bc sustainabledevelopmentreport en

Rio Tinto Alcan Primary Metal BCwww.riotintoalcaninbc.comCanada

Sustainable Development Report 2011

About This ReportWe produced our first annual sustainable development report for BC Operations in 1999. This edition, covering the calendar year 2011, marks the 13th year of public disclosure of key performance indicators that track our progress across the governance, environmental, social and economic dimensions of sustainable development.

This report was prepared primarily for the benefit of external stakeholders, including residents of our operating areas in Northwest and North Central BC, suppliers, customers, investors, and regulators. Reporting relates to our primary metal operations in BC and, unless otherwise noted, excludes the small Strathcona coke calcining plant located near Edmonton, Alberta, which reports into BC Operations.

Content has been developed in accordance with recognized international recommendations for sustainable development reporting, such as the Global Reporting Initiative (GRI) guidelines. However, since this report provides a high-level overview and pertains to a single operating location rather than to the corporation as a whole, no declaration is made with respect to formal application of GRI guidelines.

Information on broader corporate practices and outcomes in the area of sustainable development is available at www.riotintoalcan.com and www.riotinto.com. In addition to this report, Rio Tinto Alcan Primary Metal BC produces a detailed Annual Environmental Report as part of the requirements associated with our operating permits in BC. That report is available at www.riotintoalcaninbc.com.

1

Sustainable Development Report 2011Table of Contents

2 About Rio Tinto Alcan 2 Message from the Vice President 4 Message from the Director of Operations

5 Operational Overview 5 Facilities 5 People 6 Production 7 Kitimat Modernization Project

8 Introduction to Sustainable Development 8 Our Sustainable Development Approach 8 Our Sustainable Development Framework

10 Performance: Governance

11 Performance: Environment

18 Performance: Social

20 Performance: Economic

24 Our Stakeholders and Future

24 Your Feedback

Ron Plante

2

Sustainable Development Report 2011About Rio Tinto Alcan

No one was more pleased or relieved than me when Rio Tinto announced in December the full funding of our project and with that gave the Kitimat Modernization Project (KMP) notice to proceed. The investment of US$3.3 billion in Kitimat is of course nothing less than massive both in scope and complexity. That we must continue operating the old smelter while building a new one within the same footprint makes it all the bigger an undertaking.

2011 had the potential to be “our year” and so it proved.

By the end of the year my role had changed to focus on the next steps of strategic development in Western Canada and of course very specifically BC and Kitimat.

Headquartered in Montreal, Canada, Rio Tinto Alcan is one of five product groups of Rio Tinto, a leading international mining company involved in each stage of metal and mineral production. The Group is listed on the London Stock Exchange and Australian Securities Exchange under the symbol RIO.

Rio Tinto’s reputation stems from core values of accountability, respect, teamwork, and integrity as

About Rio Tinto AlcanRio Tinto Alcan is a global leader in the aluminium business. We are one of the world’s largest suppliers of high quality bauxite, alumina, and aluminium and our AP™ smelting technology is the industry benchmark. Our enviable hydroelectric power position delivers significant competitive advantages in today’s carbon-constrained world.

expressed through the principles and standards of conduct set out in our global code of business conduct, “The Way We Work.” These guiding values determine the way we manage the governance, environmental, social and economic dimensions of our business.

To learn more about Rio Tinto Alcan and Rio Tinto, please visit www.riotintoalcan.com and www.riotinto.com

The completion of the backup tunnel in Kemano and the development potential of the Douglas Channel as an integrated hub for Rio Tinto and third-party materials became a full-time job. Rio Tinto Alcan was restructured and the Primary Metal business group reformed.

BC Operations is now wonderfully placed to be a foundation within the Primary Metal group.

Staying the Safety CourseMost notably in 2011, we maintained very strong safety performance, despite the heightened potential for incidents due to overlapping de-commissioning and new-construction activities. Regrettably, we lost some ground

Message from the vice presidentIn the life of an operation as complex as Rio Tinto Alcan Primary Metal BC, no one year is quite like another. However 2011 proved to be monumental in securing the future.

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Sustainable Development Report 2011Message from the Vice President

on the journey towards zero harm by choice, with two more lost-time injuries than in 2010. But the all-injury or recordable count remained at the remarkably low and record-setting level of nine for the year.

Our environmental results also reflect continued progress in some areas, including a reduced number of permit non-compliances. Total emissions of various types were down – although this was partly a result of reduced production. Emissions per tonne of production were up in many cases, but for the most part only by moderate margins. Less positively, we reported an increased number of spills. You’ll find specific data elsewhere in this report.

Big Benefits, Highly LocalizedThe scope of the economic benefits our operations create, and the extent to which they remain within Northwest BC, continue to

speak for themselves. As in 2010, the economic impacts of our regular operations were augmented – and to a considerably larger extent – by the procurement and resulting employment benefits associated with the KMP.

That latter category of benefits has continued to expand in 2012 as we have moved further into full construction mode, supported by daily spending in the millions of dollars.

We worked in 2011 to capture KMP’s potential to advance regional economic development and diversification. As of

2011 Highlights• All-injury count at <10• Reduction in environmental

permit non-compliances• Extensive economic impact

in Northwest BC• Maximizing local benefits

from KMP • Agreement with Cheslatta

Carrier First Nation on land transfers

• Notice to Proceed on KMP

year end, more than 60 per cent of the KMP workforce was from the Kitimat-Terrace region, thanks in part to a local-priority policy.

It was also another milestone year in our relationships with neighbouring First Nations. We completed multi-year discussions with the Cheslatta Carrier First Nation regarding lands in the vicinity of the Nechako Reservoir. And in a move that can rightly be called historic, we formally transferred these properties to the First Nation in early 2012.

Vote of ConfidenceThe outcomes during the year justified the highly important vote of confidence in the future of this operation that Rio Tinto made when it gave final notice to proceed with the full scope of the KMP investment.

Over the course of 2011 and into 2012, the new state-of-the-art smelter has taken more concrete shape day-by-day. With the new technology it will use, we will be able to significantly improve our performance across a range of environmental, social and economic metrics. We anticipate significant benefits for all stakeholders, and look forward to laying them out in future reports of this type.

In the meantime, I believe 2011 performance demonstrates our readiness to make the most of our remarkable new facility – as well as our commitment to getting the best results possible from the old smelter, right up to the last pour of aluminium within its walls.

Paul HenningVice PresidentBC Operations and Strategic Projects, Western Canada

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Sustainable Development Report 2011Message from the Director of Operations

Message from the Director of OperationsWhile appointed to my current role after just shortly after year-end 2011, I’m pleased to have the opportunity to provide some comments on our operational achievements and learnings.

Although markets remained relatively soft, we were able to sell all metal units produced mainly due to our diversified production capacities, which allow us to quickly respond to customer needs.

Health, safety, the environment and quality: these remained our focal points during the year. And through rigorous use of pre-task assessments, and adherence to defined procedures and practices, we kept up year-over-year improvement. We each committed to coming to work and going home safe and healthy every working day, and we recognized that this can only be done if we believe that “zero harm by choice” is both obtainable and sustainable.

From an operational perspective – and in addition to more fully integrating Rio Tinto standards and programs into our activities – we worked to return the maximum number of pots back to operation. This was a shifting of gears, after having slowed down replacement of failed units during the economic downturn – a strategy that better matched production with demand while protecting employees from lay off.

And although markets remained relatively soft, we were able to sell all metal units produced mainly due to our diversified production capacities, which allow us to quickly respond to customer needs.

KMP continued to move forward throughout 2011, with many local contractors on site performing preliminary work for the project. There were dramatic developments after full notice to proceed in December, including the remaking of the landscape of the north end of the plant site, with demolition and new-building erection begun.

The work to support operation of a new smelter of world-class capacities got well underway in 2011. Training plans are being developed and – in cooperation with the union – the full transition plan is taking shape. The stage is set for hugely exciting developments here, which we look forward to reporting on in 2012.

Kirk GrossmannDirector of OperationsRio Tinto Alcan Primary Metal British Columbia

An aerial view of what was once Potlines 7 and 8. The image shows the cleaning and demolition work that has been done in the area in preparation for the Kitimat Modernization Project.

5

Sustainable Development Report 2011Operational Overview

FacilitiesIn 2011, our Kitimat aluminium smelter completed its 57th year of continuous operation. The KMP – which involves the replacement of the existing smelter with a new one – progressed into full construction phase during the year (see page 7).

The annual rated capacity of the existing smelter, located at the head of the Douglas Channel on BC’s northwest coast, is 282,000 tonnes of primary aluminium. Its main raw material is alumina ore, large volumes of which are imported by ship. An electrolytic reduction process is used to separate aluminium out from the ore.

This involves dissolving alumina within a molten bath inside steel structures called pots. Electricity is then used to break the bond between the aluminium and oxygen molecules of which alumina is composed. The heavier aluminium molecules sink to the bottom of the pot and are extracted and transported to a casting centre. Various alloying materials, such as magnesium and copper, are added to produce specific characteristics such as strength and corrosion resistance. The aluminium is then poured into moulds and chilled with water, forming solid ingots of specified shapes and sizes.

The large amounts of electricity required are generated at the Kemano powerhouse located 75 km southeast of Kitimat. With an installed hydroelectric generating capacity of 1,000 megawatts (MW), the Kemano powerhouse uses water impounded in the 91,000-hectare Nechako Reservoir in North Central B.C.

Other facilities on-site at Kitimat produce specific materials required in aluminium production, such as the carbon-based anodes used to introduce electricity into the pots.

PeopleRio Tinto Alcan employed 1,261 people in BC as of the end of 2011, excluding 42 workers on Long Term Disability (LTD) and down from 1,389 in 2010. All but four employees were based in Kitimat, including 1,218 working at the smelter and another 39 working shifts at the powerhouse in Kemano. Two employees were based in each of Vanderhoof and Vancouver. The KMP is estimated to have created a further 857 jobs in BC during 2011 at suppliers to the project.

Our workplace is unionized, with 81 per cent of the workforce (1,018 employees as of December 31, 2011) represented by the Canadian Auto Workers Union, Local 2301. All union members are in permanent positions.

The non-unionized workforce is made up of employees performing managerial, supervisory, professional, and administrative functions, all of whom are in permanent, full-time positions.

Operational Overview

Removing the old anodes and cathodes from Potline 7B.

6


The average age of employees in 2011 was 47 years, with an average of 20 years of service. Employee turnover (including transfers) for 2011 was 11.1 per cent, compared to 7.6 per cent in 2010.

In addition to regular employees, Rio Tinto Alcan employed 76 summer students in BC, down from 120 students in 2010, and two co-op students in 2011. Students who meet requirements relating to experience, local residency, and post-secondary education performance are then selected by draw.

Rio Tinto Alcan supports employee participation in various external training programs such as post-secondary education through accredited universities. Employees also participate in in-house training. This enables employees to develop their skills and realize their personal and career goals.

ProductionIn 2011, Rio Tinto Alcan Primary Metal BC produced 168,021 tonnes of hot metal, down from the 184,366 tonnes produced in 2010 due to the decommissioning of older potlines to make way for the new smelter.

The Kitimat smelter previously produced three types of ingots: value-added sheet; extrusion ingot in rectangular and cylindrical forms; and trilok, which is sold to customers for remelting and a variety of end-use applications. Production of alloyed cylindrical extrusion ingot was discontinued in 2011 due to market considerations. Products are shipped to markets in North America and Asia, primarily the United States, Korea, and Japan.

Total sales of ingot products were 171,591 tonnes. At an average value of $2,568 (US) per tonne, Rio Tinto Alcan estimates the earnings value at US$440.7 million, allin foreign exchange to the Canadian and BC economies.

Modernization construction is projected to reach its peak in early 2013, with the first hot metal in the new smelter expected to be poured in 2014

Ron Fossl

7


In December 2011, Rio Tinto Alcan announced a full notice to proceed with the project, representing a formal commitment to complete the $3.3 billion investment. KMP is already generating significant employment and economic activity in Northwest British Columbia (see page 23). And average daily expenditure of $3.1 million makes on-schedule completion critical.

KMP early-works implementation began in 2008, and site preparation extended until 2010. Work in 2011 included engineering and design, earth works, cleaning and demolition of buildings housing dormant potlines, utilities corridor installation, commencement of building relocations, and construction of the first phase of an on-site residential village for the construction workforce.

Kitimat Modernization Project: 2011 Status Update

The modernized smelter will continue to take fuller shape in 2012, with building relocations proceeding, the anode bake furnace (a pivotal component of pre-bake technology) and other structures to be erected, and tie-in’s to be made to existing smelter operations. Construction is projected to reach its peak in early 2013, with first hot metal in the new smelter expected to be poured in the first half of 2014.

The modernized Kitimat smelter will be one of the lowest cost and most efficient in the world, and secure the presence of the aluminium industry in Northwest BC for decades to come. (See also page 24.)

The Kitimat Modernization Project (KMP) involves replacing the existing smelter with a new facility that will use Rio Tinto Alcan’s proprietary AP™ aluminum production technology. Smelter capacity will be increased by 48 per cent to 420,000 tonnes per year, and it will use virtually all of the firm power generated at Kemano. The step-change in technology will improve cost structures, energy efficiency, environmental performance and workplace conditions.

Michel Lamarre, Ron Leibach, Brent Hegger, Kitimat mayor Joanne Monaghan, Jean Simon, Paul Henning and Haisla Nation councillor Henry Amos cast the first shovel of dirt officially marking the beginning of the Kitimat Modernization Project on 1 Dec 2011.

8

Sustainable Development Report 2011Introduction to Sustainable Development

Our Sustainable Development Approach

Sustainable development is commonly defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”1. While it cannot be achieved by one organization on its own, we believe that our business can make an important contribution to the ongoing, global transition to sustainable development.

At Rio Tinto Alcan, our commitment to sustainable development is integrated into everything we do. Our operations give us the opportunity to bring long-lasting positive change to the communities, regions and countries where we work, and our metals and minerals are transformed into end products that contribute to higher living standards.

Adopting a responsible approach in metals and mining development ensures we gain and maintain our licence to operate. It means we provide confidence to our stakeholders, and improve our access to the mineral resources, people and capital we need. Our approach to sustainable development therefore enables us to keep investing in line with the Rio Tinto Group strategy.

Our focus on sustainable development provides us with a competitive advantage. This includes helping us to manage risks effectively, reduce environmental impacts, engage with our communities, decrease operating costs, provide additional business opportunities, attract high calibre employees and ensure their health and safety, and ultimately to deliver better returns for our shareholders.

Our Sustainable Development Framework

In 2011, Rio Tinto Alcan conducted a materiality assessment to determine which issues and indicators within overarching sustainable development principles would be of most relevance to external stakeholders and to our Product Group. The Rio Tinto Alcan Sustainable Development wheel shown on the facing page reflects the outcome of this assessment.

This report has been structured to align with the four quadrants of this circle, while containing the same set of performance measures found in previous reports from Rio Tinto Alcan Primary Metal British Columbia. We believe these measures are well aligned with the current nature of our operations and our stakeholder interests, and that they are of strong local pertinence.

Introduction to Sustainable Development

KMP Construction Village

9

Sustainable Development Report 2011Introduction to Sustainable Development

We will consider refinements to future reports to more closely align with performance measures reported at the Product Group level, as well as to reflect the significant operational changes that will result from smelter modernization.

1. Our Common Future, Report of the World Commission on Environment and Development, World Commission on Environment and Development, 1987. Published as Annex to General Assembly document A/42/427, Development and International Co-operation: Environment August 2, 1987, available at http://www.un-documents.net/wced-ocf.htm

Sustainabledevelopment

Environment

Govern

ance

Fina

ncial

perfo

rman

ce

Regional

economic

development

Engagement

Human

rights

Integrity &

compliance

Heal

th

People

Communities

Processtechnology& innovation

Waste

Energy

Land

Climate

change

Air

Water

Biodiversity

Safe

ty

Economic

Social

Further commentary on the Rio Tinto Alcan perspective on each of the four quadrants that make up this framework appears at the start of each of the following main sections. These include an overview of governance, and more detailed discussions of 2011 environmental, social and economic performance results for Rio Tinto Alcan Primary Metal British Columbia.

The Rio Tinto Alcan Sustainable Development Wheel

10

Sustainable Development Report 2011Performance: Governance

2. Rio Tinto’s global policies, standards and guidance notes are available at www.riotinto.com/library/3608_policies.asp

Performance: GovernanceThe Rio Tinto Framework: Our reputation for acting responsibly plays a critical role in our success as a business and our ability to generate shareholder value. That reputation stems from our four core values: accountability, respect, teamwork and integrity. “The Way We Work,” our global code of business conduct, supported by our global policies, standards and guidance notes2, in conjunction with the requirements of local law and our voluntary commitments, forms the basis of our governance systems.

2011 Highlights in British ColumbiaEngagement – Human Rights – Integrity and Compliance

• Maintained our long-standing integrated certification to independent environmental, production process quality, and occupational health and safety standards (ISO 14001, 9001, 18001); conducted multiple surveillance and internal audits

• Completed implementation of the Rio Tinto Health, Safety, Environment and Quality (HSEQ) Management System, thus standardizing approaches to ISO compliance

• Continued to update all aspects of risk management through ongoing target setting, implementation and assessment

• Achieved high-level of compliance with results-oriented multi-media environmental permit, updated to address activity changes associated with the KMP start-up

• Continued to engage on environmental matters with provincial and other regulatory authorities, and with local stakeholders represented on our Public Advisory Committee

• Continued to engage with community-based Social Impact Committee regarding KMP implementation, and to provide information through a KMP community office

• Continued to engage with First Nations in operating area, in accordance with signed agreements and protocols where applicable, such as the Haisla Legacy Agreement

Case studyA Consistent Understanding of Standards, page 4 at www.riotintoalcaninbc.com/media/ingot/Ingot_2011_September.pdf

3. Heavy flows prevented comparative measures in the unregulated Stuart River in 2011.

Haisla Nation chief councillor Ellis Ross, Rio Tinto Alcan chief executive Jacynthe Cote and councillor Keith Nyce.

11

Sustainable Development Report 2011Performance: Environment

Performance: EnvironmentThe Rio Tinto Framework: Respect for the environment is central to our approach to sustainable development. Wherever possible we prevent, or otherwise minimize, mitigate and remediate, harmful effects of the Group’s operations on the environment. We have developed a number of practical programs for environmental management, which include input from our local communities, as well as from experts in these fields.

2011 Performance in British Columbia: Environmental outcomes were significantly influenced by activities associated with the preparation and start-up of the Kitimat Modernization Project (KMP). It was the first full year of operation without lines 7 and 8, and there were additional changes such as preparation for closure of the alloyed cylindrical extrusion line. There were reduced impacts in areas such as greenhouse gas (GHG) emissions, due to process control improvements, while hazardous waste generation increased due to KMP activities.

2011 HighlightsBiodiversity – Water – Air – Climate Change – Land – Energy – Waste – Process Technology and Innovation

• Reduced GHG emission rate from 5.01 to 4.85 tonnes per tonne of production, mainly due to a further reduction in the duration and frequency of PFC-generating anode effects

• Diverted and consumed one-third less surface water at the smelter than in 2010• Implemented action plan to reduce pot process upsets which influence fluoride emissions; fluoride

emission rate declined slightly• Found significantly lower fluoride concentrations in vegetation (with exception of some areas adjacent

to smelter) due to reduced fluoride emissions and higher precipitation• Implemented multiple improvements to hydrogen fluoride (air quality) monitoring: monitors were

replaced with more efficient technology; monitoring network was expanded and siting improved; a passive monitoring program was implemented to provide more insight on dispersion (of both hydrogen fluoride and sulphur dioxide)

• Established two new weather monitoring stations, to provide insight on pollutant sources and contributing factors in the event air-quality issues are detected

• Implemented KMP Water Management Plan, through which surface water runoff from modernization activities is captured, treated and tested; and then discharged using a configuration designed to prevent overflows during heavy precipitation

• Observed no exceedances of 20-degree water temperature threshold in the regulated Nechako River during summer salmon migration period3

• Continued to engage with First Nations and other regional interests on land stewardship and ownership transfers (see Social highlights)

• Recorded lowest number of permit non-compliances since the exceptionally low non-compliance year of 2005

• Implemented environmental monitoring and risk-management requirements as part of the KMP contract management

Children of Kildala School’s Grade six class have learned that recycling can take on many shapes. KOOSCie, the aluminium dragon made from almost 3,000 pop can pull-tabs made its debut in 2011.

12


2011 Challenges• Particulate emission rate returned to a higher level, after a significant decline in 2010, although it

remained at a lower rate than in the two preceding years• Concentrations of dissolved aluminium, fluoride and total suspended solids increased due

to higher precipitation throughout the year; improved cleaning and maintenance of potroom courtyards was implemented to reduce an aluminium source

• Spent potlining generation increased as a result of the KMP-related closure in 2010 of two potlines; this hazardous waste was shipped offsite for treatment and permanent disposal in a secure landfill

• Incidents requiring reports to regulators increased, although no known environmental damage was associated with any of these 10 incidents

2012 Priorities• Continue to maximize the environmental performance of the existing smelter, while effectively

managing environmental impacts associated with KMP implementation• Maintain scheduled progress towards KMP completion and use of new process technology and

associated reductions in environmental impacts• Continue to engage with regulators regarding potential provincial implementation of a cap-and-

trade system relating to GHG emissions• Continue to engage with regulators to initiate the new smelter air-emission permitting process• Continue to improve process emission controls to operate within Environment Canada PAH

reduction emission targets

Case studyKeeping an On-site Stream Flowing Smoothly, page 11 at www.riotintoalcaninbc.com/media/ingot/Ingot_2011_September.pdf

More detail on environmental performance and influencing factors is available in the Annual Environmental Report for BC Operations at www.riotintoalcaninbc.com/media/reports/AER%202011.pdf

Hydroelectric Generation and Use, 2011

A

C

B

A Smelter Energy Consumption 3,427,621 MWh 51.25% (2010=54%) Aluminium Production (Reduction) 3,261,270 MWh - 48.75% (2010=52%) Auxiliary Uses 166,351 MWh - 2.5% (2010=2%)

B Power Sales 3,113,021 MWh 46.5% (2010=44%)

C Transformation & Transmission Losses 127,576 MWh 2% (2010=2%)

Energy Use at Powerhouse 19,358 MWh <1% (2010=<1%)

Total Generation at Kemano: 6,688,000 MWh (2010=7,053,000)

Energy Use by Source, 2011

A

B

A Hydroelectric (total generation at Kemano) 6,687,575 MWh 96% (2010=97%)B Natural Gas 249,865 MWh 3.6% (2010=3%) Fuel Oil (gasoline, etc.) 16,935 MWh <1% (2010=<1%)

Total 6,954,375 MWh (2010=7,291,537)

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Energy Use, per Tonne of Production

kWh

/ kg

Al

Year

17.0

17.5

18.0

18.5

19.0

11100908070605040302

Based on Aluminium production energy use only.

GHG Emissions (direct & process), Tonnes (C02 equiv.)

Tonn

es, C

O2 e

quiv

.

Direct GHG emissions from sources owned or controlled by Rio Tinto Alcan Primary Metal BC, including smelting, casting, anode production, on-site coke calcining, and power operations. Emissions are expressed on a tonne of CO2-equivalency basis.

Year

0

500,000

1,000,000

1,500,000

2,000,000

11100908070605040302

GHG Emissions Rate (direct & process), per Tonne of Production

Tonn

es C

O2 e

quiv

. / t

onne

AI

Ano

de E

ffec

t M

inut

es

Direct GHG emissions from sources owned or controlled by Rio Tinto Alcan Primary Metal BC, including smelting, casting, anode production, on-site coke calcining, and power operations. Emissions are expressed on a tonne of CO2-equivalency, and per-tonne-of-Aluminium-production basis.

Year0

1

2

3

4

5

6

7

8 Tonnes CO2

11100908070605040302

0

1

2

3

4

5

6

7

8

Anode Effects Minutes

PFC Emissions Rate, per Tonne of Production

Tonn

es C

0 2 equ

ilv. /

ton

ne A

l

Year0

1

2

3

4

5

11100908070605040302

14


Fluoride Emissions, Tonnes

Tonn

es

Year

0

100

200

300

400

500

600

700

800

11100908070605040302

Fluoride Emissions Rate, kg per Tonne of Production

kg F

/ t

onne

AI

Year

Permit Limit, 1.9 kg/t Al

0.0

0.5

1.0

1.5

2.0

2.5

3.0

11100908070605040302

PAH Emissions, Tonnes

Tonn

es

Year

0

50

100

150

200

250

11100908070605040302

PAH Emissions Rate, kg per Tonne of Production

kg P

AH

/ t

onne

Al

Year

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1110090808070605040302

Particulate Emissions, Tonnes (potroom roofs)

Tonn

es

Year

0

500

1000

1500

2000

11100908070605040302

Particulate Emission Rate, kg per Tonne of Production (potroom roofs)

kg /

ton

ne A

l

Year

0

1

2

3

4

5

6

7

8

11100908070605040302

Permit Limit, 7.5 kg/t Al

SO2 Emissions, Tonnes

Tonn

es

Year

0

2,000

4,000

6,000

8,000

10,000

11100908070605040302

SO2 Emissions Rate, kg per Tonne of Production

kg S

O2 /

ton

ne A

l

Year

0

5

10

15

20

25

30

35

11100908070605040302

15


Nechako River

2011

Stuart River(unregulated)

1983–2011 Average(Days/Year)

Day

s pe

r Ye

ar

Summer Water Temperature Management,Exceedances of 20ºC Water Temperature(July 20-August 20)

0

2

4

6

8

10

12

02.44 Due to heavy water �ows down the

Stuart River, �ow measurements were not taken for 2011.

Nechako River Chinook Spawner Counts

Year

Range establishedin 1987 agreement

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

11100908070605040302

Rio Tinto Alcan Primary Metal BC also diverts saltwater into its effluent treatment lagoons as a toxicity-control measure. Amounts vary in proportion to precipitation and lagoon outflows and are returned to the marine environment. These volumes are not directly measured, and are not included in the above totals. The figures above also exclude water diverted from the Nechako Reservoir for power generation, which is released into the Kemano River.

Water Use By Source, 2011

Surface Water – Diverted from Kitimat River and Anderson Creek to Kitimat Smelter

8,970 ML (mega-litres)

Imported Surface Water – Well Water for Non-Generating Use at Kemano

36 ML

Total 9006 ML

Nechako Reservoir 2011 – In�ows and Releases (% of Long-Term Average)

Kemano DraftSpillsIn�owsPrecipitation

0

100

200

300

400

500

600

700

800

DecNovOctSepAugJulJunMayAprMarFebJan

%

Dissolved Aluminium, Dissolved Fluoride, TSS; B Lagoon

Dis

solv

ed A

lum

iniu

m (

ML)

Dis

solv

ed F

luor

ide,

TSS

(M

L)

Year

Permit Limit Dis. Al

Permit Limit TSS = 50ML

Permit Limit Dis. FTotal Suspended Solids

Dissolved Fluoride (ML)

Dissolved Aluminium

0.0

0.5

1.0

1.5

2.0

2.5

3.0

111009080706050403020

2

4

6

8

10

16


Spent Potlining Generation, Tonnes

Tonn

es

Year

0

5,000

10,000

15,000

20,000

11100908070605040302

The increase in SPL generation was a result of KMP-related potline closures in 2010.

Spent Potlining Generation Rate, kg per Tonne of Production

kg S

PL /

ton

ne A

l

Year

0

20

40

60

80

100

120

11100908070605040302

The increase in SPL generation was a result of KMP-related potline closures in 2010.

Average Potlining Lifespan, Days

Day

s

Year

1,500

2,000

2,500

11100908070605040302

Num

ber

of E

vent

sThe “speci�c” category of non-compliances includes 10 types of non-compliances that were previously reported separately. P2 = Pollution Prevention.

Year

Environmental Permit Non-Compliances

P2 Program

0

3

6

9

12

15

Dissolved aluminium ef�uent

Fluoride roof emissions

Miscellaneous

Speci�c

1110090808070605040302

Number of Spills

Year

0

2

4

6

8

10

11100908070605040302

17


The number of lost-time injuries went up by two from 2010, but safety results generally remained excellent, with an all-injury count in the record-setting single-digit range

Environmental outcomes were significantly influenced by KMP-related activities, with lower GHG emissions and higher solid waste generation

Safety coordinator Terry Taylor leads a group discussion on safety.

18

Performance: SocialThe Rio Tinto Framework: We’re committed to providing a safe and healthy workplace for our employees where their rights and dignity are respected. We set out to build enduring relationships with our neighbours that demonstrate mutual respect, active partnership, and long-term commitment. In the long run, the trust that is engendered by these solid relationships will reinforce our ability to gain preferential access to resources.

2011 Performance in British Columbia: Sustaining the excellent workplace safety results of 2010 – with a single-digit all-injury count – was among the performance highlights of the year. It was all the more impressive given the additional on-site KMP activities and significant resulting changes to usual operations. KMP was also a dominant consideration in the context of workforce development and community outreach.

2011 HighlightsCommunities – People – Health – Safety

• Maintained the total all-injury count at the record-setting low level achieved in 2010 • Incorporated comprehensive safety standards and requirements into contracts issued in relation to KMP• Continued to provide a range of employee learning and professional development opportunities: eight

new apprenticeships commenced, 15 employees pursued external training covered by an Educational Assistance Program, and additional support was provided for two employees pursuing masters-level studies

• Remained a joint owner (along with the Haisla Nation Council) and client of the Kitimat Valley Institute Corporation (local skills development); used KVI to provide health, safety and environment training to external contractors

Hosted annually, the St. Paul’s Hospital “Lights of Hope” brightens up the evening sky in Vancouver with a collection of stars including some provided by Kitimat. Leonard Nunes, Jim Ferguson and Dennis Skender donated their own time to build the 15 foot star out of material provided by the company.

19

Sustainable Development Report 2011Performance: Social

• Increased participation in BRAVO employee recognition program• Rolled out Leading for Improvement workshops for management and frontline leaders• Continued to engage with community-based Social Impact Committee regarding KMP

implementation, and to provide information through a KMP community office• Established a local-priority hiring policy for KMP work, with 62% of the project workforce to the

end of 2011 being from the Kitimat-Terrace area• Hosted contractor forum in Vancouver, to connect major KMP bidders with locally available sub-

contracted support• Completed long-term discussions with Cheslatta Carrier culminating in an agreement (in January

2012) to transfer about 4,800 hectares of watershed region land to the First Nation• Provided increased Community Investment Fund support – $1.0 million – for sporting,

recreational, cultural and other initiatives in the Kitimat, Watershed and Vancouver regions

2011 Challenges• KMP implementation – involving significant site reconfiguration and relocations – created large-

scale change for employees; additional contract resources were provided to the work-area change leads tasked with supporting employees

• An average workforce age of 46.7 years is driving significant numbers of retirements, creating increased training requirements and skills shortfalls in some areas

2012 Priorities• Continue to prepare to meet the workforce and skills requirements associated with smelter

modernization and backup tunnel projects• Increase internal communications to better familiarize employees with KMP• Renew the collective agreement with the unionized workforce

Case studyChecking in on Road Safety, page 5 at www.riotintoalcaninbc.com/media/ingot/Ingot_2011_November.pdf

Avoiding a Potentially Lethal Mix, page 7 atwww.riotintoalcaninbc.com/media/ingot/Ingot_2011_Jan-Feb.pdf

AIFR / LTIFR

Year

AIF

R /

LTI

FR

AIFR (All Injury Frequency Rate)

0

2

4

6

8

10

LTIFR (Lost Time Injury Frequency Rate)

11100908070605040302

Total # of AI and LTI

Year

# o

f AI /

LTI

AI (All Injuries)

0

20

40

60

80

100

LTI (Lost Time Injuries)

11100908070605040302

Community Donations in 2011In 2011, Rio Tinto Alcan contributed $1,029,260 to important community causes

to bene�t its northern operating communities and the broader BC public.

Business11%Culture

28%

Education13%

Environment16%

Health25%

Recreation4%

Other 3%

20

Sustainable Development Report 2011Performance: Economic

Performance: EconomicThe Rio Tinto Framework: Sustainable development is underpinned by sustainable economies. Our continuing financial success is based on our ability to secure access to land, people and capital. We use our economic, social, environmental and technical expertise to harness these resources and create prosperity for our shareholders, employees, communities, governments and business partners.

2011 Performance in British Columbia: We focused on maximizing the return from an existing facility, at the same time that we are constructing its replacement within the same footprint. Key developments included an asset acquisition and product-mix optimization, intended to lay a basis for high-return operation of the modernized smelter. Efforts continued to support a strong and diversified local economy more broadly.

2011 HighlightsFinancial Performance – Regional Economic Development

• Returned previously idled pots to production in response to improved market conditions and to mitigate impact of line shutdowns necessitated by KMP

• Brought annual operational costs in at $7.8 million under budget• Optimized product mix and maximized revenue generation, including preparation for exit from

no-longer profitable alloyed cylindrical extrusion production (shutdown in January 2012), and achievement of record power sales

• Purchased and secured Transport Canada accreditation for former West Fraser Eurocan wharf terminal; providing space for transportation of construction materials and for other KMP-related requirements, and capacity for increased product shipments post-modernization

• Completed a major asset condition assessment with first-ever remote inspection of a portion of tunnel used to deliver water to Kemano powerhouse

• Continued to implement structured business improvement initiatives including: employee training and certification in Lean Sigma Six; implementation of IPT (Improving Performance Together) gap analysis and Lean Information Centre communication tool; and use of 5S operational improvement methodology

• Continued to work with Haisla First Nation to leverage procurement, training, employment and community-development opportunities arising out of KMP, as per the terms of the Haisla Legacy Agreement

• Continued to work, in collaboration with regional development organizations, to maximize local contracting and other growth opportunities associated with KMP

The marine terminal facilities of the former Eurocan mill in Kitimat were purchased by the Rio Tinto Alcan in 2011. The terminal will be used as the main lay-down site for materials used to build the KMP.

21


2011 Challenges• Maintaining process quality despite deteriorating coke quality, structural issues in existing

potrooms, and impact of a major power outage in April• Ensuring efficient and non-disruptive cleaning and demolition of pot lines 7 and 8

2012 Priorities• Achieve a targeted increase in hot metal production • Align operating and capital expenditures with product pricing and economic conditions, and

continue to achieve further cost savings• Plan for operational transition to use of modernized facilities• Plan for implementation of Rio Tinto Business Solution enterprise software and business

optimization tool

Case studyRamping up Idled Production, page 9 at www.riotintoalcaninbc.com/media/ingot/Ingot_2011_Jan-Feb.pdf

Hot Metal Production, Tonnes

Tonn

es

Year0

50,000

100,000

150,000

200,000

250,000

300,000

11100908070605040302

Production declines in 2010 and 2011 were a result of KMP-related potline closures.

Product Mix, Casting

Trilock

Tonn

es

SheetBillet % Value-Added

Year

0

50

100

150

200

11100908070605040302

0

20

40

60

80

100

% V

alue

-Add

ed

Reduced value-added production in 2008 and 2009 was a result of responses to market demand conditions during the economic downturn

Number of Customer Complaints

Year

0

2

4

6

8

10

11100908070605040302

22


($ m

illio

ns)

Rest of BC

Northwest BC

All gures are in 2011 dollars

0

20

40

60

80

100

120

11100908070605040302

Goods & Services Purchased from

BC Suppliers$65.7 million

Pension Paymentsto BC Retirees$40.5 million

Payroll(regular earnings,

premiums, shift pay)$104.1 million

Goods & Services

Southwest BC & Vancouver Island$19.6 million30%

Interior BC$12.4 million ($7.0 million in Prince George)19%

BC Operations goods & services purchased in BC: $65.7 million (excluding raw materials)

Breakdown of Expenditures in Northwest BC*:

Communities Sectors

Telkwa/Houston/Smithers$2.7 million8%

Others$1.6 million5%

Number of Northwest Vendors Dealing with BC Operations (by community)

Total: 271

Regional District ofKitimat-Stikine

$198,000

RegionalHospital District

$445,000

OtherDistricts$19,000

Total Property Taxes: $13.1 million

Property Taxes Remaining in Northwest BC: $12.0 million

Provincial Government Portion: $1.1 million(e.g. School Purposes & BC Assessment)

Benets(WCB; CPP; EI; vacation pay;company pension,savings & life insurance plans)$57.8 million

Payroll & Bene�tsTotal number of individualsemployed as of Dec. 31, 2011 : 1,257†

– 32% of total employment in Kitimat– 10% of total employment in Kitimat-Terrace area† Excluding workers on LTD

Total estimated direct, indirect/induced employment in Kitimat-Terrace area: 3,143Total number of pensioners living in BC (approximate): 1,573Average compensation per employee in 2011: $128,780(including benets)

District of Kitimat$11.3 million

BC AssessmentAuthority &

Municipal FinanceAuthority

$76,000

Debt$288,000

School & Transit Purposes$730,000

Manufacturing$9.8 million

29%

Wholesale & Retail Trade$9.1 million27%

Construction &Contracting$5.7 million17%

Services$6.0 million18%

Transportation$1.5 million4%

Kitimat/Kitamaat

$24.0 million71%

Terrace/Kitwanga$6.6 million20%

(goods and services)

12Telkwa/

Houston/Smithers

6Prince Rupert

Terrace/Kitwanga

134

Kitimat/Kitamaat

119

Historical Breakdown of Expenditures in BC (2002 –2011)

Payroll & Benets forBC Employees$161.8 million

Northwest BC $33.7 million

51%

BC Operations $281.1 Million

Direct Economic Contributions to BC in 2011

payroll & benets for BC employees $ 161.8 milliongoods & services from BC suppliers $ 65.7 millionpension payments to BC retirees $ 40.5 millionproperty taxes $ 13.1 million

Excludes vendors with less than $25,000 in annual sales

Prince Rupert$0.4 million1%

* This year’s analysis uses a narrower geographic denition of “Northwest BC” which excludes interior communities including Prince George.

23


Rest of BC$72.3 million

75%

KMP Goods & Services purchased in BC: $95.8 million

Breakdown of Expenditures in Northwest BC:

Northwest BC* $23.5 million

25%

Terrace/Kitwanga$1.3 million5%

Other$0.3 million2%

Kitimat/Kitamaat$21.9 million

93%

Direct Economic Contributions of KMP to BC in 2011

* This year’s analysis uses a narrower geographic de�nition of “Northwest BC” which excludes interior communities including Prince George.

24

Sustainable Development Report 2011Our Stakeholders and Future

Our Stakeholders and FutureThe Kitimat Modernization Project is expected to deliver significant benefits from the standpoint of all of our operation’s stakeholders. Expanded production at more competitive costs will secure market position, employment stability and spinoff economic benefits. And new technology will increase energy efficiency, improve process control, and significantly reduce environmental impacts. Our skilled workforce will have the benefit of better working environments within what will be one of the three largest smelters on the continent, and what will remain a cornerstone of the regional and provincial economies. For information and updates: www.kitimatworksmodernization.com

Your FeedbackOur sustainable development reports are intended to provide relevant and balanced information on the impacts of our operations that are of interest to our stakeholders. Let us know how we did. In particular, we’d like to know:

• whether we missed any topics that are of interest to you, or included any that you don’t find relevant; and

• whether or not we are providing the right amount and type of information on the topics we did include.

Please send your feedback and suggestions for report improvement to [email protected]. And if you let us know a bit about who you are and why our operations interest you, we’ll be able to make even better use of your input.

A view to the future for Kitimat. Once completed, the new potlines at Kitimat will look similar to the one show above at the company’s smelter in Alma.

3

INDEX OF TERMS

AIFR All Injury Frequency RateAP Alcan Pechiney (39) Technology CO2e Carbon Dioxide EquivalencyCPP Canada Pension PlanEI Employment InsuranceGHG Greenhouse GasISO International Organization for StandardizationKMP Kitimat Modernization ProjectLTD Long Term DisabilityLTIFR Lost Time Injury Frequency RateMWh Megawatt HoursPAH Polycyclic Aromatic HydrocarbonsPFC PerfluorocarbonRTA Rio Tinto AlcanSO2 Sulphur DioxideSPL Spent PotliningWCB WorkSafeBC

Printed in Canada on 100% post-consumer recycled fibre.

© Rio Tinto plc and Rio Tinto Limited Published 2012

Rio Tinto Alcan Primary Metal BC OperationsKitimat OperationsPO Box 18001 Smeltersite RoadKitimat, BC V8C 2H2Tel: 250 639 8000Fax: 250 639 8127

Kitimat Modernization Project Community Office254 Upper City Centre MallKitimat, BC V8C 1T6Tel: 250 632 4712Fax: 250 632 4771

Vancouver OfficeSuite 354 - 200 Granville Street Vancouver, BC V6C 1S4 Tel: 604 257 1400Fax: 604 257 1421

Rio Tinto Alcan1188 Sherbrooke Street WestMontreal, Quebec H3A 3G2Tel: 514 848 8000

Vanderhoof OfficePO Box 25, 158 Stewart StreetVanderhoof, BC V0J 3A0Tel: 250 567 5105Fax: 250 567 5800

Burns Lake OfficeEvergreen MallPO Box 936Unit 3B, 321 Highway 16Burns Lake, BC V0J 1E0Tel: 250 692 4144Fax: 250 692 1888

Skins Lake Spillway22573 Ootsa Lake Rd.East Burns Lake, V0J 1E4Tel: 250 694 3532

www.riotintoalcaninbc.comwww.kitimatworksmodernization.com

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