gains or losses are
included in income. The impact of a US$0.01 movement in the value of the
Canadian dollar on deferred income taxes is approximately $7 million. During
2000, a gain of $18 million was recorded in this regard, compared to a loss of
$26 million in 1999.

ALUMINUM PRICES

Depending on market conditions and logistical considerations, Alcan may sell
primary aluminum to third parties and may purchase primary aluminum and
secondary aluminum, including scrap, on the open market to meet the requirements
of its fabricating businesses. In addition, depending on pricing arrangements
with fabricated products customers, Alcan may hedge some of its purchased metal
supply in support of those sales.

Through the use of forward purchase and sale contracts and options, Alcan seeks
to limit the impact of lower metal prices, while retaining the ability to
benefit from higher prices.

Alcan estimates that on an annual basis, each $100 per tonne change in the price
of aluminum has an after-tax impact of approximately $130 million on the
Company's profitability.

For further details, refer to note 17 of the financial statements.

THE YEAR 2000 ISSUE

No Alcan operating location has experienced any material disruption to planned
production levels caused by a Year 2000-related problem associated with its
systems hardware and related software used in business applications or
manufacturing processes. Information received at the beginning of 2000 from
suppliers and customers indicates that no major supplier or customer has
experienced a Year 2000-related disruption that could have a significant impact
on Alcan.

Costs of Alcan's Year 2000 program were expensed as incurred and were less than
$50 million, most of which was spent prior to 2000.

CAUTIONARY STATEMENT

Statements in this report that describe the Company's objectives, projections,
estimates, expectations or predictions may be "forward looking statements"
within the meaning of applicable securities laws and regulations. The Company
cautions that such statements involve risk and uncertainty and that actual
actions or results could differ materially from those expressed or implied.
Important factors that could cause differences include global supply and demand
conditions for aluminum and other products, aluminum ingot prices and changes in
raw material costs or availability, changes in the relative value of various
currencies, cyclical demand and pricing within the principal markets for the
Company's products, changes in government regulations, particularly those
affecting environmental, health or safety compliance, relationships with and
financial and operating conditions of customers and suppliers, the effects of
integrating acquired businesses and the ability to attain expected benefits,
economic developments within the countries in which the Company conducts
business, and other factors relating to the Company's operations, such as
litigation, labor negotiations and fiscal regimes.

<PAGE>   50
45

FINANCIAL SECTION

                                                             OECD Guidelines  46
                                                            Auditors' report  46
                                           Consolidated Financial Statements  47
                                  Notes to Consolidated Financial Statements  50
                                                         Eleven-Year Summary  74
                                                    Quarterly Financial Data  76

RESPONSIBILITY FOR THE ANNUAL REPORT

Alcan's management is responsible for the preparation, integrity and fair
presentation of the financial statements and other information in the Annual
Report. The financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and include, where appropriate,
estimates based on the best judgement of management. A reconciliation with
generally accepted accounting principles in the United States is also presented.
Financial and operating data elsewhere in the Annual Report are consistent with
that contained in the accompanying financial statements.

Alcan's policy is to maintain systems of internal accounting and administrative
controls of high quality consistent with reasonable cost. Such systems are
designed to provide reasonable assurance that the financial information is
accurate and reliable and that Company assets are adequately accounted for and
safeguarded. The Board of Directors oversees the Company's systems of internal
accounting and administrative controls through its Audit Committee, which is
comprised of directors who are not employees. The Audit Committee meets
regularly with representatives of the shareholders' independent auditors and
management, including internal audit staff, to satisfy themselves that Alcan's
policy is being followed.

The Audit Committee has recommended the appointment of PricewaterhouseCoopers
LLP as the independent auditors, subject to approval by the shareholders.

The financial statements have been reviewed by the Audit Committee and, together
with the other required information in this Annual Report, approved by the Board
of Directors. In addition, the financial statements have been audited by
PricewaterhouseCoopers LLP, whose report is provided on page 46.


[SIGNATURE]                               [SIGNATURE]
W.R.C. Blundell,                          Suresh Thadhani,
Interim Chief Executive Officer           Chief Financial Officer
February 15, 2001





<PAGE>   51

                                       46

OECD GUIDELINES

The Organization for Economic Cooperation and Development (OECD), which consists
of 29 industrialized countries including Canada, has established guidelines
setting out an acceptable framework of reciprocal rights and responsibilities
between multinational enterprises and host governments. Alcan supports and
complies with the OECD guidelines and has a CODE OF CONDUCT, which is consistent
with them.

AUDITORS' REPORT

TO THE SHAREHOLDERS OF ALCAN INC.
(FORMERLY ALCAN ALUMINIUM LIMITED)

We have audited the consolidated balance sheets of Alcan Inc. (formerly Alcan
Aluminium Limited) as at December 31, 2000, 1999 and 1998 and the consolidated
statements of income, retained earnings and cash flows for each of the years in
the three-year period ended December 31, 2000. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31,
2000, 1999 and 1998 and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 2000 in accordance
with Canadian generally accepted accounting principles.

PricewaterhouseCoopers LLP            Montreal, Canada
Chartered Accountants                 February 15, 2001
<PAGE>   52
47 > Alcan Inc.

                       CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF INCOME (in millions of US$, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31                                    2000        1999       1998
                                                        --------    --------   --------
<S>                                                     <C>         <C>        <C>
REVENUES
Sales and operating revenues                            $  9,148    $  7,324   $  7,789
Other income (notes 9 and 10)                                 96         179        231
                                                        --------    --------   --------
                                                           9,244       7,503      8,020
                                                        --------    --------   --------
COSTS AND EXPENSES
Cost of sales and operating expenses                       7,113       5,695      6,076
Depreciation and amortization (note 2)                       545         477        462
Selling, administrative and general expenses                 405         375        448
Research and development expenses                             81          67         70
Interest                                                      78          76         92
Other expenses (notes 5, 9 and 10)                           139         127        219
                                                        --------    --------   --------
                                                           8,361       6,817      7,367
                                                        --------    --------   --------
Income before income taxes and other items                   883         686        653
Income taxes (note 6)                                        254         211        210
                                                        --------    --------   --------
Income before other items                                    629         475        443
Equity income (loss) (note 8)                                  4          (1)       (48)
Minority interests                                             1         (14)         4
                                                        --------    --------   --------
Net income before amortization of goodwill              $    634    $    460     $  399
Amortization of goodwill (note 2)                             16          --         --
                                                        --------    --------   --------
Net income                                              $    618    $    460     $  399
Dividends on preference shares                                10           9         10
                                                        --------    --------   --------
Net income attributable to common shareholders          $    608    $    451     $  389
                                                        --------    --------   --------
Net income per common share before
   amortization of goodwill (note 2)                    $   2.50    $   2.06    $  1.71
Amortization of goodwill per common share (note 2)          0.05          --         --
                                                        ========    ========   ========
Net income per common share (note 2)                    $   2.45    $   2.06    $  1.71
                                                        ========    ========   ========
Dividends per common share                              $   0.60    $   0.60    $  0.60
                                                        ========    ========   ========
</TABLE>

CONSOLIDATED STATEMENT OF RETAINED EARNINGS (in millions of US$)

<TABLE>
<CAPTION>
Year ended December 31                                    2000        1999       1998
                                                        --------    --------   --------
<S>                                                      <C>         <C>        <C>
Retained earnings - beginning of year                   $  4,227    $  4,078   $  3,862
Net income                                                   618         460        399
                                                        --------    --------   --------
                                                           4,845       4,538      4,261
Amount related to common shares purchased
   for cancellation                                          400         171         37
Dividends   - Common                                         145         131        136
            - Preference                                      10           9         10
                                                        --------    --------   --------
Retained earnings - end of year (note 15)               $  4,290    $  4,227   $  4,078
                                                        ========    ========   ========
</TABLE>
<PAGE>   53

                                                                 48 > Alcan Inc.
CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)


Consolidated Balance Sheet (in millions of US$)

<TABLE>
<CAPTION>

December 31                                     2000        1999         1998
                                              -------     --------      -------
<S>                                           <C>         <C>          <C>
ASSETS

CURRENT ASSETS

Cash and time deposits                        $   261      $   315      $   615
Receivables (net of allowances of
  $55 in 2000, $31 in 1999, $43 in 1998)       2,280        1,299        1,401

Inventories
     Aluminium operating segmente
          - Aluminum                            1,034          709          826
          - Raw materials                         414          294          345
          - Other supplies                        268          188          242
                                              -------      -------      -------
                                                1,716        1,191        1,413
     Packaging operating segment                  399           85           --
                                              -------      -------      -------
                                                2,115        1,276        1,413
                                              -------      -------      -------
                                                4,656        2,890        3,429
                                              =======      =======      =======
Deferred charges and other assets (note 8)        719          525          575
Property, plant and equipment (note 9)
     Cost (excluding construction work
          in progress)                         14,807       11,771       11,758
     Construction work in progress              1,979        1,220          911
     Accumulated depreciation                   6,753        6,557        6,772
                                              -------      -------      -------
                                               10,033        6,434        5,897
                                              -------      -------      -------
Intangible assets, net of accumulated
  amortization (note 9)                           330           --           --
Goodwill, net of accumulated
  amortization (notes 3 and 9)                  2,669           --           --
                                              -------      -------      -------
Total assets                                  $18,407      $ 9,849      $ 9,901
                                              =======      =======      =======

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Payables                                      $ 2,427      $ 1,268       $ 1,132
Short-term borrowings                           1,080          167            86
Debt maturing within one year (note 12)           333          311           166
                                              -------      -------       -------
                                              $ 3,840      $ 1,746       $ 1,384
                                              =======      =======       =======

Debt not maturing within one year
  (notes 12 and 17)                             3,195        1,011         1,537
Deferred credits and other liabilities
  (note 11)                                       874          563           604
Deferred income taxes (note 6)                  1,227          781           747
Minority interests                                244          207           110
SHAREHOLDERS' EQUITY
Redeemable non-retractable preference
  shares (note 13)                                160          160           160
Common shareholders' equity
     Common shares (note 14)                    4,597        1,230         1,251
     Retained earnings (note 15)                4,290        4,227         4,078
     Deferred translation adjustments
       (note 16)                                  (20)         (76)           30
                                              -------      -------       -------
                                                8,867        5,381         5,359
                                              -------      -------       -------
                                                9,027        5,541         5,519
                                              =======      =======       =======
Commitments and Contingencies
  (note 18)
TOTAL LIABILITIES AND SHAREHOLDERS'
  EQUITY                                      $18,407      $ 9,849       $ 9,901
                                              =======      =======       =======

</TABLE>

Approved by the Board:


/s/ W. R. C. Blundell,                       /s/ Guy Saint-Pierre
---------------------------                  -----------------------------
W. R. C. Blundell, Director                  Guy Saint-Pierre, Director
<PAGE>   54

49 > Alcan Inc.

CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
CONSOLIDATED STATEMENT OF CASH FLOWS (in millions of US$)
<TABLE>
<CAPTION>
Year ended December 31                                              2000       1999        1998
                                                                    ----       ----        ----
<S>                                                             <C>          <C>         <C>
OPERATING  ACTIVITIES
Net income                                                      $    618     $  460      $  399

Adjustments to determine cash from operating activities:
    Depreciation and amortization                                    561        477         462
    Deferred income taxes                                             52        110          29
    Equity (income) loss -- net of dividends                          (3)         2          53
    Change in operating working capital
        Change in receivables                                       (981)       101        (109)
        Change in inventories                                       (839)       137         (72)
        Change in payables                                         1,160       137         (18)
        Changes in operating working capital due to:
            Deferred translation adjustments                         (41)       (82)         46
            Acquisitions, disposals and
                consolidations/deconsolidations                      478        (54)         47
                                                                --------     ------      ------
                                                                    (223)       239        (106)
    Change in deferred charges, other assets, deferred
       credits and other liabilities -- net                           28        (26)       (113)
    Gain on sales of businesses -- net                                (9)      (110)       (156)
    Impairment in value of property, plant and equipment              --         --         143
    Other -- net                                                      42         30          28
                                                                --------     ------      ------
CASH FROM OPERATING ACTIVITIES                                     1,066      1,182         739
                                                                --------     ------      ------
FINANCING  ACTIVITIES
New debt                                                           1,586         13         359
Debt repayments                                                     (419)      (347)        (57)
                                                                --------     ------      ------
                                                                   1,167       (334)        302
Short-term borrowings -- net                                         280         45        (169)
Common shares purchased for cancellation                            (530)      (219)        (46)
Common shares issued                                                  21         27           9
Redemption of preference shares                                       --         --         (43)
Dividends -- Alcan shareholders (including preference)              (155)      (140)       (146)
          -- Minority interests                                       (2)        (8)         (2)
                                                                --------     ------      ------
CASH FROM (USED FOR) FINANCING ACTIVITIES                            781       (629)        (95)
                                                                --------     ------      ------
INVESTMENT ACTIVITIES
Property, plant and equipment                                     (1,491)    (1,169)       (805)
Business acquisitions                                               (244)      (129)        (72)
                                                                --------     ------      ------
                                                                  (1,735)    (1,298)       (877)
Net proceeds from disposal of businesses, investments
    and other assets                                                 184        460         221
Preaquisition loan to algroup to finance special payment
    to algroup shareholders                                         (532)        --          --
                                                                --------     ------      ------
CASH USED FOR INVESTMENT ACTIVITIES                               (2,083)      (838)       (656)
                                                                --------     ------      ------
Effect of exchange rate changes on cash and time deposits              2        (11)          2
                                                                --------     ------      ------
DECREASE IN CASH AND TIME DEPOSITS                                  (234)      (296)        (10)
Cash of companies consolidated (deconsolidated) -- net               180         (4)         17
Cash and time deposits -- beginning of year                          315        615         608
                                                                --------     ------      ------
Cash and time deposits -- end of year                           $    261     $  315      $  615
                                                                ========     ======      ======
</TABLE>
<PAGE>   55
                                                                 50 > Alcan Inc.

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

1 > NATURE OF OPERATIONS
Alcan is engaged, together with subsidiaries, joint ventures and related
companies, in most aspects of the aluminum and specialty packaging businesses on
an international scale. Its operations include the mining and processing of
bauxite, the basic aluminum ore; the refining of bauxite into alumina; the
generation of electric power for use in smelting aluminum; the smelting of
aluminum from alumina; the recycling of used and scrap aluminum; the fabrication
of aluminum, aluminum alloys and non-aluminum materials into semi-fabricated and
finished products; the producing and converting of specialty packaging and
packaging products for many industries including the food, pharmaceutical,
cosmetic and health sectors; the distribution and marketing of aluminum,
non-aluminum and packaging products; and, in connection with its aluminum
operations, the production and sale of industrial chemicals. Alcan, together
with its subsidiaries, joint ventures and related companies, has bauxite
holdings in six countries, produces alumina in five, smelts primary aluminum in
seven, operates aluminum fabricating plants in 16, has packaging facilities in
14 and has sales outlets and maintains warehouse inventories in the larger
markets of the world. Alcan also operates a global transportation network that
includes bulk cargo vessels, port facilities and freight trains.

2> SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Unless otherwise stated, these financial statements conform with generally
accepted accounting principles (GAAP) in Canada. Note 4 provides an explanation
and reconciliation of differences in Canadian and U.S. GAAP.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP in Canada and
the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

These consolidated financial statements include the accounts of subsidiaries
that are controlled by Alcan, all of which are majority owned. Joint ventures,
irrespective of percentage of ownership, are proportionately consolidated to the
extent of Alcan's participation. Companies subject to significant influence are
accounted for using the equity method. Under the equity method, Alcan's
investment is increased or decreased by Alcan's share of the undistributed net
income or loss and deferred translation adjustments since acquisition.
Investments in companies in which Alcan does not have significant influence are
accounted for using the cost method. Under the cost method, dividends received
are recorded as income.

Intercompany balances and transactions, including profits in inventories, are
eliminated.

FOREIGN CURRENCY

The financial statements of self-sustaining foreign operations (located
principally in Europe and Asia) are translated into U.S. dollars at prevailing
exchange rates. Revenues and expenses are translated at average exchange rates
for the year while assets and liabilities are translated at exchange rates in
effect at year-end. Differences arising from exchange rate changes are included
in the Deferred translation adjustments (DTA) component of Common shareholders'
equity. If there is a reduction in the Company's ownership in a foreign
operation, the relevant portion of DTA is recognized in Other income or Other
expenses at that time. All other operations, including those in Canada, are
considered to be integrated foreign operations having the U.S. dollar as the
functional currency. Under this method, monetary items are translated at current
rates and translation gains and losses are included in income except for
unrealized gains and losses arising from the translation of long-term monetary
assets and liabilities, which are deferred and amortized over the remaining
lives of the related items. Non-monetary items are translated at historical
rates.

Gains or losses on forward exchange contracts or currency options, all of
which serve to hedge certain future identifiable foreign currency exposures, are
included, together with related hedging costs, in Sales and operating revenues,
Cost of sales and operating expenses or Property, plant and equipment, as
applicable, concurrently with recognition of the underlying items being hedged.

Unrealized gains or losses on currency swaps, all of which are used to hedge
certain identifiable foreign currency debt obligations, are recorded
concurrently with the unrealized gains or losses on the debt obligations being
hedged.

Other gains and losses from foreign currency denominated items are
included in Other income or Other expenses.
<PAGE>   56
51 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
(in millions of US$, except where indicated)

2 > SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

REVENUE RECOGNITION

The Company recognizes revenue when goods are shipped or services performed and
when significant risks and benefits of ownership are transferred.

COMMODITY CONTRACTS AND OPTIONS

Gains or losses on forward metal contracts and options, all of which serve to
hedge certain future identifiable aluminum price exposures, are included,
together with related hedging costs, in Sales and operating revenues or Cost of
sales and operating expenses, as applicable, concurrently with recognition of
the underlying items being hedged.

INTEREST RATE SWAPS

Amounts receivable or payable under interest rate swaps are recorded in Interest
concurrently with the interest expense on the underlying debt.

INVENTORIES

Aluminum, raw materials, packaging products and other supplies are stated at
cost (determined for the most part on the monthly average method) or net
realizable value, whichever is lower.

CAPITALIZATION OF INTEREST COSTS

The Company capitalizes interest costs associated with the financing of major
capital expenditures.

DEPRECIATION

Depreciation is calculated on the straight-line method using rates based on the
estimated useful lives of the respective assets. The principal rates range from
2% to 10% for buildings and structures, 1% to 4% for power assets and 3% to 20%
for chemical, smelter and fabricating assets.

AMORTIZATION AND IMPAIRMENT OF GOODWILL

Goodwill is recorded at cost less accumulated amortization and is
amortized over a period of 40 years using the straight-line method of
amortization. Periodic assessments will be made to determine whether there is
permanent impairment in the remaining unamortized goodwill balance based on the
undiscounted cash flows of the underlying operations.

AMORTIZATION OF INTANGIBLE ASSETS

Intangible assets are recorded at cost less accumulated amortization and
are amortized over 15 years using the straight-line method of amortization.

ENVIRONMENTAL COSTS AND LIABILITIES

Environmental expenses are accrued when it is probable that a liability for past
events exists. For future removal and site restoration costs, provision is made
in a systematic manner by periodic charges to income, except for assets that are
no longer in use, in which case full provision is charged immediately to income.
Environmental expenses are normally included in Cost of sales and operating
expenses except for large, unusual amounts which are included in Other expenses.
Accruals related to environmental costs are included in Payables and Deferred
credits and other liabilities.

Environmental expenditures of a capital nature that extend the life, increase
the capacity or improve the safety of an asset or that mitigate or prevent
environmental contamination that has yet to occur are included in Property,
plant and equipment and are depreciated generally over the remaining useful life
of the underlying asset.
<PAGE>   57
52 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

2 > SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

POST-RETIREMENT BENEFITS OTHER THAN PENSIONS

The costs of post-retirement benefits other than pensions are recognized on an
accrual basis over the working lives of employees.

INCOME TAXES

Since 1998, the Company uses the liability method for income taxes, under which
deferred income tax liabilities are revalued for all changes in tax rates and
exchange rates. Prior to 1998, the Company used the deferral method.

CASH AND TIME DEPOSITS

All time deposits have maturities of 90 days or less and qualify as cash
equivalents.

NET INCOME PER COMMON SHARE

Net income per common share is calculated by dividing Net income  attributable
to common shareholders by the average number of common shares outstanding (2000:
248.2 million;  1999: 219.1 million;  1998: 227.4 million). Net income
attributable to common shareholders is computed by subtracting Preference
dividends from Net income.

3> COMBINATION WITH ALUSUISSE GROUP LTD

Pursuant to the combination agreement entered into between the Company and
Alusuisse Group Ltd (algroup), the shareholders of algroup, in response to the
Company's share exchange offer, tendered 6,747,707 shares, representing 99.37%
of the outstanding registered algroup shares, in exchange for 115,385,790 shares
of the Company valued at $30.11 per share. Accordingly, the combination was
completed and algroup became a subsidiary of the Company on October 17, 2000.
The Company is proceeding to acquire the remaining shares of algroup in
accordance with the provisions of Swiss law. algroup is a diversified industrial
enterprise whose activities are focused on aluminum and packaging. In addition,
the Company assumed from algroup total debt of $2,171.

The combination is accounted for using the purchase method of accounting and the
results of operations of algroup are included in the Consolidated Financial
Statements since acquisition. The purchase price was allocated in the accounts
based on the assigned fair values of the assets acquired and liabilities assumed
as follows:

FAIR VALUE OF NET ASSETS ACQUIRED

<TABLE>

<S>                                                   <C>
Cash and time deposits                                $  175
Other current assets                                   1,657
Deferred charges and other assets                        117
Capital assets                                         3,008
                                                      ------
Current liabilities                                    1,997
Long-term debt*                                        1,292
Deferred credits and other liabilities                   303
Deferred income taxes                                    467
                                                      ------
FAIR VALUE OF NET ASSETS                              $  898
                                                      ======
</TABLE>


*Includes preacquisition loan from Alcan to finance special payment to algroup
shareholders.

Determination of fair values was based on valuations performed by
independent appraisers and consultants. Allocation of the purchase price in a
major business combination necessarily involves a number of estimates as well as
the gathering of information over a number of months following the date of the
combination. This estimation process will be finalized in 2001. Accordingly,
there may be some changes to the assigned values presented above.

Net restructuring costs for plant closures estimated at $43, identified at the
time of the combination, are recognized in the purchase price allocation. These
charges are primarily for employee severance costs and are expected to be
incurred over the next two years.
<PAGE>   58
53 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

3 > COMBINATION WITH ALUSUISSE GROUP LTD (CONT'D)

The difference between the total purchase price and the net fair value of all
identifiable assets and liabilities acquired was $2,620 and is accounted for as
goodwill, which is being amortized over a period of 40 years using the
straight-line method of amortization.

CONSIDERATION

<TABLE>

<S>                                                                             <C>

Issuance of common shares (115,385,790 common shares without nominal
   or par value; average market value of $30.11 per share)                       $ 3,474

Other consideration                                                                   44
                                                                                 -------
TOTAL CONSIDERATION                                                              $ 3,518
                                                                                 =======
</TABLE>

Supplemental Pro Forma Information (in millions of US$, except per share
amounts)

The following unaudited pro forma information presents a summary of consolidated
results of operations of the Company and algroup as if the combination had
occurred on January 1, 1999. These pro forma results have been prepared for
comparative purposes only.

<TABLE>
<CAPTION>
                                                                      2000       1999
                                                                     -------    -------
<S>                                                                  <C>        <C>
Sales and operating revenues                                         $13,146    $12,388
                                                                     -------    -------
Net income before amortization of goodwill                           $   737    $   655
                                                                     -------    -------
Net income                                                           $   672    $   590
                                                                     -------    -------
Earnings per common share before amortization of goodwill            $  2.22    $  1.93
                                                                     -------    -------
Earnings per common share                                            $  2.02    $  1.74
                                                                     =======    =======
</TABLE>

4 > DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)

CURRENCY TRANSLATION

Under Canadian GAAP, unrealized exchange gains and losses on translation of
long-term monetary items are deferred and amortized over the life of those
items, whereas, under U.S. GAAP, such gains and losses are absorbed in income
immediately.

INVESTMENTS

Under U.S. GAAP, certain portfolio investments which are considered to be
"available-for-sale" securities are measured at market value, with the
unrealized gains or losses included in Comprehensive income. Under Canadian
GAAP, these investments are measured at cost.

COMPREHENSIVE INCOME

U.S. GAAP requires the disclosure of Comprehensive income which, for the
Company, is Net income under U.S. GAAP plus the movement in Deferred translation
adjustments under U.S. GAAP plus the unrealized gains or losses for the period
less gains or losses realized during the period on "available-for-sale"
securities. The concept of Comprehensive income does not exist under Canadian
GAAP.

JOINT VENTURES

Under Canadian GAAP, joint ventures are accounted for using the proportionate
consolidation method, while under U.S. GAAP, joint ventures are accounted for
under the equity method. Under an accommodation of the U.S. Securities and
Exchange Commission, accounting for joint ventures need not be reconciled from
Canadian to U.S. GAAP. The different accounting treatment affects only the
display and classification of financial statement items and not net income or
shareholders' equity. See note 7 for summarized financial information about
joint ventures.
<PAGE>   59
                                                                 54 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

4 > DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP) (CONT'D)

CONSOLIDATED STATEMENT OF INCOME

Under U.S. GAAP, separate subtotals for net income, and net income per common
share, before amortization of goodwill would not be presented.

STATEMENT OF CASH FLOWS

Under U.S. GAAP, separate subtotals within operating, financing and investment
activities would not be presented.

RECONCILIATION OF CANADIAN AND U.S. GAAP

<TABLE>
<CAPTION>
                                            2000                        1999                        1998
                                      -----------------           -----------------          ------------------
                                                  $ per                       $ per                       $ per
                                                 Common                      Common                      Common
                                        $         Share             $         Share            $          Share
                                      ---        ------           ---        ------          ---         ------
<S>                                   <C>           <C>           <C>           <C>           <C>           <C>
Net income - as reported              618                                       460          399
Differences due to:
  Foreign currency translation         (8)                                       (9)          14*
  Other                                (4)                                        4            4
                                      ---                                      ----          ---
Net income - U.S. GAAP                606          2.40           455          2.04          417           1.79
                                      ---          ----           ---          ----          ---           ----
Net income attributable to common
  shareholders - as reported          608          2.45           451          2.06          389           1.71
                                      ---          ----           ---          ----          ---           ----
Net income attributable to common
  shareholders - U.S. GAAP            596          2.40           446          2.04          407           1.79
                                      ===          ====           ===          ====          ===           ====
</TABLE>

* $13 relates to a difference in the realized exchange gain on the sale of
  shares in an equity investment.

<TABLE>
<CAPTION>
                                          2000                        1999                       1998
                                       As          U.S.            As          U.S.           As           U.S.
                                 Reported          GAAP      Reported          GAAP     Reported           GAAP
                                 --------          ----      --------          ----     --------           ----
<S>                                <C>           <C>           <C>           <C>          <C>            <C>
Deferred charges and other assets
  - December 31                    $  719        $  716        $  525        $  534       $  575         $  622
Deferred income taxes
  - December 31                    $1,227        $1,231        $  781        $  781       $  747          $ 747
Retained earnings
  - December 31                    $4,290        $4,324        $4,227        $4,273       $4,078         $4,129
Deferred  translation
  adjustments (DTA)
  - December 31                    $  (20)       $  (76)       $  (76)       $ (132)      $   30         $  (24)
 </TABLE>

<TABLE>
<CAPTION>

                                                                               2000         1999           1998
                                                                               ----         ----           ----
<S>                                                                            <C>         <C>             <C>
COMPREHENSIVE INCOME (U.S. GAAP ONLY)
Net income                                                                     $606        $ 455           $417
Net change in deferred translation adjustments*                                  56         (108)           (27)
Net change in market value of available-for-sale securities*                     (4)         (26)            45
                                                                               ----        -----           ----
Comprehensive income                                                           $658        $ 321           $435
                                                                               ====        =====           ====
</TABLE>

* In 1999, $8 of deferred translation adjustments and $24 of the excess of
  market value over book value of available-for-sale securities were transferred
  to net income ($41 and nil, respectively in 1998).
<PAGE>   60
55 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

4 > DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP) (CONT'D)

Reconciliation of Canadian and U.S. GAAP (cont'd)
<TABLE>
<CAPTION>
                                                                                      2000        1999        1998
                                                                                    -------     -------      ------
<S>                                                                                   <C>         <C>         <C>
ACCUMULATED OTHER COMPREHENSIVE INCOME (U.S. GAAP ONLY)
Accumulated other comprehensive income -- beginning of year                          $(113)      $  21        $  3
Change in deferred translation adjustments                                              56        (108)        (27)
Change in excess of market value over book value of available-for-sale securities       (4)        (26)         45
                                                                                    -------     -------      ------
Accumulated other comprehensive income -- end of year                                $ (61)      $(113)       $ 21
                                                                                    =======     =======      ======
</TABLE>

The difference between DTA under Canadian GAAP and U.S. GAAP arises from the
different treatment of exchange on long-term debt at January 1, 1983, resulting
from the adoption of accounting standards on foreign currency translation.

5 > REORGANIZATION COSTS

In 2000, the Company announced the closure of the Rogerstone Foil operations in
the U.K. by the end of June 2001 due to adverse market conditions. This closure
will result in a reduction of approximately 220 employees. As a result, the
Company has incurred $25 for closure costs which are included in Other expenses.
At December 31, 2000, there remains approximately $12 of accrued liabilities.

Included in Other expenses in 2000 are other asset write-offs and restructuring
costs totalling $28. Restructuring costs relating to the merger with algroup are
described in note 3.

In 1999, the Company undertook a reorganization which included the
implementation of a number of early retirement and severance programs resulting
in a reduction of approximately 570 employees in the Company's workforce. As a
result of this reorganization and other restructuring programs, the Company
incurred costs of $49 in 1999 which were included in Other expenses. At December
31, 2000, there remains approximately $15 of accrued liabilities.

6 > INCOME TAXES

<TABLE>
<CAPTION>
                                                                                      2000        1999        1998
                                                                                    -------     -------      ------
<S>                                                                                   <C>         <C>         <C>
INCOME BEFORE INCOME TAXES AND OTHER ITEMS
Canada                                                                               $ 428       $ 174       $ 175
Other countries                                                                        455         512         478
                                                                                    -------     -------      ------
                                                                                     $ 883       $ 686       $ 653
                                                                                    -------     -------      ------
CURRENT INCOME TAXES
Canada                                                                               $  19       $ (78)      $  65
Other countries                                                                        183         179         116
                                                                                    -------     -------      ------
                                                                                       202         101         181
                                                                                    -------     -------      ------
DEFERRED INCOME TAXES
Canada                                                                                  25          48         (22)
Other countries                                                                         27          62          51
                                                                                    -------     -------      ------
                                                                                        52         110          29
                                                                                    -------     -------      ------
INCOME TAX PROVISION                                                                 $ 254       $ 211       $ 210
                                                                                    =======     =======      ======
</TABLE>
<PAGE>   61
                                                                 56 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

6 > INCOME TAXES (CONT'D)

The composite of the applicable statutory corporate income tax rates in Canada
is 40.2% (1999: 40.4%; 1998: 40.4%). The following is a reconciliation of income
taxes calculated at the above composite statutory rates with the income tax
provision:

<TABLE>
<CAPTION>

                                                                                    2000        1999        1998
                                                                                   -----       -----       -----
<S>                                                                                <C>         <C>         <C>
Income taxes at the composite statutory rate                                       $ 355        $ 277      $ 264
Differences attributable to:
  Exchange translation items                                                           7          (12)        46
  Exchange revaluation of deferred income taxes                                      (18)          26        (31)
  Effect of tax rate changes on deferred income taxes                                (20)          --         (4)
  Unrecorded tax benefits on losses - net                                            (19)          (1)        (3)
  Investment and other allowances                                                    (38)         (29)       (21)
  Large corporations tax                                                               6            5          4
  Withholding taxes                                                                    9            7          5
  Reduced rate or tax exempt items                                                   (12)         (31)       (47)
  Foreign tax rate differences                                                         7           (4)       (16)
  Prior years' tax adjustments                                                       (40)         (40)         3
  Other - net                                                                         17           13         10
                                                                                   -----        -----      -----
INCOME TAX PROVISION                                                               $ 254        $ 211      $ 210
                                                                                   =====        =====      =====
</TABLE>

At December 31, the principal items included in Deferred income taxes are:

<TABLE>
<CAPTION>

                                                                                   2000          1999       1998
                                                                                 -------       ------      -----
<S>                                                                              <C>           <C>         <C>
LIABILITIES:
Property, plant, equipment and intangibles                                        $1,291        $ 796      $ 773
Undistributed earnings                                                                34           29         28
Inventory valuation                                                                   80           47         49
Other - net                                                                          166           83         56
                                                                                 -------       ------      -----
                                                                                   1,571          955        906
                                                                                 =======       ======      =====

ASSETS:

Tax benefit carryovers                                                               326          105        103
Accounting provisions not currently deductible for tax                               220          173        167
                                                                                 -------       ------      -----
                                                                                     546          278        270
VALUATION ALLOWANCE (AMOUNT NOT LIKELY TO BE RECOVERED)                              202          104        111
                                                                                 -------       ------      -----
                                                                                     344          174        159
                                                                                 -------       ------      -----
NET DEFERRED INCOME TAX LIABILITY                                                 $1,227        $ 781      $ 747
                                                                                 =======       ======      =====
</TABLE>

The valuation allowance relates principally to loss carryforward benefits and
tax credits where realization is not likely due to uncertain economic conditions
in certain countries, principally Brazil and South Korea, as well as time and
other limitations in the tax legislation giving rise to the potential benefits.
In 2000, $4 ($13 in 1999) of the valuation allowance was reversed when it became
more likely than not that benefits would be realized due to higher than expected
taxable income in the United States.

Based on rates of exchange at December 31, 2000, tax benefits of approximately
$127 relating to prior and current years' operating losses and $32 of benefits
related to capital losses and tax credits carried forward will be recognized in
income when it is more likely than not that such benefits will be realized.
These amounts are included in the valuation allowance above. Approximately $20
of these potential tax benefits expire in 2001.

In 1997, income taxes on Canadian operations for the years 1988 to 1991 were
reassessed by the Canadian tax authorities. Most of the additional taxes and
interest related to transfer pricing issues and are recoverable in other
countries. The process to obtain recoveries from other countries is under way.
During 1999, the Canadian tax authorities indicated their intention not to
proceed with the reassessments made in 1997 in respect of the years 1988 and
1989. As a result of these favourable prior year tax adjustments, in 1999 the
Company received a total of $108 from the Canadian tax authorities and the
Company's 1999 income tax provision has been reduced by $31, of which $18
relates to interest. In 2000, certain provinces decided not to proceed with the
reassessments pertaining to 1988 and 1989. As a result of this and other
adjustments, the Company recorded $32 of tax recoveries. See note 21.
<PAGE>   62
                                                                 57 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

7 > JOINT VENTURES

The activities of the Company's major joint ventures are the procurement and
processing of bauxite in Australia, Brazil, Guinea and Jamaica, smelting
operations in Norway, as well as aluminum rolling operations in Germany and the
United States.

Alcan's proportionate interest in all joint ventures is included
in the consolidated financial statements. Summarized financial information
relating to Alcan's share of these joint ventures is provided below.


Because most of the activities of the Company's joint ventures results in the
supplying of materials to other operations of the Company, third-party revenues,
and related costs and expenses attributable to the Company's participation in
these joint ventures is insignificant. Accordingly, summarized income statement
information as well as cash flow from operating activities would not provide
meaningful information.

<TABLE>
<CAPTION>

                                                                     2000        1999       1998
                                                                  -------     -------     ------
<S>                                                               <C>         <C>         <C>
FINANCIAL POSITION AT DECEMBER 31
Inventories                                                       $   113     $   103     $  174
Property, plant and equipment -- net                                  768         688        959
Other assets                                                          103          90        101
                                                                  -------     -------     ------
Total assets                                                      $   984     $   881     $1,234
                                                                  -------     -------     ------
Short-term debt                                                   $    28     $    27     $   19
Debt not maturing within one year                                     106         117        123
Other liabilities                                                     208         150        167
                                                                  -------     -------     ------
Total liabilities                                                 $   342     $   294     $  309
                                                                  -------     -------     ------
CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31
Cash from (used for) financing activities                         $   (17)    $     2     $   (1)
Cash used for investment activities                               $   (57)    $   (61)    $  (85)
                                                                  =======     =======     ======
</TABLE>

8 > DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets comprise the following elements:

<TABLE>
<CAPTION>
                                                                     2000        1999       1998
                                                                  -------     -------     ------
<S>                                                               <C>         <C>         <C>
Prepaid pension costs                                             $   284     $   189     $  171
Income taxes recoverable                                               52          59        116
Marketable securities                                                  44          53         38
Prepaid mining expenses                                                60          62         44
Investments                                                            50          32         58
Costs related to combination (note 3)                                  --          20         --
Net assets held for disposal                                           70          --         --
Premiums on currency and metal options                                  1          10         39
Unamortized exchange losses                                            18          10         --
Amount receivable on currency swap of debt                             16           6         25
Long-term notes and other receivables                                  60          30         21
Other                                                                  64          54         63
                                                                  -------     -------     ------
                                                                  $   719     $   525     $  575
                                                                  =======     =======     ======
</TABLE>

INVESTMENTS
<TABLE>
<CAPTION>
                                                                     2000        1999       1998
                                                                  -------     -------     ------
<S>                                                               <C>         <C>         <C>
Companies accounted for under the equity method                   $    19     $    11     $   13
Portfolio investments -- at cost, less amounts written off             31          21         45
                                                                  -------     -------     ------
                                                                  $    50     $    32     $   58
                                                                  =======     =======     ======
</TABLE>
<PAGE>   63
                                                                 58 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

8 > DEFERRED CHARGES AND OTHER ASSETS (CONT'D)

INVESTMENTS (cont'd)

As described in note 10, in 2000 the Company sold its interest in Indian
Aluminium Company, Limited (Indal). In 1998 the Company had acquired a
controlling interest in Indal, the accounts of which were consolidated with
those of the Company, until Indal was sold in 2000. Prior to 1998 Indal was
treated as an equity investment. Also in 1998, Nippon Light Metal Company, Ltd.
(NLM) ceased to be an equity investment and became a portfolio investment. See
note 10.

For 1998, the combined results of operations, shown below, include information
for NLM and Indal to the dates these entities ceased to be equity accounted
investments.

In 1998, the Company recorded a special after-tax charge of $27 included in
Equity loss, reflecting the Company's share of construction contract losses and
restructuring provisions in NLM.

<TABLE>
<S>                                                                                                          <C>
                                                                                                             1998
                                                                                                            ------

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31

Revenues                                                                                                   $ 3,626
Costs and expenses                                                                                           3,719
                                                                                                            ------
Loss before income taxes                                                                                       (93)
Income taxes                                                                                                    12
                                                                                                            ------
Net loss                                                                                                    $ (105)
                                                                                                            ------
Alcan's share of Net loss                                                                                   $  (48)
                                                                                                            ------
Dividends received by Alcan                                                                                 $    5
                                                                                                            ======
</TABLE>

9 > CAPITAL ASSETS

PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<S>                                                           <C>                   <C>                     <C>
                                                               2000                  1999                    1998
                                                              -------              -------                 -------
COST (EXCLUDING CONSTRUCTION WORK IN PROGRESS)
Land and property rights                                      $   366              $   220                 $   236
Buildings, machinery and equipment                             14,441               11,551                  11,522
                                                              -------              -------                 -------
                                                              $14,807              $11,771                 $11,758
                                                              =======              =======                 =======
</TABLE>

Accumulated depreciation relates primarily to Buildings, machinery and
equipment.

In 1999, the Company completed the sale of a property in the United Kingdom for
a gain of $19 included in Other income. In early 1999, the Company sold the
Aughinish alumina refinery. Negotiations for the sale began in late 1998 and, as
a result of that process, the Company determined that the value of these assets
was impaired as at December 31, 1998. In 1998, a charge of $143 reflecting the
impairment was included in Other expenses. Excluding the impairment charge,
these assets contributed approximately $27 of income before taxes in 1998.

On an ongoing basis, capital expenditures of the Company are estimated at $750
per year. In addition, the Company expects to spend approximately $300 in 2001
on the completion of the new smelter at Alma, Quebec.

INTANGIBLE ASSETS

<TABLE>
<S>                                                           <C>                   <C>                     <C>
                                                               2000                  1999                    1998
                                                              -------              -------                 -------
Cost                                                          $   335              $    --                 $    --
Accumulated amortization                                            5                   --                      --
                                                              -------              -------                 -------
                                                              $   330              $    --                 $    --
                                                              =======              =======                 =======
</TABLE>

Intangible assets are primarily trademarks and patented and non-patented
technology.

GOODWILL

<TABLE>
<S>                                                           <C>                   <C>                     <C>
                                                               2000                  1999                    1998
                                                              -------              -------                 -------
Cost                                                          $ 2,686              $    --                 $    --
Accumulated amortization                                           17                   --                      --
                                                              -------              -------                 -------
                                                              $ 2,669              $    --                 $    --
                                                              =======              =======                 =======
</TABLE>
<PAGE>   64
59 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

10 >  SALES AND ACQUISITIONS OF BUSINESSES AND INVESTMENTS

     JAPAN

     In 1999, the Company sold a portion of its investment in Nippon Light Metal
     Company, Ltd. (NLM), reducing its holdings to 5.1%, for net cash proceeds
     of $38. Included in Other income is a gain of $37 ($37 after tax). The
     after-tax gain includes a previously deferred gain of $17 related to the
     sale in 1996 of Toyo Aluminium K.K. (Toyal) to NLM.

     In 1998, the Company reduced its 45.6% investment in NLM to 11.2%. The net
     cash proceeds from the sale of shares were approximately $193 with a
     corresponding gain, included in Other income, of approximately $146 ($140
     after tax), including a previously deferred gain of $87 after tax related
     to the sale in 1996 of Toyal to NLM.

     INDIA

     In 2000, the Company sold its 54.6% interest in Indian Aluminium Company,
     Limited (Indal) to Hindalco Industries Limited (Hindalco). Net proceeds
     from the sale were $162 resulting in a gain of $3, included in Other
     income.

     EUROPE

     In 1999, the Company completed the sale of the Aughinish alumina refinery
     in Ireland. The net book value of the assets sold had been written down to
     net realizable value in 1998 in anticipation of completion of the sale in
     1999. The write-down in 1998 of $143 was included in Other expenses. In
     1999, the Company completed the sale of businesses in Germany and France
     for gains of $44 and $8, respectively, included in Other income.

     SOUTH KOREA

     In 2000, the Company's subsidiary, Alcan Taihan Aluminum Limited (ATA),
     acquired a 95% interest in Aluminium of Korea Limited for $200 in cash and
     the assumption of $114 of debt. As a result of the transaction, the Company
     owns 68% of ATA.

     Included in the Company's balance sheet at the date of acquisition were the
     following assets and liabilities:

<TABLE>
     <S>                                           <C>
     Working capital                               $  (2)
     Property, plant and equipment                   347
     Other assets -- net                              (4)
                                                   -----
                                                     341
     Long-term debt                                   77
     Minority interest                                64
                                                   -----
     Net assets                                    $ 200
                                                   =====
</TABLE>

     In 1999, the Company purchased a 56% interest in ATA, a newly created
     company based in South Korea. Total cash consideration paid by the Company
     for its equity interest was $129. In addition, the Company assumed total
     debt of $58.

     Included in the Company's balance sheet at the date of acquisition were the
     following assets and liabilities:

<TABLE>
     <S>                                           <C>
     Working capital                               $ (19)
     Property, plant and equipment                   237
     Other assets -- net                               1
                                                   -----
                                                     219
     Long-term debt                                    2
     Minority interest                                88
                                                   -----
     Net assets                                    $ 129
                                                   =====
</TABLE>

11 > DEFERRED CREDITS AND OTHER LIABILITIES

     Deferred credits and other liabilities comprise the following elements:

<TABLE>
<CAPTION>
                                                    2000        1999        1998
                                                    ----        ----        ----
     <S>                                           <C>         <C>          <C>
     Deferred revenues                             $  37       $  43        $ 56
     Post-retirement and post-employment benefits    539         378         395
     Environmental liabilities                        91          44          40
     Rationalization costs                            23          36          23
     Claims                                           43          39          43
     Amount payable for metal and
     currency forward contracts                       41          --          --
     Other                                           100          23          47
                                                   -----       -----       -----
                                                   $ 874       $ 563       $ 604
                                                   =====       =====       =====

</TABLE>
<PAGE>   65
                                                                 60 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

12 > DEBT NOT MATURING WITHIN ONE YEAR

<TABLE>
<CAPTION>
                                                                  2000                 1999                 1998
                                                                 -------              -------              -------
<S>                                                              <C>                  <C>                 <C>
ALCAN INC. (FORMERLY ALCAN ALUMINIUM LIMITED)
Commercial paper -- CAN$ (a)                                     $   897              $    --             $     --
Commercial paper -- US$ (a)                                          578                   --                   --
Long-term credit facilities (a)                                      250                   --                   --
Deutschmark bank loans, due 2001/2005 (DM298 million) (b)            142                  175                  218
5.875% Debentures                                                     --                  150                  150
5.375% Swiss franc bonds, due 2003 (c)                               109                  111                  130

CARIFA loan, due 2006 (d)                                             60                   60                   60
6.25% Debentures, due 2008                                           200                  200                  200
9.5% Debentures (e)                                                   --                  100                  100
9.625% Sinking fund debentures, due 2019 (e)                          --                   18                  150
8.875% Debentures, due 2022 (f)                                      150                  150                  150
7.25% Debentures, due 2028                                           100                  100                  100
Other debt, due 2001                                                   7                    7                    7

ALCAN ALUMINUM CORPORATION
7.25% Debentures                                                      --                   --                  100
Other debt, due 2001/2004                                              1                    2                    2

ALCAN DEUTSCHLAND GMBH AND SUBSIDIARY COMPANIES
5.65% Bank loans, due 2001 (DM15 million)                              7                    8                    9
5.06% Bank loans, due 2004 (DM25 million)                             12                   --                   --
Bank loans, due 2008/2013 (DM16 million) (b)                           8                    8                   64

QUEENSLAND ALUMINA LIMITED
Bank loans, due 2001/2003 (b)                                         77                   70                   78
Other debt                                                            --                    9                   --

ALUSUISSE GROUP AG
6.75% Swiss franc bond, due 2001 (CHF150 million)                     92                   --                   --
4.5% Bank loan, due 2002 (CHF100 million)                             61                   --                   --

ALUSUISSE FINANCE LTD.
Euro Medium Term Note Program (EMTN)
     EMTN, due 2002 (Euro400 million) (g)                            372                   --                   --
     EMTN, due 2008 (DM25 million) (g)                                12                   --                   --
     EMTN, due 2008 (DM16 million) (g)                                 8                   --                   --

ALA (NEVADA) INC.
7.1% Bank loan, due 2001                                              60                   --                   --
0.5% EMTN, due 2001                                                   33                   --                   --

ALUSUISSE CANADA INC.
5.69% Bank loan, due 2003                                             35                   --                   --
6.24% Bank loan, due 2004                                             30                   --                   --

SWISS ALUMINIUM AUSTRALIA LTD.
Bank loans, due 2001 (AUD111 million) (b)                             62                   --                   --

OTHER
Bank loans, due 2001/2011 (b)                                         86                  117                  140
4% Eurodollar, due 2003 (h)                                           14                   14                   14
Other debt, due 2001/2011                                             65                   23                   31
                                                                 -------              -------              -------
                                                                   3,528                1,322                1,703
Debt maturing within one year included in current liabilities       (333)                (311)                (166)
                                                                 -------              -------              -------
                                                                 $ 3,195              $ 1,011              $ 1,537
                                                                 =======              =======              =======
</TABLE>
<PAGE>   66
61 >  Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

12 > DEBT NOT MATURING WITHIN ONE YEAR (cont'd)

     (a)  The Company has two long-term global, multi-year and multi-currency
          facilities with a syndicate of major international banks amounting to
          $1,000 and $1,750. The facilities expire in tranches at various dates
          in 2001, 2005 and 2006.

          At December 31, 2000, $250 had been borrowed under these facilities at
          market rates. These facilities are also available as back-up for
          commercial paper issued by the Company in Canada and the U.S. at
          market rates.

          At December 31, 2000, the entire amount of commercial paper borrowings
          as well as the $250 borrowed under the above facilities has been
          classified as debt not maturing within one year since the Company has
          both the intent and ability, through its long-term credit facilities,
          to refinance the borrowings on a long-term basis.

          Commercial paper borrowings of principal amount $518 with a rate tied
          to U.S. LIBOR have been swapped for CHF920 million with a rate tied to
          CHF LIBOR for the period to February 2001. Commercial paper borrowings
          of principal amount CAN$1,368 million have been swapped for $894
          through the use of forward exchange contracts.

     (b)  Interest rates fluctuate principally with the lender's prime
          commercial rate, the commercial bank bill rate, or are tied to LIBOR
          rates.

     (c)  The Swiss franc bonds were issued as CHF178 million and were swapped
          for $105 at an effective interest rate of 8.98%.

     (d)  The Caribbean Basin Projects Financing Authority (CARIFA) loan bears
          interest at a rate related to U.S. LIBOR.

     (e)  In 2000, $18 ($132 in 1999) of the 9.625% debentures were redeemed at
          face value (104.64% in 1999). The 1999 loss on redemption of $6 was
          included in Other expenses. The 9.5% debentures were redeemed in
          January 2000 at a price of 104.64%. The loss on redemption of $3 was
          included in Other expenses in 2000.

     (f)  The Company has the right to redeem the debentures during the years
          2002 to 2012 at amounts declining from 104% to 100% of the principal
          amount.

     (g)  The EMTN notes of principal amounts of Euro400 million, DM25 million
          and DM16 million with rates tied to EURIBOR or LIBOR have been swapped
          for CHF608 million, (pound)9 million and (pound) 5 million,
          respectively.

     (h)  Debenture holders are entitled to receive at their option 1,772 common
          shares held by the Company in NLM, a portfolio investment, in exchange
          for each ten thousand dollar principal amount of debentures. The
          Company can redeem the debentures at 100% of the principal.

     The Company has swapped, to 2001 and 2002, the interest payments on $79 and
     $61, respectively, of its floating rate debt in exchange for fixed interest
     payments.

     Based on rates of exchange at year-end, debt repayment requirements over
     the next five years amount to $333 in 2001, $524 in 2002, $241 in 2003, $88
     in 2004 and $24 in 2005.
<PAGE>   67
                                                                 62 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

13 > PREFERENCE SHARES

     AUTHORIZED

     An unlimited number of preference shares issuable in series. All shares are
     without nominal or par value.

     AUTHORIZED AND OUTSTANDING

     In each of the years 2000, 1999 and 1998, there were authorized and
     outstanding 5,700,000 series C and 3,000,000 series E redeemable
     non-retractable preference shares with stated values of $106 and $54,
     respectively.

     The 1,700,000 series D redeemable non-retractable preference shares with
     stated value of $43, authorized and outstanding throughout 1997, were
     redeemed in June 1998.

     Preference shares, series C and E are eligible for quarterly dividends
     based on an amount related to the average of the Canadian prime interest
     rates quoted by two major Canadian banks for stated periods.

     Preference shares, series C and E may be called for redemption at the
     option of the Company on 30 days' notice at CAN$25.00 per share.

     Any partial redemption of preference shares must be made on a pro rata
     basis or by lot.

14 > COMMON SHARES

     The authorized common share capital is an unlimited number of common shares
     without nominal or par value. Changes in outstanding common shares are
     summarized below:

<TABLE>
<CAPTION>
                                                               NUMBER (in thousands)             STATED VALUE
                                                            2000      1999      1998       2000        1999      1998
                                                          -------   -------   -------    --------    --------  --------
    <S>                                                  <C>        <C>       <C>        <C>        <C>       <C>
     OUTSTANDING -- BEGINNING OF YEAR                     218,315   226,003   227,344    $  1,230    $  1,251   $ 1,251
     ISSUED FOR CASH:
     Executive share option plan                              521       886       135          13          19         2
     Dividend reinvestment and share purchase plans           237       271       254           8           8         7

     ISSUED IN EXCHANGE FOR TENDERED ALGROUP SHARES       115,446*       --        --       3,476          --        --
     PURCHASED FOR CANCELLATION                           (16,598)   (8,845)   (1,730)**     (130)        (48)       (9)
                                                          -------   -------   -------    --------    --------    ------
     OUTSTANDING -- END OF YEAR                           317,921   218,315   226,003    $  4,597    $  1,230   $ 1,251*
                                                          =======   =======   =======    ========    ========   =======
</TABLE>

*    115,386 shares were tendered in response to the Company's share exchange
     offer; 60 shares were tendered after the Company's share exchange offer.

**   1,645 were cancelled in 1998 and 85 in 1999.

     Under the executive share option plan, certain employees may purchase
     common shares at market value on the effective date of the grant of each
     option. The vesting period for options granted beginning in 1998 is linked
     to Alcan's share price performance, but does not exceed nine years. Options
     granted before 1998 vest generally over a fixed period of four years from
     the grant date and expire at various dates during the next 10 years.
     Changes in the number of shares under option as well as average exercise
     price are summarized below:

<TABLE>
<CAPTION>
                                                         AVERAGE EXERCISE PRICE (CAN$)         NUMBER (IN THOUSANDS)
                                                         2000        1999        1998       2000        1999      1998
                                                        ------      ------      ------     ------       -----     -----
     <S>                                                <C>         <C>         <C>        <C>          <C>       <C>
     OUTSTANDING -- BEGINNING OF YEAR                   $40.91      $38.16      $38.64      5,472       5,156     4,193
     Granted                                            $46.52      $45.41      $34.91      2,422       1,315     1,122
     Exercised                                          $35.75      $32.76      $26.96       (521)       (886)     (135)
     Cancelled                                          $31.37      $31.80      $33.23        (47)       (113)      (24)
                                                        ------      ------      ------      -----       -----     -----
     OUTSTANDING -- END OF YEAR                         $43.20      $40.91      $38.16      7,326       5,472     5,156
                                                        ======      ======      ======      =====       =====     =====
</TABLE>
<PAGE>   68
                                                                 63 > Alcan Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

14 > COMMON SHARES (cont'd)

RANGE OF EXERCISE PRICES FOR OPTIONS OUTSTANDING AT DECEMBER 31, 2000

<TABLE>
<CAPTION>

RANGE OF EXERCISE PRICES (CAN$)     NUMBER OF OPTIONS (in thousands)
----- -- -------- ------ ------     ------ -- ------- --- ----------
<S>                                 <C>
       $21.94 - $34.00                              290
       $34.01 - $40.00                            1,200
       $40.01 - $46.00                            2,357
       $46.01 - $48.98                            3,479
                                                  -----
                                                  7,326
                                                  =====
</TABLE>

At December 31, 2000, approximately 4,913,000 of outstanding options with an
average exercise price of CAN$41.56 were vested.

During 1998, the Company also granted 774,700 options, which grants become
effective, subject to certain restrictions, upon the exercise of options
previously granted.

Upon consummation of the combination with Alusuisse Group Ltd, described in note
3, all options granted under the Company's executive share option plan prior to
the consummation were vested.

At December 31, 2000, the Company had reserved for issue under the executive
share option plan 17,858,854 shares.

The Company does not recognize compensation expense for options granted under
the executive share option plan. If the Company had elected to recognize
compensation expense for these options in accordance with the methodology
prescribed by Statement No. 123 of the U.S. Financial Accounting Standards Board
(FASB), net income would have been lower by $29, or $0.12 per share ($13, or
$0.06 per share, in 1999 and $9, or $0.04 per share, in 1998).

The FASB provides the choice of either recognizing the compensation expense in
the financial statements or disclosing it in the notes to the financial
statements. To compute the notional compensation expense, the Black-Scholes
valuation model was used to determine the fair value of the options granted.
Using the model, the fair value of options averages approximately 31% to 35% of
the exercise price.

In June 2000, the Company obtained authorization to repurchase, within a 12
month period, up to 21,800,000 common shares under a normal course issuer bid.
During 2000, 16,598,100 common shares were purchased and cancelled at a cost of
$530.

In 1999, 8,845,000 common shares for an amount of $219 were purchased and
cancelled under a previous authorization (1998: 1,730,000 common shares for an
amount of $46).


SHAREHOLDER RIGHTS PLAN

In 1990, shareholders approved a plan whereby each common share of the Company
carries one right to purchase additional common shares. The plan, with certain
amendments, was reconfirmed at the 1995 Annual Meeting and further amendments
were approved at the 1999 Annual Meeting. The rights under the plan are not
currently exercisable but may become so upon the acquisition by a person or
group of affiliated or associated persons ("Acquiring Person") of beneficial
ownership of 20% or more of the Company's outstanding voting shares or upon the
commencement of a takeover bid. Holders of rights, with the exception of an
Acquiring Person, in such circumstances will be entitled to purchase from the
Company, upon payment of the exercise price (currently $100.00), such number of
additional common shares as can be purchased for twice the exercise price based
on the market value of the Company's common shares at the time the rights become
exercisable.

The plan has a permitted bid feature which allows a takeover bid to proceed
without the rights under the plan becoming exercisable, provided that it meets
certain minimum specified standards of fairness and disclosure, even if the
Board does not support the bid.

The plan expires in 2008, subject to reconfirmation at the Annual Meeting of
Shareholders in 2002 and 2005 but may be redeemed earlier by the Board, with the
prior consent of the holders of rights or common shares, for $0.01 per right. In
addition, should a person or group of persons acquire outstanding voting shares
pursuant to a permitted bid or a share acquisition in respect of which the Board
has waived the application of the plan, the Board shall be deemed to have
elected to redeem the rights at $0.01 per right.
<PAGE>   69
64 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

15 > RETAINED EARNINGS

     Consolidated retained earnings at December 31, 2000, include $3,118 of
     undistributed earnings of subsidiaries and joint ventures, some part of
     which may be subject to certain taxes and other restrictions on
     distribution to the parent company; no provision is made for such taxes
     because these earnings are reinvested in the businesses.

16 > CURRENCY GAINS AND LOSSES

     The following are the amounts recognized in the financial statements:

<TABLE>
<CAPTION>
                                                       2000      1999     1998
                                                       ----     -----     ----
<S>                                                    <C>      <C>       <C>

     CURRENCY GAINS (LOSSES) EXCLUDING REALIZED
       DEFERRED TRANSLATION ADJUSTMENTS:
     Forward exchange contracts and currency options   $ 34     $ (23)    $(58)
     Other                                               (2)      (15)       4
                                                       ----     -----     ----
                                                       $ 32     $ (38)    $(54)
                                                       ----     -----     ----
     DEFERRED TRANSLATION ADJUSTMENTS --
       BEGINNING OF YEAR                               $(76)    $  30     $ 43
     Effect of exchange rate changes                      9      (100)      28
     Losses (Gains) realized*                            47        (6)     (41)
                                                       ----     -----     ----
     BALANCE -- END OF YEAR                            $(20)    $ (76)    $ 30
                                                       ====     =====     ====

</TABLE>

*    The loss realized in 2000 relates principally to the sale
     of the company's investment in Indian Aluminium Company, Limited. The gains
     realized in 1999 and 1998 relate principally to the sale of a portion of
     the Company's Investment in Nippon Light Metal Company, Ltd.

     In 2000, $26 ($25 in 1999 and $5 in 1998) of exchange losses, related to
     hedging of Canadian dollar construction costs of the new smelter at Alma,
     Quebec, are included in Construction work in progress.

17 > FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS

     In conducting its business, the Company uses various instruments, including
     forward contracts and options, to manage the risks arising from
     fluctuations in exchange rates, interest rates and aluminum prices. All
     such instruments are used for risk management purposes only.

     FINANCIAL INSTRUMENTS -- CURRENCY

     In order to hedge certain identifiable foreign currency revenue and
     operating cost exposures as well as certain capital commitments, the
     Company enters into forward exchange and option contracts.

     At December 31, 2000, the contract amount of forward exchange contracts
     outstanding used to hedge future firm net operating cash flows was $2,248
     ($507 in 1999 and $473 in 1998) while the contract amount of purchased
     options outstanding used to hedge future firm operating cost commitments
     was $58 ($199 in 1999 and $1,499 in 1998). At December 31, 2000, the
     contract amount of forward exchange contracts outstanding used to hedge
     future commitments (mainly Canadian dollar) principally for the
     construction of a new smelter at Alma, Quebec, was $212 ($490 in 1999 and
     $281 in 1998) while the contract amount of purchased options outstanding
     used to hedge the Canadian dollar commitments for the new smelter was nil
     ($55 in 1999 and $315 in 1998).

     The market value of outstanding forward exchange contracts related to
     hedges of operating costs or revenues at December 31, 2000 was such that if
     these contracts had been closed out, the Company would have received $14
     (received $29 in 1999 and paid $18 in 1998). Based on prevailing market
     prices, if the currency option contracts related to operating cost
     commitments had been closed out on December 31, 2000, the Company would
     have paid $2 (received $4 in 1999 and paid $33 in 1998). The market value
     at December 31, 2000 of outstanding forward exchange contracts related to
     hedges of cost commitments principally for the new smelter at Alma, Quebec,
     was such that if these contracts had been closed out, the Company would
     have received nil (received $8 in 1999 and paid $8 in 1998). Based on
     prevailing market prices, if the currency option contracts relating to
     smelter construction cost commitments had been closed out at December 31,
     2000, the Company would have received nil (received $1 in 1999 and paid $2
     in 1998). Unrealized gains and losses on outstanding forward contracts and
     options are not recorded in the financial statements until maturity of the
     underlying transactions.
<PAGE>   70
65 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

17 > FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS (CONT'D)

     FINANCIAL INSTRUMENTS -- CURRENCY (cont'd)

     In addition, certain intercompany foreign currency denominated loans are
     hedged through the use of forward exchange contracts. At December 31, 2000,
     the contract amount of such forward contracts was $193 ($204 in 1999 and
     $212 in 1998) and the market value was such that if these contracts had
     been closed out, the Company would have paid $3 (received nil in 1999 and
     $4 in 1998).

     Included in Deferred charges and other assets and Receivables is an amount
     of $1 ($42 in 1999 and $71 in 1998) consisting of net losses on terminated
     forward exchange contracts and options, as well as the net cost of
     outstanding options, used to hedge future costs, including costs related to
     the construction of the new smelter at Alma. These deferred charges are
     included in the cost of the items being hedged at the same time as the
     underlying transactions being hedged are recognized.

     FINANCIAL INSTRUMENTS -- DEBT NOT MATURING WITHIN ONE YEAR

     As indicated in note 12, certain of the Company's foreign currency
     denominated debts have been swapped.

     Commercial paper borrowings of principal amount of $518 with a rate tied to
     U.S. LIBOR have been swapped for CHF920 million with a rate tied to CHF
     LIBOR for the period to February 2001. If the swap had been closed out at
     December 31, 2000, the Company would have paid $48. This amount is
     recognized in the balance sheet and, because the swap is hedging an
     intercompany CHF loan, has no net income impact.

     Commercial paper borrowings of principal amount of CAN$1,368 million have
     been swapped for $894 through the use of forward exchange contracts. If the
     contracts had been closed out at December 31, 2000, the Company would have
     received $17, of which an amount of $12 related to the swap of the
     principal has been recorded in Deferred charges and other assets.

     The 5.375% Swiss franc bonds of principal amount of CHF178 million have
     been swapped for $105 at an effective interest rate of 8.98%. If the swap
     had been closed out at December 31, 2000, the Company would have received a
     net amount of $4 ($6 in 1999 and $24 in 1998) of which an amount of $4
     related to the swap of the principal ($6 in 1999 and $25 in 1998) has been
     recorded in Deferred charges and other assets.

     The Euro Medium Term Note Program notes of principal amounts of Euro400
     million, DM25 million and DM16 million, with rates tied to EURIBOR or
     LIBOR, have been swapped for CHF608 million, (pound)9 million and (pound)5
     million, respectively. If the swaps had been closed out at December 31,
     2000, the Company would have received $1.

     FINANCIAL INSTRUMENTS -- INTEREST RATES

     The Company sometimes enters into interest rate swaps to manage funding
     costs as well as the volatility of interest rates. Amounts receivable or
     payable related to swaps are recorded in Interest concurrently with the
     interest expense on the underlying debt.

     Changes in the fair value of the interest rate swaps are not recognized on
     a mark to market basis since these relate specifically to interest costs on
     identifiable debt.

     If all interest rate swap agreements had been closed out on December 31,
     2000, the Company would have received $2. There were no significant
     interest rate swap agreements outstanding at December 31, 1999 and 1998.

     COMMODITY CONTRACTS -- METAL

     Depending on supply and market conditions, as well as for logistical
     reasons, the Company may sell primary metal to third parties and may
     purchase primary and secondary aluminum on the open market to meet its
     fabricated products requirements. In addition, the Company may hedge
     certain commitments arising from pricing arrangements with some of its
     customers.

     Through the use of forward purchase and sales contracts and options, the
     Company seeks to limit the negative impact of low metal prices whilst
     retaining most of the benefit from higher metal prices.

<PAGE>   71
                                                                 66 > Alcan Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

17 > FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS (CONT'D)

     COMMODITY CONTRACTS -- METAL (cont'd)

     At December 31, 2000, the Company had outstanding forward contracts
     (principally forward purchase contracts) covering 410,650 tonnes (326,800
     tonnes at December 31, 1999 and 465,600 tonnes at December 31, 1998),
     maturing at various dates principally in 2001, 2002 and 2003 (2000, 2001
     and 2002 at December 31, 1999 and 1999, 2000 and 2001 at December 31,
     1998). In addition, the Company held call options outstanding for 175,650
     tonnes (135,500 tonnes at December 31, 1999 and 346,000 tonnes at December
     31, 1998) maturing at various dates in 2001 and 2002 (2000 and 2001 at
     December 31, 1999 and 1999 and 2000 at December 31, 1998).

     At December 31, 2000, the Company had put options outstanding for 151,000
     tonnes, maturing in 2001, 2002 and 2003 (27,300 tonnes maturing in 2000 and
     2001 at December 31, 1999 and 20,000 tonnes maturing in 1999 at December
     31, 1998).

     Included in Receivables or Deferred charges and other assets is $23 ($7 in
     1999 and $22 in 1998) representing the net cost of outstanding options.

     The option premiums paid and received, together with the realized gains or
     losses on the contracts, are included in Sales and operating revenues or
     Cost of sales and operating expenses, as applicable, concurrently with
     recognition of the underlying items being hedged.

     Based on metal prices prevailing on December 31, 2000, if all commodity
     forward purchase and sale contracts and options had been closed out, the
     Company would have received $10 (received $64 in 1999 and paid $39 in
     1998).

     OIL DERIVATIVES

     As a hedge of future oil purchases, as at December 31, 2000, the Company
     had outstanding approximately 18.1 million barrels of oil futures, maturing
     at various times in the years 2001 to 2006. Based on oil prices prevailing
     on December 31, 2000, if all these futures had been closed out, the Company
     would have paid $7.

     COUNTERPARTY RISK

     As exchange rates, interest rates and metal prices fluctuate, the above
     contracts will generate gains and losses that will be offset by changes in
     the value of the underlying items being hedged. The Company may be exposed
     to losses in the future if the counterparties to the above contracts fail
     to perform. However, the Company is satisfied that the risk of such
     non-performance is remote, due to its controls on credit exposures.

     FINANCIAL INSTRUMENTS -- MARKET VALUE

     On December 31, 2000, the fair value of the Company's long-term debt
     totalling $3,528 ($1,322 in 1999 and $1,703 in 1998) was $3,516 ($1,323 in
     1999 and $1,762 in 1998), based on market prices for the Company's fixed
     rate securities and the book value of variable rate debt.

     At December 31, 2000, the quoted market value of the Company's portfolio
     investments having a book value of $31 ($21 in 1999 and $45 in 1998) was
     $46 ($39 in 1999 and $90 in 1998).

     At December 31, 2000, the market value of the Company's preference shares
     having a book value of $160 ($160 in 1999 and 1998) was $139 ($139 in 1999
     and $140 in 1998).

     The market values of all other financial assets and liabilities are
     approximately equal to their carrying values.
<PAGE>   72
67 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

18 > COMMITMENTS AND CONTINGENCIES

     The Company has guaranteed the repayment of approximately $17 of
     indebtedness by third parties. Alcan believes that none of these guarantees
     is likely to be invoked. Commitments with third parties and certain related
     companies for supplies of goods and services are estimated at $252 in 2001,
     $106 in 2002, $89 in 2003, $74 in 2004, $59 in 2005, and $446 thereafter.
     Total commitments to these entities, excluding $749 in relation to the
     smelter at Alma, were $106 in 2000, $18 in 1999 and $23 in 1998.

     Minimum rental obligations are estimated at $44 in 2001, $36 in 2002, $26
     in 2003, $20 in 2004, $17 in 2005 and $80 thereafter. Total rental expenses
     amounted to $58 in 2000, $57 in 1999 and $83 in 1998.

     Alcan, in the course of its operations, is subject to environmental and
     other claims, lawsuits and contingencies. The Company has environmental
     contingencies relating to approximately 33 existing and former Alcan sites
     and third-party sites. Accruals have been made in specific instances where
     it is probable that liabilities will be incurred and where such liabilities
     can be reasonably estimated. Although it is possible that liabilities may
     arise in other instances for which no accruals have been made, the Company
     does not believe that such an outcome will significantly impair its
     operations or have a material adverse effect on its financial position.

     In addition, see reference to combination agreement in note 3, income taxes
     in note 6, capital expenditures in note 9, debt repayments in note 12,
     financial instruments and commodity contracts in note 17, and subsequent
     event - acquisition of 30% of Gove alumina refinery in note 24.

19 > SUPPLEMENTARY INFORMATION
<TABLE>
<CAPTION>
                                                       2000       1999     1998
                                                      ------     -----    -----
<S>                                                    <C>      <C>       <C>

     INCOME STATEMENT
     Interest on long-term debt                       $  123     $ 104    $  93
     Capitalized interest                             $  (81)    $ (41)   $ (15)
                                                      ------     -----    -----
     BALANCE SHEET
     Payables
       Accrued employment costs                       $  288     $ 205    $ 196
     Short-term borrowings                            $1,080     $ 167    $  86

     At December 31, 2000, the weighted average
       interest rate on short-term borrowings
       was 6.5% (6.7% in 1999 and 4.7% in 1998).
                                                      ------     -----    -----

     STATEMENT OF CASH FLOWS
     Interest paid                                    $  161     $ 128    $  96
     Income taxes paid                                $  203     $  96    $ 298
                                                      ======     =====    =====
</TABLE>

<PAGE>   73
                                                                 68 > Alcan Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

20 > POST-RETIREMENT BENEFITS

Alcan and its subsidiaries have established pension plans in the principal
countries where they operate, generally open to all employees. Most plans
provide pension benefits that are based on the employee's highest average
eligible compensation before retirement. Pension payments are periodically
adjusted for cost of living increases, either by Company practice, collective
agreement or statutory requirement. Plan assets consist primarily of listed
stocks and bonds.

Alcan's funding policy is to contribute the amount required to provide for
benefits attributed to service to date, with projection of salaries to
retirement, and to amortize unfunded actuarial liabilities for the most part
over periods of 15 years or less, generally corresponding to the expected
average remaining service life of the employees. All actuarial gains and losses
are amortized over the expected average remaining service life of the employees.

The Company provides life insurance benefits under some of its retirement plans.
Certain early retirement arrangements also provide for medical benefits,
generally only until the age of 65. These plans are generally not funded.

<TABLE>
<CAPTION>
                                                     PENSION BENEFITS                   OTHER BENEFITS
                                                2000       1999       1998       2000         1999       1998
                                                ----       ----       ----       ----         ----       ----
<S>                                            <C>        <C>         <C>       <C>        <C>         <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1              $ 4,047    $ 3,827    $ 3,550    $   186     $    176    $   172
Service cost                                      83         99         84          5            4          4
Interest cost                                    255        241        236         12           11         11
Members' contributions                            21         21         20         --           --         --
Benefits paid                                   (217)      (209)      (200)       (10)         (10)        (9)
Amendments                                       435         66         80         (1)           3         --
Acquisitions/divestitures                      2,047         (5)        (1)        27           --         --
Actuarial (gain) loss                           (263)        59         45        (18)           2         (2)
Currency (gains) losses                          (91)       (52)        13         --           --         --
                                             -------    -------    -------    -------     --------    -------
Benefit obligation at December 31            $ 6,317    $ 4,047    $ 3,827    $   201     $    186    $   176
                                             -------    -------    -------    -------     --------    -------
CHANGE IN MARKET VALUE OF PLAN ASSETS
(ASSETS)
Assets at January 1                          $ 4,917    $ 4,298    $ 4,231    $    --      $    --    $    --
Actual return on assets                          250        800        204         --           --         --
Members' contributions                            21         21         20         --           --         --
Benefits paid                                   (217)      (209)      (200)        --           --         --
Company contributions                             44         44         36         --           --         --
Acquisitions/divestitures                      2,087         --         --          5           --         --
Currency gains (losses)                          (88)       (37)         7         --           --         --
                                             -------    -------    -------    -------     --------    -------
Assets at December 31                        $ 7,014    $ 4,917    $ 4,298    $     5     $     --    $    --
                                             -------    -------    -------    -------     --------    -------
Assets in excess of benefit obligation       $   697    $   870    $   471       (196)    $   (186)   $  (176)
Unamortized
     -- actuarial (gains) losses              (1,311)    (1,115)      (763)       (39)         (17)       (22)
     -- prior service cost                       590        246        263          1            2         (5)
                                             -------    -------    -------    -------     --------    -------
NET ASSET (LIABILITY) IN BALANCE SHEET       $   (24)   $     1    $   (29)   $  (234)    $   (201)   $  (203)
                                             =======    =======    =======    =======     ========    =======
</TABLE>
<PAGE>   74
69 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

20 > POST-RETIREMENT BENEFITS (CONT'D)

     The accumulated benefit obligation (ABO) of pension plans is $5,867 ($3,661
     in 1999 and $3,414 in 1998). For certain plans, the ABO exceeds the market
     value of the assets. For these plans, the ABO is $588 ($158 in 1999 and
     $1,239 in 1998) while the market value of the assets is $308 ($28 in 1999
     and $1,041 in 1998).


<TABLE>
<CAPTION>
                                                       PENSION BENEFITS                   OTHER BENEFITS
                                               2000        1999       1998        2000        1999        1998
                                             -------     -------    -------     -------    --------     -------
<S>                                         <C>          <C>        <C>         <C>        <C>          <C>
COMPONENTS OF NET PERIODIC (BENEFIT) COST
Service cost                                $   83     $    99      $  84       $   5       $   4        $   4
Interest cost                                  255         241        236          12          11           11
Expected return on assets                     (345)       (301)      (293)         --          --           --
Amortization
     -- actuarial gains                       (102)        (86)       (95)         (2)         (3)          (2)
     -- prior service cost                      89          76         94          --          (4)          (4)
                                            ------      ------      -----       -----       -----        -----
NET PERIODIC (BENEFIT) COST                 $  (20)     $   29      $  26       $  15       $   8        $   9
                                            ======      ======      =====       =====       =====        =====

</TABLE>

<TABLE>
<CAPTION>
                                                       PENSION BENEFITS                   OTHER BENEFITS
                                               2000        1999       1998        2000        1999        1998
                                             -------     -------    -------     -------    --------     -------
<S>                                         <C>          <C>        <C>         <C>        <C>          <C>

WEIGHTED AVERAGE ASSUMPTIONS AT DECEMBER 31
Discount rate                                  6.3%        6.5%       6.3%        7.3%       6.9%         6.4%
Average compensation growth                    3.7%        4.3%       4.3%        4.5%       5.0%         4.5%
Expected return on assets                      7.0%        7.3%       7.2%        N/A         n/a          n/a
                                             -----      ------      -----       -----       -----        -----

</TABLE>

     The assumed health care cost trend rate used for  measurement  purposes is
     6.6% from 2001 through 2005,  decreasing to 5.4% in 2006 and remaining at
     that level  thereafter.  A one  percentage  point change in assumed  health
     care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                                                                OTHER BENEFITS
                                                                                               1%          1%
                                                                                            INCREASE   DECREASE
                                                                                            --------   ---------
     <S>                                                                                   <C>          <C>
     SENSITIVITY ANALYSIS
     Effect on service and interest costs                                                      1           (1)
     Effect on benefit obligation                                                              9           (8)
                                                                                            --------   ---------
</TABLE>
<PAGE>   75
                                                                 70 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

21 > INFORMATION BY GEOGRAPHIC AREAS
<TABLE>
                                      LOCATION                               2000           1999          1998
                                      --------                              -------        -------       -------
<S>                                   <C>                                  <C>             <C>           <C>
SALES AND OPERATING REVENUES          Canada                                $   625        $   620       $   580
-- THIRD PARTIES (BY DESTINATION)     United States                           3,665          3,067         3,073
                                      Brazil                                    465            371           473
                                      United Kingdom                            600            450           548
                                      Germany                                   756            641           769
                                      Switzerland                                65             25            25
                                      Other Europe                            1,475          1,224         1,531
                                      Australia                                 131             60            67
                                      Asia and Other Pacific                  1,228            817           681
                                      All other                                 138             49            42
                                                                            -------        -------       -------
                                      Total                                 $ 9,148        $ 7,324       $ 7,789
                                                                            -------        -------       -------
SALES AND OPERATING REVENUES          Canada                                $ 2,042        $ 1,852       $ 1,980
-- INTERCOMPANY (BY ORIGIN)           United States                             563            528           504
                                      Brazil                                     44             56            37
                                      United Kingdom                            373            327           294
                                      Germany                                   181            147           143
                                      Switzerland                               237             75            78
                                      Other Europe                               72             34           223
                                      Australia                                 114             72            70
                                      Asia and Other Pacific                      9             --            --
                                      All other                                 401            260           358
                                                                            -------        -------       -------
                                      Subtotal                                4,036          3,351         3,687
                                      Consolidation eliminations             (4,036)        (3,351)       (3,687)
                                                                            -------        -------       -------
                                      Total                                 $    --        $    --       $    --
                                                                            -------        -------       -------
                                      Sales to subsidiary companies are made at fair market prices recognizing
                                      volume, continuity of supply and other factors.
SALES AND OPERATING REVENUES          Canada                                $   915        $   941       $ 1,004
-- THIRD PARTIES (BY ORIGIN)          United States                           3,713          3,119         3,229
                                      Brazil                                    443            334           369
                                      United Kingdom                            565            445           515
                                      Germany                                 1,401          1,196         1,379
                                      Switzerland                               414             50            56
                                      Other Europe                              589            470           721
                                      Australia                                 137             60            67
                                      Asia and Other Pacific                    852            611           424
                                      All other                                 119             98            25
                                                                            -------        -------       -------
                                      Total                                 $ 9,148        $ 7,324       $ 7,789
                                                                            =======        =======       =======
</TABLE>
<PAGE>   76
71 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

21 > INFORMATION BY GEOGRAPHIC AREAS (cont'd)

<TABLE>
<CAPTION>
                         LOCATION                     2000     1999     1998
                                                    --------  -------  -------
<S>                      <C>                        <C>       <C>      <C>
NET INCOME*              Canada                     $   295  $   111  $   133
                         United States                  155      178      144
                         Brazil                          34        5       13
                         United Kingdom                  10       18        2
                         Germany                         43       30        7
                         Switzerland                      1        3       --
                         Other Europe                    17       13      (98)**
                         Australia                       59       36       25
                         Asia and Other Pacific         (22)      46       92***
                         All other                       56       33       39
                         Consolidation eliminations     (30)     (13)      42
                                                    -------   ------   ------
                         Total                      $   618   $  460   $  399
                                                    -------   ------   ------
CAPITAL ASSETS - NET     Canada                     $ 4,002   $3,050   $2,376
AT DECEMBER 31           United States                1,579      681      714
                         Brazil                         736      743      710
                         United Kingdom               1,047      444      462
                         Germany                      1,322      499      650
                         Switzerland                    752       34       47
                         Other Europe                 1,006      113      302
                         Australia                      551       71       70
                         Asia and Other Pacific       1,026      504      269
                         All other                    1,011      295      297
                                                    -------   ------   ------
                         Total                      $13,032   $6,434   $5,897
                                                    -------   ------   ------
CAPITAL EXPENDITURES     Canada                     $ 1,097   $  845   $  326
AND INVESTMENTS          United States                  113       63       62
                         Brazil                          42       86      188
                         United Kingdom                  49       41       85
                         Germany                         55       49       44
                         Switzerland                     18        2        4
                         Other Europe                    68       19       31
                         Australia                       12        4        4
                         Asia and Other Pacific         239      154       80
                         All other                       42       35       53
                                                    -------   ------   ------
                         Total                      $ 1,735   $1,298   $  877
                                                    -------   ------   ------
AVERAGE NUMBER           Canada                          11       11       11
OF EMPLOYEES             United States                    5        4        4
(in thousands)           Brazil                           3        3        3
                         United Kingdom                   3        3        3
                         Germany                          4        4        5
                         Switzerland                      1       --       --
                         Other Europe                     2        2        3
                         Australia                       --       --       --
                         Asia and Other Pacific           5        8        5
                         All other                        3        3        2
                                                    -------   ------   ------
                         Total                           37       38       36
                                                    =======   ======   ======
</TABLE>


*    If presented to reflect the effect of prior years' income tax reassessments
     described in note 6, in addition to the net benefit of $31 recorded in
     Canada in 1999, net income in Canada in 1999 would be increased by a
     further $68 and decreased by $52 in the United States, $8 in the United
     Kingdom and $8 in Germany. In 2000, net income in Canada would be increased
     by a further $25 and decreased by $14 in the United States, $5 in the
     United Kingdom and $6 in Germany.

**   Includes write-down of $120 after tax related to the Aughinish alumina
     refinery.

***  Includes gain of $140 after tax related to the sale of a portion of the
     Company's investment in Nippon Light Metal Company, Ltd.
<PAGE>   77
                                                                 72 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

22 > INFORMATION BY OPERATING SEGMENT

The following presents selected information by operating segment, viewed on a
stand-alone basis. In 2000, as a result of the combination of the Company and
algroup (see note 3), the operating segments were reorganized to create four
operating segments, Primary Metal; Aluminum Fabrication, Americas and Asia;
Aluminum Fabrication, Europe; and Packaging. Comparative information has been
restated to conform to the 2000 organizational structure. Transactions between
operating segments are conducted on an arm's-length basis and reflect market
prices. Thus, earnings from the Primary Metal group is mainly profit on metal
produced by the Company, whether sold to third parties or used in the Company's
Fabrication and Packaging groups. Earnings from the Fabrication and Packaging
groups represents only the fabricating profit on rolled and packaging products
and downstream businesses. The accounting principles used to prepare the
information by operating segment are the same as those used to prepare the
consolidated financial statements of the Company except that the pension costs
for the operating segments are based on the normal current service cost with all
actuarial gains, losses and other adjustments being included in Intersegment and
other items. Some Corporate office and certain other costs have been allocated
to the respective operating segments.
<TABLE>
<CAPTION>
SALES AND OPERATING REVENUES                            INTERSEGMENT                      THIRD PARTIES
                                               2000        1999        1998        2000        1999      1998
                                             -------     -------     --------    --------    -------    -------
<S>                                            <C>        <C>         <C>         <C>         <C>        <C>
Primary Metal                                $ 1,667     $ 1,317      $ 1,405    $  2,123    $ 1,689     $ 1,813
Aluminum Fabrication, Americas and Asia           82          80           --       3,929      3,402       3,478
Aluminum Fabrication, Europe                     289         268           --       1,854      1,524       2,485
Packaging                                         58          55           --       1,216        681          --
Intersegment and other items                  (2,096)     (1,720)      (1,405)         26         28          13
                                             -------     -------      -------     -------    -------     -------
                                             $    --     $    --      $    --     $ 9,148    $ 7,324     $ 7,789
                                             =======     =======      =======     =======    =======     =======
</TABLE>

The fabrication groups include the foil operations for 1998, which have been
reclassified to the packaging segment for 1999 and 2000. Intersegment data for
the fabrication groups is not available for 1998.


<TABLE>
<CAPTION>
EBITDA                                                                            2000        1999       1998
                                                                                -------     -------    --------
<S>                                                                               <C>         <C>        <C>
Primary Metal                                                                   $   994     $   557    $    629
Aluminum Fabrication, Americas and Asia                                             296         349         299
Aluminum Fabrication, Europe                                                        164         144         157
Packaging                                                                            73          43          --
                                                                                -------     -------    --------
EBITDA from operating segments                                                    1,527       1,093       1,085
Depreciation and amortization                                                      (545)       (477)       (462)
Intersegment and other items                                                         32         182         111
Corporate office                                                                    (49)        (37)        (37)
Interest                                                                            (78)        (76)        (92)
Income taxes                                                                       (254)       (211)       (210)
Minority interest                                                                     1         (14)          4
                                                                                -------     -------    --------
NET INCOME BEFORE AMORTIZATION OF GOODWILL                                      $   634     $   460    $    399
                                                                                =======     =======    ========
NET INCOME AFTER AMORTIZATION OF GOODWILL                                       $   618     $   460    $    399
                                                                                =======     =======    ========
</TABLE>

Included in 1999  Intersegment  and other items are a gain of $44 from the sale
of the Company's piston  operations in Germany,  a gain of $37 from the sale of
a portion of the  Company's  portfolio  investment  in NLM, a gain of $19 from
the sale of property in the U.K. and a gain of $8 from the sale of a subsidiary
in France.

Included in 1998 Intersegment and other items are a gain of $146 from the sale
of a portion of the Company's interest in NLM and a loss of $143 related to the
impairment of the Aughinish alumina refinery assets sold in 1999.

Included in 2000 EBITDA for Primary Metal and Packaging are $18 and $26 related
to rationalization costs, respectively.

Included in 1999 EBITDA for Primary Metal is $38 related to rationalization
costs.

Included in 1998 EBITDA for Primary Metal; Aluminum Fabrication, Americas and
Asia; and Aluminum Fabrication, Europe, groups are $1, $9 and $15 related to
rationalization costs, respectively.
<PAGE>   78
73 > Alcan Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont'd)
(in millions of US$, except where indicated)

22 > INFORMATION BY OPERATING SEGMENT (CONT'D)

<TABLE>
<CAPTION>
TOTAL ASSETS AT DECEMBER 31                                                        2000        1999       1998
                                                                                 -------     -------     -------
<S>                                                                              <C>         <C>         <C>
Primary Metal                                                                    $ 7,772     $ 4,793     $ 4,351
Aluminum Fabrication,
    Americas and Asia                                                              2,949       2,848       2,534
Aluminum Fabrication,
    Europe                                                                         3,326       1,299       2,178
Packaging                                                                          3,712         405          --
Cash and other corporate items                                                       648         504         838
                                                                                 -------     -------     -------
                                                                                 $18,407     $ 9,849     $ 9,901
                                                                                 =======     =======     =======
</TABLE>

<TABLE>
<CAPTION>
                                              DEPRECIATION AND AMORTIZATION            CAPITAL  EXPENDITURES
                                             2000         1999          1998        2000       1999       1998
                                            -----        ------        -----      -------     -------    ------
<S>                                         <C>          <C>           <C>        <C>         <C>        <C>
Primary Metal                               $ 243        $ 232         $ 227      $ 1,114     $   907     $ 475
Aluminum Fabrication,
    Americas and Asia                         154          140           121          365         303       317
Aluminum Fabrication,
    Europe                                     76           67           104          110          60        78
Packaging                                      62           28            --           97          20        --
Intersegment and other items                   10           10            10           49           8         7
                                            -----        -----         -----      -------     -------     -----
                                            $ 545        $ 477         $ 462      $ 1,735     $ 1,298     $ 877
                                            =====        =====         =====      =======     =======     =====
</TABLE>

23 > PRIOR YEAR AMOUNTS

     Certain prior year amounts have been reclassified to conform with the 2000
     presentation.

24 > SUBSEQUENT EVENT -- ACQUISITION OF 30% OF GOVE ALUMINA REFINERY

     In January 2001, the Company acquired the remaining 30% of the Gove alumina
     refinery and related bauxite mine at a cost of $362, subject to certain
     post-closing adjustments which would require the payment of additional
     amounts of up to $30. As a result of this transaction, the Company now owns
     100% of these assets.
<PAGE>   79

<TABLE>
<CAPTION>
ELEVEN-YEAR SUMMARY
                                                                                  2000     1999     1998     1997     1996     1995
                                                                                  ----     ----     ----     ----     ----     ----
<S>             <C>                                                              <C>      <C>      <C>      <C>      <C>      <C>
CONSOLIDATED    Sales and operating revenues                                     9,148    7,324    7,789    7,777    7,614    9,287
INCOME          Other income                                                        96      179      231       88       75      100
STATEMENT       Cost of sales and operating expenses                             7,113    5,695    6,076    6,005    5,919    7,247
ITEMS           Depreciation and amortization                                      545      477      462      436      431      447
(in millions    Selling, administrative and general expenses                       405      375      448      444      422      484
of US$)         Research and development expenses                                   81       67       70       72       71       76
                Interest                                                            78       76       92      101      125      204
                Other expenses                                                     139      127      219       54       88       61
                Income taxes                                                       254      211      210      248      212      326
                Equity income (loss)                                                 4       (1)     (48)     (33)     (10)      (3)
                Minority interests                                                   1      (14)       4       (4)      (1)       4
                                                                                ------   ------   ------   ------   ------   ------
                Net income (Loss) before amortization of goodwill
                     and extraordinary item                                        634      460      399      468      410      543
                     Amortization of goodwill                                       16       --       --       --       --       --
                                                                                ------   ------   ------   ------   ------   ------
                Net income (Loss) before extraordinary item                        618      460      399      468      410      543
                     Extraordinary gain (Loss)                                      --       --       --       17       --     (280)
                                                                                ------   ------   ------   ------   ------   ------
                Net income (Loss)                                                  618      460      399      485      410      263
                                                                                ------   ------   ------   ------   ------   ------
                Net income (Loss) attributable to common shareholders              608      451      389      475      394      239
                                                                                ------   ------   ------   ------   ------   ------
CONSOLIDATED    Operating working capital                                        1,968    1,307    1,682    1,483    1,461    1,731
BALANCE         Capital assets -- net                                           13,032    6,434    5,897    5,458    5,470    5,672
SHEET ITEMS     Total assets                                                    18,407    9,849    9,901    9,374    9,228    9,736
(in millions    Total debt                                                       4,608    1,489    1,789    1,515    1,516    1,985
of US$)         Deferred income taxes                                            1,227      781      747      969      996      979
                Preference shares                                                  160      160      160      203      203      353
                Common shareholders' equity                                      8,867    5,381    5,359    4,871    4,661    4,482
                                                                                ------   ------   ------   ------   ------   ------
PER COMMON      Net income (Loss) before amortization of goodwill
SHARE                and extraordinary item                                       2.50     2.06     1.71     2.02     1.74     2.30
(in US$)        Net income (Loss) before extraordinary item                       2.45     2.06     1.71     2.02     1.74     2.30
                Net income (Loss)                                                 2.45     2.06     1.71     2.09     1.74     1.06
                Dividends paid                                                    0.60     0.60     0.60     0.60     0.60     0.45
                Common shareholders' equity                                      27.89    24.65    23.71    21.43    20.57    19.84
                Market price -- NYSE close                                       34.19    41.38    27.06    27.63    33.63    31.13
                                                                                ------   ------   ------   ------   ------   ------
OPERATING       CONSOLIDATED ALUMINUM SHIPMENTS
DATA            Ingot products (includes primary and secondary ingot,              974      859      829      858      810      801
(in thousands        trading and scrap)
of tonnes
except for      Rolled products                                                  1,855    1,609    1,603       --       --       --
LME price)      Aluminum used in engineered products and packaging                 352      302      220       --       --       --
                                                                                ------   ------   ------   ------   ------   ------
                Total fabricated products                                        2,207    1,911    1,823    1,694    1,539    1,733
                Conversion of customer-owned metal                                 328      315      289      276      258      225
                                                                                ------   ------   ------   ------   ------   ------
                Total aluminum volume                                            3,509    3,085    2,941    2,828    2,607    2,759
                Consolidated primary aluminum production                         1,562    1,518    1,481    1,429    1,407    1,278
                Consolidated aluminum purchases                                  1,670    1,297    1,227    1,254    1,003    1,365
                Consolidated aluminum inventories (end of year)                    568      477      469      451      408      449
                PRIMARY ALUMINUM CAPACITY
                     Consolidated subsidiaries                                   1,899    1,583    1,706    1,558    1,561    1,561
                     Total consolidated subsidiaries and related companies       1,899    1,583    1,706    1,695    1,698    1,712
                Average three-month LME price (US$ per tonne)                    1,567    1,388    1,379    1,620    1,536    1,830
                                                                                ------   ------   ------   ------   ------   ------
OTHER           Cash from operating activities (in millions of US$)              1,066    1,182      739      719      981    1,044
STATISTICS      Cash from (used for) financing activities (in millions of US$)     781     (629)     (95)     (46)    (700)    (744)
                Cash from (used for) investment activities (in millions of US$) (2,083)    (838)    (656)    (587)     178     (273)
                Capital expenditures (in millions of US$)                        1,735    1,298      877      641      482      441
                Ratio of total borrowings to equity (%)                          33:67    21:79    24:76    23:77    23:77    29:71
                Average number of employees (in thousands)                          37       38       36       33       34       39
                Common shareholders -- registered (in thousands at end of year)     19       20       20       21       22       23
                Common shares outstanding (in millions at end of year)             318      218      226      227      227      226
                     Registered in Canada (%)*                                      76       61       60       61       61       61
                     Registered in the United States (%)                            24       39       39       39       39       38
                     Registered in other countries (%)                              --       --        1       --       --        1
                Return on average common shareholders' equity (%)                   10        9        7       10        9        5
                                                                                ------   ------   ------   ------   ------   ------
*Shares held by former algroup shareholders are registered in Canada.
</TABLE>




<TABLE>
<CAPTION>
ELEVEN-YEAR SUMMARY
                                                                                      1994      1993      1992      1991      1990
                                                                                      ----      ----      ----      ----      ----
<S>             <C>                                                                  <C>       <C>       <C>       <C>       <C>
CONSOLIDATED    Sales and operating revenues                                         8,216     7,232     7,596     7,748     8,757
INCOME          Other income                                                           109        75        69        82       162
STATEMENT       Cost of sales and operating expenses                                 6,740     6,002     6,300     6,455     6,996
ITEMS           Depreciation and amortization                                          431       443       449       429       393
(in millions    Selling, administrative and general expenses                           528       551       596       635       659
of US$)         Research and development expenses                                       72        99       125       131       150
                Interest                                                               219       212       254       246       197
                Other expenses                                                          95       106       118       163        65
                Income taxes                                                           112       (13)      (17)     (104)      126
                Equity income (loss)                                                   (29)      (12)       53        89       211
                Minority interests                                                      (3)        1        (5)       --        (1)
                                                                                    ------    ------    ------    ------    ------
                Net income (Loss) before amortization of goodwill
                     and extraordinary item                                             96      (104)     (112)      (36)      543
                     Amortization of goodwill                                           --        --        --        --        --
                                                                                    ------    ------    ------    ------    ------
                Net income (Loss) before extraordinary item                             96      (104)     (112)      (36)      543
                     Extraordinary gain (Loss)                                          --        --        --        --        --
                                                                                    ------    ------    ------    ------    ------
                Net income (Loss)                                                       96      (104)     (112)      (36)      543
                                                                                    ------    ------    ------    ------    ------
                Net income (Loss) attributable to common shareholders                   75      (122)     (135)      (56)      521
                                                                                    ------    ------    ------    ------    ------
CONSOLIDATED    Operating working capital                                            1,675     1,314     1,460     1,717     1,842
BALANCE         Capital assets -- net                                                5,534     6,005     6,256     6,525     6,167
SHEET ITEMS     Total assets                                                        10,003     9,812    10,154    10,843    10,681
(in millions    Total debt                                                           2,485     2,652     2,794     3,024     2,648
of US$)         Deferred income taxes                                                  914       888       955     1,126     1,092
                Preference shares                                                      353       353       353       212       212
                Common shareholders' equity                                          4,308     4,096     4,266     4,730     4,942
                                                                                    ------    ------    ------    ------    ------
PER COMMON      Net income (Loss) before amortization of goodwill
SHARE                and extraordinary item                                           0.34     (0.54)    (0.60)    (0.25)     2.33
(in US$)        Net income (Loss) before extraordinary item                           0.34     (0.54)    (0.60)    (0.25)     2.33
                Net income (Loss)                                                     0.34     (0.54)    (0.60)    (0.25)     2.33
                Dividends paid                                                        0.30      0.30      0.45      0.86      1.12
                Common shareholders' equity                                          19.17     18.28     19.06     21.17     22.19
                Market price -- NYSE close                                           25.38     20.75     17.63     20.00     19.50
                                                                                    ------    ------    ------    ------    ------
OPERATING       CONSOLIDATED ALUMINUM SHIPMENTS
DATA            Ingot products (includes primary and secondary ingot, trading          897       887       870       866       857
(in thousands   and scrap)
of tonnes
except for      Rolled products                                                         --        --        --        --        --
LME price)      Aluminum used in engineered products and packaging                      --        --        --        --        --
                                                                                    ------    ------    ------    ------    ------
                Total fabricated products                                            1,763     1,560     1,389     1,333     1,488
                Conversion of customer-owned metal                                     189        91       206       145        81
                                                                                    ------    ------    ------    ------    ------
                Total aluminum volume                                                2,849     2,538     2,465     2,344     2,426
                Consolidated primary aluminum production                             1,435     1,631     1,612     1,695     1,651
                Consolidated aluminum purchases                                      1,350       865       675       591       646
                Consolidated aluminum inventories (end of year)                        435       403       418       463       447
                PRIMARY ALUMINUM CAPACITY
                     Consolidated subsidiaries                                       1,561     1,711     1,711     1,676     1,685
                     Total consolidated subsidiaries and related companies           1,712     1,862     1,862     1,827     1,836
                Average three-month LME price (US$ per tonne)                        1,500     1,161     1,278     1,333     1,636
                                                                                    ------    ------    ------    ------    ------
Other           Cash from operating activities (in millions of US$)                     65       444       465       659       760
Statistics      Cash from (used for) financing activities (in millions of US$)        (191)     (172)      (44)      197       433
                Cash from (used for) investment activities (in millions of US$)         71      (339)     (450)     (857)   (1,245)
                Capital expenditures (in millions of US$)                              356       370       474       880     1,367
                Ratio of total borrowings to equity (%)                              35:65     37:63     37:63     37:63     33:67
                Average number of employees (in thousands)                              42        46        49        54        57
                Common shareholders -- registered (in thousands at end of year)         26        28        32        34        38
                Common shares outstanding (in millions at end of year)                 225       224       224       223       223
                     Registered in Canada (%)*                                          55        59        69        68        54
                     Registered in the United States (%)                                44        40        30        31        44
                     Registered in other countries (%)                                   1         1         1         1         2
                Return on average common shareholders' equity (%)                        2        (3)       (3)       (1)       11
                                                                                    ------    ------    ------    ------    ------
See note 4 to the consolidated financial statements for U.S. GAAP information.
</TABLE>

<PAGE>   80
                                                                 76 > Alcan Inc.

QUARTERLY FINANCIAL DATA
(in millions of US$, except where indicated)
<TABLE>
<CAPTION>

(unaudited)                                          FIRST        SECOND        THIRD      FOURTH       YEAR
----------                                           -----        ------        -----      ------       -----
<S>                                                  <C>          <C>           <C>        <C>          <C>
2000
Revenues                                            $ 1,979       $ 2,063      $ 2,004     $ 3,198     $ 9,244
Cost of sales and operating expenses                  1,454         1,560        1,530       2,569       7,113
Depreciation and amortization                           116           114          120         195         545
Income taxes                                            104            88           34          28         254
Other items                                             131           148          139         280         698
                                                    -------       -------      -------     -------     -------
Net income before amortization of goodwill              174           153          181         126         634
Amortization of goodwill                                 --            --           --          16          16
                                                    -------       -------      -------     -------     -------
Net income(1)                                       $   174       $   153      $   181     $   110     $   618
Dividends on preference shares                            2             3            2           3          10
                                                    -------       -------      -------     -------     -------
Net income attributable to common shareholders      $   172       $   150      $   179     $   107     $   608
                                                    -------       -------      -------     -------     -------
Net income per common share before
amortization of goodwill                            $  0.78       $  0.70      $  0.85     $  0.39     $  2.50
Amortization of goodwill per common share                --            --           --        0.05        0.05
                                                    -------       -------      -------     -------     -------
Net income per common share (in US$)(2)             $  0.78       $  0.70      $  0.85     $  0.34     $  2.45
Net income under U.S. GAAP(3)                       $   171       $   152      $   179     $   104     $   606
                                                    -------       -------      -------     -------     -------
1999
Revenues                                            $ 1,841       $ 1,835      $ 1,884     $ 1,943     $ 7,503
Cost of sales and operating expenses                  1,468         1,396        1,390       1,441       5,695
Depreciation and amortization                           118           117          116         126         477
Income taxes                                             34            69           71          37         211
Other items                                             183           182          149         146         660
                                                    -------       -------      -------     -------     -------
Net income(1)                                       $    38       $    71      $   158     $   193     $   460
Dividends on preference shares                            3             1            3           2           9
                                                    -------       -------      -------     -------     -------
Net income attributable to common shareholders      $    35       $    70      $   155     $   191     $   451
                                                    -------       -------      -------     -------     -------
Net income per common share (in US$)(2)             $  0.16       $  0.32      $  0.71     $  0.87     $  2.06
Net income under U.S. GAAP(3)                       $    38       $    67      $   160     $   190     $   455
                                                    -------       -------      -------     -------     -------
1998
Revenues                                            $ 1,971       $ 2,005      $ 1,960     $ 2,084     $ 8,020
Cost of sales and operating expenses                  1,497         1,549        1,514       1,516       6,076
Depreciation and amortization                           110           113          116         123         462
Income taxes                                             78            76           44          12         210
Other items                                             169           181          179         344         873
                                                    -------       -------      -------     -------     -------
Net income(1)                                       $   117       $    86      $   107     $    89     $   399
Dividends on preference shares                            3             2            3           2          10
                                                    -------       -------      -------     -------     -------
Net income attributable to common shareholders      $   114       $    84      $   104     $    87     $   389
                                                    -------       -------      -------     -------     -------
Net income per common share (in US$)(2)             $  0.50       $  0.37      $  0.46     $  0.38     $  1.71
Net income under U.S. GAAP(3)                       $   117       $    94      $   103     $   103     $   417
                                                    =======       =======      =======     =======     =======
</TABLE>
[FN]

(1) The second quarter of 2000 includes an after-tax gain of $6 from disposal of
    property, a gain of $10 from the demutualization of the Company's life
    insurance providers and a favourable tax adjustment of $8 for the
    revaluation of deferred taxes. This is offset in part by a non-operating
    exceptional provision of $9 in the U.S., merger costs of $4 and
    rationalization costs of $2. The third quarter of 2000 includes favourable
    tax adjustments of $46, including the revaluation of deferred taxes,
    partially offset by asset write-offs of $12. The fourth quarter of 2000
    includes non-cash merger charges related to the merger with Alusuisse Group
    Ltd of $60, rationalization charges in respect of the closure of foil
    operations at Rogerstone in the U.K. of $18, asset write-offs of $6,
    partially offset by favourable tax adjustments of $21, including the
    revaluation of deferred taxes.

    The first quarter of 1999 included an unfavourable tax adjustment of $9 for
    the revaluation of deferred taxes. The second quarter of 1999 included an
    after-tax gain of $26 on the sale of the Company's piston operations in
    Germany, a restructuring charge of $20 relating to the Company's Full
    Business Potential program and an unfavourable tax adjustment of $12 for the
    revaluation of deferred taxes. The third quarter of 1999 included after-tax
    gains on the sale of businesses, principally a further sale of shares in NLM
    in Japan and the Company's building products business in France, totalling
    $47, as well as rationalization costs of $5 in Primary Metal and an
    unfavourable tax adjustment of $2 for the revaluation of deferred taxes. The
    fourth quarter of 1999 included a favourable tax adjustment in Canada
    relating to prior periods of $28, including the revaluation of deferred
    taxes, a gain on disposal of property, principally in the U.K. of $17,
    offset in part by $8 from rationalization costs in the U.K. and Jamaica.

    The first quarter of 1998 included an after-tax charge of $17 related to
    Alcan's share of construction contract losses, restructuring costs and
    operating losses at NLM in Japan. The second quarter of 1998 included an
    after-tax charge of $27 related to Alcan's share of restructuring costs and
    operating losses at NLM. The third quarter of 1998 included an after-tax
    gain of $20 for exchange revaluation of the Company's accumulated deferred
    tax liability, after-tax charges of $7 for rationalization costs in Europe
    and $9 for equity losses in NLM. The fourth quarter of 1998 included an
    after-tax gain of $140 from the sale of a portion of the Company's
    investment in NLM, an after-tax loss of $120 from the write-down for
    impairment of the Aughinish alumina refinery assets sold in 1999, an
    after-tax gain of $8 principally from the sale of Handy Chemicals Ltd., $9
    from rationalization costs in Europe and Asia, and a favourable tax
    adjustment of $11 for the revaluation of deferred taxes.

(2) Net income per common share calculations are based on the average number of
    common shares outstanding in each period.

(3) See note 4 to the consolidated financial statements for explanation of
    differences between Canadian and U.S. GAAP.

</FN>
<PAGE>   81
77 > Alcan Inc.

CORPORATE GOVERNANCE

The business and affairs of Alcan are managed by its Board of Directors acting
through the Management of the Company. The Directors and Officers of Alcan are
named on the following page. In discharging its duties and obligations, the
Alcan Board acts in accordance with the provisions of the Canada Business
Corporations Act, the Company's constituting documents and by-laws and other
applicable legislation and Alcan policies.

Alcan does not have a controlling shareholder.

Corporate governance has traditionally received the active attention of Alcan's
Board. For instance, an intensive review of the guiding principles of Alcan
conducted by the Board in the 1970s led to the publication in 1978 of a policy
statement entitled ALCAN, ITS PURPOSE, OBJECTIVES AND POLICIES. This statement
set forth a series of basic business principles to guide Alcan employees in
conducting a widespread international enterprise and helped Alcan achieve public
understanding and trust. These principles are now found in Alcan's CODE OF
CONDUCT, which provides detailed ethical guidelines for Alcan employees as well
as consultants and contractors engaged by Alcan.

The Toronto Stock Exchange now requires a formal description of corporate
governance practices by all listed companies. Alcan's disclosure in this regard
is published in the Management Proxy Circular issued in connection with the
forthcoming Annual Meeting; a copy is available from CIBC Mellon Trust Company
at the address on page 79.

Committees of the Board (described briefly at right) assist the Board in
carrying out its functions and make recommendations to it on various matters.
Membership of these Committees is indicated on the following page.

The CORPORATE GOVERNANCE COMMITTEE has the responsibility for reviewing Board
practices and performance, candidates for directorship and Board Committee
membership. It also considers recommendations from the Personnel Committee
regarding Board compensation and the appointments of the Chairman of the Board
and the Chief Executive Officer.

The AUDIT COMMITTEE assists the Board in fulfilling its functions relating to
corporate accounting and reporting practices as well as financial and accounting
controls in order to provide effective oversight of the financial reporting
process; it also reviews financial statements as well as proposals for issues of
securities.

The ENVIRONMENT COMMITTEE has the responsibility for reviewing policy,
management practices and performance of Alcan in environmental matters.

The PERSONNEL COMMITTEE has the responsibility for reviewing all personnel
policy and employee relations matters (including compensation), and for making
recommendations to the Corporate Governance Committee on Board compensation and
on the appointments of the Chairman of the Board and the Chief Executive
Officer.

A special committee composed of members of the Personnel Committee administers
the Alcan Executive Share Option Plan.
<PAGE>   82
                                                                 78 > Alcan Inc.

DIRECTORS AND OFFICERS
(As at February 26, 2001)

<TABLE>
<CAPTION>

DIRECTORS                                          OFFICERS

<S>                                                <C>                                               <C>

JOHN R. EVANS, C.C.(1, 3, 5, 8)                    W. R. C. BLUNDELL*
Chairman of the Board, Montreal                    Interim President and
AGE 71, DIRECTOR SINCE 1986                        Chief Executive Officer

W. R. C. BLUNDELL, O.C.(1, 3, 7)                   ROBERT L. BALL                                     (1) Member of Audit
Director of various companies, Toronto             Executive Vice President,                              Committee
AGE 73, DIRECTOR SINCE 2000 AND FORMERLY           PRESIDENT, ROLLED PRODUCTS, EUROPE
FROM 1987 TO 1999                                                                                     (2) Chairman of Audit
                                                   RICHARD B. EVANS                                       Committee
MARTIN EBNER(3, 7)                                 Executive Vice President,
Chairman, BZ Group Holding Limited,                PRESIDENT, ALUMINUM FABRICATION, EUROPE            (3) Member of Personnel
Wilen, Switzerland                                                                                        Committee
AGE 55, DIRECTOR SINCE 2000                        EMERY P. LEBLANC
                                                   Executive Vice President,                          (4) Chairman of Personnel
TRAVIS ENGEN*(4, 7)                                PRESIDENT, PRIMARY METAL                               Committee
Chairman and Chief Executive,
ITT Industries, Inc., New York                     BRIAN W. STURGELL                                  (5) Member of Environment
AGE 56, DIRECTOR SINCE 1996                        Executive Vice President,                              Committee
                                                   PRESIDENT, ALUMINUM FABRICATION,
RUPERT GASSER(1)                                   AMERICAS AND ASIA                                  (6) Chairman of Environment
Executive Vice President,                                                                                 Committee
Nestle S.A., Vevey, Switzerland                    SURESH THADHANI
AGE 62, DIRECTOR SINCE 2000                        Executive Vice President and                       (7) Member of Corporate
                                                   Chief Financial Officer                                Governance Committee
DR. WILLI KERTH(5)
Director, Alusuisse Swiss                          HENK VAN DE MEENT                                  (8) Chairman of Corporate
Aluminium Ltd., Neuhausen,                         Executive Vice President,                              Governance Committee
Switzerland                                        PRESIDENT, GLOBAL PACKAGING
AGE 64, DIRECTOR SINCE 2000
                                                   KURT WOLFENSBERGER
J. E. NEWALL, O.C.(3, 6, 7)                        Executive Vice President,
Chairman, NOVA Chemicals                           PRESIDENT, ENGINEERED PRODUCTS, EUROPE
Corporation, Calgary
AGE 65, DIRECTOR SINCE 1985                        CYNTHIA CARROLL
                                                   Vice President, PRESIDENT, BAUXITE, ALUMINA AND
DR. PETER H. PEARSE, C.M.(5)                       SPECIALTY CHEMICALS
Natural resources consultant,
Vancouver AGE                                      DANIEL GAGNIER
68, DIRECTOR SINCE 1989                            Senior Vice President,
                                                   Corporate and External Affairs**
GUY SAINT-PIERRE, O.C.(2, 7)
Chairman, SNC-Lavalin Group Inc.,                  DAVID MCAUSLAND
Montreal                                           Senior Vice President, Mergers and
AGE 66, DIRECTOR SINCE 1994                        Acquisitions, Chief Legal Officer
                                                   and Secretary
GERHARD SCHULMEYER(1)
President and Chief Executive Officer,             GASTON OUELLET
Siemens Corp., New York                            Senior Vice President,
AGE 62, DIRECTOR SINCE 1996                        Human Resources

PAUL M. TELLIER, C.C.(1)                           GLENN R. LUCAS
President and Chief Executive Officer,             Vice President and Treasurer
Canadian National Railway Company,
Montreal                                           RICHARD GENEST
AGE 61, DIRECTOR SINCE 1998                        Vice President and Controller

</TABLE>

*    On February 26, 2001, Alcan announced the appointment of Mr. Travis Engen
     as President and Chief Executive Officer, effective March 12, 2001.

**   Including Environment, Health and Safety.
<PAGE>   83
79 > Alcan Inc.

SHAREHOLDER INFORMATION

COMMON SHARES

The  principal  markets for trading in Alcan's  common shares
are the New York and  Toronto  stock  exchanges.  The  common
shares are also  traded on the  London,  Frankfurt  and Swiss
stock exchanges.

The transfer agents for the common shares are CIBC Mellon Trust Company in
Montreal, Toronto, Winnipeg, Regina, Calgary and Vancouver, Mellon Investor
Services L.L.C. in New York, and CIBC Mellon Trust Company in England.

Common share dividends are paid quarterly on or about the 20th of March, June,
September and December to shareholders of record on or about the 20th of
February, May, August and November, respectively.

PREFERENCE SHARES

The preference shares are listed on the Toronto Stock Exchange. The transfer
agent for the preference shares is CIBC Mellon Trust Company.

INVESTMENT PLANS

The Company offers holders of common shares two convenient ways of buying
additional Alcan common shares without payment of brokerage commissions. These
are known as the Dividend Reinvestment Plan and the Share Purchase Plan. Copies
of the prospectus describing these Plans may be obtained from CIBC Mellon Trust
Company at the address below.

SECURITIES REPORTS FOR 2000

The Company's Annual Information Form, to be filed with the Canadian securities
commissions, and the annual 10-K report, to be filed with the Securities and
Exchange Commission in the United States, will be available to shareholders
after April 1, 2001. Copies of both may be obtained from CIBC Mellon Trust
Company at the address below.
<TABLE>
<CAPTION>

              DIVIDEND                           PRICES* AND AVERAGE DAILY TRADING VOLUMES
------------------------------------------------------------------------------------------------------------
                            NEW YORK STOCK EXCHANGE        (US$)        TORONTO STOCK EXCHANGE    (CAN$)
------------------------------------------------------------------------------------------------------------
2000          US$           High       Low       Close     Avg. Daily   High      Low     Close   Avg. Daily
QUARTER                                                    Volume                                 Volume
------------------------------------------------------------------------------------------------------------
<S>          <C>          <C>         <C>       <C>       <C>          <C>       <C>     <C>      <C>
First        0.150        45 15/16    30 4/16   34 1/16   1,364,008    67.25     44.30   48.55      944,659
Second       0.150        35 10/16    29 1/16   31        1,189,854    52.50     42.90   46.00      827,276
Third        0.150        35 4/16     28 3/16   28 15/16    983,691    52.00     41.95   43.70      859,522
Fourth       0.150        35 3/16     28 3/16   34 3/16   1,652,341    53.00     42.50   51.35    1,221,086
-----------------------------------------------------------------------------------------------------------
Year         0.600
-----------------------------------------------------------------------------------------------------------
1999
QUARTER
-----------------------------------------------------------------------------------------------------------
First        0.150        30 14/16    22 15/16  25 13/16    548,364    46.45     34.15   38.85      657,380
Second       0.150        33 12/16    25 15/16  31 15/16    806,756    49.50     38.80   46.75      819,628
Third        0.150        36 15/16    29 3/16   31 4/16     806,492    54.90     43.05   46.10      632,561
Fourth       0.150        42          30 12/16  41 6/16     913,348    61.00     45.25   59.40      614,803
-----------------------------------------------------------------------------------------------------------
Year         0.600
===========================================================================================================
</TABLE>

*    The share prices are those reported as "New York Stock Exchange --
     Consolidated Trading" and reported by The Toronto Stock Exchange.

FURTHER INFORMATION

CONTACT FOR SHAREHOLDER ACCOUNT INQUIRIES:
CIBC Mellon Trust Company
320 Bay Street, 3rd Floor
Toronto, Ontario, Canada
M5H 4A6

Telephone: (416) 643-5500
(collect call outside North America)
or 1-800-387-0835 (toll free
in North America)
inquiries@cibcmellon.ca

MAILING ADDRESS:
P.O. Box 7010
Adelaide Street Postal Station
Toronto, Ontario, Canada
M5C 2W9

INVESTOR CONTACT:
Michael Hanley
Vice President, Investor Relations
Telephone: (514) 848-8368
investor.relations@alcan.com

MEDIA CONTACT:
Marc Osborne
Director, External Communications
Telephone: (514) 848-1342
media.relations@alcan.com
<PAGE>   84
                                                                 80 > Alcan Inc.

GLOSSARY

INDUSTRY-RELATED TERMS

ALLOY

A substance with metallic properties, composed of two or more chemical elements
of which at least one is a metal, such as aluminum, and produced to have certain
specific characteristics.

ALUMINA

Most alumina is a white, powdery substance produced from bauxite by a chemical
process during which aluminum oxide is extracted from the ore. Between four and
five tonnes of bauxite are required to produce about two tonnes of alumina,
which yield one tonne of aluminum.

ALUMINUM

Although aluminum is the most common metal on earth, constituting 8% of the
earth's crust, it is never found in its pure form. Aluminum metal is produced by
separating aluminum from oxygen in alumina.

BAUXITE

The most economic source of aluminum is bauxite, an ore or rock composed of
hydrous aluminum oxides and aluminum hydroxides. It is predominantly found in
tropical and sub-tropical regions.

CHEMICALS

Chemical-grade alumina (alumina hydrate) is the starting material for a wide
variety of specialty chemical products.

ENGINEERED PRODUCTS

A basic aluminum fabricated product that has been mechanically, and at times
thermally, altered to create special properties for specific purposes. Castings,
composites, extrusions and/or components for various systems or end-use markets
are examples.

FABRICATED PRODUCTS

Generally, fabricated products are rolled products (such as sheet) as well as
rod, wire and cable, extruded and drawn products, castings and other engineered
products.

FOIL

Foil is a thin sheet of metal, around 0.006 inch (0.15 millimeter) thick or
less, and is widely used in the packaging, household and industrial markets.

INGOT

A cast form suitable for fabricating or remelting. Sometimes called sheet ingot,
foundry ingot or an extrusion billet, ingots and billets can be produced in a
wide range of alloys and purity levels and in different shapes and sizes.

LITHO SHEET

Aluminum sheet is widely used as the metal plate on which an image is produced
for lithographic printing.

LONDON METAL EXCHANGE (LME)

The LME is a metals trading centre for the Western World. The LME also
determines the metal price (per tonne) for aluminum trading for current and
future delivery.

PACKAGING

A range of flexible and specialty packaging is produced from aluminum, paper,
plastic, glass, paperboard and laminated products and serves the food,
pharmaceutical, cosmetics/personal care, and tobacco businesses.

RECYCLED METAL

Aluminum ingot can be made by remelting used beverage cans (UBCS) or any other
post-consumer scrap, as well as customer process scrap. Recycling aluminum only
requires about 5% of the energy required to produce primary metal.

ROLLED PRODUCTS

At rolling mills, sheet ingots are reduced in thickness by passing them between
rollers in a series of reversing hot mills and, finally, in a cold mill. Sheet
is primarily used for the container, lithography, transportation and building
end-use markets.

SMELTING

Primary aluminum is produced through the electrolytic reduction of alumina. The
molten aluminum is cast into ingots and then fabricated into a variety of
products.

TOLLING

The activity of rolling or converting customer-owned metal or alumina is called
tolling.

FINANCIAL TERMS

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization.

EVA(R), ECONOMIC VALUE ADDED

A registered trademark of Stern Stewart & Co. and is a key measure of
performance. The term means the difference between the return on capital and the
cost for using that capital over the same period.

RETURN ON AVERAGE COMMON SHAREHOLDERS' EQUITY (AT TIMES REFERRED TO AS ROE, OR
RETURN ON EQUITY)

Net income after preference share dividends, expressed as a percentage of
average common shareholders' equity.
<PAGE>   85
DEFINITIONS

The word "Alcan" or "Company" means Alcan Inc. (formerly Alcan Aluminium
Limited) and, where applicable, one or more consolidated subsidiaries. A
"subsidiary" is a company controlled by Alcan. A "joint venture" is an
association (incorporated or unincorporated) of companies jointly undertaking
some commercial enterprise and proportionately consolidated to the extent of
Alcan's participation. A "related company" is one in which Alcan has significant
influence over management but owns 50% or less of the voting stock. The "Alcan
Group" refers to Alcan Inc., its subsidiaries, joint ventures and related
companies. "algroup" means Alusuisse Group Ltd.

In this report, unless stated otherwise, all dollar amounts are stated in United
States dollars and all quantities in metric tons, or tonnes. A tonne is 1,000
kilograms, or 2,204.6 pounds.

The following abbreviations are used:
/t       per tonne
kt       thousand tonnes
kt/y     thousand tonnes per year
Mt       million tonnes
Mt/y     million tonnes per year

VISIT ALCAN'S WEB SITE:
www.alcan.com

Further information on Alcan, its policies and its activities, is available on
Alcan's Internet site and contained in various Company publications. Copies of
its policies and publications are also available by writing to the address on
the back cover.

VERSION FRANCAISE

Pour obtenir la version francaise de ce rapport, veuillez ecrire a la Compagnie
Trust CIBC Mellon dont l'adresse figure a la page 79.

ANNUAL MEETING

The Annual Meeting of the holders of common shares of Alcan Inc. will be held on
Thursday, April 26, 2001. The meeting will take place at 10:00 a.m. (EDT) in the
Assembly Hall, International Civil Aviation Organization, Atrium Entrance, 999
University Street, Montreal, Quebec, Canada.

This report was printed using vegetable-based inks and is recyclable.
<PAGE>   86
                    ALCAN . . .
                    Innovative Aluminum and Packaging
                    Solutions Worldwide


         [GRAPHIC OMITTED]


                    1188 Sherbrooke Street West      Mailing Address:
                    Montreal, Quebec, Canada         P.O. Box 6090
                    H3A 3G2                          Montreal, Quebec, Canada
                                                     H3C 3A7

                                                     Telephone: (514) 848-8000
                    www.alcan.com                    Telecopier: (514) 848-8115

                    Printed in Canada