Rio Sees `Significant Earnings Momentum' for Aluminum

March 12-- Rio Tinto Group, the world's second- largest aluminum producer, expects ``significant earnings momentum'' from its unit producing the lightweight metal in 2008. Each 10-cents-a-pound movement in the average aluminum price over the 2007 level of $1.20 a pound will boost the company's underlying earnings by $620 million, London-based Rio said today in a statement. Underlying earnings before interest, taxes, depreciation and amortization for the unit as though the unit had been part of Rio for the whole of last year were $4.8 billion, the company said. Rio didn't provide figures for 2006. Its Rio Tinto Alcan unit produced 4.2 million metric tons of aluminum, 8.5 million tons of alumina and 32 million tons of bauxite in 2007. Rio is battling a hostile $136 billion takeover bid from BHP Billiton Ltd, which Rio says ``significantly'' undervalues the company and doesn't reflect its prospects. Rio Chief Executive Officer Tom Albanese said last week that price gains for metals in which Rio leads BHP have been faster than expected. Rio agreed to buy Montreal-based Alcan Inc. in July 2007 for $38.1 billion and is now the largest producer of primary aluminum after Russia's United Co. Rusal, according to 2008 output estimates compiled by London-based metals consulting company CRU. The Alcan purchase allows Rio to take advantage of surging demand for the metal in China and India. Aluminum for delivery in three months on the London Metal Exchange has gained 25 percent this year and was down 1.3 percent at $3,020 a ton as of 9:10 a.m. local time.