Rio Tinto plc Rio Tinto plc Announces That Rio Tinto Limited has Released the Attached Notification to the Australian Stock Exchange.

LONDON--(BUSINESS WIRE)--Sept. 13, 1999--

Rio Tinto Limited

Year 2000 Compliance Report - September 1999

"Has your company's assessment of its potential exposure to the Year 2000 problem changed materially from what the market has previously been told? If it has, your response should describe the change."

No.

"Has your company initiated any material action to address the Year 2000 problem beyond actions previously disclose to the market or does it propose to initiate any such action? If is has, your response should describe the action."

No.

Rio Tinto's activities and progress relating to Year 2000 are set out below.

Strategy

The Rio Tinto Group has been pursuing a strategy since 1996 to ensure that all significant computer systems and computer-controlled plant and equipment across all Group sites, will be Year 2000 compliant. The key objective is to ensure "business as usual" before, during and after 31 December 1999, including leap years. The Group's strategy is focused on those systems and operating plant and equipment that are critical to the continuity of its business, the health and safety of employees and protection of the environment. The Group is also concerned to ensure that its key business partners are prepared for the Year 2000.

In June 1997, the Rio Tinto Group established a programme for addressing Year 2000 compliance. Accountability for compliance lies with line management while monitoring and review is conducted at Group level.

The Group's Year 2000 programme comprises two elements. The first addresses the Group's internal systems and processes. The second addresses external dependencies involving business partners.

Internal systems

The following steps are intended to achieve the British Standards Institution's Year 2000 compliance standard for critical internal applications:

-- preparation of an inventory of computer systems, microprocessor

controlled plant and equipment and PLC (programmable logic 

control) operating equipment

-- identifying from the inventory of systems and operating

equipment, those that are essential to the safety and well-being

of employees, protection of the environment and continuity of

Group businesses

-- testing Year 2000 compliance of critical systems and equipment,

including simulated tests and written assurances from customers

and suppliers

-- taking corrective action, where necessary, to ensure Year 2000

compliance

-- testing the corrective action

-- developing appropriate contingency plans, where necessary.

External dependencies

The Group's strategy also includes liaison with third party suppliers, customers and business partners to pursue Year 2000 compliance through the business chain. This includes companies in which the Group has a significant interest but which it does not control. Rio Tinto cannot take responsibility for the actions of these entities or third party suppliers, customers or business partners, however, it continues to encourage and monitor the development and implementation of their Year 2000 strategies. Where the necessary assurances cannot be obtained appropriate contingency plans are being developed and will continue to be refined.

Information Technology (IT) systems

The Group relies on information technology (IT) systems for a wide range of business applications as well as specialised applications such as mine planning and ore reserve modelling. The great majority of these systems have been purchased from major software houses. Rio Tinto does not have common systems across its operations and accordingly, the risk of Year 2000 failure is diversified amongst a range of systems and suppliers. The inventory, rectification and testing of these systems is now substantially complete. This has involved, in a number of instances, the accelerated replacement or upgrade of IT systems.

Non-IT systems

Rio Tinto is heavily dependent on computerised process control systems to manage and control its mining, smelting, refining and other processing activities. Further, many items of machinery and equipment used in the mining industry contain date aware components that potentially could be affected by the Year 2000 issue. The inventory, rectification and testing of these items is substantially complete.

Third parties

Rio Tinto systems have a very low level of integration with third party systems. However, the Group is reliant upon the continued operation of key suppliers, customers, national utilities and infrastructure. These risks are greatest where the Group's operations, suppliers or customers are located in developing countries. However, only 15% of the Group's assets are in these countries, generating only 25% of the Group's sales revenue. Each of the Group's business units has been assessing the Year 2000 preparations of its key business partners. These assessments are used to determine the need for, and nature of, contingency plans in the event of Year 2000 failure. This work with key business partners is on-going and will continue throughout the year.

Most likely worst case scenario 

Due to the inherent uncertainties associated with the Year 2000, and in particular, the reliance on key suppliers and customers, it is difficult to predict the likely impact that the Year 2000 will have.

In particular it is difficult to assess the risk posed by suppliers of external infrastructure such as power and water in that it is not feasible to obtain categoric assurance of Year 2000 readiness, particularly as these utilities are in turn dependent on their own third party suppliers.

Each business operates with a high degree of autonomy and because of the Group's geographical, product and systems diversity the likelihood of a material Year 2000 failure attributable to third parties is considered to be low.

Rio Tinto is of the opinion that the most likely worst case scenario will be a series of widespread but minor and unrelated interruptions to materials and services provided by third parties. These should be mitigated by the contingency plans that are put in place and are not expected to have a material impact on Rio Tinto's results.

Contingency plans

Contingency plans for critical exposures in all business units are substantially complete but will continue to be monitored, refined and rehearsed during the remainder of the year. Contingency plans will vary from business unit to business unit but will include, where practicable, advanced delivery of product and rescheduling of planned shutdowns. The Group routinely maintains "insurance spares" of parts that are critical to ensuring the continuity of production. In addition business units will build up stocks of other key parts and consumables as a contingency against interrupted supply lines.

Monitoring and review

Rio Tinto has appointed an executive director to oversee the Group's Year 2000 initiatives. He is supported by a small group that visits and monitors the progress of individual business units in all aspects of their Year 2000 programmes.

The Technology Group Chief Executive receives a monthly report on the Group's Year 2000 progress and keeps the Board informed.

Various business units in the Group have engaged external consultants to review and comment on their Year 2000 processes. The Group also has a programme in place to assess in detail Year 2000 progress at key business units using specialist IT staff and process control engineers from other business units in the Group.

To date the Group has not identified any systems or equipment under its control that cannot be rectified before the Year 2000.

Year 2000 costs

Capital and revenue expenditure related to the Group's Year 2000 program is being brought to account as and when incurred. Since inception of the Group's Year 2000 project some US$42m before tax has been recognised in the accounts up to 30 June 1999, of which US$20m relates to capital expenditure. Total forecast costs are expected to be US$55m. These amounts are inclusive of internal labour and overhead costs and will be met from normal operating budgets. Future costs include retaining Year 2000 resources to monitor changes or developments, executing contingency plans and a modest amount for unforeseen issues. No significant IT projects have been deferred as a result of Year 2000 rectification activity.