Jan du Plessis the chairman of metals group Rio Tinto has distributed the following letter to shareholders as Australia contemplates its “super tax” on mining firms in the region:

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Rio Tinto is expanding its Mine of the Future™ programme to develop new equipment and systems for deep underground mines and has selected three partners to work on the project. Aker Wirth and Atlas Copco will individually work with Rio Tinto to develop two new tunneling concepts and Herrenknecht will work with the Group on the development of a new shaft boring machine.

Rio Tinto’s Mine of the Future™ programme was unveiled in January 2008 and initially focused on the Group’s Pilbara iron ore operations. The programme is designed to create next generation technologies for mining operations that result in greater efficiency, lower production costs, improved health, safety and environmental performance, and more attractive working conditions.

Projects such as Resolution Copper in Arizona and Oyu Tolgoi in Mongolia will use an underground block cave mining method. This method requires construction of significant underground infrastructure prior to ore production. In anticipation of this need, Rio Tinto Technology and Innovation has been engaged in a long-running development programme to improve significantly both the safety and speed of constructing underground infrastructure such as shafts and tunnels.

The two new tunneling concepts from Atlas Copco and Aker Wirth will enable fast and cost effective tunnel creation. The shaft boring machinery being developed by Herrenknecht will combine rock excavation, rock transport and structural support – currently three separate processes – into a single system. All three new concepts are a result of civil tunneling industry technologies combined with input from Rio Tinto mining experts and contractor partners Redpath and Cementation.

John McGagh, Rio Tinto Head of Innovation, said, “At the heart of our Mine of the Future™ programme is industry-leading work to pioneer new technologies. The partnerships announced today will help us fundamentally change the world of underground mining by further improving safety and allowing more rapid construction of new underground mines. Our new partners will be very valuable in helping us to solve the challenges of developing block cave mines.”

The Rio Tinto, Atlas Copco and Herrenknecht teams will present information on their respective mining breakthroughs at the upcoming Society for Mining, Metallurgy and Exploration conference on 1-3 March 2010 in Phoenix, Arizona.

Rio Tinto has taken its borates business off the market after the sales process did not achieve values acceptable to the company in the prevailing economic conditions. The sales process is continuing for other businesses slated for divestment, including talc.

Rio Tinto believes the borates business is a good fit within its overall portfolio, based on its asset base, share of global supply and presence in Asian markets. Rio Tinto has also decided not to sell its Jadar lithium-borate deposit in Serbia, which will now be transferred from its Exploration group to be managed within the borate business.

This year Rio Tinto has announced agreed sales totalling US$2.5 billion, including US$850 million for the undeveloped potash assets in Argentina and Canada, US$750 million for the Corumbá iron ore operation in Brazil, US$761 million for the Jacobs Ranch coal mine in the United States and US$125 million for the Ningxia aluminium smelter in China.

Rio Tinto Alcan today announced it will slow the construction of the Yarwun alumina refinery expansion in Gladstone and curtail annual bauxite production at its Weipa mine to 15 million tonnes (from 19.4 million tonnes in 2008) due to the sharp fall in alumina and aluminium demand and prices in recent months.

Announcing the decision, Rio Tinto Alcan Bauxite and Alumina president Steve Hodgson said the depressed state of the market and a sharp cutback in demand made further tough decisions necessary.

Mr Hodgson said that the current demand for aluminium remained poor and despite major industry wide production cutbacks, stocks continue to increase.

“Even with alumina industry capacity cuts equivalent to 21 million tonnes per year since the beginning of the crisis, including cuts of 12 million tonnes made since January, there is still little improvement in the alumina price.

“At current prices around 70 per cent of the industry is currently operating at a financial loss,” Mr Hodgson said.
 
Work on the Yarwun alumina refinery expansion will be slowed to reduce the rate of capital expenditure. The change to the construction schedule will result in a revised completion date in the second half of 2012.

The decisions announced today will result in the loss of around 100 permanent roles at Weipa and approximately 570 contractor roles in Gladstone. Additionally, approximately 35 permanent roles will be lost from the Yarwun refinery and at Boyne Smelters also in Gladstone.

Mr Hodgson said cost reduction and cash conservation initiatives were being implemented across all Rio Tinto Alcan business units and operations.

“We are strongly focused on minimising costs and conserving cash, and this work is ongoing in our operations as we continue to closely monitor market conditions.”

The role and contractor reductions include:

• Approximately 500 contractor roles at the Yarwun alumina refinery expansion near Gladstone, Queensland
• Approximately 20 permanent roles at Boyne Smelters Limited in Gladstone, Queensland
  100 permanent roles at the Weipa bauxite mine, Cape York, Queensland
• Approximately 15 permanent roles at the Yarwun Alumina Refinery in Gladstone. Additionally a change to the maintenance arrangement at the Yarwun refinery has recently resulted in a reduction of about 70 operational maintenance contract roles

“We will ensure all impacted employees receive their full entitlements and ensure they have the support and assistance they need in the coming weeks,” Mr Hodgson said.

Rio Tinto announces that Jan du Plessis will be appointed as Chairman of the Boards with effect from the conclusion of the Annual General Meeting of Rio Tinto Limited on 20 April 2009. He joined the Boards as a non executive director on 1 September 2008.

As previously announced, Rio Tinto’s current Chairman, Paul Skinner, will retire from the Boards as Chairman and a non-executive Director at the conclusion of the AGM on 20 April 2009.

Mr du Plessis said “I am delighted to have the opportunity to lead the Rio Tinto Boards at a time of significant change and to be working with such a strong management team led by Chief executive, Tom Albanese. Our immediate focus must be on giving Rio Tinto the best possible platform to create shareholder value and to weather the tough and uncertain global economic conditions. Pursuing the completion of the transaction with Chinalco will give Rio Tinto this platform, from which we will be even better placed to prosper when we see economic recovery.”

Mr Andrew Gould, Senior Independent Director, Rio Tinto, said, “On re-starting the search for a successor to Paul Skinner, the Nominations Committee focused on identifying a candidate with outstanding abilities and experience to lead the Rio Tinto Boards. Jan du Plessis brings a wealth of international business experience to the role and has clearly demonstrated his capabilities since he joined the Boards in September. I am delighted that he will be taking up the role of Chairman. I would like to thank Paul Skinner for agreeing to stay on until a successor was found and for his contribution to the company during his tenure.”

Biographical details – Jan du Plessis

Jan du Plessis will continue to be Chairman of the Board of British American Tobacco plc, a role he has held since 2004. He is a non-executive director and chairman of the Audit Committee of Lloyds Banking Group plc, although he has indicated that he intends to stand down from that role in due course. Jan has also been a non-executive director of Marks & Spencer Group PLC since November 2008.

He was previously Group Finance Director of Richemont, the Swiss luxury goods group and chairman of RHM plc, then a leading British food manufacturer. Jan has degrees in Commerce and Law from the University of Stellenbosch, South Africa, and is a South African Chartered Accountant.