© APMG Alcan’s Response to Climate Change Challenge H.A. Porteous Vice-president, Government Relations, Alcan Europe 25 October 2007

© APMGDiapositive 2 Global Presence December 2006 North American Global Headquarters Bauxite & AluminaMontreal Primary MetalMontreal European Global Headquarters PackagingParis Engineered ProductsParis North America Employees: 24,000 Europe Employees: 30,000 Asia Employees: 8,000 Alcan Inc. Revenues: US$23.6 billion Employees: 68,000 Facilities: 430 Countries & Regions: 61 A balanced presence and a global reach South America Employees: 3,000 Africa/Middle East Employees: 1,000 Oceania Employees: 2,000

© APMGDiapositive 3 Business Groups BAUXITE AND ALUMINA PRIMARY METAL ENGINEERED PRODUCTS PACKAGING

© APMGDiapositive 4 Rio Tinto Integration Today, Rio Tinto will announce it has completed acquisition of Alcan Alcan welcomes its integration into Rio, an industry leader In the context of sustainability and climate change, we are very glad we share with Rio the same philosophy and objectives

© APMGDiapositive 5 Commitment to Sustainability

© APMGDiapositive 6 ALCAN COMMITTED TO SUSTAINABILITY Alcan’s aspiration is to be an “industry shaper” Being ahead of the curve and establish new standards

© APMGDiapositive 7  No company can be sustainable over the long term if it is not economically viable  No company can be economically viable in the 21 st century if it fails to accept its social and environmental responsibilities Leadership from the top Dick Evans: managing the business in a way that supports “Alcan’s governing objective of maximizing value…in a sustainable way”, with Alcan’s commitment to sustainability…the glue that runs throughout our integrated management system. What does “Sustainability” Mean at Alcan?

© APMGDiapositive 8 Committed to Sustainability Alcan’s sustainability framework directly supports the governing objective and instils the highest standards for social responsibility, and environment, health and safety Alcan’s 8 key topics related to sustainability: Energy Climate Change Natural Resource Management Life Cycle Product Stewardship Community Development Well-Being Environmental Releases Industry Shifts

© APMGDiapositive 9 Alcan, working with the global industry, has identified 4 means to address the climate change challenge 1.Reduce direct GHG emissions per ton of aluminium ; 2.Improve aluminium production Energy efficiency; 3.Maximize collection and recycling of used products ; 4.Promote light vehicles.

© APMGDiapositive 10 Worked with IPCC and National Governments to develop Transparent and Accurate GHG Inventory Data from Interlocking Standards environment/climate/pfc_measurement.pdf environment/climate/ghg_protocol.pdf WRI/WBCSD Corporate Good Practice Standards IAI Industry GHG Protocol USEPA/IAI PFC Measurement Protocol IPCC Good Practice Guidance

© APMGDiapositive 11 Alcan’s Progress in GHG Reduction: Global Smelter emissions - Worldwide comparison 1990 to 2005:  Total smelter emissions (direct + indirect) reduced by 25%  Production increased by 35%  Intensity decreased by 45%  objective to further reduce direct GHG intensity by 10%  Through its TARGET program, Alcan’s company-wide greenhouse gas management program (launched in 2000)…  Alcan has taken a leadership role and has formalized a GHG reduction programme on a cross-company basis including the establishment of reduction objectives

© A L C A N I N C.Slide 12 Business group or unit How? - Alcan’s technology © A L C A N I N C.Slide 12 Business group or unit  Alpsys computerized pot control system  Requires large investment in workforce training and constant workforce vigilance May 2005 to August 2006 Sept Oct st release 1998 ALCAN-AP Pot Process Control System all over the world ALCAN-AP Pot Process Control System around the world ABI ADG * ALBA * ALMA * Alouette * ALRO ALUAR * Alucam Baie Comeau Comalco Dunkerque Egyptalum HILLSIDE * Karmoy Kidriecevo La Corogne Lannemezan * Lauralco Lochaber * Mostar MOZAL * NALCO * PNL * Podgorica Saint-Jean * San Ciprian Talum * Tomago * SOHAR * ( * = ALPSYS) ALPSYS ® Potmicro

13 78% reduction in PFC emissions per tonne aluminium from 1990 baseline 2010 goal is a 80% reduction in PFC emissions per tonne aluminium Encouraged IAI to adopt voluntary PFC Emissions reduction targets 0.88

© A L C A N I N C.14 CEPS TF ‘Strategic Implications of the EU ETS Review’ Alcan’s AP technology, developed in France, when using the Alpsys® process control system, provides benchmark PFC performance (less than 0,1 tCO2eq / t Al) AP Technology, the GHG emissions

© A L C A N I N C.15 CEPS TF ‘Strategic Implications of the EU ETS Review’ AP Technology, the net carbon consumption

© A L C A N I N C.16 CEPS TF ‘Strategic Implications of the EU ETS Review’ -10% Reduction objective Voluntary Objective Encouraged IAI to adopt global energy intensity reduction targets Source : IAI

© A L C A N I N C.17 CEPS TF ‘Strategic Implications of the EU ETS Review’ Alcan’s AP technology is benchmark for energy consumption AP Technology, energy consumption

© A L C A N I N C.19 CEPS TF ‘Strategic Implications of the EU ETS Review’ Continuing to improve Process Energy Efficiency  Alcan has launched a new research and development (R&D) initiative focused on its leading AP series aluminum smelting technology. AP50 is the next generation smelter technology – to be piloted in Saguenay, Quebec.  Alcan has set an ambitious target of developing a 20% more energy efficient and environmentally friendly cell through the accelerated introduction of new innovative technologies.

© A L C A N I N C.20 CEPS TF ‘Strategic Implications of the EU ETS Review’ 1 Tonne of aluminium 20 Tonnes of C0 2 e Emissions 1 Tonne of aluminium Tonnes of C0 2 e Emissions Sustainable Trains Cars for today and tomorrow Serving our Customers in a Carbon- Constrained World 300,000 tonnes less CO 2 e emissions 15 tonne reduction in weight due to new aluminum alloys & techniques Cooperation with customers in aerospace

© A L C A N I N C.21 CEPS TF ‘Strategic Implications of the EU ETS Review’ Other Product Applications Energy Savings and Greenhouse Gas Reductions through Building and Renewable Energy Applications Wind TurbinesSolar SheetingGreen Buildings

© APMGDiapositive 22 Recycling only requires 5% of the energy Greenhouse gas emitted is 95% less 22 Recycling

© APMGDiapositive 23 Source: GARC, Global aluminium flow 2004 Energy: 50% Hydropower 200 Primary Smelters X‘000 Manufact. Plants 1200 Recycling Plants

© APMGDiapositive 24 Importance of primary and recycled Aluminium production in EU

© APMGDiapositive 25 Global Policy Leadership We have made much progress and Alcan and with the other International Aluminium Institute members (70 percent of global production) We believe, however, that more must be done to encourage aluminium industry progress, everywhere We are encouraging the industry to adopt even more ambitious voluntary targets and to consider development of a global sector agreement

© APMGDiapositive 26 Policy context European aluminium producers support global market-based mechanisms to: accelerate real GHG reductions, with existing technology; stimulate the development of new emission abatement solutions; and, give business the flexibility to adapt its GHG reduction plans in time and in geographical implementation The world, however, is far from an effective global system and remains divided on how best to tackle climate change Industry welcomes sound approaches to reduce CO2e emissions and, generally, views the AP6 and Kyoto plans as complementary

© APMGDiapositive 27 Competitiveness challenges Even though excluded from the EU ETS, our industry is severely impacted by the CO2 cost in the price of electricity We can not pass through any of these costs This threatens further dislocation, for no environmental gain Two independent reports have assessed the impact of EU ETS on production costs for aluminium -Carbon Trust – European ETS: Implication for Industry Competetiveness (2004) – Conclusion: €25/t CO2 will increase marginal production cost by 13,1% -International Energy Agency – Industrial Competetiveness under the EU ETS (2005) – Conclusion: €30/t CO2 will increase the cost by 11,2% Rather than regional constraints a global sector approach/agreement would be a better means to make progress; especially, to bring in those regions of the world which do not yet participate

© APMGDiapositive 28 Aluminium Sector Suitability Homogeneous sector Facilitates the development of sector-wide baselines Significant variations in emissions from the same technology type could be closed with best practices Standard technology : two major electrolytic technologies, with a couple of major sub-grouping in each Söderberg technology (older, smaller and less efficient) Prebake technology Most new investments generally use best available technology Accelerated adoption of BAT would reduce emissions, significantly, while meeting ever increasing demand

© APMGDiapositive 29 A Sector ‘Agreement? Target primary production (80% of emissions) Baseline Setting: Global BAT for new facilities Global top X% for older technology types Procedures to ensure credits for results supplementary to BAU Definition of the sector and its boundaries Indirect emissions could be included on a basis of BAT by fuel source and/or calculated on regional baselines Rate-based or indexed crediting : entities or projects emitting below a certain level (e.g. XtCO2/unit of primary metal) would generate credits Credits would flow through a bridge from the Clean Development Mechanism

© APMGDiapositive 30 Questions What is sufficient participation (companies and countries)? Availability and reliability of emissions data (Russia/China?) Volume of credits, prices and buyers? How to recognize full life cycle benefits and promote recycling to help satisfy the growing demand for aluminium? Role of international associations Negotiation of baselines and other terms of agreement Role of independent international authorities (CDM model or a new multilateral agreement) Monitoring/Supervision of the system Enforcement issues Country-based approach Legal authority to ensure compliance

© APMGDiapositive 31 EU Aluminium Sector Competitiveness While a global sector crediting agreement could promote environmental progress in non-annex (developing) countries, it will do nothing to promote the competitiveness of the EU aluminium industry CDM/JI trap – Even the existing CDM/JI mechanism militates against developing countries doing voluntarily what western industry already has done, as they expect to receive credits for adopting best practices. This would be exaggerated by a global sectoral crediting agreement; especially, if it was to include indirects EU industry will require mitigation of the CO2 cost pass through and to remain outside the EU ETS, post 2012, if it is to remain competitive

© APMGDiapositive 32 Conclusions Alcan is well advanced in addressing GHG emissions on a voluntary basis Alcan’s technology can contribute further to GHG reduction Alcan’s R&D will reduce emissions and electro-intensity, further Alcan is encouraging the global industry, through the IAI approach, further to accelerate widespread adoption of best practices and best available technology Alcan is leading an industry consideration of how a sectoral crediting agreement could provide industry in developing countries further incentives to make environmental progress

© APMGDiapositive 33